The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle). Requirement 2 – B Hudson’s wholesale inventories should be reported on the balance sheet at the replacement cost amount. The text indicates that the replacement cost is less than the NRV (or ceiling) and more than the NRV-NP (or floor) making the
manuf cost 250000 6) Kingdom Leasing, Inc. Incurred costs of $6500 in negotiating and closing the lease. There are no uncertainties regarding additional costs yet to be incurred and the collectibility of the lease payments is reasonably predictable. lease neg 6500 Required: PV res value 11566.2 a) Determine what type of lease this would be for the lessor and calculate the following: (show all work) $238,434 Lease Receivable Sales Price Cost of Sales b) Prepare Kingdom's amortization schedule for the lease terms. c) Prepare all the journal entries for Kingdom for 2012.
24. While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that a. all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal. b. at the end of the lease the property usually can be purchased by the lessee. c. a lease reflects the purchase or sale of a quantifiable right to the use of property.
If Ms. Thompson’s analysis was right, for investors holding callable bonds, they could make money from these discrepancies. Investors who don’t hold the callable bond can short sell the relatively overpriced security and buy the relatively underpriced one. 1. Create the two synthetic bonds described in
Factors for consideration a. law’s non-logical implications in interpretation what parties would’ve agreed to (ex. Haines: duration and scope of contract) - policy: at-will doctrine in employment: policy - would’ve agreed to terms had they anticipated situation - had in mind, but didn’t express it b. context - what is the objective of the contract? Is it ambiguous? Ex. Spaulding v. Morse (369): stop yearly payment to trust during time in armed services - enforce according to terms if unambiguous, consider context if terms are ambiguous - not only context at time of contract formation, but also what happened AFTER ⇨ changed circumstances - why look at context?
Distinguish among operating, investing, and financing activities. Managers’ activities and responsibilities can be classified into three broad functions. List and discuss each function. Identify and discuss the relevant costs in accepting an order at a special price Smith & Company claims that the relevant range concept is only important for variable costs. Explain the relevant range concept and discuss whether you agree with Smith & Company.
It is a good choice when an investor needs their return in a certain time period. The payback period is very easily computed. The benchmark is not a constant value and does not have a required rate of return nor is there another input, but is based on how long until the investors need their investment returned. 3. Describe the Internal Rate of Return (IRR) method for determining a capital budgeting project's desirability.
Either the direct or indirect method is permitted. Statement 117 “requires that donor-restricted cash that must be used for long-term purposes is classified as cash flows from financing activities” (Copley, 2011, p. 318). Typically at the bottom of the statement is where noncash and financing activities are shown, as their disclosure is also
Jones purchase the stock of Smithon outright leaving Smithon intact? The stock should not be purchase by Mr. Jones. Mr. Jones acquiring the assets, liabilities and also would inherit the contractual obligations of the selling corporation, would, be the results of the purchase. In lay terms, he has bought the existing Smithon Corporation and he is responsible of ensuring daily operations run efficiently but the tax aspect of acquisition he is responsible for existing and any future tax liabilities that the selling corporation had. It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock.
Specific variances – actual figures v expected figures – this includes • Actual v budget • Actual v Forecast It is unlikely that you will be perfect at budgeting (unless you have a crystal ball), so you are bound to get variances at least occasionally. Generally, small variances are simply part of doing business, large variances need investigating – but don’t get complacent; think of it like testing for lumps, or checking moles – you need to get a foundation of what is NORMALLY a bit over or a bit under before you can understand WHAT IS ODD… and this only comes with practice. Trend variances – small, continual changes over time, that incrementally diverge from expected. • this month’s v last month’s • August 2010 v August 2011 – both actual and budgets What can seem normal, can seem so because we are used to it. Trend analysis is a bit like watching your weight; when you check your scales each day, it only seems like tiny changes, but if you look at this birthday compared to your weight last birthday that is when you notice the few extra kilos have snuck on … Trend analysis puts a spotlight on the changes that creep up on us little by