In 2017, Ghostbusters Corp. spent $420,000 for “goodwill”visits by sales personnel to key customers. The purposeof these visits was to build a solid, friendly relationshipfor the future and to gain insight into the problemsand needs of the companies served. How should thisexpenditure be reported?

In 2017, Ghostbusters Corp. spent $420,000 for “goodwill”visits by sales personnel to key customers. The purposeof these visits was to build a solid, friendly relationshipfor the future and to gain insight into the problemsand needs of the companies served. How should thisexpenditure be reported?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4TP: Malone Industries has been in business for five years and has been very successful. In the past...

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. In 2020, Ghostbusters Corp. spent $420,000 for “goodwill” visits by sales personnel to key customers. The purpose of these visits was to build a solid, friendly relationship for the future and to gain insight into the problems and needs of the companies served. How should this expenditure be reported?
For many years, Janice Virtue had been a professor of Business Ethics in the Faculty of Business at a major Canadian university. In 2018, while continuing to teach one section of Business Ethics, she established Virtue Ltd. (VL) in order to market her numerous publications and online courses involving the application of ethical principles to business situations. While the company experienced a net operating loss of $128,000 in the fiscal period ending December 31, 2018, VL experienced rapidly increasing sales during 2019. Because Janice believed the improvement was indicative of the success to come, VL moved to larger premises that were purchased for $423,000. Of this total, $100,000 related to the land, with the remaining $323,000 allocated to the building. Because the building was to be used exclusively for non-residential purposes, it was allocated to a separate Class 1. In selling the previous premises in 2019, VL experienced an allowable capital loss on the land of $36,000. The…
On February 14, 2020, Gerald Company established a sales agency in Secret Place.Upon establishment of the sales agency, the home office sent samples costing ₱8,000and a working fund of ₱3,000 to be maintained on the imprest basis. During the sixmonths period, the sales agency reported to the home office sales orders. These werebilled at ₱70,000 of which of ₱40,000 was collected. The sales agency paid expenses of₱5,800 but was reimbursed by the home office.On August 15, 2020, the sales agency samples were valued at ₱2,000. It was estimatedthat the gross profit on goods shipped to fill sales order averaged 40% of cost.The cost of sales of the sales agency for the six months period is:
Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entities. Two years ago, Luisa Mellina, Ginnians partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a series of training programs focusing on the auditing of not-forprofit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: Required: 1. Write out the cost equation for Ginnians audit professional time. 2. If Ginnian expects to have 9 audits of not-for-profits next month and expects that audit professionals will have a total of 130 hours of not-for-profit training, what is the anticipated cost of professional time? 3. Are the hours spent auditing not-for-profit entities positively or negatively correlated with audit professional costs? Is percentage of experienced team members positively or negatively correlated with audit professional cost? 4. What does R2 mean in this equation? Overall, what is your evaluation of the cost equation that was developed for the cost of audit professionals?
Malone Industries has been in business for five years and has been very successful. In the past year, it expanded operations by buying Hot Metal Manufacturing for a price greater than the value of the net assets purchased. In the past year, the customer base has expanded much more than expected, and the companys owners want to increase the goodwill account. Your CPA firm has been hired to help Malone prepare year-end financial statements, and your boss has asked you to talk to Malones managers about goodwill and whether an adjustment can be made to the goodwill account. How do you respond to the owners and managers?
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The Faith Rural Bank ltd has presented the following trial balance for the 2011 financial year: GH₵‘000 GH₵’000 Operating expenses 987.00 Donations 24.00 Staff cost 2,213.00 Directors remuneration 39.00 Capital work-in-progress 168.00 Motor Vehicles/ Accumulated depreciation 327.00 182.00 Equipment & furniture / Accum. Depreciation 588.00 163.00 Computers/Accum. Depreciation 390.00 133.00 Land and Building / Accum. Depreciation 776.00 83.00 Corporate tax 180.00 Sundry payables 763.00 Interest from short funds 243.00 Interest from Government securities 7,137.00 Interest on loan and advances 373.00 Other accounts 789.00 Staff advances 449.00 Loans and Overdrafts granted 8,233.00 Income surplus 01/01/2011 1,146.00 Allowance for doubtful debts 01/01/2011 614.00 Statutory reserves 01/01/2011 648.00 Capital surplus 410.00 Trade investment 1,343.00 Government Treasury Bills 19,593.00 Interest on customer’s deposits 3,515.00 Amounts due to other…
The Ombudsman Foundation is a private nonprofit organization providing dispute resolution and conflict management training. The Foundation had the following preclosing trial balance at December 31, 2024, the end of its fiscal year: Account: Debits Credits Accounts payable $23,600 Accounts receivable (net) $46,300 Accrued interest receivable 16,700 Accumulated depreciation 3,260,500 Cash 110,000 Contributed services 26,000 Contributions—no restrictions 2,410,000 Contributions—purpose restrictions 796,000 Contributions—endowment 2,371,700 Current pledges receivable 75,500 Education program expenses 1,536,100 Fund-raising expenses 116,500 Investment revenue—purpose restrictions 86,500 Training seminars expenses 4,546,100 Land, buildings, and equipment 5,610,700 Long-term investments 2,743,300 Management and general expenses 396,600 Net assets without donor restrictions 448,000 Net assets with donor restrictions…
Abby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet: Designing and planning P1,800,000 Code development 2,700,000 Testing 900,000 Production of product master 4,500,000 In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered…