Joan Holtz 1. Electric Utility Bills Revenue of the Electric Company can be measured given the amount of electricity generated for the year multiplied by the per-kilowatt/hour charge to customers. This is because the electric service has already been provided and distributed to customers for ready consumption 2. Retainer Fee The amount of revenue to be counted in 2010 is $5,000 from the $10,000 retainer fee good for 1 year. This is because, despite the fact that there was no way
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working in the accounting department at his aunt’s software company, O’Brian Software. Nick is going over the financial statements when he recognizes some questionable revenue recognition issues. Nick proceeds to address his concerns with the chief financial officer of the company, Lee Marchetti. Lee explains to Nick how revenue recognition is broken down and that a lot of information and judgment is involved. It is also pointed out that since the company went public three years ago they have consistently
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000 purchases of CUTCO products were made online with revenues of $8.7 million. 4. In 2006, CUTCO launched its pilot store with three main objectives: to test the market for retail sales, to ascertain the effect of retail sales on direct sales, and to determine whether the customer demographic would match or vary from existing customers. The initial cost of the pilot store was approximately $150,000 and was expected to bring in annual revenues between $250,000 and $300,000. This venture revealed
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Executive Summary Statement of the Problem Hampton Machine Tool Company is a manufacturing company located in the St. Louis area that supplies industrial tools to manufacturers in both the automobile and military defense industries. St. Louis National Bank is considering a loan request from Hampton on September 14, 1979. The loan request consists of the renewal of a previously granted loan of $1 million, used to repurchase stock, and an additional $350 thousand, needed to upgrade machinery.
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audited many times in the past by external CPA firms, this is the first year your firm has conducted the audit. GPC’s total revenue for 2011 is $80 million. In examining the revenue for the year, you notice that $3 million of the revenue does not come from GPC’s primary operations (i.e., revenue from sales of paper goods). This $3 million in revenue is labeled as timber revenue in GPC’s books. This strikes you as odd because, generally, GPC buys timber. That is, timber is part of the cost of goods
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money to company in the form of bonds, loan conditions such as interest rates, security, other conditions Contracting – legally binding obligation that gives party the right to demand the performance of whatever promised * management (agency problem) – information asymmetry, act in self interest * debt Stewardship – compliance with delegated authority Agency Cost of equity Perquisite consumption – Manager give themselves more luxury than would seem reasonably from the principals point
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Role: • An accounting advisor engaged by a lawyer to help with concerns about an earnout arrangement (payment for the purchase of a business based on performance after the sale has closed). Key users: • Ms. Kellett and Mr. Jones are the only relevant users. Ms. Kellett will use the report to assist her in assessing the earnout agreement. Key facts: • Earnout arrangement being proposed for sale of company. • Selling price will depend on earnings after the sale closes and buyer (role is working
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C H A P T E R 2 CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING LEARNING OBJECTIVES After studying this chapter, you should be able to: •1 •2 •3 •4 Describe the usefulness of a conceptual framework. Describe efforts to construct a conceptual framework. Understand the objective of financial reporting. Identify the qualitative characteristics of accounting information. Define the basic elements of financial statements. •6 •7 Describe the basic assumptions of accounting. Explain the
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CHAPTER 2 SUGGESTED SOLUTIONS TO QUESTIONS AND PROBLEMS 1. P.V. Ltd. Income Statement for Year 2 Accretion of discount (10% × 286.36) $28.64 P.V. Ltd. Balance Sheet As at Time 2 Financial Asset Cash $315.00 Shareholders’ Equity Opening balance Net income Capital Asset Present value 0.00 $315.00 $315.00 $286.36 28.64 Note that cash includes interest at 10% on opening cash balance of $150. 2. Suppose that P.V. Ltd. paid a dividend of $10 at the end of year 1 (any portion of year 1 net income
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section the flow diagram is labelled selling activities. In selling activities reporting consist of two elements, inflows and outflows. For the inflow: Revenue-the result from sale of goods and services to customers For the outflow: Expenses- the outflows that were made in order to generate these revenues Income is the amount by which revenues exceed expenses. Since the word income is often used with various qualifying adjectives, the term net income is used to refer
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