Process
c. The company reported line costs of $14,739 million for 2001. The journal entry for these transactions is debit to Line Costs Expense for $14,739 million and a credit to Cash for the
The adjustment labeled “Capitalized interest” relates to the interest that is not expensed but instead is capitalized under Country A GAAP. The adjustment labeled “Depreciation related to capitalized interest” relates to the depreciation of the interest that was capitalized as part of the cost of the asset.…
Two General Accounting employees—Dan Renfroe and Angela Walter—made journal entries in the amount of $150 million and $171 million, respectively, without detailed support. It was noted that this was not out of the ordinary at WorldCom. In your opinion, was this a proper accounting practice? Explain.…
C) Amounts on Cash Flow Statement for the most recent year that relate to depreciation, gains and sales of property and equipment, and purchases and sale of property of equipment is:…
When a business erroneously records expenses as assets, it has violated the measurement issue of A. communication. B. classification. C. valuation. D. recognition.…
Cost principle assets are to be recorded at cost this equals the value which was reciprocated at the time of the attainment. Assets in the United States like land and buildings appreciate in value over a given period of time these items do not get revalued for future financial reporting.…
c. May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.…
d. Prepare a journal entry to capitalize $225 million of line costs in quarter 3. What is the effect on pre-tax operating income for quarter 3? DR - Cash and Cash Equivalent $225…
Generally it is recorded as the asset but as it does not have any economic future benefits to the company and it occurs only once so it should be treated as intangible assets. Under paragraph 69 of AASB 138, intangible assets does not allow the initial cost to be treated as an asset which needs to be treated as an expense and should be written off immediately as an expense.…
The definition of assets is in FASB Concept Statement 6, paragraph 25: Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.…
Expenses are all the costs that a business or organization has to pay out, this includes…
When companies merge and acquire many smaller companies with different computer systems, different management styles, and different cultures the transition can be a rocky one. Differences in corporate cultures and values are often one of the major grounds for mergers to fail (Tichy, 1997). In 1999 WorldCom made a concerted effort to purchase Sprint, however regulators in the U.S. were concerned with the formation of a large telecom company. When this merger was unsuccessful it was noted that the company needed focus from its leadership.…
Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes Objective 2.1 1) Cost objects include: A) products B) customers C) departments D) All of these answers are correct. Answer: D Diff: 2 Terms: cost object Objective: 1 AACSB: Reflective thinking 2) Actual costs are: A) the costs incurred B) budgeted costs C) estimated costs D) forecasted costs Answer: A Diff: 1 Terms: actual costing Objective: 1 AACSB: Reflective thinking 3) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is: A) cost accumulation B) cost assignment C) cost tracing D) conversion costing Answer: B Diff: 1 Terms: cost assignment Objective: 1 AACSB: Reflective thinking 4) In order to make decisions, managers need to know: A) actual costs B) budgeted costs C) both costs D) neither cost Answer: C Diff: 1 Terms: budgeted costs Objective: 1 AACSB: Ethical reasoning…
1) Once cost is established for a capital asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.…
If expense creates a liability, it means cash has not been used for the expense, therefore increases should be added back. Opposite applies when a decrease in liabilities occurs. If current assets decrease, it means that expenses have caused the decrease; therefore should add back the decrease as Cash has not been used for the…
Clearly, there have been cases where management knowingly deceived the auditors. Then there seem to be other instances where the accounting treatment envelope was pushed just a bit too far. In the case of Enron, David B. Duncan, the former Andersen partner in charge of the Enron audit who was the government's chief witness in the trial against Arthur Andersen, stood behind the decisions that resulted in the widespread use of off-balance sheet financing in the reporting of certain partnership transactions. (3) Certainly he carried out the breadth of the related accounting pronouncements to the extent allowable. Off-balance sheet financing is a technique generally used by companies entering into a joint venture whereby both invest in a project Monies borrowed to get the venture up and running appear on the newly formed entity's books. This is a strategy sanctioned by accounting pronouncements so long as proper disclosures are made.…