...Client Understanding Paper 541 ACCOUNTING THEORY AND RESEARCH Client Understanding Paper As a newly hired Staff I, you are responsible for analyzing the work papers for one of the clients of your organization. Your client is not clear about why you are asking for information on the following topics: Adjusting lower cost of market inventory on valuation “The conservatism principle and a specific accounting pronouncement, Accounting Research Bulletin No. 43 (ARB No. 43) leads to an accounting valuation method known as the lower of cost or market, or LCM. In this method the term "market" includes both the market in which the company purchases its merchandise as well as the market in which it sells its merchandise.” (Arverkamp, 2013) The Lower of cost or market aspect (LCM) is also supported and defined by SFAC No. 2 and SFAC No. 6. The LCM rule considers the market that purchases and sells the inventory. Capitalizing interest on building construction Under FASB 34, companies must capitalize interest on construction projects. Interest cost should be capitalized as part of the historical cost of acquiring certain assets. The interest cost eligible for capitalization in most situations would be the interest cost recognized on borrowings and other obligations. The amount capitalized is an allocation of the interest cost incurred during the period required to complete the asset. This interest rate for capitalization purposes should be based on the rates...
Words: 533 - Pages: 3
...Client Understanding Paper Tanisha Wilson University Of Phoenix Accounting Theory and Research ACC/541 Bethany Bartlett August 19, 2013 Client Understanding Paper To our valued clients at Morton Sales Company, It is my pleasure to have the opportunity to assist your organization with your financial needs. As I was analyzing the working papers given, a request for some additional information needed was submitted. It has been conveyed to my attention that there is questions or concerns in regards to why the information was requested. The concerns include the reason for the adjusting lower cost of market inventory valuation, the capitalizing interest on building construction, the recording of gain or loss on asset disposal, and the adjusting goodwill for impairment. Please rest assured that we will do our best to answer your questions and settle your concerns with anticipation that your trust will be gained and our relationship will flourish tremendously. The Financial Accounting Standards Board (FASB) established clear guidelines that address all the items in question. A clear outline of the FASB generally accepted accounting standards (GAAP) will be given for each item stated above, and how these improvements to Morton Sales Company will help improve Morton Sales Company financial health. Lower Cost of Market The issuance of the ARB No. 43 by The American Institute of Certified Public Accountants (AICPA) and the Financial Standards Accounting Board (FASB) states...
Words: 1348 - Pages: 6
...Client Understanding Paper ACC541 September 16, 2013 Client Understanding Paper I am happy to get the opportunity to work with your company on this assignment. I have analyzed the working papers, and have submitted some supplementary information as requested. I understand that there are 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 this analysis. Adjusting Lower Cost of Market Inventory on Valuation ARB No. 43 addresses the concern of inventory adjustments to lower of cost or market. GAAP maintains that the potential selling price will progress in the same direction and that probable future losses should be reported in the same period as the inventory decline. Companies should use the lower of cost or market method to value inventories. The AICPA has provided a definition to use in applying the LCM rule. As used in the phrase lower of cost market the term market means current replacement cost. Market should not exceed the net realizable value and market should not be less than net realizable value reduced by an allowance...
Words: 1104 - Pages: 5
...Client Understanding Paper Sharon Sherman ACC/541 December 13, 2010 Rebecca Kime Client Understanding Paper To be able to complete the analysis of the work papers of the current clients’ work papers certain 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 the life cycle of inventories the inventories will decline in value. Although the primary basis of accounting for inventories is cost when when inventories usefulness become lower than cost then the use of adjusting lower cost of market is accepted. There are many advocates that think that inventories should be valued at market price. The belief is assets should reflect current values. Generally Accepted Accounting Principles instructs that when inventories decline in value the future selling price should move in the same direction in the same time period. The American Institute of Certified Public Accountants provides the following definitions for use when applying the lower cost or market rule to inventories. These definitions are: 1. Market should not...
