Study Guides (238,345)
Canada (115,087)
York University (9,811)
Accounting (97)
ACTG 3110 (13)

ACTG 3110 - Notes to Practice Cases for Final Exam (Week 12)

3 Pages
Unlock Document

York University
ACTG 3110
Elizabeth Farrell

PRACTICE CASE TWO ASPE - Part II is acceptable by the bank if you estimate bad debts, should be accounted for in allowance for bad debts, A /R is net of bad 1) Takes 2-weeks to 2 months to complete a pool, build in the summer wouldn't pick completed contract --> wouldn't have issues at year end than in some other indus try multiple deliverables -- construction of the pool, service (open/close the pool) customers --> government, not high credit risk; other customers but in business for long time so should be able to estimate bad debts cash basis is not appropriate because of historical evidence + government as a c ustomer multiple units --> similar discussion in both part I and part II performance for the pool construction --> when you finish building the pool standard warranty costs are not a separate unit because they don't have standalo ne value, whenever you do the work, you have performance --> recognize a portion over each year extended warranty - not recognize when get cash upfront, recognize over the peri od of the extended warranty 2) asset retirement obligation because there's a mandatory obligation based on gove rnment regulations, contractual obligations (all contamination from the chemical s should be eliminated from the plant and storage facilities) debit the related asset the present value of $1.5 million, credit asset retireme nt obligation depreciation expense related to the asset (credit asset-accumulated depreciation ) part I - interest expense, part II - accretion expense 3) write down the inventory of the chemicals (bad for loan because it will reduce i nventory value) now manufacturing chemicals -- choice -- variable vs. absorption costing (prefer full costing from company to get higher inventory value, must clarify from bank whether they can use this), and then FIFO/average cost 4) only research would have to be expensed (training costs, relocation costs, advertising costs, general start up are not a llowed to be capitalized) key criteria for capitalizing development costs is proving that there is a comme rcial market internal usefulness --> intend to use the technology when it's completed in part I - must capitalize in part II - may capitalize or expense every time you can capitalize something, if it has a limited lifespan, talk abou t amortization might as well expense, it's easier and reflects cash flows better, doesn't reall y affect any of the bank's objectives 5) joint control --> PI and BEI must have unanimous consent for all decisions fo r PEI part I - equity method --> exposure draft that will get rid of proportionate con solidation, makes more sense on an ongoing basis part II - equity, proportionate, cost if private, or fair value if public say why you don't want to use proportionate consolidation equity method
More Less

Related notes for ACTG 3110

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.