© Car sionaire (similar to Presto's role) will provide premium food and beverage service to guests in the suite. Evaluate-is a suite license a lease? Assume a customer signs a 20-game license for specified games to occur within a single Major League Baseball season. Sales Commissions, Writing an Email Assume the New York Yankees pay its sales staff a 2% sales commission on each luxury suite license contract signed (such as by a corporate customer). Research whether this commission 4.7 payment should be reported as an asset or an expense by the New York Yankees. Craft your response in the form pays email, and assume you're responding to a question asked to you by the accounting manager for the Yankees. should be reported as an asset or an expense by the New York Yankees. Craft your response in the form Why Documentation Matters A company is evaluating a lease to determine whether it should be classified as a Gnance or operating lease and concludes that it should be reported as a finance lease. However, company accountants eolize that a similar lease contract, executed just two years ago, has been accounted for as an operating lease. The company is unable to locate documentation explaining the rationale for the earlier lease's operating classification. Think through this issue. What should the company do? What lessons can the company learn from this? 4.8 Writing an Analysis-Derivatives Facts: You are a corporate accountant for Theta, Inc. Today's date is 12/31/20X5. You've been asked to review a contract in which Theta agrees to purchase 200 shares of IBM stock from Delta (seller) in 1 year (on 12/31/20x6), for $140 per share. Said another way, Theta has entered into a forward contract for the 4.9 purchase of stock. Required: Act as though you are writing just the Analysis section of an issues memo, and research the following ques- tion: Does Theta's contract with Delta meet the definition of a derivative? In your response, include applicable excerpts and guidance sandwiches that relate the guidance to this fact pattern. In your research, you need only consider the following paragraphs from the guidance: O ASC 815-10-05-4 ASC 815-10-10-1 potional ASC 815-10-15-83, 15-88, 15-92, 15.96 2 5 T c 100 na, 120 12\ 15-45 ASC 815-10-15-119 and 120 In your analysis, include only those paragraphs that are most responsive to this issue. Assume that no scope excep- tions apply. Drafting an Email, Earnings per Share Your audit team is reviewing the third quarter financial statements of Smirks, Inc., a publicly traded company. The audit manager, Jason, thinks the client may have omitted an important item and has asked you to research whether interim financial statements are required to include earnings per share amounts. Prepare an email responding to Jason's question. Comment on any other potential ramifications of Smirks, Inc.'s omission that come to mind, which you can offer to research. 4.10 Writing a Short Issues Memo-Inventory Valuation You have been asked to draft a brief issues memo (“to the files") analyzing the following issue. 4.11 Charles Corp. has leased a mine from which it recently extracted 2,000 kilograms of bauxite (a min- eral used in producing aluminum). Charles Corp. plans to sell the bauxite to aluminum manufacturers. Charles Corp. is analyzing whether its bauxite inventory can be carried at its selling price per ASC 330- 10-35-16(b). Assume that quoted market prices are generally available for bauxite, and that the market for bauxite is active. Using the standard memo format, analyze whether all necessary conditions are met for the accounting treatment roposed. If assumptions are needed to fully evaluate the guidance, identify those assumptions in your analysis. For this articular memo, you are not required to present alternative treatments; assume for this issue that you have solely been sked to document whether the conditions in ASC 330-10-35-16(b) are met. enebn

© Car sionaire (similar to Presto's role) will provide premium food and beverage service to guests in the suite. Evaluate-is a suite license a lease? Assume a customer signs a 20-game license for specified games to occur within a single Major League Baseball season. Sales Commissions, Writing an Email Assume the New York Yankees pay its sales staff a 2% sales commission on each luxury suite license contract signed (such as by a corporate customer). Research whether this commission 4.7 payment should be reported as an asset or an expense by the New York Yankees. Craft your response in the form pays email, and assume you're responding to a question asked to you by the accounting manager for the Yankees. should be reported as an asset or an expense by the New York Yankees. Craft your response in the form Why Documentation Matters A company is evaluating a lease to determine whether it should be classified as a Gnance or operating lease and concludes that it should be reported as a finance lease. However, company accountants eolize that a similar lease contract, executed just two years ago, has been accounted for as an operating lease. The company is unable to locate documentation explaining the rationale for the earlier lease's operating classification. Think through this issue. What should the company do? What lessons can the company learn from this? 4.8 Writing an Analysis-Derivatives Facts: You are a corporate accountant for Theta, Inc. Today's date is 12/31/20X5. You've been asked to review a contract in which Theta agrees to purchase 200 shares of IBM stock from Delta (seller) in 1 year (on 12/31/20x6), for $140 per share. Said another way, Theta has entered into a forward contract for the 4.9 purchase of stock. Required: Act as though you are writing just the Analysis section of an issues memo, and research the following ques- tion: Does Theta's contract with Delta meet the definition of a derivative? In your response, include applicable excerpts and guidance sandwiches that relate the guidance to this fact pattern. In your research, you need only consider the following paragraphs from the guidance: O ASC 815-10-05-4 ASC 815-10-10-1 potional ASC 815-10-15-83, 15-88, 15-92, 15.96 2 5 T c 100 na, 120 12\ 15-45 ASC 815-10-15-119 and 120 In your analysis, include only those paragraphs that are most responsive to this issue. Assume that no scope excep- tions apply. Drafting an Email, Earnings per Share Your audit team is reviewing the third quarter financial statements of Smirks, Inc., a publicly traded company. The audit manager, Jason, thinks the client may have omitted an important item and has asked you to research whether interim financial statements are required to include earnings per share amounts. Prepare an email responding to Jason's question. Comment on any other potential ramifications of Smirks, Inc.'s omission that come to mind, which you can offer to research. 4.10 Writing a Short Issues Memo-Inventory Valuation You have been asked to draft a brief issues memo (“to the files") analyzing the following issue. 4.11 Charles Corp. has leased a mine from which it recently extracted 2,000 kilograms of bauxite (a min- eral used in producing aluminum). Charles Corp. plans to sell the bauxite to aluminum manufacturers. Charles Corp. is analyzing whether its bauxite inventory can be carried at its selling price per ASC 330- 10-35-16(b). Assume that quoted market prices are generally available for bauxite, and that the market for bauxite is active. Using the standard memo format, analyze whether all necessary conditions are met for the accounting treatment roposed. If assumptions are needed to fully evaluate the guidance, identify those assumptions in your analysis. For this articular memo, you are not required to present alternative treatments; assume for this issue that you have solely been sked to document whether the conditions in ASC 330-10-35-16(b) are met. enebn

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

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