Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
1. Relevance versus Faithful Representation. The fair value of the build- ing may provide more relevant information to decision makers, but fair value estimates are not as free from error as historical cost information. 2. Comparability versus Consistency. A change to the prevalent method used in the industry would allow JCB's financial statements to be more easily compared with competitors; however, it would reduce the ability to analyze JCB's previous financial statements because the inventory method would not be consistently applied over time. 3. Timeliness versus Verifiability. Because the bank has asked that Hobson, Inc. provide financial statements as quickly as possible after year-end, the qualitative characteristic of timeliness dictates that financial information be collected and summarized as quickly as possible. However, because some suppliers are slow in submitting invoices, estimating liabil- ities will make the financial statements less verifiable. 4. Neutrality versus Relevance. The officers of Starship, Inc. believe that disclosing the potential liability will unnecessarily bias the financial statements in a negative fashion. On the other hand, the auditors believe that given the potential liability associated with the malfunctions, external users would find knowledge of this risk very relevant. When a company cannot justify applying the going concern assumption, different measurement attributes may be required. The identified situations would most likely require the use of the following attributes: 1. Plant and equipment would be valued on a liquidation basis. Thus, an exit market value under distressed conditions would be the proper valuation. 2. The discounted value of expected future principal and interest payments would be the proper valuation for these bonds. 3. Accounts receivable should be valued at their net realizable value, regardless of the going concern assumption. A company in financial difficulty may have to sell its receivables to a third party rather than wait for the orderly collection process to occur. The expected sales price would be the proper valuation. 4. Inventory should be valued at expected liquidation value under forced sale. LIFO inventory values are lower than current market prices in a normal inflationary market. The revaluation of inventory in this case may result in an increase in inventory values rather than a decrease. Although such an increase would normally not be recorded before a sale validated the market value, the increase could be recorded earlier if evidence of a higher market value was strong. 5. Investments in other companies would be valued at fair value if fair value can be determined. 1.The $26.0 billion in future minimum payments expected to be received by McDonald's in connection with its agreements with franchisees certainly represents a future economic benefit. The rights to receive the payments are guaranteed to McDonald's by contract, so it seems safe to say that they are controlled by McDonald's. The big question is whether the payments are the result of a past transaction or event. Some might argue that the signing of the franchise contracts is a past event. However, the payments come about because of future sales and future occupancy by franchisees. So, the $26.0 billion is not recognized as an asset. If it were recognized, the appropriate amount would be the discounted present value of the future payments. 2. This accounting treatment illustrates that conservatism still lies behind many accounting rules. If the $26.0 billion in cash flows were payments to be made by McDonald's, they might be recognized as a liability. This is the treatment afforded some long-term leases.
The Colson Company issued $300,000 of 10% bonds on January 1, 2011. The bonds are due January 1, 2016, with interest payable each July 1 and January 1. The bonds are issued at 98. Prepare the journal entries for (a) January 1, (b) the July 1, and ..
The SEC's Enforcement Division investigates possible violations of securities laws, recommends SEC action when appropriate, either in a federal court or before an administrative law judge, and negotiates settlements.
When a parent uses the initial value method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is true before making adjustments on the consolidated worksheet?
Compute the relevant cost of making and puchasing the component. Which alternative is less costly and by how much? What qualitative factors might influence the decision about whether to make or to buy the component?
The expected economic life of the asset is ten years. The lease term is 5 years. The asset is expected to have a residual value of $2,000 at the end of ten years. Using the straight-line method, what would Best record as annual depreciation?
Issued 5,000 ordinary shares at P45 per share, less cost related to the issuance of the share totalling P7,000.00
Marilyn's basis in the partnership interest was $80,000 before the distribution. What is Marilyn's basis in the inventory, land, and partnership interest following the distribution?
On June 30, 2011, Georgia-Atlantic, Inc., leased a warehouse facility from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease terms, payable each June 30 and December..
Which of the following is not characteristic of a corporation? a) The financial loss that a stockholder may suffer from owning stock in a public company is limited. b) Cash dividends paid by a corporation are deductible as expenses by the corporation..
What is the effect of amortizing a bond discount upon an annual net income and the annual net cash flow from operating activities?
Background: As one of the world's largest retail giants, Wal-Mart provides a perfect illustration of inventory disclosure. What is Walmart's ending inventory as of January 31, 2013? What percentage of Walmart's total assets is the Inventories asset?
Accumulated depreciation of $20,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd