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Please answer the following questions. Just number your answers according to the questions asked.
Do not include the questions in the paper please leave them out.
1) Underwood Company maintains its accounting records using iGAAP. The company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $15,000 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 10% per year. What amount will the corporation receive at the time the lease expires?
2)Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP with respect to the accounting for cash and receivables.
3) Walton Company, which uses iGAAP, has a note receivable with a carrying value of $30,000 at December 31, 2010. On January 2, 2011, the borrower declares bankruptcy, and Walton estimates that only $25,000 of the note will be collected. Briefly describe the accounting for the loan subsequent to the bankruptcy, assuming Walton estimates that more than $25,000 can be repaid.
4) Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP with respect to the accounting for inventories.
5) Explain the main obstruction to achieving convergence in the area of list accounting.
6) A central issue in reporting on operating segments of a business enterprise is the determination of which segments are reportable.
Instructions
1. What are the tests to determine whether or not an operating segment is reportable?
2. What is the test to determine if enough operating segments have been separately reported upon, and what is the guideline on the maximum number of operating segments to be shown?
7) Interim financial reporting has become an important topic in accounting. There has been considerable discussion as to the proper method of reflecting results of operations at interim dates. Accordingly, the Accounting Principles Board issued an opinion clarifying some aspects of interim financial reporting.
Instructions
(a) Discuss usually how income should be recognized at interim dates and specifically how revenue should be documented for industries subject to large cyclic fluctuations in income and for long-term contracts using the percentage-of-completion method at annual reporting dates.
(b) Discuss in general how product and period costs should be documented at interim dates. Also discuss how inventory and cost of goods sold may be afforded special accounting treatment at interim dates.
(c) Discuss how the stipulation for income taxes is computed and reflected in interim financial statements.
8) Nicole, Inc. uses iGAAP for its external financial reporting. During 2009, an employee of
The company was injured in the factory. Discussions with corporate attorneys resulted in a
Determination that the company would be required to pay between $1,000,000 and
$2,000,000 to settle the injury claim. Nicole, Inc. accrued a contingent liability on
December 31, 2009 for $1,000,000. On February 4, 2011, Nicole, Inc. settled the lawsuit
For $2,200,000. What amount of loss should be reported on the income statement for the
Year ended December 31, 2010 for Nicole, Inc. related to this lawsuit?
9) Bill Novak is working on an audit of an iGAAP client. In his review of the client’s interim reports, he notes that the reports are prepared on a discrete basis. That is, each interim report is viewed as a distinct period. Is this acceptable under iGAAP? If so, explain how that treatment could affect comparisons to U.S. GAAP Company?
10) Bell Inc. took a physical inventory at the end of the year and determined that $650,000 of goods were on hand. In addition, Bell, Inc. determined that $50,000 of goods that were in transit that were shipped f.o.b. shipping were actually received two days after the inventory count and that the company had $75,000 of goods out on consignment. What amount should Bell report as inventory at the end of the year?
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