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. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. 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).
True b. False 6(9-7) Free cash flows and valuation F G Answer: a EASY [vi]. Projected free cash flows should be discounted at the firm's weighted average cost of capital to find the value of its operations. a. True b.
Peter Swap I. Issue: Will recognizing compensation expense as part of Mizri Corporation’s stock compensation plan faithfully represent the exchange? II. GAAP List: * 718-10-30-22: An equity instrument for which it is not possible to reasonably estimate fair value at the grant date shall be accounted for based on intrinsic value * 718-20-35-3: A modification of an equity award shall be treated as an exchange of the original award for a new award incurring additional compensation cost for any incremental value III. Alternatives: A.
| | | present value of future lease payments as an asset and also showing this same amount as an offsetting liability. | | | undiscounted sum of future lease payments as an asset and as an offsetting liability. | | | undiscounted sum of future lease payments, less the residual value, as an asset and as an offsetting liability. | 8 points Question 3 Which of the following statements is most CORRECT? Answer | | If new debt is used to refund old debt, the correct discount rate to use in the refunding analysis is the before-tax cost of new debt.
According to IAS 17- paragraph 7, the classification of leases is based on the extent to which risks and rewards incidental to ownership of a leased asset lie with the lessor or the lessee. IAS 17-paragraph 8 also mentions that a lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership, while a finance lease is determined if it transfers substantially all the risks and rewards incidental to ownership. 1. Based on the IAS 17-7 and IAS 17-8, the junior accountant's analysis was incorrect. The junior accountant interpreted the lease as an operating lease based on the fact that the equipment reverts to the lessor at the end of the lease.
2. Which of the following statements about valuing a firm using the APV approach is most CORRECT? a. The value of operations is calculated by discounting the horizon value, the tax shields, and the free cash flows at the cost of equity. b.
Therefore impairment exists. ASC 320-10-35-33A: If an entity intends to sell the debt security (that is, it has decided to sell the security), an other-than-temporary impairment shall be considered to have occurred. ASC 320-10-35-33B: If an entity does not intend to sell the debt security, the entity shall consider available evidence to assess whether it more likely than not will be required to sell the security before the recovery of its amortized cost basis (for example, whether its cash or working capital requirements or contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs). If the entity more likely than not will be required to sell the security before recovery of its amortized cost basis, an other-than-temporary impairment shall be considered to have occurred. ASC 320-10-35-33C: If an entity does not expect to recover the entire amortized cost basis of the security, the entity would be unable to assert that it will recover its
This summary will be assessing the requirements of Statement of Financial Accounting Standards (SFAS) 116 and 117 and how it impacts the financial statements. The Statement No. 116 addresses Accounting for Contributions Received and Contributions Made, contributions consist of gifts of cash, marketable securities, property and equipment, utilities, supplies, intangible assets (such as patents and copyrights), and the services of professionals and skilled workers (University of Phoenix, 2007, p.490). These contributions have to be accounted for at fair value, unless their is a particular collection or contributed service. Statement No.
Which of the following is true regarding the use of LIFO for inventory valuation? a. If LIFO is used for external financial reporting, then it must also be used for internal reports. b. For purposes of external financial reporting, LIFO may not be used with the lower of cost or market approach.
The basic ideas of the monetary policy and economic stabilization policy were foreign at the time, dating only from John Maynard Keynes' work in 1936 (Keynes, 2011). These rates influence financial conditions in the household and the ability to secure and spend more money. Short-term rates alter borrowing costs for firms, households, and the spending circulation cycle is affected. Movements in short-term directly affect long-term notes such as bonds and mortgages. These factors indicate current and future values of the short-term rates, therefore it creates issue with future long-term rates.