April 01, 2013
As a newly hired Staff I there will be a responsibility to analyze the work papers for the organization’s clients. In this situation a client is not clear about why a Staff I is asking for information on adjusting lower of cost or market inventory valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment and requires explanations on these topics. An explanation of each is provided to include sources from accounting websites, Generally Accepted Accounting Principles (GAAP), and accounting pronouncements. In addition to the explanation for each accounting practice there is also an explanation of the impact it will have on the financial statements and examples of calculations to aid with real-world application.
Client Understanding Paper
When beginning a job in the accounting field it is likely that the newly hired staff will be responsible for analyzing the documentation of clients within the organization. If a client becomes confused why certain documents are required to be analyzed explanations will need to be provided to the client for his or her understanding. Within this paper is an explanation of some of the topics a newly hired accountant may encounter when working with clients. These topics cover adjusting lower of cost or market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment. Adjusting Lower of Cost or Market Inventory on Valuation
A requirement of Generally Accepted Accounting Principles (GAAP) is that inventory is recorded at the lower of cost or the market value and is known as Lower of Cost and Market (LCM). This pronouncement is covered under Accounting Research Bulletin No. 43 (ARB). The need for LCM typically occurs because the inventory has become obsolete, it has deteriorated, or the market...