...ACCT 307 Intermediate Accounting 2, Part B Assignment Professor: Allan Bishop Student Name: Darrell Allen Student Number: 810-390-377 Date: April 4th, 2013 1. The two companies that I have chosen are WalMart and Target. They are both retailer industries that sell numerous different items as well as provide services to customers. Particularly Walmart, which offers auto-repairs, eye-glasses, prescription drugs and fast food service (McDonalds). They sell items such as clothing, basic food items (amongst a wide variety of other food items), movies, books, video games and more. 2. A) The “capital” for Target is: Property and equipment: 2011 2012 Land 6,122 5,928 Buildings and improvements 26,837 23,081 Fixtures and equipment 5,141 4,939 Computer hardware and software 2,468 2,533 Construction-in-progress 963 567 Accumulated depreciation ...
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...contingent liabilities, the proposal suggests that current obligations are the only ones to consider when accounting for liabilities, which in themselves should be stated separately from the events which may dictate their occurrence. The uncertainty of the events themselves should also be disclosed, when presenting the measurements for the liability. Additionally, defining contingency with regard to the amount required to settle a liability rather than the probability of its occurrence will aid the goal of better recognition rather than simple disclosure. Similarly, with respect to contingent assets, the proposed changes require elimination of the term “contingent asset,” and clarify that purely the rights associated with a past transaction or event give the ability to recognize an asset as such, to be controlled by an entity. The amendment proposal also inquires into the need for further guidance on how the creation of a constructive obligation is incurred, and proposes to omit the criterion of probability recognition, due to the contingent liabilities proposed change of recognizing the liability and applying contingency as a term solely for the amount and not the possibility of the liability. With regard to measurements, the proposal adds non-financial liability measurement to be determined in terms of the amount an entity would rationally pay to settle the present obligation, states the cash flow method as viable for measuring the above named liabilities, and mentions...
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...Team 2: Defend the asset/liability approach of accounting for inter-period income tax allocation. The asset/liability method of income tax allocation is balance sheet oriented. The intent is to accrue and report the total tax benefit or taxes payable that will actually be realized or assessed on temporary differences when their respective future taxable or deductible amounts are expected to occur. The book states 5 arguments: 1. The balance sheet is becoming more important financial statement. Reporting deferred taxes based on the expected tax rates when the temporary differences reverse increases the predictive value of future cash flows, liquidity, and financial flexibility. 2. Reporting deferred taxes based on the expected tax rates is conceptually more sound because the reported amount represents either the likely future economic sacrifice (future tax payment) or economic benefit (future reduction in taxes). 3. Deferred taxes may be the result of historical transactions, but, by definition, they are taxes that are postponed and will be paid (or will reduce taxes) in the future at the future tax rates. 4. Estimates are used extensively in accounting. The use of estimated future tax rates for deferred taxes poses no more of a problem regarding verifiability and reliability than using, say, estimated lives for depreciation. 5. Because the tax expense results from changes in balance sheet values, its measurement is consistent with the SFAC No. 6 and SFAS...
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...the concept of liabilities of financial accounting. The definition of liabilities, current liabilities, and long-term liabilities are covered. The assigned readings clarify the difference among accounts payable, notes payable, accrued expenses, depreciation, and amortization procedures. This week, you gain insight into the methods used for presentation and analysis of long-term liabilities and how those journal entries are calculated and recorded. During Week Two, you also prepare the necessary calculations and journal entries for depreciation and amortization. Liabilities OBJECTIVE: Differentiate among accounts payable, notes payable, and accrued expenses. Resource: Ch. 10 of Financial Accounting Content • Ch. 10: “Liabilities” o Current Liabilities • What is a Current Liability? • Statement Presentation and Analysis o Long-Term Liabilities • Bond Basics • Accounting for Bond Issues • Accounting for Bond Retirements • Accounting for Long-Term Notes Payable • Statement Presentation and Analysis OBJECTIVE: Prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts. Resource: Ch. 10 of Financial Accounting Content • Ch. 10: “Liabilities” o Current Liabilities • What is a Current Liability? • Statement Presentation and Analysis o Long-Term Liabilities • Bond...
