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!
Steve Morgan, controller for Newton Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him-advertising. During the year, the company had instituted an expensive advertising campaign to sell some of its slower-moving products. It was still too early to tell whether the advertising campaign was successful. There had been much internal debate as how to report advertising cost. The vice president of finance argued that advertising costs should be reported as a cost of production, just like direct materials and direct labor. He therefore recommended that this cost be identified as manufacturing overhead and reported as part of inventory costs until sold. Others disagreed. Morgan believed that this cost should be reported as an expense of the current period, based on the conservatism principle. Others argued that it should be reported as Prepaid Advertising and reported as a current asset.The president finally had to decide the issue. He argued that these costs should be reported as inventory. His arguments were practical ones. He noted that the company was experiencing financial difficulty and expensing this amount in the current period might jeopardize a planned bond offering. Also, by reporting the advertising costs as inventory rather than as prepaid advertising, less attention would be directed to it by the financial community.Required:
1. E1.Evaluate the recommendation of the Vice president (Treating Ad as cost of production and overhead). The effect on financial statements.
2. E2.Evaluate the recommendation of controller Morgan (Treating Ad as operating expense). The effect on financial statements.
3. E3.Evaluate the recommendation of others (Treating Ad as prepaid advertising). The effect on financial statements.
4. E4.Evaluate the recommendation of the president (Treating Ad as cost of Inventory). The effect on financial statements.
5.5h5.Which of the standard of professional ethics are involved and what is the responsibility of the presidents and other member of management in this case?
The invoice of a machine is $40,000. Various other costs relating to the acquistion and installation of the machine including transportation, electrical wiring, special base, and so on amount to $7,500.
Identify two behavioural advantages that could arise and identify two potential problems that could arise.
question show the fund or nonfund accounts that should be used to account for each of the subsequent1. tax revenues
Write a memo to your senior staff advising them of your desire to approach performance measurement from a balanced scorecard perspective.
With possibility that the US Congress will relax restrictions on cutting old growth, a local lumber company is considering expanding its facilities. They can sell the lumber for .18 a board foot. The tax rate for company is 30%. The company has th..
Prepare journal entries for Pike Corp-oration to account for its investment in Salmon Corporation for 2010 and 2011 and calculate the balance of Pike''s investment in Salmon at December 31, 2011.
Our clients are currently under audit. The unresolved issue relates to this stock loss. Each client showed their share of the loss ($90,000 each) on their individual income tax returns.
A division of Hewelett-Packard Company altered its production operations from one where large labor force assembled electronic components to the automated production facility dominated by computer-controlled robots. Evaluate the budgeted profit as ..
Manchester Foundry produced 45,000 tons of steel in March at a cost of £1,150,000. In April, the foundry produced 35,000 tons at a cost of £950,000. Using only these two data points, determine the cost function for Manchester following the instruc..
Use the contribution margin ratio CVP formula to compute Peyton Travel's break-even sales in dollars. If the average sales price of a ticket is $660.00; how many tickets must be sold to reach break-even?
the bottled water company comprehensive master budgetin the following pages you are given basic information for the
Prepare a short report for Mr. Banner to explain the reasons for the negative cash balance at the end of the previous year and other operating problems. To support your points, you may use a statement of cash flows and relevant financial ratios.
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