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.
Judgement Case 9-1 – Inventory costs; lower of cost or market; retail inventory method Requirement 1 Theoretically, Hudson should account for the warehousing costs related to its wholesale inventories as a part of inventory. All of the necessary costs associated with preparing, and in this case storing, items for sale are to be included in inventory. The key here is that the warehousing cost is related to a particular set of items and for that reason it is important to account for the warehousing cost with the inventory in order to satisfy the matching principle. The matching principle “requires that revenues and any related expenses be recognized together in the same period” (The matching principle). By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold.
There are also implied terms for the supply of goods and services regarding the work and materials. The implied terms are that the transferor has the legal right to transfer the property and that the goods will correspond to the description given within the contract
Cash is collected. B. Persuasive evidence of an arrangement exists. C. Delivery has occurred or services have been rendered. D. The seller's price to the buyer is fixed or determinable.
it represents the purchase price of a business that is about to be sold. D. it is the difference between the fair market value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business. 42) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton.
• What would the effect of IFRS be on this transaction if the acquisition is structured through Fuzzy’s foreign subsidiary? Would the foreign subsidiary record it as an acquisition of business or a group of assets? Authoritative Literature and Conclusion It is important to determine whether the transaction is a business combination or an asset acquisition for a variety of reasons including: ___________. ASC 805-10-25-1 states that an entity shall account for each business combination by applying the acquisition method. For acquired assets that are not a business, they shall be accounted for as an asset acquisition.
The law of apparent agency refers to a commercial law that deals with contracts. This law involves a person called an agent. The agent is typically authorized to act on the behalf of the other. This will then help aid the relationship with a third party. This apparent agency can differ from other agency principles depending on who the legal representation is for, for example someone could have the representation form a guardian.
Purchases of assets are characterized by the acquisition by the buyer of specified assets from an entity, which may or may not represent all or substantially all of its assets, and the assumption by the buyer of specified liabilities of the seller, which typically do not represent all of the liabilities of the seller. When the parties choose to structure an acquisition as an asset purchase, there are unique drafting and negotiating issues regarding the specification of which assets and liabilities are transferred to the buyer, as well as the representations, closing conditions, indemnification and other provisions essential to memorializing the bargain reached by the parties. There are also statutory (e.g., bulk sales and fraudulent transfer statutes) and common law issues (e.g., de facto merger and other successor liability theories) unique to asset purchase transactions that could result in an asset purchaser being held liable for liabilities of the seller which it did not agree to assume. These drafting and legal issues are dealt with from a United States (“U.S.”) law perspective in (1) the Model Asset Purchase Agreement with Commentary, which was published by the Mergers & Acquisitions Committee (formerly named the Negotiated Acquisitions Committee) (the “M&A Committee”) of the American Bar Association (“ABA”) in 2001 (the “Model Asset Purchase Agreement” or the “Model Agreement”); (2) the Revised Model Stock Purchase Agreement with Commentary, which was published by the M&A Committee in 2010 (the “Model Stock Purchase Agreement” or the “RMSPA”); and (3) the Model Public Company Merger Agreement with Commentary which was published by the M&A Committee in 2011 (the “Model Public Company Merger Agreement”). In recognition of how mergers and acquisitions (“M&A”) have
An easement can be created by necessity as when property is landlocked or by prescription when the easement is acquired adversely. A license is a revocable privilege to be on the land of another. Liens are interests in real property that can be foreclosed in the event of nonpayment. A person’s interest in real property can be a freehold estate such as a fee simple or a life estate. The determination of whether
In cases where a company’s economic factors indicate that it conducts its operations in more than one economic environment and one functional currency, each operation may be considered a foreign entity with a different functional currency for purposes of applying ASC 830. 830-10-55-6 says in some instances, a foreign entity might have more than one distinct and separable operation. For example, a foreign entity might have one operation that sells parent-entity-produced products and another operation that manufactures and sells foreign-entity-produced products. If they are conducted in different economic environments, those two operations might have different functional currencies. Similarly, a single subsidiary of a financial institution might have relatively self-contained and integrated operations in each of several different countries.