Accounting at Maccloud Winery

851 Words Oct 18th, 2013 4 Pages
GSM 5301 Accounting for Decision Making ACCOUNTING AT MACCLOUD WINERY
Syed Mohd Muhsin Sy Mohamad Mohd Khalis Mohd Asrar Norhelena Mansor Mohd Hezreey Onn

Keywords to be used:
A=Asset L=Liability OE=Owners’ Equity R=Revenue E=Expenses SOCI=Statement of Comprehensive Income SOFP=Statement of Financial Position PPE= Property, Plant & Equipment NBV = Net Book Value

Should the leased building be accounted for as an asset?

No, leased building should be accounted for as an expenses (cost of sales)

Why?

Because: i) The lease contract signed was not mention on purchase bargain ii) Mike might not assume ownership of the building iii) The lease would be considered an operating lease (business expense) – expenses would be accrued
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 To provide allowance for losses on Pierce Disease  The allowance is in SOFP under liability A = Allowance for losses – expenses  To be used in the future to cover for future costs

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