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...Comparing IFRS to GAAP Serena Schulke ACC/291 March 21,2016 Emily Baculik Comparing IFRS to GAAP Comparing the IFRS and GAAP has been a three-week process for learning team F. Our team spent time discussing fair value measurements, component depreciation, revaluation of plant assets, development expense, development cost, contingent liabilities, and the differences between GAAP and IFRS accounting liabilities. Fair Value The GAAP fair value standards focus on the sale of an asset or the transfer of a liability using an exit price, unadjusted for transaction costs (Tran, 2012). Unlike GAAP, IFRSs standards are based on principle rather than on strict rules. IFRS requires some assets and liabilities to be measured at fair value in certain circumstances, the concept of fair value measurements in integral to the IASB’s conceptual framework (Tran, 2012). Component Depreciation Component depreciation is a method in which the parts or sections of property or individual depreciated at different rates. Component depreciation should be use by a business when it has items that will have product or assets that are the same with different useful lives (Business Dictionary,2016). Revaluation of Plant Assets Revaluation of plant assets is a change in the book value of assets, caused by a devaluation of the currency in which their value is recorded in the accounts (Business Dictionary, 2016). Revaluation of plant assets should be used for all of your plant assets to maintain...
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...INTRODUCTION TO ACCOUNTING SEMINAR (1) TRUE/FALSE (NOTE: Show any required calculations in your answers) 1. A corporation is a business that is legally separate and distinct from its owners. 2. Primary users of accounting information are accountants. 3. Accounting is thought to be the "language of business" because business information is communicated to users. 4. The role of accounting is to provide many different users with financial information to make economic decisions. 5. Accounting information users need reports about the economic activities and condition of businesses. 6. The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities. 7. Stakeholders use only accounting reports as the source of information to base all of their business decisions. 8. Managerial accounting information is used by external and internal users equally. 9. Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management. 10. A business is an organization that provides goods or services to their customers in exchange for money or other items of value. 11. Managerial accounting is primarily concerned with the recording and reporting of economic data and activities of an entity for use by stockholders, creditors, governmental agencies, and the public. 12. The cost concept is the basis for entering the exchange...
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...Development costs creates a Deferred Tax Liability 2 2.2 Analysis on arguments by directors 3 2.2.1 No Income Tax Expenses 3 2.2.2 No deferred tax liability 4 2.2.3 Tax losses 5 2.3 Information utility to users of financial report of deferred tax liabilities 6 3.0 Conclusion 7 References 8 1.0 Introduction Accounting Standard AASB 112 (Income Taxes) prescribe the accounting treatment for income taxes. As stated by Leo, Hoggett, & Sweeting (2012), transactions undertaken by an entity and other events affecting the entity have two separate effects, which are current and future tax consequences. This is because accrual principal is applied on accounting treatment whereas income tax treatment uses the cash flow method. For accounting treatment, accounting profit is profit or loss for a period before deducting tax expense whereas for income tax treatment, taxable income described as gross income minus any allowable deduction. Difference between accounting and tax treatments lead to taxable temporary differences and deductible temporary differences. Discussion was carried out to determine how exploration and development cost create a deferred tax liability, analyse the argument presented by the directors in view of the AASB 112 and discuss the infromation ultility to readers of annual report of including or excluding deferred tax liability. 2.0 Discussion 2.1 Exploration and Development costs creates a Deferred Tax Liability As stated by Leo, Hoggett, &...
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...CHAPTER 9 [pic] Current Liabilities, Contingencies, and the Time Value of Money OVERVIEW OF EXERCISES, PROBLEMS, AND CASES Estimated Time in Learning Objective Exercises Minutes Level 1. Identify the components of the current liability category of 1 10 Easy the balance sheet. 2 10 Easy 3 10 Easy 2. Examine how accruals affect the current liability category. 4 20 Mod 5 15 Mod 6 10 Mod 7 15 Mod 8 15 Mod 3. Demonstrate an understanding of how changes in current liabilities 9 5 Easy affect the statement of cash flows. 10 5 Mod 11 5 Mod 4. Determine when contingent liabilities should be presented on the 12 15 Mod balance sheet or disclosed in notes and how to calculate their amounts. 5. Explain the difference between simple and compound interest. 13 20 Mod 6. Calculate amounts using the future value and present value concepts. 14 5 Easy 15 5 Mod 16 10 Mod 17 10 Mod 24* 10 Diff 25* 10 Diff 7. Apply the compound interest concepts to some common 18 5 Mod accounting situations. 19 10 Mod 20 10 Diff 24* 10 Diff 25* 10 Diff 8. Demonstrate an understanding of the deductions 21 15 Mod and expenses for payroll accounting. (Appendix 9A) 22 20 Mod 9. Determine when compensated absences must be 23 10 Diff accrued as a liability. (Appendix 9A) *Exercise, problem, or case covers two or more learning objectives Level = Difficulty levels:...
