...Notes to Consolidated Financial Statements Note 1 Summary of Significant Accounting Policies Nature of Operations Wireless Cookies, Etc is a company that manufactures and distributes various types of baked goods to wholesale retailors and individuals via the internet. The products are available to everyone who has internet connection and is interested in selling our product in their store. The product is available in the USA, several European countries, several Caribbean countries. The cost is negotiated with each vendor who offers the product in a retail store. Revenue Recognition The revenue is a computation of revenues, total expenses, and net income. It explains how the profit is calculated. Cost of Products Sold The cost of products sold is classified in detail in regards to the supplies and materials used to produce the product Selling, General and Administrative Expense The cost incurred used to sell and market the product. Pay the salaries to all who helped in the production of the product Currency Translation Due to the company having to send products to different countries because of this the company has to e use the current exchange rate for orders that are established in different countries. The current exchange rate is used and all contracts are negotiated in the country in which the product is sold. Cash Flow Presentation This represents how the cash flow is utilized within the company. For the purchase of supplies to the payout of dividends and...
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...1. (TCO C) The total amount of patent cost amortized to date is usually: shown in a separate Accumulated Patent Amortization account, which is shown contra to the Patent account. shown in the current income statement. X reflected as credits in the Patent account. reflected as a contra property, plant, and equipment item. 2. (TCO C) When developing computer software to be sold, which of the following costs should be capitalized? Designing Coding Testing X None of the above 3. (TCO C) Mini Corp. acquires a patent from Maxi Co. in exchange for 2,500 shares of Mini Corp.’s $5 par value common stock and $75,000 cash. When the patent was initially issued to Maxi Co., Mini Corp.’s stock was selling at $7.50 per share. When Mini Corp. acquired the patent, its stock was selling for $9 a share. Mini Corp. should record the patent at what amount? $87,500 $93,750 X $97,500 $75,000 4. (TCO C) On January 2, 2011, Klein Co. bought a trademark from Royce, Inc. for $1,000,000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Royce’s books was $800,000. In Klein’s 2011 income statement, what amount should be reported as amortization expense? X $100,000 $80,000 $50,000 $40,000 5. (TCO C) Harrel Company acquired a patent on an oil extraction...
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...Carrie Williams AC551 November 10, 2011 Velocity Cellular Case Study Velocity Cellular Case 1. Velocity should treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement. 2. Velocity should allocate the revenue of $200 between the activation card and the prepaid voucher. 3. A. Velocity should recognize revenue from the activation card and the prepaid voucher. B. Velocity should recognize revenue from the prepaid voucher as the minutes that are used. 4.) Velocity should disclose its use of a multiple-element arrangement in the financial statements. 1. Should Velocity treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement? According to ASC 605-25-25-5 Velocity should treat the “Power Starter pack” as a multiple-element arrangement. “In an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if all of the following criteria are met: A. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered item(s) on a standalone. In the context or a customer’s ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). B. There is objective and reliable evidence of the fair value of the...
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...Carrie Williams AC551 November 10, 2011 Velocity Cellular Case Study Velocity Cellular Case 1. Velocity should treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement. 2. Velocity should allocate the revenue of $200 between the activation card and the prepaid voucher. 3. A. Velocity should recognize revenue from the activation card and the prepaid voucher. B. Velocity should recognize revenue from the prepaid voucher as the minutes that are used. 4.) Velocity should disclose its use of a multiple-element arrangement in the financial statements. 1. Should Velocity treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement? According to ASC 605-25-25-5 Velocity should treat the “Power Starter pack” as a multiple-element arrangement. “In an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if all of the following criteria are met: A. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered item(s) on a standalone. In the context or a customer’s ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). B. There is objective and reliable evidence of the fair value...
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...Keller Graduate School of Management AC551 Federal Taxes and Decisions Final Exam – Professor Abner TRUE-FALSE QUESTIONS—CHAPTER 10 1. Terry Trumbull purchased a tract of land. In order to have city water, he had to pay the water company $5,000 to extend the water line to his property. The $5,000 cost is an addition to the basis of the land. TRUE 2. When property that is subject to an existing debt is purchased, the basis of the property is the amount of cash paid initially plus the unpaid debt to which the property is subject. TRUE 3. The basis for nonbusiness property changed to business use is the greater of the adjusted basis of the property or its fair market value on the date it is converted to business use. FALSE 4. During 2011, Carl Crofts received a gift of property having a fair market value of $25,000 at the time of the gift. The donor’s adjusted basis in the property at the time of the gift was $21,000. The donor paid a gift tax of $700 on the property. Carl’s basis in the property is $21,700. FALSE 5. In 2011, Tom Turner received a gift of property that had a fair market value of $10,000 at the time of the gift. The donor’s adjusted basis in the property at the time of the gift was $12,000. Tom’s basis for computing depreciation is $12,000. TRUE MULTIPLE CHOICE QUESTIONS—CHAPTER 10 36. Leonard Lambert’s commercial building, which had an adjusted basis of $500,000, was partially destroyed by fire. The fair market value was $800,000 just...
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