Financial Misstatements: Where to Look……………………………....5 Accounting for the Costs to treat Environmental Contamination…………………7 Coping with FASB Statement No. 106-- "Accounting for Post-retirement Benefits Other Than Pensions…………………………………………………8 On the Implementation of Accrual Accounting: A Study of Conflict and Ambiguity……………………………………………………………………..8 Depreciation Rules and the Relation between Marginal and Historical Cost…….9 The Role of Accruals in Asymmetrically Timely Gain and Loss Recognition…
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acct 1511 notes Chapter 6 – Financial Reporting Principles, Accounting Standards and Auditing 6.2 Accounting Principles and the use of Accounting Information Doing accounting takes expert knowledge, considerable experience and continuous attention to new problems and solutions. Concepts and principles are important, as they form logical structure that practising accountants use every day to consider problems to make recommendations GAAP (Generally Accepted Accounting Principles) applied
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TIME INTERVAL CONCEPT TIME INTERVAL CONCEPT, in accounting, requires that financial statements be prepared at regular intervals, e.g. monthly, quarterly, annually. Final accounts are prepared at the end of the accounting period ie one year. Internal accounts can be prepared monthly, quarterly or half yearly. DUAL ASPECT CONCEPT Dual aspect concept states that every transaction has two effects if there is any debit entry then there must be credit entry. This state that there are two aspects
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Questions for Fair value accounting case 1. What is fair value accounting, what are its advantages and disadvantages 2. How is it different from historical cost accounting 3. What are level 1, 2, 3 assets 4. Give a simple example of level 1, 2, 3 assets 5. Suggest 3 ways to improve reporting fair value assets. ------------------------------------------------- QUESTION 1: Fair value accounting is method of accounting the value of assets, liabilities and shareholders’ equity
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purposes, this intra-entity gross profit must be deferred by eliminating the amount from the inventory account on the balance sheet and from the ending inventory figure within cost of goods sold (Entry G). 2. Because the effects of the transfer carry over into the subsequent fiscal period, the unrealized gross profit must also be removed a second time: from the beginning inventory component of cost of goods sold and from the beginning retained earnings balance (Entry *G). a. The retained
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completes a specified cumulative level of revenue transactions or remains a customer for a specified time period. The vendor shall recognize the rebate or refund obligation as a reduction of revenue based on a systematic and rational allocation of the cost of honoring rebates or refunds earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the rebate or refund… In this case USSR offer a promotion for back-to-school and should recognize
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|Temporary Loss | |Does the investor have substantial influence or control? | | | | |Investor owns 20% to 50% of stock and has significant influence but |On BS at historical cost plus |N/A |Realized loss on | |not control of the corporation |share of earnings since | |IS, new basis on | |
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Chapter 1 Environment and Theoretical Structure of Financial Accounting EXERCISES Exercise 1-1 Requirement 1 | | Haskins and Price | | | |Operating Cash Flow | | | | |
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E2-7 A. 6 Matching B. 5 Historical Cost C. 7 Full Disclosure D. 2 Going Concern E. 11 Conservatism F. 1 Economic Entity G. 4 Periodicity H. 10 Industry I. 9 Materiality J. 3 Monetary Unit E2-8 A. (Principle) Historical Cost B. ? C. (Principle) Full Disclosure D. (Principle) Matching E. Materiality F. Industry G. (Assumption) Economic Entity H. (Principle) Full Disclosure I. (Principle) Revenue Recognition J
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recommending Nike as a “Strong Buy” and others recommending a “Hold.” In case 13, Nike Inc.: Cost of Capital, I am acting as a portfolio manager to estimate Nike’s cost of capital to determine whether the stock is overvalued or undervalued. II. Alternative Solutions • Dividend Growth Model (DGM) see appendix for calculations • Capital Asset Pricing Model (CAPM) see appendix for calculations • Weighted Average Cost of Capital (WACC) see appendix for calculations III. Analysis of the Alternatives
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