...As a newly hired Staff I, you are responsible for analyzing the work papers for one of the clients of your organization. Your client is not clear about why you are asking for information on the following topics: * Adjusting lower cost of market inventory on valuation * Capitalizing interest on building construction * Recording gain or loss on asset disposal * Adjusting goodwill for impairment Recording Gain or Loss on disposal of Assets Any asset, such as land, a factory or equipment purchased by Evenbetternow, LLC for business purposes is called a capital asset. When a company disposes of capital assets, it is required by the Financial Accounting Standards Board (FASB) that the financial records account for any gain or loss incurred during the disposal. As capital asset items are used, they will lose value and depreciate. Evenbetternow, LLC recently disposed of two assets. In order to be in compliance with the Financial Accounting Standards Board Statement No. 121 (Accounting for the Impairment or Disposal of Long-Lived Assets) we need assess the disposal of these two items and account for the gain and or loss received. We will first need to determine the original value of the asset and minus the accumulated depreciation to date to discover the book value for each item. By comparing the book value to the amount received for each item, we can determine if Evenbetternow, LLC incurred a gain or loss on each asset (Luecke, 2002). Recording a gain or loss on the...
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...Response to Client Request II Charles Thornton, Christine Collins, Jose Rodriguez, Vanessa Van Kirk ACC 541 September 23, 2013 Sonja Wilson Response to Client Request II As requested, the staff has prepared a base analysis of the information you have requested. While the staff waits for the lawyer to determine the probability of a loss in this lawsuit, our staff has researched and prepared an analysis to help educate you and prepare you for the different outcomes. This includes how your accounting department will need to account for the contingency and how that may affect your company’s ability to pay the mortgage and the impairment of the patent. In 1975, the FASB issues SFAS No. 5, which establishes standards of financial accounting and reporting for loss contingencies (Summary of SFAS No. 5, n.d.). SFAS explains two types of contingencies. In your company’s case we will cover the loss contingency. First before reporting a potential loss you must determine its likelihood of occurrence. FASB defines the criteria for reporting contingencies in three categories: (1) probable meaning the loss is likely, (2) reasonably possible meaning the loss is more than remote but less likely, or (3) remote meaning the loss has a slight chance (Schroeder, Clark, Cathey, 2011). Once the lawyer has determined the likelihood of loss for your company, the accounting department will charge the contingencies against income and record a liability, only if two conditions are met: (1) “Information...
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...Response to Client Request 1 Tiffaney Brown ACC/541 November 30, 2015 Kenneth Burton Memorandum To: | Jane Phoenix, supervisor | From: | Tiffaney Brown | Date: | November 30, 2015 | Re: | FASB research results | | | As you requested, I have completed the research on the lease types and lease structure issues on the Financial Accounting Standards Board (FASB) website for the Lone Star Trucking Company. I did specific research on direct financing, sales type, and operating leases. After going over the information I have, I will provide you my recommendation for handling the client’s situation According to the FASB, both the client and the client’s potential new customer need to determine if their arrangement will meet one or more of these four criteria: 1. Transfer of ownership – the potential lease will transfer ownership of the property to the lessee at the end of the designated lease term (fasb.org). The client will have met this criterion if the lease agreement provides for the transfer of title at or shortly after the end of the lease term. Usually, there is a nominal fee that is required by statutory regulation to transfer title. 2. Bargain purchase option – the potential lease will contain a bargain purchase option, where the lessee will have the option to purchase the asset for a percentage less than the fair market value (fasb.org). 3. Lease term - the potential lease term is equal to 75 percent or more of the estimated economic life of...
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...Response to Client Request I Sharad Prabhakar ACC 541/Accounting theory and research January 17, 2011 Heber Howard Memo To: Mr. Supervisor From: Sharad Prabhakar Date: January 17th, 2011 Re: ABC Trucking Co. assignment results Message: These are the results of the assignment given to me by you last week regarding ABC Trucking company potential new client. I have done the required research on the Financial Accounting Standards Board (FASB) website regarding lease structures and current practices as it would relate to the specific issue at hand with ABC Trucking. All my research has shown that leasing would be an optimum option for the company to consider when leasing the extra trucks according to the requirement of the new potential client. Some of the benefits of leasing are that they will be able to finance all of the cost of the additional trucks without having to use of their own cash, they will be able to keep the trucks off their balance sheet if they choose an operating lease, and a lease will protect them when the trucks will became old and obsolete. Basically, there are two types of leases that ABC Trucking can choose from, below is a brief description and requirements of each: 1. Capital Lease: this is when the agreement for the lease is designed for the lessee acquires the assets and the end of the lease. From ABC Trucking’s perspective, they will be entering into a capital lease if it meets any one of the following four conditions as in...
