TO: Nikita La Femme, V.P. of Operations and Harry Dim, Staff Accountant, Craig’s Crocodiles Inc.
FROM: Team 1: Tri Duong, Andrew Gamble, Belona Gvargezzobalan, Khanh Nguyen, Craig Stevens, Dean Scott, Grace Shirvani,
RE: Evaluation of the accounting and legal issues for Craig’s Crocodiles Inc.
We have evaluated the accounting and legal issues arising from the expansion of your business. Feel free to contact us for any other questions or information.
Executive Committee:
Head of Contacts: Dean Scott:
18111 Nordhoff Street, Northridge, CA-91330
Office: 818-521-2354
Fax: 818-867-5309 dean.scott.5@my.csun.edu Assistant: Tri Duong
18111 Nordhoff Street, Northridge, CA-91330
Office: 818-324-5282
Fax: 818-233-2284 tri.duong.497@my.csun.edu Executive Summary
Purpose: To explore and analyze Craig's Crocodiles’ different accounting options for how and when they should treat their revenue. In addition, this report will also analyze the potential legal liability Craig’s Crocodiles is accountable for after breaking their lease agreement with Pauly Property Management Services.
Background: Craig’s Crocodiles was established on January 1st, 2008 as a company that catches crocodiles and sells them as pets. After their first year of business, Craig’s Crocodiles is looking to expand. This means that the company will need to prepare income statements to show their past and projected profits in order to qualify for loans. In addition, Craig’s Crocodiles will also need to break their office and warehouse lease early in order to have more room for the expanded business.
Accounting Analysis: Selling crocodiles as pets is a unique business model that has never been done before and therefore there is no established standard to follow for when
