...Prof. Alejandro Méndez Case 11-1 Polluter Corp Facts of Case: Polluter Corp is an SEC registrant and manufacturer household cleaning products. In the course of operations, Polluter Corp emits emission pollutants; The Company receives emissions allowances, (EAs,) from the government for 2010 to 2030. Polluter Corp will upgrade their production facilities in 2014 in order to reduce their pollutants. Emissions Allowance are given by the government in order to offset pollution expense, with the goal being to reduce pollution 2010 Transactions After 2014, Polluter will emit less pollution, but until then it will need more EAs in order to avoid penalties. Transactions Fiscal Year 2010 After 2014, Polluter Corp will emit less pollution, but until then it will need more EA’s in order to avoid penalties, Polluter buys extra EA’s for 2012 from Clear Air Corp for $3 million. In an effort to offset the cost of the April 2, 2010 purchase of 2012 Eas, the company sold Eas with a vintage year of 2016 to Dirty Chemical Corp for $2 million. Answer Required: 1. What is the appropriate classification in the statement of cash flows in the company’s December 31, 2010, financial statements for its purchase of 2012 EAs from Clean Air Corp ? According to the FASB codification section 805-50-3-1-2, these allowance will be recognized as intangible assets at their cost. When a company buys any assets, the cash outflow due to purchase will be classified in the...
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...Corporate Finance Library Standards and Regulations FASB Codification Codification Presentation 230 Statement of Cash Flows 230-10 Overall 230-10-45 Other Presentation Matters Copyright © 2015 by Financial Accounting Foundation, Norwalk, Connecticut 230-10-45 Other Presentation Matters General Note: The Other Presentation Matters Section provides guidance on other presentation matters not addressed in the Recognition, Initial Measurement, Subsequent Measurement, and Derecognition Sections. Other presentation matters may include items such as current or long-term balance sheet classification, cash flow presentation, earnings per share matters, and so forth. The FASB Codification also contains Presentation Topics, which provide guidance for general presentation and display items. See those Topics for general guidance. General > Form and Content 45-1 A statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions. 45-2 A reconciliation of net income and net cash flow from operating activities, which generally provides information about the net effects of operating transactions and other events that affect net income and operating cash flows in different periods, also shall be provided. 45-3 Financial statements shall not report an amount of cash flow per share. Neither cash flow nor any component of it is an alternative to net income as an indicator of an entity's performance, as reporting...
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