Client Understanding Paper Colleen Witten ACC/541 11/11/2013 Thomas Gruber Adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal and adjusting goodwill for impairment are all areas in which numbers on a financial statement can be distorted. There are rules and regulations regarding each one that a company should follow and auditing of these areas is necessary for financial statement compliance. Any organization
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information must be obtained. The topics of the information requested are the (1) adjusting lower cost of market inventory on valuation, (2) capitalizing interest on building construction, (3) recording gain or loss on asset disposal, and (4) adjusting goodwill for impairment. To alleviate the concern of the client of why the information is requested analysis of each topic and its importance will be discussed in this paper. The adjusting lower cost of market inventory valuation is essential because through
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base. 1. In the bonus method, only identifiable assets are valued and recorded. The capital account balances are then aligned to indicate the percentage of the actual contributions being made by each partner. 2. In the goodwill method, the amount being contributed and the
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some questions as to why the information has been asked for in reference to the adjusting lower cost of market inventory valuation, capitalizing interest on building construction, the recording of gain or loss on asset disposal and the adjusting goodwill for impairment. I will be providing you with responses to your questions and have no doubt the answers will give you a better understanding on some of the accounting practices that may help increase the organization’s familiarity and practices from
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…………………………………………………………………….15 5. CHAPTER 4 --- What is the Business Goodwill…………………….……………………………….15 5.1. What Creates Business Goodwill……………………………….……………………….……15 5.2. Types of Business Goodwill……………………………………………….……………….……16 5.3. Accounting View of Business Goodwill…………………………………………….….….16 5.4. Economic View of Business Goodwill……………………………………………….….….16 5.5. How Business Goodwill is Determined…………………..……………………….….17-18 5.6. How Do You Calculate Goodwill in Accounting?............................18-19-20
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amount ($1,100), then no impairment loss is recorded. Since that is the case, under US GAAP, Eagle should not report an impairment loss on their CGU. Eagle in Serbia Under IFRS: Eagle acquired a smaller competing company in 2011 in Serbia; goodwill was allocated to the CGU. The guidelines for determining whether an impairment loss is recorded are the same as the scenario for Eagle in Italy, “An asset is impaired when its carrying amount exceeds its recoverable amount.” The fair value of the
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Goodwill Impairment Analysis and Memo Below is a sample goodwill impairment analysis memo. If you need more detail analysis. Please free to contact us. —————————————————————————————————————- DESCRIPTION OF TRANSACTION Description of transaction giving rise to recording of goodwill. The acquisitions were accounted for in accordance with FAS Statement No. 141R which was codified under the “Business Combinations topic of the FASB ASC. Describe how the purchase price was allocated to
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impairment on goodwill. ASC 350-20 Alternative 1: No impairment Alternative 2: Impairment Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value ASC 350-20-35-2 In 2008 Ida acquired a smaller competing company located in Spain. Led to goodwill. The Spanish operations a cash-generating unit under IFRSs and a reporting unit under U.S GAAP. At the end of 2008 and 2009 the recoverable amount of the CGU including goodwill, under IFRSs
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by the representatives of a deceased partner, undertaken after the firm is dissolved on account of the death of a partner and before its affairs have been completely wound up: Provided that where any partner or his representative has bought the goodwill of the firm, nothing in this section shall affect his right to use the first name. Profits by partner after dissolution and before winding up- Where a partner, after dissolution and before the affairs of the partnership are wound up, derives any
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client is not clear about why the company is 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; and adjust goodwill for impairment. This paper will strive to answer these questions for the client. Adjusting Lower Cost of Market Inventory on Valuation One of the requirements of the Generally Accepted Accounting Principles (GAAP) is that inventory be recorded
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