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...Accounting Equation ACC 300 April 28, 2014 Accounting Equation The accounting equation is an important part of a financial statement. It gives, at all times, proper information because it gathers the appropriate numbers that explain a company’s assets. A balance sheet portrays the financial situation of a company at any given point. The accounting equation is known as: Assets equals Liabilities plus Owner’s Equity. Assets refer to the resources that the business owns, such as accounts receivable, machinery and equipment, land and buildings, inventory, cash at hand and bank and prepaid insurance. It is evident from the accounting equation that the total amount of assets is obtained by summing liabilities and owner’s equity (McLaney & Atrill, 2007). Liabilities refer to the obligations of the business, which are the amounts that the company owes. Liabilities are mostly accounts payable including loans payable, creditors, salaries and wages payable, interests and income taxes payable. Liabilities can be perceived in two dimensions, which include claims by creditors against the assets of the business, and as a source along with the capital (Warren & Reeve, 2011). Owner’s or stockholders equity, sometimes known as capital, refers to amount left after subtracting liabilities from assets. It usually denotes the amount of investment plus the cumulative net profit of the business that has not been withdrawn by the owner or distributed to the stockholders in the case of...
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...Lesson 1 Chapter 1 LIFA 1.1 WHAT IS ACCOUNTING? · Accounting- an information system that identifies, measures, records and communicates understandable, relevant, reliable, and comparable information about an organization’s economic activities. · Recordkeeping, or bookkeeping, is the recording of financial transactions, either manually or electronically, for the purpose of creating a reliable bank of data · Primary objective of accounting- to provide useful info for decision-making · Accounting info results from the accounting activities of identifying, measuring, recording, reporting, and analyzing economic transactions. 1. What is the major objective of accounting? · Accounting is an information and measurement system that identifies, measures, records, and communicates understandable, relevant, reliable, and comparable information to people that helps them in making better decisions. It helps people in business to identify and react to investment opportunities, and better assess opportunities, products, investments, and social[->0] and community responsibilities. 2. Distinguish between accounting and recordkeeping. · Recordkeeping is the recording of financial transactions and events, either manually or electronically. While recordkeeping is essential to data reliability, accounting is this and much more. Accounting includes identifying, measuring, recording, reporting, and analyzing economic events and transactions. It involves interpreting information, and designing...
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...1. Introduction Accounting treatment for income taxes for for-profit entities is subject to Australian Accounting Standard Board (AASB) 112 Income Taxes. In accounting for income tax, complying with tax-effect method involves the occurrence of tax consequences due to different treatments are applied for transactions and other events happened inside an entity for accounting and taxation purposes, namely current tax consequences and future tax consequences. The purpose of this report was to identify and analyze the reasoning behind the responsibility of exploration and development costs (E&D) for the creation of a deferred tax liability (DTL) and its treatments for both accounting and taxation purposes. Moreover, the analysis was performed with reference to case study of Gravatt Ltd., a company operating in the mining industry where its directors arguing on the disadvantages of applying tax-effect accounting standards of AASB 112 and rather not to comply with one. This report was not discussing only on the rationale behind deferred tax liabilities according to AASB Framework for the Preparation and Presentation of Financial Statements and AASB 112 Income Taxes, but also the comparison of the impact on information utility captured by the users of financial statements of Gravatt in case of recognizing and unrecognizing deferred tax liabilities to be reported on its annual reports. 2. Discussion 2.1 Deferred Tax Liabilities Deferred tax liabilities (DTL) can be defined...
