Property, Plant and Equipment Property, Plant and Equipment I- Nature of Accounting Issues Businesses purchase and use a variety of fixed assets, such as equipment, furniture, tools, machinery, buildings, and land. These fixed assets are long-term or relatively permanent assets. Also, they are tangible assets because they exist physically. They are owned and used by the business and are not offered for sale as part of normal operations. Perhaps the most descriptive titles these assets are
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can be drawn from two separate parts of FASB Codification on Leases. According to ASC-840-10-25-5, “…minimum lease payments comprise the payments that the lessee is obligated to make or can be required to make during in connection with the leased property”. Clearly the $1,000,000 payment is required and in connection with the leased property since this payment is being made directly to Goliath who is the lessor and is needed to complete the arrangement. FASB expands is minimum lease payment requirements
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components of comprehensive income. Section 220 of the FASB codification discusses comprehensive income and all that’s included when reporting. Comprehensive income is the change in equity of a business during a period from transactions and other events and circumstances from nonowner sources. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners (FASB ASC 220-10-10-1). Other comprehensive income are the revenues
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financials hinge upon the expectedconclusion of the lawsuit. FASB Codification section 450-20-25-2 stipulates that in the event that theanticipated outcome of litigation results in a loss to the business, and can be rationallyprojected, then the cost should be accrued to the financials and footnoted as such.If the conclusion of the process is most likely to create a loss for the business, but thecost cannot judiciouslybe estimated, then FASB Codification 450-20-50-5 necessitates that a contingency disclosure
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expense reduces net sales or revenue. According to FASB, ASC 330-10-05-2 “An inventory has financial significance because revenues may be obtained from its sale, or from the sale of the goods or services in the production of which it is used. Normally such revenues arise in a continuous repetitive process or cycle of operations in which goods are acquired, created, and sold, and further goods are acquired for additional sales.” Inventory is defined in FASB, ASC 330-10-20, “Inventory: The aggregate of
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Second, the private sector was firmly established as the source for accounting policy making in the United States. Accounting Research Bulletins (ARB) The CAP would issue 51 ARBs during its existence, several of which survive in today’s FASB’s Codification, and four Accounting Terminology Bulletins. e) weaknesses: The CAP decided early on that formulating a statement of broad principles would take too long and instead approached issues on a case-by-case basis. Without a framework and often without
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Inventory Write-Downs and Reversals 1. Codification a. FASB Codification -- Topic#330, Subtopic#10 Overall is the primary authoritative guidance for the accounting for inventories. The predecessor literature that governed accounting for inventories is Accounting Research Bulletins (ARB) No.43 Chapter 4. b. According to Codification- Topic#330, Subtopic#10, Section#20 Glossary, the following three types of goods are classified as inventory: Held for sale in the ordinary course of business
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Week 2 Case Study 1) Firm Fixed-Price Contract: A contract in which the price is not subject to any adjustment by reason of the cost experience of the contractor or his performance under the contract (FASB 2012). References to Firm Fixed-Price Contract are under the Revenue Codification. Revenue/Topic 605 Revenue Recognition/35 Construction-Type and Production-Type Contracts I did not locate any SEC documents relating directly to Firm Fixed-Price Contract but Topic 605 Revenue Recognition
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the lawsuit considered a loss contingency? 2. Will the loss be accrued, and if so for what amount? 3. What disclosures should be made in the company’s financial Statement? Analysis – Issue 1: Is the lawsuit considered a loss contingency? FASB Accounting Standards (ASC) 450-20 provides information on contingencies, covering the definition of a loss contingency as well as providing examples of loss contingencies. Contingencies are described in (ASC) 450-20-20 as follows: Contingency: An
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FASB Accounting Standards Codification Case This case consists of a series of questions. For each question, your mission is to locate the paragraph in the FASB Accounting Standards Codification (ASC) that answers the question. Please CUT AND PASTE the paragraph from the standards into this document for each question and provide a full reference, including the topic, subtopic, section, and paragraph (e.g. “ASC 605-15-25-1”, or “ASC Master Glossary” for definitions). Submit a hard copy of your answers
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