According to section 225-10-S99 of the FASB Codification, the following income statement presentation is relevant to this case: Net sales, which is equal to gross sales less discounts, returns and allowances, should be stated first. Sales of tangible products (children’s clothing) and revenues from services (spa services) should be stated separately from one another on the income statement. Gross profit, Cost of Sales, according to the case, “includes expenses incurred to acquire and produce
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CHAPTER 1 ENVIRONMENT AND THEORETICAL STRUCTURE OF FINANCIAL ACCOUNTING Overview The primary function of financial accounting is to provide useful financial information to users external to the business enterprise. The focus of financial accounting is on the information needs of investors and creditors. These users make critical resource allocation decisions that affect the nation’s economy. The primary means of conveying financial information to investors, creditors, and other external users
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MEMORANDUM TO: Chief Executive Officer FROM: Financial Controller DATE: January 29, 2015 SUBJECT: Required Reporting for Pensions and Other Postretirement Plans Several issues have to be considered in the wake of the firm’s recent acquisition of a new company. First, the acquired company has two different pension plans whose reporting requirements are unfamiliar to the firm. Second, the acquired company has two segments that do not fit the firm’s requirements, and
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you agree with the justification offered for accrual accounting? Explain. The basic goals have not been completely supported in their statements. Accrual accounting and cash basis both have a reason to be in grated. Accrual accounting is favored by FASB as it shows a more specific accounting transcript than cash basis accounting does. Bonus Question: Identify which accounting pronouncement specifically observes: “This Statement relies on a basic premise of generally accepted accounting principles
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agree with Reggie or his superior? Reggie Lewis should review section 605 of the Accounting Standards Codification concerning everything surrounding revenue recognition. ASC 605-25-1 states that, “The recognition of revenue of an entity during a period involves consideration of the following two factors, being realized or realizable and being earned.” In terms of revenue realization, FASB Concepts Statement No. 5 states that, “revenue is realized when products, merchandise or other assets are
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the employee stock options to vest would be if the cumulative revenue over the following three-year period is greater than $10 million. If the revenue target was factored into the fair value assessment, the grant-date fair value would be $6. Per FASB ASC 718-10-30-27: Performance or service conditions that affect vesting are not reflected in estimating the fair value of an award at the grant date because those conditions are restrictions that stem from the forfeitability of instruments to which
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ASC 605-25: Revenue Recognition: Multiple-Element Arrangements ASC 605-10-S99: SEC Materials (Inconsequential or Perfunctory) Instructions for accessing the FASB Codification database: 1. Go to http://aaahq.org/ascLogin.cfm 2. User ID: AAA52999 3. Password: BbJ5LMm 4. Click on link to FASB Accounting Standards Codification (from American Accounting Association webpage) 5. Search on 605-25 (or access via topical drop down menu) Columbia On-Line Networks TOPIC 1: Revenue Recognition
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Management Representations 1941 AU Section 333 Management Representations (Supersedes SAS No. 19.) Source: SAS No. 85; SAS No. 89; SAS No. 99; SAS No. 113. See section 9333 for interpretations of this section. Effective for audits of financial statements for periods ending on or after June 30, 1998, unless otherwise indicated. Introduction .01 This section establishes a requirement that the independent auditor obtain written representations from management as a part of an audit of financial
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While general principles of accrual accounting and cash accounting differ on the core issue of when revenues should be recognized, the FASB Accounting Standards is designed to assist firms in establishing a set of consistent and practical criteria by which to recognize revenue. The Revenue Recognition Principle dictates that revenue ought to be recognized when it is realizable and when it is earned. In the case of the transaction between Eye Vision Inc. and Holland Hospital, there are two distinct
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Analysis of IFRS and U.S. GAAP GAAP or acronym for Generally Accepted Accounting Principles refers to the standard framework of guidelines for financial accounting used in any given jurisdiction. It is a common set of accounting principles, standards, and procedures that companies use to compile their financial statements (Investopedia). For many years, countries have developed their own accounting standards. The U.S. has always followed the U.S. GAAP while most European countries followed the
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