Financial Accounting Notes

1. The Allowance for uncollectible accounts currently has a credit balance of $900. After analyzing the accounts in the accounts receivable subsidiary ledger, the company's management estimates that uncollectible accounts will be $15,000. What will be the amount of uncollectible accounts expense reported on the income statement?

Assets and liabilities are bifurcated in current and non-current. Current asset is defined as any asset which can be converted into cash readily and will be used within one accounting period normally 1 year e.g. Receivables, Inventory, Prepaid Expenses.

Differences in the asset impairment testing model may result in assets being impaired earlier under IFRS and Mexican FRS. However, there are certain differences on the impairment testing under the three frameworks. The broad based requirement to capitalize development costs under IFRS and Mexican FRS (when certain criteria are met) creates the potential for differences compared with US GAAP, wherein development costs are generally expensed as incurred. IFRS prohibits (whereas US GAAP and Mexican FRS permit) the use of the lastin, first-out inventory-costing methodology. In addition, Mexican FRS accepts the inventory costing

The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within

On JB Hunt’s balance sheet for 2011 lists current assets of $513,542,000 and current liabilities of $438,515,000, yielding a current ratio of 1.17, which indicates the company, has $1.17 of current assets for every $1 of current liabilities. The previous year 2010, the current ratio was 0.91. This shows a 29% increase in the current ratio over the previous year. An organization with a current ratio of 2 or higher is usually viewed by lenders to be a safe risk for short-term credit. Based on the 29% increase in current ratio, JB Hunt is in a better position to obtain

For analysis sake, the transition from LIFO to FIFO method helps one to evaluate the up-to-date costs of inventories and debt paying capabilities as well as portraying their uninflated inventory turnover values (Subramanyam, 2014). Additionally, since inventories often represent significant percentages of a company’s assets and inflation leads to price increases overtime, LIFO to FIFO restatements can allow analysts to compare companies with different inventory valuation methods (Investopedia, 2016c). More specifically, investors can assess each method’s short and long-term effects on values such as tax expense and net income (affecting earnings

The Open-Road Motorcycle Company is the largest online retailer of salvage title motorcycles. We are focused on bringing the customer the best value on entry level motorcycles by providing lower prices than our competitors. Our motorcycles are sold all over the United States, and we currently have 30 stores all across the country.

The use of LIFO as an inventory management system is recognized as one of three management systems and has been accepted by GAAP. However, IFRS does not recognized LIFO as an acceptable management system. Many advocates of LIFO argue that it provides an accurate revenue match with expenses since sales reveal the most recent selling prices, then the cost of goods sold should also reflect the most recent inventory purchasing costs. However, the ending inventory balances shown on the

Simple interest vs. Compound interest: o Simple interest amount = Principal * annual interest rate * period o Compound interest amount includes interest not only on the initial investment but also on the accumulated interest in previous periods. Example: Assume we will save $1,000 for three years and earn 6% interest compounded annually.

Work-in-process inventory. Merchandising and manufacturing inventory accounts. Perpetual inventory system. Determining when title passes. Inventory errors. Overstatement of purchases and ending inventory. Period vs. product costs. Reporting Purchase Discounts Lost. Cost flow assumption. FIFO periodic vs. perpetual system. Purchase commitments. Using LIFO for reporting purposes. LIFO liquidation. LIFO liquidations. Dollar-value LIFO Dollar-value LIFO method.

| Accounts receivable are amounts expected to be collected from customers. Usually, collection is within one year, and thus, accounts receivable are considered a current asset.

Step 2. As of the acquisition date, intangible assets and liabilities need to be measured at their fair market value. At this point, various items may not be recorded on the balance sheet, thus it may cause the task of measuring intangible assets and liabilities to be difficult for the owner. In addition, some intangibles cannot be recognized as assets under Generally Accepted Accounting Principles (GAAP).

When it comes to valuation, both standards in this case differ significantly in their approach to the same. To begin with, while "U.S. GAAP permits the use of LIFO for inventory valuation, IFRS prohibits its use" (Kieso, Weygandt and Warfield, 2010). According to the authors, IFRS in this case only permit the use of average cost and FIFO. In that regard, inventory must be revalued in instances where entities have utilized LIFO. Next, according to a document prepared by Ernst and Young a firm that offers professional services, the two standards also differ when it comes to revaluation. While U.S. GAAP does not permit revaluation, revaluation as per IFRS "is a permitted accounting policy election for an entire class of assets, requiring revaluation to fair value on a regular basis" (Ernst and Young, 2011).

AASB 138 defines intangible assets as “identifiable non-monetary assets without physical substance”. Such assets include but are not limited to goodwill, trademarks, patents and research and development. AASB 138 Intangible Assets has been implemented to prescribe the accounting treatment for intangible assets that have not been specifically dealt with in any other standard. Therefore, this standard only applies to intangible assets that have not been previously dealt with. Furthermore, it can be established that this standard is an example of normative accounting theories because the standard prescribes what should be done, rather than predicts what people may do. According to AASB 138 Intangible Assets, in order for an asset to be recognised in the financial statements it must meet specific criteria. The required criterion states that the asset must be identifiable, the entity has control of the asset, future economic benefits are probable and the cost of the asset can be measured reliably.

The first in, first out (FIFO) method of inventory valuation is a cost flow assumption that the first goods purchased are also the first goods sold. In most companies, this assumption closely matches the actual flow of goods, and so is considered the most theoretically correct inventory valuation method. The FIFO flow concept is a logical one for a