RSM220H1 : rsm220 case draft
Document Summary
Subject: lumbersell limited (lsl), financial reporting issues-fiscal year: 2010. This memo discusses how certain issues faced by lsl will impact its financial statements, and concludes on how they should be treated under accounting methods. The company will be reporting under ifrs for the first time this year. Being the company s controller, it is my job to properly manage financial reports in accordance to the new guidelines so their users can make well-informed decisions. In this case, users include the bank representatives. To allow for an increase in the line of credit, the representatives would want lsl to have favourable liquidity ratios. For this reason we want the company s liabilities for the year to be minimized. After signing a licensing agreement with bowman inc. (bi), lsl has earned exclusive sales and distribution rights for bi s products. But in return, it has to pay royalty fees to bi as a percentage of sales.
