ACC 703 Lecture Notes - Revenue Recognition, Office Supplies, Financial Statement

50 views2 pages
Published on 20 Apr 2013
School
Ryerson University
Department
Accounting
Course
ACC 703
Professor
Chapter 6 Case 3
BLACK – answers from the professor’s PowerPoint
BLUE – the professor’s elaboration on the answer
Major going concern problem.
What basis is the financial statement prepared on? Audited financial statement?
Issues with current assets – way too high, trying to maximize the income.
GRANT IN REVENUE!!! Should be 625000. Revenue recognition issue.
Growth revenue is ridiculously overstated.
Big at risk issue – problem with giving current assets as a lump sum.
Grant has been received? Used the money and have no cash to pay. If you have the cash
you didn’t pay the liabilities, if you don’t have the cash, you haven’t paid the liabilities.
Loss in the year.
Grant is a non reciprocal transaction.
How do we report 1 million of the grant?
Net the grant against the asset that the grant was received for. Lowers future
amortization.
Set up a deferred credit in the long term liability. Lower expense. IFRS.
Same affect on the income.
PPE net of amortization too high, should have been net of grant if you decided to use
IFRS.
Revaluation approach?
120000 that was capitalized and expense.
Incorporation costs – they are not asset, expensed.
Office equipment – capitalized
Travel in search of land expense if tax minimization is the objective, in this case
capitalize in the cost of the land.
Cost of calls – capitalize in the cost of the land.
Product development cost we have the resources, and intend to sell capitalized
because the product development criteria is met.
Grant negotiation cost – net against the grant.
Cost of the contract – expense/capitalize. Capitalize and amortize/write it off over the life
of the contract. Tax minimization – expense.
Miscellaneous – expense.
110000 penalties talk to department of national defence to avoid the penalty because
construction was delayed.
Investment at cost – WRONG!!! Cant report controlled investment at cost
consolidation.
No acquisition differential unlikely that you bought it at book value (60% of book
value)
Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Blue the professor"s elaboration on the answer. Issues with current assets way too high, trying to maximize the income. Big at risk issue problem with giving current assets as a lump sum. Used the money and have no cash to pay. If you have the cash you didn"t pay the liabilities, if you don"t have the cash, you haven"t paid the liabilities. Net the grant against the asset that the grant was received for. Set up a deferred credit in the long term liability. Ppe net of amortization too high, should have been net of grant if you decided to use. Incorporation costs they are not asset, expensed. Travel in search of land expense if tax minimization is the objective, in this case capitalize in the cost of the land. Cost of calls capitalize in the cost of the land. Product development cost we have the resources, and intend to sell capitalized because the product development criteria is met.

Get OneClass Grade+

Unlimited access to all notes and study guides.

YearlyMost Popular
75% OFF
$9.98/m
Monthly
$39.98/m
Single doc
$39.98

or

You will be charged $119.76 upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.