Client Understanding Paper
When accounting professionals work with clients outside the profession, there is a lessened understanding of the rules and regulations required by the Financial Accounting Standards Board (FASB). Clients will ask questions when they do not understand the reasoning behind the information needed. Adjusting costs, determining capitalization, asset disposal, and goodwill are often harder to understand concepts in accounting and the accountant needs to be able to explain the requirements of the accounting standards codifications (ASC) in relation to the issues the clients ask about. Adjusting lower cost of market inventory on valuation
FASB ASC 330-10-35-1 through FASB ASC 330-10-35-11
When inventory worth is now less than cost, the valuation needs to be adjusted to the lower cost. When the costs change, the organization should adjust the inventory to the current value. This allows for a proper matching of cost and revenues in the financial statements as to not disguise how an organization is currently doing. The price of the inventory is listed at the lower of cost or market.
A loss is recorded when the market price is lower than the original cost of the inventory. This loss is also recorded when inventory shows damage, becomes obsolete, or other reasons that would cause the inventory to have a lesser value than the original cost. This adjustment shows the use that is still in the inventory. When the organization recognizes this loss, the organization counts the loss against revenues in the current period of the discovering of the loss.
The reason the accountancy team needs this information is so the accounting staff can properly recognize the current revenues of the period. The information will lead to a current and proper set of financial statements, as indicated by the rules in the FASB. Capitalizing interest on building construction
FASB ASC 835-20-30-1 through FASB ASC 835-20-30-12
An organization can only capitalize a...
Please join StudyMode to read the full document