Words: 1489 - Pages: 6
...Client Understanding Paper Judy Blackman ACC/541 August 1, 2011 Kenneth Quirk client understanding 1 I want to thank you for the opportunity to work with you and your organization on this important project. As I was analyzing the papers provided, I realized that additional information was needed. It was brought to my attention that you are unclear about why the additional information was requested on the adjusting lower cost of market inventory on valuation, the capitalizing interest on building construction, the recording of gains or losses on asset disposal, and the adjusting goodwill for impairment. The adjusting lower cost of market inventory on valuation is specified in Accounting Research Bulletin No. 43 (ARB No. 43). Statement of Financial Accounting Standards (SFAS) No. 34 is the statement, which deals with capitalization of interest as part of the cost of the asset. SFAS No. 144 addresses the reporting and accounting for the impairment of the disposal of long-lived assets (Federal Accounting Standards Advisory Board, n.d.). New rules for the accounting for goodwill has been addressed in SFAS No. 142. I will be explaining each of these items in full detail. I will include the accounting principles and practices in hopes of improving your organization's practices and knowledge from this analysis. Adjusting lower cost of market inventory on valuation The lower-of-cost or market (LCM) is defined by “a basis whereby inventory is stated at the lower...
Words: 1554 - Pages: 7
...Client Understanding Paper ACC/541 April 10, 2012 Client Understanding Paper Dear Client, please find below the detailed written explanation on the topics you requested. The items addresses are as follows: 1. Adjusting lower cost or market inventory on valuation. 2. Capitalizing interest on building construction. 3. Recording gain or loss on asset disposal. 4. Adjusting goodwill for impairment. Adjusting lower cost or market inventory on valuation The term “inventory” applied to all the goods/materials that are acquired with the intention to resale to make profits, which includes: * “Are held for sale in ordinary course of business. * Are in process of production for such sales, or * Are to be currently consumed in the production of goods or services to be available for sale” (Schroeder, Clark, & Cathey, 2011, p. 264). Inventory physical count can be determined by using periodic or perpetual inventory system. The valuation of inventory is of significant importance for multiple reasons. First ending inventory constitutes major part in current assets and have substantial impact on working capital of the organization. Second, inventory value has direct impact on the net profits of the organization. There are several methods available in US Generally Accepted Accounting Principle (GAAP) for valuation of inventories, such as FIFO, LIFO, Average inventory and Lower of cost or market. Lower of cost or market (LCM) valuation method...
Words: 1283 - Pages: 6
...Client Understanding Paper It is very important that our clients understand how we evaluate their financial and accounting information. As an accountant, I am responsible for evaluating my client’s financial paper. In this paper, I will be discussing how my client’s financial papers will be evaluated. I will do so by analyzing the following topics: 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. The Financial Accounting Standard Boards (FASB) established the guidelines and the General Accepted Accounting Principles (GAAP) that should be followed when preparing and evaluating any financial and accounting statements. Adjusting lower cost of market inventory on valuation There are different methods used to evaluate inventory. When evaluating inventory, it is best to pick a method that will work well for the company in which you are evaluating. Inventory are tangible personal property, which are held for sale in the ordinary course of business, are in the process of production for sale, or are to be consumed in the production of goods to be available for sale (Schroeder, Clark, & Cathey, 2005). According to Schroeder, Clark, and Cathey (2005) it is important to valuate inventories for two major reasons. First, inventories generally represent a major section of current assets; therefore, they have a major impact on a company’s working capital and...
Words: 445 - Pages: 2
...Client Understanding Paper Stephanie Simmons ACC/541 Professor Mark Taylor August 13, 2012 Client’s cleat understanding is a goal of ABC Company. The firms provide detailed explanations to address each customer’s need. ABC Company recognizes that your company has questions related to 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. Inventories of companies are recorded at cost, except when the inventory declines in value below its original cost. When the cost declines below the original cost the company should write down the inventory to report this loss. “A company abandons the historical cost principle when the future utility of the asset drops below its original cost. Companies therefor report inventories at the lower-of-cost-or-market (LCM) at each reporting period” (Kieso, E., & Weygandt, 2010, p. 438). LCM uses a conservative approach to inventory valuation, meaning that when doubt exists about the value of an asset the company should use the lower value of an asset, which will reduce net income. This provides the company with a more conservative balance sheet and income statement valuations. To determine LCM, one must also consider net realizable value (NRV). This value represents the selling price of inventories minus the fees associated with completion of sales. Conclusion of market value also refers to an items current...
