Re: Research Memo
This memo provides the answers to the Questions CE 10-1 through 4. CE 10-1
Capitalize: Capitalize is used to indicate that the cost would be recorded as the cost of an asset. That procedure is often referred to as deferring a cost, and the resulting asset is sometimes described as a deferred cost.
Nonmonetary Asset: Nonmonetary assets are assets other than monetary ones. Examples are inventories; investments in common stocks; property, plant, and equipment.
Nonreciprocal Transfer: Nonreciprocal transfer is a transfer of assets or services in one direction, either from an entity to its owners (whether or not in exchange for their ownership interests) or to another entity, or from owners or another entity to the entity. An entity's reacquisition of its outstanding stock is an example of a nonreciprocal transfer.
1. An unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities 2. Must be voluntary
3. Nonreciprocal transfer by another entity acting other than as an owner * Those characteristics distinguish contributions from exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately equal value; from investments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its owners; and from other nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. * In a contribution transaction, the value, if any, returned to the resource provider is incidental to potential public benefits. In an exchange transaction, the potential public benefits are secondary to the potential proprietary benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or...