I am writing a memo to provide the feedback regarding the accounting issues and its adjustments. Fully refundable deposit: Revenue recognition Accounting Issues The deposits for 6 months prior to wedding dates are recorded as revenue upon the receipt of the payments. GAPP and analysis ASPE section 3400 revenue recognition, • Performance: NOT MET. The services/goods are not transferred to the customers yet. Collecting deposit is 6 months prior to their wedding dates. • Measurement: MET. There is no actual contract or amounts were shown, however the deposit amount is collected and it comes total of $25,000. • Collection: MET. The fully refundable fees/deposits are collected total of $25,000 The criteria is not met, and the refundable deposit …show more content…
The cost given up for rental rate is $1,500 per Sunday. It comes total 2 Sundays as $3,000 and the non-monetary transaction is not recorded on the financial statement. GAPP and analysis ASPE section 3831.06 excludes the measurement at fair value following criteria. (Direct quote from CPA handbook & ebook) • Transaction has the lack of commercial substances: NOT MET. • Transaction is an exchange of a product held for sale….be sold in the same line of the business….: NOT MET. It is a two different business. Wedding vs Advertisements are not the same line of business. • The fair value is not measurable (asset received & given up): NOT MET. It is measurable. Advertisement is measured at $4,850, and the rental for Pavilion is $1,500 per Sunday. • Transaction is a non-monetary, non-reciprocal transfer to owners: NOT MET. It is not a non-reciprocal. All the exclusion from measurement at fair value is not met, so it should be recorded at preferably asset given up as $3,000. Accounting …show more content…
• Likely: the chance of paying the settlement is high. • Unlikely: the chance of paying the settlement is low. • Not determinable or measurable: the chance of paying the settlement is unable to be determined. The amount of contingency loss is accrual basis, and should be disclosed under financial statement disclosure when it is likely paying the settlement and the amount is estimated. Lawsuit loss and lawsuit provision should be recorded accordingly. Under ASPE the lawsuit is recognized as a liability when it is probable and measurable. In Anne's case, the chance of paying the settlement is unlikely, so the lawsuit/contingency loss expense should be reversed. Accounting adjustment It is a liability if Anne needs to settle the payout, however after she consulted with the lawyer, she should be able to get a refund of $800,000. The expense should be corrected in 2018 once the payout is returned to Anne, and it should be recorded as receivables for the amount to be paid. Income tax payables Accounting
The fair value of neither the asset(s) received nor the asset(s) relinquished is determinable within reasonable limits.
Our client, Sue Davis, was in a car accident in Yankton, South Dakota. Sue sustained massive head injuries, and the paramedics did not think that she would make it to the hospital alive. Once all was said and done Sue incurred $400,000.00 in medical bills, $45,000.00 in lost wages, and $50,000.00 in property damage to her Bentley.
1. A liability, estimated at $157,050 at December 31, 2012, was settled on February 26, 2013, at $175,160.
The value of the property is to be determined at the time of the trail.
a. Transfer from the debtor to the creditor of receivables from third parties, real estate, or
Transferring funds, placing orders, sending invoices, and shipping goods to customers are all types of activities or transactions.
1.Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180.
If the cost of an available-for-sale security exceeds its fair value by $40,000, the entry to recognize the loss
The losses compensated for in this case include difficult-to-quantify losses such as disability, emotional distress, suffering, and pain, and economic losses such as lost earnings and medical expenses (Greene, Coon and Bornstein, 2001). Again here, capping or limiting the jury award would imply that even after suffering economic and noneconomic damages in the hands of the defendant, a plaintiff would not likely get back to the position they were in before the injury.
(a) The liability of the United States for compensation to a beneficiary in the case of death or of permanent total or permanent partial disability may be discharged by a lump-sum payment equal to the present value of all future payments of compensation computed at 4 percent true discount compounded annually if--
How are requirements for contingencies reported? What would happen to the financial statements if the client loses the lawsuit?
A transaction can be any exchange between the supplier and consumer in the economy. Some primary examples of a transactions are exchange of goods for money, or exchange of goods for other goods, or even the exchange of information and intermediate products. And all these exchanges in the market entail costs, also known as transaction costs.
The insurance carrier disputes the value of the equipment, crops, or other non-building related losses.
1) As part of 1997 sales drive, 800 units were given out for rent at a rate of 35$ per week and also 600 units were given out for rent at a rate of 30$ per week.
Most of these arrangements have terms of approximately one year. Accruals for expected payouts under these programs are included as accrued marketing and promotion in the accrued and other liabilities line item in the Consolidated Balance Sheets.