Should buck present the borrowing and payment activity

Assignment Help Financial Accounting

Reference no: EM132583629 , Length: word count:750

Financial Accounting Theory and capstone

In a minimum of 750-words paper, respond to Case attached to this assignment page.

Case - Buck's Dilemma: Gross or Net

Required:

1. Should Buck present the borrowing and payment activity related to its revolving line of credit as cash flows from operating, investing, or financing activities?

2. For each of the following scenarios, on the basis of the specific facts and circumstances, determine whether Buck should present its borrowing and payment activity under the Facility on a net or gross basis within the financing activities section of its statement of cash flows.

Scenario 1:
• The line of credit has a maximum borrowing capacity of $100 million, and under the terms of the agreement, all draws are considered to be due on demand.
• On July 15, 2010, Buck drew $60 million on the Facility.
• On August 30, 2010, Buck drew an additional $40 million on the Facility.
• On September 30, 2010, Buck paid down the draws by $50 million.
• Assume the turnover of transactions is considered to be quick.
Scenario 2:
• The line of credit has a maximum borrowing capacity of $100 million, and under the terms of the agreement, specific maturity terms will be negotiated by Buck and the bank after each draw on the Facility.
• On June 15, 2010, Buck drew $60 million, and signed a note to repay the full amount borrowed by December 15, 2010.
• On September 30, 2010, Buck drew an additional $40 million, and signed a note to repay the full amount borrowed by December 1, 2010.
• On December 1, 2010, Buck paid $40 million to the bank related to the second draw.
• On December 15, 2010, Buck paid $60 million to the bank related to the first draw.
• Assume the turnover of the transactions is considered to be quick.
Scenario 3:
• The line of credit has a maximum borrowing capacity of $100 million. Individual draws on the Facility do not contain specific maturity dates, other than the entire amount outstanding under the Facility becomes due at the end of the three-year term.
• On June 30, 2010, Buck drew $70 million on the Facility.
• On September 30, 2010, Buck drew an additional $15 million on the Facility.
• On November 30, 2010, Buck drew the remaining $15 million available under the Facility.
• On December 15, 2010, Buck made a payment of $50 million related to the outstanding balance.
• Assume the turnover of the transactions is considered to be quick.
3. What international accounting standard (IFRSs) applies to cash flow statement presentation? In general, how do those guidelines compare to U.S. GAAP?

Ensure that your paper is organized and formatted to APA 6th edition.

Attachment:- Case - Bucks Dilemma.rar

Reference no: EM132583629

Questions Cloud

Calculate the sample mean and the sample variance : Calculate the sample mean and the sample variance, and report both values using separate cat() statements, rounding to 5 decimal places

Write a brief memorandum explaining the concept : Write a brief memorandum explaining the concept of Total Quality Management describing how this approach would apply to the case study found on Form 18

Describe behavior of your number one targeted segment : Describe a behavior of your number one targeted segment. How would you facilitate your communications?

Separation of duties : Discuss importance of separation of duties for personnel. Describe reasons why separation of duties is a critical requirement for policy framework compliance

Should buck present the borrowing and payment activity : Should Buck present the borrowing and payment activity related to its revolving line of credit as cash flows from operating, investing, or financing activities

Infected with dangerous virus : Data has been collected to identify specific cases of people who are infected with a dangerous virus. What are the top five cities for infected cases?

How senior managers support beneficial changes : Give 3 examples on how senior managers support beneficial changes to policies and procedures

Identify the major issues facing oliver markets : -Identify the major issues facing Oliver's Markets. -Identify the major driving forces operating in the supermarket industry.

Understanding the health care professional : What is their function/medical training? Discuss how the expanding roles of allied health in health care delivery have affected each profession.

User Account

All Pages