they are the historical cost principle, matching principle, revenue recognition principle, and full disclosure principle. When dealing with historical cost principle the assets are altered if changes occur in the market value but no adjustments are made. Matching principles compare the revenues and expenses that was earned and occurred within that time period. Revenue recognition principle takes place when a business has all the revenue needed. The information is reported under the earned column
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controls over 50% of the wires that internet service providers use to carry internet traffic all over the world. Even before the fraud began, the company was already going through financial difficulties due to a large amount of debt and declining revenue. Its $40 billion merger with MCI was the largest in history. They tried to merge with Sprint in mid-2000 but the U.S. Justice Department did not approve. How was the fraud perpetrated? The fraud was not perpetrated in lower levels of the organization
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Impairment. IFRS requires reversal of inventory impairments in the period in which an impairment condition reverses (with the reversal limited to the amount of the original write-down). 3. Property, Plant, and Equipment a. Cost. After initial recognition, IFRS permits two measurement alternatives: at cost less accumulated depreciation; or, if fair value can be measured reliably, at a revalued amount that equals its fair value at the date of the revaluation less any subsequent accumulated depreciation
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605-10-25-1: Revenue and Gains 25-1 The recognition of revenue and gains of an entity during a period involves consideration of the following two factors, with sometimes one and sometimes the other being the more important consideration: • a. Being realized or realizable. Revenue and gains generally are not recognized until realized or realizable. Paragraph 83(a) of FASB Concepts Statement No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, states that revenue and gains
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Comparing IFRS to GAAP Comparing and Contrasting IFRS differs a lot from GAAP. IFRS does not demand a specific order of accounts on the statement of financial position. When reporting assets, IFRS reports them in reverse order of liquidity. Doing so, allows the people that use the financial statements a better understanding of the structure of the company’s assets. GAAP is the opposite of IFRS. GAAP lists assets in the order of the assets with the highest liquidity first. For example, cash
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General Mills, Inc. A. What is the nature of General Mills business? That is, based on what you know about the company and on the accompanying financial statements, how does General Mills make money? * Nature of General Mills business is to have people eat their brands for breakfast, lunch, dinner, and snacks. * General Mills uses LIFO method for their inventory inside the US and use FIFO outside the US. * General Mills makes money through their brand (inventory) and their investments
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assets from 2006 to 2007? PepsiCo has the greater percentage increase of total assets. d. Which company had more depreciation and amortization expense for 2007? Provide a rationale as to why there is a difference in these amounts between the two companies. Coca-Cola depreciation and amortization expenses were higher in 2007 than PepsiCo’s expenses. e. What type of income format(s) is used by these two companies? Identify any differences in income statement format between these two companies
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are two ways use to record revenue or expense transactions. However, there is a difference in recognizing cash and accrual accounting transactions. Moreover, in cash basis accounting, a transaction is recognized when the money changes hands. Therefore, cash receipts are treated as revenue and payments are treated as an expense. However, in accrual basis accounting, it records the effect of each transaction as it occurs. Revenues are recorded when they are earned and expenses are recorded when occur
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CHAPTER 13 NON-FINANCIAL AND Current liabilitieS SOLUTIONS TO EXERCISES EXERCISE 13-1 (10-15 minutes) (a) Classifications on balance sheet prepared under ASPE: |1. |Current liability; financial liability. | |2. |Current asset. | |3. |Current liability or long-term
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Accounting: Focus on the Red Flags Written by Richard M. Rockwood May 2002 © Copyright 2002, FocusInvestor.com. All rights reserved. This material is for personal use only. It is a violation of federal copyright law to reproduce part or all of this publication without written permission from FocusInvestor.com. The goal of this short article is to show the investor examples of how companies can manipulate their reported earnings. This article also provides information on what warnings signs
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