I am an accountant that have been hired by the union representing Tachdirt’s employees to prepare a report on how to account for a number of controversial issues that arose on the union’s review of Tachdirt’s December 31, 2017 financial statements and its preliminary discussions with Tachdirt’s management. My recommendations will be in accordance with the International Financial Reporting Standards. The reason for using IFRS is, Tachdirt Foods Limited will be publicly traded in five years. They decided to start using the IFRS accounting standards now. Thus, the IFRS will be applied to their financial statements.
Yousef Azoulay, owns 60 percent of the shares. While the other four individuals, each own 10 percent. This means that Yousfef is in …show more content…
Future benefit expected to flow
- It allows Tachdirt to use the health organization’s logo on the products.
2. Control of the benefit
- Tachdirt can use or not use it
3. Result of a past transaction or event
- Donated $312,000 to the health organization.
4. Recognition (measure with reliability, probable flow of economic resources)
- Tachdirt is allowed to use the seal of approval for four years.
It meets the criteria so rather than expensing the cost, capitalized it since it is an intangible asset. Also, since it was a donation they are qualified for a tax rebate.
Professional athlete - The matching principle requires to match revenue and expenses in the same period. When Tachdirt billed the $288,000 they did not match the expenses. Having the full expense amount on December 2017 income statement won’t be an accurate screen shot of the organization. The financial statement will look worse than it actually it is. The professional athlete is not an asset because it does not provide a future benefit. Cost should be expense because the professional athlete does not provide a future benefit. In other words, expensed the $12,000 per month. Shipped a large order to a customer - To recognized revenue in the IFRS, the five steps has to be