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...Response to Client Request I ACC/541 To: Regional Trucking Company From: The Consulting Group In Re: Leases and Lease Structures A company wants information about leases and lease structures in the FASB codification required by the supervisor in response to the request of the client. The client is a regional trucking company. The company owns one hundred trailers 20 less than the requirement to take a new job proposal. The opportunity offers new growth, the doubt about the duration of the work is unclear and the client needs advice about whether to buy or lease the extra trailers needed to complete the job. The paper will give the outcome of the research completed on the lease and lease structures in the FASB codification required by the supervisor in response to the request of a client. The codifications of the Financial Accounting Standards Boards give substance to different lease structures and the terms and conditions for lease transactions. The statement of financial accounting standards (SFAS) speaks of different lease structures. SFAS Number 13 discusses the categorization of various principles about lease structures to capital leases and operating leases. The capital leases are leases in which the benefits and the risks pass to the lessee. “A lease is considered a sales type lease when the manufacturer or dealer’s profit or loss implies that the leased item is considered inventory and the seller or the lessor is earning a profit on the...
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...Client Response II ACC/541 January 31, 2011 Client Response II To: ABC Warehouse CC: Date: [ 1/31/2011 ] Re: Loss Contingencies Reporting Requirement for Lawsuit Contingencies The implication to the company depends upon outcome of the lawsuit. If the outcome results in a loss to the company, the loss should be accrued as estimated into the company’s financials, provided that the loss can be reasonably estimated and noted, in detail per FASB Codification section 450-20-25-2. If the loss cannot reasonably estimated, FASB Codification section 450-20-50-5, states that in the company’s financial statement there should be a disclosure of the contingency outlining conditions which could possibly result in an additional loss. If the litigation is unlikely to result in a loss, the Codification of FASB section 450-20-50-6, requires no disclosure in the financial statement. Reporting requirement for Debt Reorganization If there is an unfavorable outcome in the pending litigation, the cash flow of the company may become distressed to the point where the company may sue for relief under chapter 11 bankruptcy code for debt reorganization. There is a detailed method for creditors, provided by the bankruptcy plan of the organization suing for relief, to recoup funds allocated to the company through the restructuring of the company’s debt . In the restructuring of the company’s debt, it may result in modified repayment schedules, debt forgiveness, modification...
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...Explains how the impairment of the patent would be reflected on the financial statements in the event of losing a lawsuit - page 377 Response to Client Request II Week 4 Team A Names ACC/541 Date: MEMORANDUM TO: FROM: DATE: SUBJECT: Financial Implications of Pending Litigation ____________________________________________________________ __________________ Financial Implications The pending litigation has several implications for accurate financial reporting as established in the Generally Accepted Accounting Principles (GAAP). The immediate impact is the requirement for contingencies in the financial statements to report the potential that these statements will be restated to account for the outcome of the lawsuit. Pending the outcome of the lawsuit, the company may be required to reorganize their debts under a chapter 11 bankruptcy. The lawsuit also challenges the validity of a patent, which is a revenue generating asset of the client’s. Pending the outcome of the lawsuit, the patent will need to be tested for impairment. Reporting Requirements for Lawsuit Contingencies The implications for the lawsuit on the company financials depend upon the anticipated outcome of the lawsuit. If the anticipated outcome of the lawsuit is likely to result in a loss to the company, and that loss can be reasonably estimated, the loss should be accrued as estimated into the company financials, and noted as such, as detailed in the FASB Codification section...
