If the company decides to purchase the new equipment for Larson, a mistake has been made somewhere, because equipment bought only two years ago is being scrapped. How did this mistake take place?
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If the company decides to purchase the new equipment for Larson, a mistake has been made somewhere, because equipment bought only two years ago is being scrapped. How did this mistake take place?
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- Which of the following statements is false with respect to replacement analysis? a. Functional obsolescence is the only type of obsolescence that should be considered in a replacement analysis. b. A changing external environment can lead to the need for a replacement analysis. c. Companies frequently use equipment long after a replacement would be economically justified. d. In a replacement analysis, the current asset is referred to as the defender.Ethical Considerations. In the process of closing thecompany books, you encounter a problematic transaction. One of the company’s customers was invoicedtwice for the same project materials, resulting in a$1,000 overcharge. You immediately notify the controller, whose response is, “Let it go, it happens often.It’ll probably balance out on some future transaction.”What should you do now?6) Harriet has been reviewing the accounting system for her company and she is very concerned about the accounting for spoilage. It appears that spoilage is accounted for only at the end of the processing cycle. While this concept is acceptable in general, Harriet believes that a better method can be found to properly account for the spoilage when it occurs. She believes that there must be something better than the weighted-average method of accounting for spoilage. She would like the company to use a method that provides closer tracking of the spoilage with the accounting for the spoilage.Required:Discuss the problems Harriet is having with the accounting system.
- Household Solutions manufactures kitchen storage products. During the year, the company became aware of potential costs due to (1) a recently filed lawsuit for patent infringement for which the probability of loss is remote and damages can be reasonably estimated, (2) another recently filed lawsuit for food contamination by the plastics used in Household Solutions’ products for which a loss is probable but the amount of loss cannot be reasonably estimated, and (3) a new product warranty that is probable and can be reasonably estimated. Which, if any, of these costs should be accrued?Decorative Concrete produces a concrete overlay for residential and commercial concrete flooring. Customers have complained that one of the products results in excessive cracking. The likelihood the company will incur a loss on this product is probable and the amount of the loss is estimated to be somewhere between $17 and $5 million Required: 1. Should this contingent liability be reported, disclosed in a note only, or both? 2. What loss, if any, should Decorative Concrete report in its income statement? 3. What liability, if any, should Decorative Concrete report in its balance sheet? 4. What journal entry, if any, should be recorded? Complete this question by entering your answers in the tabs below. Requidad 1 Required 2 Required 3 Required 4 Should this contingent liability be reported, disclosed in a note only, or both? Should this contingent liability be reported, disclosed in a note only, or both? Required t Required 2 >The plant manager of a manufacturing firm suggested in a conference of the company’s executives that accountants should speed up depreciation on the machinery in the finishing department because improvements were rapidly making those machines obsolete, and a depreciation fund big enough to cover their replacement is needed. Discuss the accounting concept of depreciation and the effect on a business concern of the depreciation recorded for plant assets, paying particular attention to the issues raised by the plant manager.
- How could Pascal and Super Tech have identified and addressed this risk? What should Pascal do now? Case - Pascal is the manager of software development for Super Tech. He discovered that Bill, the lead software designer, has announced that he is leaving the company next week. Pascal finds that Bill has accepted a job with Super Tech main competitor. Pascal fear that in his new job, Bill will use technology developed while at the company and disclose the identities of key customers.Robert Hamilton was hired 6 months ago as the controller of a small oil and gas exploration and development company, Gusher, Inc., headquartered in Beaumont, Texas. Before working at Gusher, Hamilton was the controller of a larger petroleum company, Eureka Oil Company, based in Dallas.The joint interest billing and fixed asset accounting systems of Gusher are outdated, and frequent processing problems and errors have been occurring. Hamilton immediately recognized these problems and informed the president, Mr. Barton, that it was crucial to install a new system. Barton concurred and met with Hamilton and Sally Jeffries, the information systems senior manager. Barton instructed Jeffries to make the new system a top priority. Basically, he told Jeffries to deliver the system to meet Hamilton’s needs as soon as possible.Jeffries left the meeting feeling overwhelmed because the IT department is currently working on two other very big projects, one for the production department and the…Depreciation continues to be one of the most controversial, difficult, and important problem areas in accounting. Required: 1. Explain the conventional accounting concept of depreciation accounting, and discuss its conceptual merit with respect to (a) the value of the asset, (b) the amount(s) expensed, and (c) the discretion of management in selecting the method. 2. Answer the following: a. Explain the factors that should be considered when applying the conventional concept of depreciation to the determination of how the value of a newly acquired computer system should be assigned to expense for financial reporting purposes. (Ignore income tax considerations for this case.) b. What depreciation methods might be used for the computer system?
- The Donovan Co. is nearing completion of a construction contract. The work has not gone to plan due to the issues outlined below: 1. The client requested a variation in the contract by requiring new security devices to be fitted, at an additional cost to Donovan of P1,00,000. The client has accepted reponsibilty for these additional costs even though they were not originally agreed. 2. Donovan has carried out additional work on the contract as there had been building errors. This cost P2,500,000 and the client refuses to accept responsibility. Which, if either, of the above issues should be included in contract revenue, according to IAS 11, Construction Contracts? a. Neither issue b. Issue (1) only c. Issue (2) only d. Both issue (1) and issue (2)Matt Holmes recently joined Klax Company as a staff accountant in the controller’s office. Klax Company provides warehousing services for companies in several midwestern cities. The location in Dubuque, Iowa, has not been performing well due to increased competition and the loss of several customers that have recently gone out of business. Matt’s department manager suspects that the plant and equipment may be impaired and wonders whether those assets should be written down. Given the company’s prior success, this issue has never arisen in the past, and Matt has been asked to conduct some research on this issue. Instructions If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Provide Codification references for your responses. a. What is the authoritative guidance for asset impairments? Briefly discuss the scope of the standard (i.e., explain the types of transactions to which the standard applies). b. Give several examples of…Which of the following gains or losses would Organic Foods account for as unusual and/or infrequent? a. A hurricane destroys rainwater tanks that result in a loss for Organic Foods. b. The used vehicle market is weak and Organic Foods is forced to sell its used delivery truck at a loss. c. Organic Foods owns an organic farm in Venezuela that is seized by the government. The company records a loss.