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...Accounting Equation Carrie Caruthers ACC300 March 7, 2016 Chastity Gaither Accounting Equation The financial health of a business can be initially measured through the accounting equation. The equation is broken down into three parts; assets, liabilities and owner’s (stockholder’s) equity. Each play an important part in keeping the business financial position in check. Assets = Liability + Owner’s Equity Assets = Liability + Owner’s Equity Assets This is most easily defined as what a business owns, or in some situations, their resources. Some examples of assets are computer equipment, building(s), products, supplies and even profits. (Accounting Coach, n.d.) When looking at the accounting equation, you will notice it sits by itself on the left side of the equation. Liabilities When first thinking about liabilities, I think about monthly bill paying time. Most every person pays bills to various companies/individuals on a regular basis. To define it for the accounting equation, it is just as simple; bills or money that is owed to another. (Kimmel, Waygandt, & Kieso, 2012) Liabilities can be services received immediately or services/products to be received in the future. They can range from internet services, utilities, insurance premiums, salaries & wages, and rent. Liabilities are found on the right side of the accounting equation in the first position. Owner's Equity Probably my most favorite part of this equation is owner’s equity, which is the owner’s claim to...
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...1 CHAPTER ONE: ACCOUNTING IN BUSINESS Chapter Outline I. Importance of Accounting—we live in the information age, where information, and its reliability, impacts the financial well-being of us all. A. Accounting Activities Accounting is an information and measurement system that identifies, records and communicates relevant, reliable, and comparable information about an organizations business activities. B. Users of Accounting Information 1. External Information Users—those not directly involved with running the company. Examples: shareholders (investors), lenders, customers, suppliers, regulators, lawyers, brokers, the press etc. a. Financial Accounting—area of accounting aimed at serving external users by providing them with generalpurpose financial statements. b. General-Purpose Financial Statement—statements that have broad range of purposes which external users rely on. 2. Internal Information Users—those directly involved in managing and operating an organization. a. Managerial Accounting—is the area of accounting that serves the decision-making needs of internal users. b. Internal Reports—not subject to same rules as external reports. They are designed with special needs of external users in mind. 3. Internal Controls—procedures set up to protect company property and equipment, ensure reliable accounting reports, promote efficiency, and encourage adherence to company policies. C. Opportunities in Accounting Four broad areas of opportunities are financial, managerial...
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...position. The financial position of a company is measured by the following items: 1. Assets (what it owns) 2. Liabilities (what it owes to others) 3. Owner's Equity (the difference between assets and liabilities) The accounting equation (or basic accounting equation) offers us a simple way to understand how these three amounts relate to each other. The accounting equation for a sole proprietorship is: The accounting equation for a corporation is: Assets are a company's resources—things the company owns. Examples of assets include cash, accounts receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and goodwill. From the accounting equation, we see that the amount of assets must equal the combined amount of liabilities plus owner's (or stockholders') equity. Liabilities are a company's obligations—amounts the company owes. Examples of liabilities include notes or loans payable, accounts payable, salaries and wages payable, interest payable, and income taxes payable (if the company is a regular corporation). Liabilities can be viewed in two ways: (1) as claims by creditors against the company's assets, and (2) a source—along with owner or stockholder equity—of the company's assets. Owner's equity or stockholders' equity is the amount left over after liabilities are deducted from assets: Assets - Liabilities = Owner's (or Stockholders') Equity. Owner's or stockholders' equity also reports the amounts invested into the...
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...Accounting Equation Essay ACC/300 Lucinda Degarmo November 30, 2015 Professor Brandy Havens The accounting equation is a simple formula used to measure a company’s financial position. There are three elements that make up an accounting equation; Assets, Liabilities, Equity. There are two types of accounting equations, one for a sole proprietorship and one for a corporation. The accounting equation used for the sole proprietorship is as follows: Assets = Liabilities + Owner’s Equity. The accounting equation used for a corporation is: Assets = Liabilities + Stockholder’s Equity. Assets are considered to be the company’s resources, basically the things a company owns. These are things such as cash, accounts receivable, inventory, prepaid insurance, investments, equipment, land, buildings. The accounting equation tells us that the amount of Assets must be equal to the company’s liabilities plus owner’s or stockholder’s equity. Liabilities are considered to be the obligations that the company owes. Liabilities would be considered things like accounts payable, salaries, loans payable, income taxes payable, interest payable. There are two ways to view liabilities the first view is as a claim by creditors against the company’s assets, or a source along with the equity of the company’s assets. Equity whether it be Owner’s Equity or Stockholder’s Equity is considered the amount left over when the liabilities are deducted from the company’s assets. The...
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