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...Response to Client Request ACC 541 24, December 2012 Memorandum To: Supervisor From: Sarah Dixon Re: Leases and lease structure issues It has come to my attention of our client’s concern regarding the uncertain relationship with a customer who may potentially offer the company a significant growth benefit. The following memo will address the client’s concern and recommend a solution to the problem, giving a summary of several different types of leases. One of the most important issues here lies with understanding that the client’s main concern is trying to make as much profit as he possibly can for his regional trucking company. The opportunity offered to this client could potentially be very profitable if handled in the correct manner. The client has the option to either purchase twenty more trailers to accommodate this customer or use an alternative means of acquiring these assets known as leasing (Schroeder, 2011). I will explain leases and lease structure issues of several different types of leases including direct financing leases, sales type leases, and operating leases which could greatly benefit this client. A lease is a contractual agreement between the lessee, or the user, to pay the lessor, or the owner, for the use of an asset or services. Leases are classified under the Financial Accounting Standards Board (FASB) under the number 840. The lessee is the receiver of the services or assets under the lease agreement, and the lessor is the owner...
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...Accounting Standards Board Paper Katherine Meyer ACC/ 541 Kenneth Burton July 30, 2012 The Accounting Standards Board and the Financial Accounting Standards Board have been critical in modernizing the accounting field. The Accounting Standards Board was created out of criticism of the field and the Financial Accounting Standards Board was created out of criticism of the Accounting Standards Board. The histories of the boards have improved the accounting profession and have made the flow of information more fluid. Around 1959 the methods that were used to formulate accounting principles were in question because the methods had not arisen from research or had been based on theory. About the same time, the CAP was being questioned for issuing inconsistent standards. The CAP was made up of part- time members whose independence quickly came into question. The members of the CAP were also required to also be members of the AICPA and it was not long before accountants and the financial statement users were demanding a wider representation in the development of accounting principles. In response to the demand the AICPA forms the Accounting Principles Board or the APB. The APB was made up of seventeen to twenty- one accounting professionals, individuals from the industry, the government, and academia. The objectives of the APB were to advance the written expression of the generally accepted accounting principles and to narrow the areas of differences in appropriate practice...
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...Response to Client Request ACC/541 September 2, 2013 To: From: Subject: Lease Type and Lease Structure This memo includes research on leases and lease structure. Through intensive research on the Financial Accounting Standards Board (FASB), three sub-types of leases were found for lessors to account for the leases. The three sub-types are direct financing, sales-type, and operating leases. The international accounting standards board (IASB) and FASB are proposing a draft for lease accounting. The critics are disputing some of the concerns with operating lease financial reporting. This memo will address the proposal changes for operating leases. Also included is a lease type recommendation for the client. According to FASB ASC 840-30-05-4 (2009), lease capitalization includes direct financing and sales-type leases. These types of leases are recognizable by meeting one of the four criteria’s. A lessee under the capital lease method recognizes the lease according to FASB ASC 840-30-25-1 (2009), as an asset and as a commitment. The lessee accounts for the lease commitment in accordance to FASB ASC 840-30-30-1 (2009), at inception when the amount is equal to the present value (PV). In addition, the lease term will exclude the payment portion that represents specific cost such as insurance, maintenance, and taxes. For capital leases, a lessee recognizes lease assets and liabilities on the balance sheet (FASB, 2013). The lessee will...
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...20/20: A Vision for the Future of Counseling: The New Consensus Definition of Counseling David M. Kaplan American Counseling Association Vilia M. Tarvydas The University of Iowa Samuel T. Gladding Wake Forest University Author Note David M. Kaplan, Professional Affairs, American Counseling Association; Vilia M. Tarvydas, Department of Rehabilitation and Counselor Education, The University of Iowa; Samuel T. Gladding, Department of Counseling, Wake Forest University. The authors wish to thank Jason Wilke for his assistance. Correspondence concerning this article should be addressed to David Kaplan, American Counseling Association, 5999 Stevenson Avenue, Alexandria, VA 22304. E-mail: dkaplan@counseling.org Abstract With the promulgation of the 20/20 consensus definition of counseling, there is finally profession-wide clarity as to what it means to engage in professional counseling. This article describes the development and discusses the implications of the definition: Counseling is a professional relationship that empowers diverse individuals, families, and groups to accomplish mental health, wellness, education, and career goals. The 20/20 consensus definition of counseling has been endorsed by 29 major counseling organizations. Keywords: counseling, definition, 20/20, consensus, professional identity 20/20: A Vision for the Future of Counseling: The New Consensus Definition of Counseling For well over half a decade, the counseling profession has been...
