ACC 201 FINAL df topics
identify some of the issues that pertain to the use of fair value accounting and historical cost as it applies to long-term assets, including both tangible and intangible assets
Fair value accounting is largely for financial assets and liabilities Regarding plant, equipment, and intangible assets, a majority of the companies use fair accounting; thus fair value companies have been known to have a higher asset value on their balance sheets. Fair value is continuously accepted and used by over 100 countries worldwide, and is considered an improved accounting procedure, and is a more realistic, reliable source; in addition, with regards to accounts concerning derivatives and hedges, employee stock options, financial assets, and goodwill impairment testing, historical accounting is conservative and reliable The U.S. GAAP often emphasizes on historical accounting due to the accuracy; however, it is also viewed as indicative of the current values, and often considered as taking the view that value results from the purchase of inputs, and consequently selling the products above the actual cost
The Field Detergent Company sold merchandise to the Abel Company on June 30, 2016. Payment was made in the form of non interest-bearing note requiring Abel to pay $85,000 on June 30, 2018. Assume that a 10% interest rate properly reflects the time value of money in this situation Calculate the amount at which Filed should record the note receivable and corresponding sales revenue on June 30, 2016
PV= $85,000 (.82645)= $70,248= Note/revenue Present value of $1: n=2,i= 10%
In the United States, the inventory method Last-In, First-Out (LIFO), is in widespread use. If the United States adopts IFRS, LIFO will not be allowed to be used by companies reporting under IFRS. If you were a chief financial officer, and your company is using LIFO, please outline to your board of directors, in 300 words or more, the possible impact of changing from LIFO to another IFRS-approved inventory method.
effect the tax method of reporting inventory enormous increase the income tax liabilities caused by the accelerated income recognition, might possibly increase the net income, by the accelerated figures alone. LIFO method has the most recent cost of the product purchased and the first cost expensed as the cost of goods sold, which means that the last cost of the item will be the reported inventory cost. One main issue is the tax reduction that LIFO does provide to a business.
