Management and Organizational Studies 2285 Lecture 5: Solution+Problem+10-7
7 Jun 2017
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*calculation of loss: book value: chesley corporation. *it is assumed the transaction lacks commercial substance. * the new machinery cannot be recorded at a cost higher. Since the amount of cash is not significant, it is assumed this is a non-monetary transaction that does not have commercial substance. Cost of goods sold (b) for transactions #1 and #4 with secord and ansong, no alternative situation would change the accounting for the transaction since they are monetary transactions. For the accounting for transaction #2 with bateman to change, the situation would have to result in different cash flows over the course of the machine"s life so as to cause the transaction to have commercial substance. For transaction #3 with shripad, situations that could result in different cash flows over the course of the machine"s life would cause the transaction to have commercial substance.