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...Journal of Information Systems Vol. 16, No. 2 Fall 2002 pp. 209–222 Impact of Information Technology on Public Accounting Firm Productivity Rajiv D. Banker Hsihui Chang The University of Texas at Dallas Yi-ching Kao University of Wisconsin–Milwaukee ABSTRACT: In recent years, information technology (IT) has played a critical role in the services provided by the public accounting industry. However, no empirical research has evaluated the impact of IT on public accounting firms. This study focuses on five offices of an international public accounting firm that recently made large IT investments, primarily in audit software and knowledge-sharing applications. Both qualitative and quantitative information from the research site are analyzed to estimate the change in productivity following the implementation of IT. The results from both regression analysis and Data Envelopment Analysis (DEA) indicate significant productivity gains following IT implementation, documenting the value impact of IT in a public accounting firm. Keywords: public accounting; information technology (IT); IT productivity; IT adoption; data envelopment analysis. Data Availability: The confidentiality agreement with the firm that provided the data for this study precludes revealing its identity and disseminating detailed data without its written consent. I. INTRODUCTION dvances in information technology (IT) have transformed many firms in professional services industries, but perhaps none as much as those in...
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...Journal of Information Systems Vol. 16, No. 2 Fall 2002 pp. 209–222 Impact of Information Technology on Public Accounting Firm Productivity Rajiv D. Banker Hsihui Chang The University of Texas at Dallas Yi-ching Kao University of Wisconsin–Milwaukee ABSTRACT: In recent years, information technology (IT) has played a critical role in the services provided by the public accounting industry. However, no empirical research has evaluated the impact of IT on public accounting firms. This study focuses on five offices of an international public accounting firm that recently made large IT investments, primarily in audit software and knowledge-sharing applications. Both qualitative and quantitative information from the research site are analyzed to estimate the change in productivity following the implementation of IT. The results from both regression analysis and Data Envelopment Analysis (DEA) indicate significant productivity gains following IT implementation, documenting the value impact of IT in a public accounting firm. Keywords: public accounting; information technology (IT); IT productivity; IT adoption; data envelopment analysis. Data Availability: The confidentiality agreement with the firm that provided the data for this study precludes revealing its identity and disseminating detailed data without its written consent. I. INTRODUCTION dvances in information technology (IT) have transformed many firms in professional services industries, but perhaps...
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...Probability and Statistics for Finance The Frank J. Fabozzi Series Fixed Income Securities, Second Edition by Frank J. Fabozzi Focus on Value: A Corporate and Investor Guide to Wealth Creation by James L. Grant and James A. Abate Handbook of Global Fixed Income Calculations by Dragomir Krgin Managing a Corporate Bond Portfolio by Leland E. Crabbe and Frank J. Fabozzi Real Options and Option-Embedded Securities by William T. Moore Capital Budgeting: Theory and Practice by Pamela P. Peterson and Frank J. Fabozzi The Exchange-Traded Funds Manual by Gary L. Gastineau Professional Perspectives on Fixed Income Portfolio Management, Volume 3 edited by Frank J. Fabozzi Investing in Emerging Fixed Income Markets edited by Frank J. Fabozzi and Efstathia Pilarinu Handbook of Alternative Assets by Mark J. P. Anson The Global Money Markets by Frank J. Fabozzi, Steven V. Mann, and Moorad Choudhry The Handbook of Financial Instruments edited by Frank J. Fabozzi Collateralized Debt Obligations: Structures and Analysis by Laurie S. Goodman and Frank J. Fabozzi Interest Rate, Term Structure, and Valuation Modeling edited by Frank J. Fabozzi Investment Performance Measurement by Bruce J. Feibel The Handbook of Equity Style Management edited by T. Daniel Coggin and Frank J. Fabozzi The Theory and Practice of Investment Management edited by Frank J. Fabozzi and Harry M. Markowitz Foundations of Economic Value Added, Second Edition by James L. Grant Financial Management and Analysis, Second Edition...
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...through the research process. To Adéle Mulder and Charl Marais, thank you for your continuous insight and perspectives, both academic and otherwise. And finally to Hilda and Gerrie Steyn, who have been absolutely crucial throughout all my years of study, thank you for your indispensable support, in all its forms. iv SUMMARY The worldwide increase of corporate failures on the scale of Enron and WorldCom has sparked a renewed international trend of corporate governance review. With the external company auditor blamed at least in part for many corporate failures, corporate governance reform also necessitates a review of the statutory regulation of the company auditor. In particular, the lack of auditor independence when auditing clients has been under the legislator’s spotlight. The problems associated with unregulated or poorly regulated auditors are well...
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