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Lecture

ACC 110 Lecture Notes - Canadian Imperial Bank Of Commerce, Promissory Note, Financial Statement


Department
Accounting
Course Code
ACC 110
Professor
Bradley Mc Master

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SOLD Inc.
Required: Not known.
Role: To make recommendations with regards to the preparation of SOLD Inc’s next
annual financial statements and to review the statements once they are prepared.
Stakeholders: Sonya(Primary Stakeholder), Sonya’s Parents (they hold a notes
payable), Bank (critical), Adele Tan
Stakeholder Objectives: Sonya to minimize net income. CIBC accurate reporting.
Warehouse accurate.
*conflict.
Facts:
Changes business model.
Private Corporation that is fully owned by Sonya.
Previously owned by parents. Transfer of all common shares to Sonya is to be
paid out of the company’s future profits.
The company executed a 5-year lease for the warehouse.
Borrowed 300,000 from CIBC.
Previous lease full amount paid. How to account for it?
Hired friend as a VP of Marketing for a below-market salary and a bonus
equal to 5% of the annual growth in revenue.
Constraints:
Terms of the loan. Limit loans and dividends.
GAAPS
Issues:
Revenue Recognition
Notes Payable for shares Sonya bought from her parents *personal and
business transactions separate. Economic entity.
When is the inventory considered ours?
How to respond to restrictions?
Website assets or exp.
Who are the stakeholders?
Are there any constraints (regulatory or otherwise) on preparing financial
information?
Why / when do such constraints exist (think common language, common
purpose?)
Read some of the earlier discussion by students on this Discussion Board about
similar issues.
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