Words: 1245 - Pages: 5
...Client Understanding Ken Smith ACC/541 June 02, 2014 Dominick Margarella Client Understanding Mr. Wentworth, this firm in trusted in me a clarified to you the understanding of four important points that will enhance your skills even more as you work at ABC Financial Standards Incorporation. Our amazing staff well encourage you to perform at your honest best meeting with the Securities and Exchange Commission (SEC) which is a government agency, The Financial Accounting Standards Board (FASB) is a private organization in the United States, and working with accountants who are licensed to serve the general public rather than one particular company are called Certified public accounts. (Horngren, Harrison, Bamber, Accounting, 5th edition pg. 7). The four points that will be address to you is 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. Inventory Valuation Methods are First-in-Last-out (FIFO), Last-in-First out (LIFO) and Average Cost Method. These method are designed to calculate the cost of goods sold and cost of ending inventory. An explanation of the inventories valuation method are as follow: FIFO is assumed that items from the inventory are sold in the order in which they are purchased or produced. Purchase is of an out let as a store (Item) Produced is of a manufactory (Raw Material) With LIFO method inventory is sold first and...
Words: 544 - Pages: 3
...Issues Simulation Summary LAW/421 July 2, 2012 Kathryn Harris Abstract This paper discusses many of the issues discussed in the simulation on addressing international legal and ethical issues. This paper discusses many of the issues involved in resolving legal disputes in international transactions. Some of the issues discussed include selecting local counsel, fully understanding the foreign laws, due diligence, and choosing the right law and dispute resolutions. This paper also highlights some of the factors that could possibly work against CadMex when it comes to its decision on sublicensing agreements. Some of the factors discussed in this paper include time and cost increases in addition to price differences between generic brands in Canada and CadMex’s brand. The paper will also discuss some of the ways local customs and laws can conflict and how to deal with the situation. Finally, this paper will also cover how companies should resolve domestic and international disputes differently than the companies discussed in the week one readings. Addressing International Legal and Ethical Issues Simulation Summary Understanding how to address international legal and ethical issues is essential in creating a strong business relationship with other businesses abroad. There are many issues involved in resolving international legal disputes including selecting local counsel, full understanding of the local laws, due diligence, and the choices surrounding law and dispute...
Words: 1616 - Pages: 7
...Spiritual Discernment in Counseling Paper Instructions Purpose: To practice ethically as a professional counselor, it is important that you as a counselor trainees develop an awareness of your personal values and an ability to identify and manage potential biases. The American Counseling Association’s Code of Ethics mandates that “Counselors are aware of their own values, attitudes, beliefs, and behaviors and avoid imposing values that are inconsistent with counseling goals. Counselors respect the diversity of clients, trainees, and research participants” (A.4.b.). Therefore, it is important that you spend time identifying your own values, understanding the origin of these values, and discovering how your personal values may adversely affect your ability to work with clients with differing values. The purpose of the Spiritual Discernment in Counseling Paper is to 1) familiarize you with the views of vocational decision making and the will of God that are advocated in Christian circles today, 2) explore and identify your own approach to spiritual discernment, 3) increase your awareness of how your approach may influence your counseling, and 4) develop a strategy to work with clients with different approaches to spiritual discernment. Directions: To complete this paper, download the article “Discerning Spiritual Discernment: Assessing Current Approaches for Understanding God’s Will” by Dennis Horton, found in Blackboard. Divide your paper using the headings below (without...
Words: 606 - Pages: 3
...Management Complete the Employment Law Compliance Plan task as described in the message from Traci on the Atwood and Allen Consulting Page. Individual Assignment: Employment Law Compliance Plan Purpose of Assignment For this task, Traci has asked you to develop an employment law compliance plan for your chosen client. This task will help you gain a better understanding of employment laws at the city, state, or national level. It is also important for you to understand how to be compliant with the applicable laws, and what the consequences are of noncompliance. Knowing laws that are applicable to employment in various business situations is essential starting and maintaining a successful business. Lists at least 3 employment laws the client must be concerned about Includes brief summary of each law Includes consequences of noncompliance with laws Includes recommendations for compliance with identified laws The paper is no more than 1,400 words in length. Format your paper consistent with APA guidelines. Use at least two (4) references from the reading assignment, Internet articles, Electronic Reserve Readings articles, or HR journal articles to support your paper. At least one(1) in-text citation must be from the text book. HRM 531 WEEK 2 EMPLOYMENT LAW COMPLIANCE PLAN To purchase this, Click here http://www.activitymode.com/product/hrm-531-week-2-employment-law-compliance-plan/ Contact us at: SUPPORT@ACTIVITYMODE.COM HRM 531 WEEK 2 EMPLOYMENT LAW COMPLIANCE PLAN ...
Words: 721 - Pages: 3
...parties | Enquiry | Statements by client personnel | Inspection | -Documents prepared by independent parties-Documents prepared by the client-Physical inspection of tangible assets | Analysis | Data interrelationships | Recalculation / Reperformance: Performing independent calculations or recalculating the client’s calculations. • Computation produces highly reliable mathematical evidence. • Computation addresses existence and valuation for calculated amounts. Reperformance is applied in control testing, the auditor independently executes an internal control procedure. Observation: looking at the application of policy or procedures by others. (reliable evidence as to performance at the time of observation) PRODUCES A GENERAL AWARENESS OF EVENTS. Confirmation: consist of written enquiry to verify accounting records. Can produce evidence regarding existence, ownership, valuation, and cut off. -should be printed on the clients letterhead, signed by the client officer. -auditor needs to ensure that the address on the confirmation is legitimate -the recipient should be able to provide the information. -the auditor must mail the confirmations. -Responses must be returned directly to the auditor. Positive confirmationrequest a reply in all cases (follow up for all exceptions reported) Negative confirmation request a reply only when information is incorrect Enquiry: involves the collection of oral evidence from the client and independent third parties. ...
Words: 1315 - Pages: 6
...Jeremy Borden The purpose of this paper is to explain the purpose, goal, and/or outcome of each step in the audit process. The steps included in these pages are essential when conducting any audit of any company. Although specific audit procedures are different from one engagement to the next, the following steps are involved in every engagement. The first step in the audit process for any engagement is to make contact with the potential client. The goal of this step is to obtain new audit business. This is often times is done through the submittal of a general proposal that includes details on the nature of services provided, the qualifications of the firm’s auditors, anticipated fees, and other pertinent information to persuade the client to choose the firm. If the potential client is a publicly held company, arrangements for the audit are made through the audit committee. The proposal and oral presentations are made to provide a basis for selection. If the potential client is a private company, a partnership, or a smaller company, arrangements are made through the owners, a partner, or an executive of the company. This initial contact will often lead to oral discussions, negotiations, and other fact-finding topics before a final formal proposal is written and the audit is accepted. The proposal will also include a mention of contacting the previous auditor of the potential client. This is important because the potential client will have to give consent to the previous...
Words: 1963 - Pages: 8
...Jerra K. Roberts University of Phoenix CERTIFICATE OF ORIGINALITY: I certify that the attached paper, which was produced for the class identified above, is my original work and has not previously been submitted by me or by anyone else for any class. I further declare that I have cited all sources from which I used language, ideas and information, whether quoted verbatim or paraphrased, and that any and all assistance of any kind, which I received while producing this paper, has been acknowledged in the References section. This paper includes no trademarked material, logos, or images from the Internet, which I do not have written permission to include. I further agree that my name typed on the line below is intended to have, and shall have the same validity as my handwritten signature. Student's signature (name typed here is equivalent to a signature): ___Jerra K. Roberts ________________________ ___ My Beliefs, Values and Clinical Gestalt with Individual’s and Systems’ Clinicians working in the Human Service field have extremely challenging jobs. They must learn to balance their own beliefs with the client’s beliefs. This involves taking the clinicians’ personal values and experiences and putting them aside to determine what is the best treatment approach for the client. Recognizing my own identity will help me see how I fit in the community and with the clients who I interact with (Murphy & Dillon, 2011). People have multiple identities based on age...
Words: 1317 - Pages: 6
