Case Study
Student’s Name:
NOTE: The project will be done using CONNECT – The student will be provided feedback (once) on cases submitted by the due date. It is the student’s responsibility to send the Instructor an email – shayes@vbgov.com informing them that their chapter cases are ready for review (worth 3 pts.) (All cases in the chapter must be completed before the Instructor will review the cases) are ready for review. No cases will be reviewed past the required submission date.
Communication Case 3–1
A first-year accounting student is confused by a statement made in a recent class. Her instructor stated that the assets listed in the balance sheet of the IBM Corporation include computers that are classified as current assets as well as computers that are classified as noncurrent assets. In addition, the instructor stated that investments in marketable securities of other corporations could be classified in the balance sheet as either current or noncurrent assets.
Required:
Explain to the student the distinction between current and noncurrent assets pertaining to the IBM computers and the investments in marketable securities.
Answer:
Balance sheets are usually arranged in a particular order whereby financial statement elements are categorized in subgroups. This arrangement facilitates review of the balance sheet information by interested parties. The categories (or subgroups) included in the classified balance sheet may be as follows: Assets | Liabilities and Equity | Current assets: Cash Accounts Receivable Notes Receivables Prepaid AssetsNon-current Assets: Long-term Investments Property, Plant and Equipment Intangible Assets | Current Liabilities: Accounts Payable Accrued Expenses Customer Deposits Current Maturities of Long-term DebtLong-term Liabilities: Bank Loan Deferred Tax LiabilityOwner 's (or Shareholder 's) Equity |
Of course, other categories may be presented on the balance sheet. For example, a category called
NOTE: The project will be done using CONNECT – The student will be provided feedback (once) on cases submitted by the due date. It is the student’s responsibility to send the Instructor an email – shayes@vbgov.com informing them that their chapter cases are ready for review (worth 3 pts.) (All cases in the chapter must be completed before the Instructor will review the cases) are ready for review. No cases will be reviewed past the required submission date.
Communication Case 3–1
A first-year accounting student is confused by a statement made in a recent class. Her instructor stated that the assets listed in the balance sheet of the IBM Corporation include computers that are classified as current assets as well as computers that are classified as noncurrent assets. In addition, the instructor stated that investments in marketable securities of other corporations could be classified in the balance sheet as either current or noncurrent assets.
Required:
Explain to the student the distinction between current and noncurrent assets pertaining to the IBM computers and the investments in marketable securities.
Answer:
Balance sheets are usually arranged in a particular order whereby financial statement elements are categorized in subgroups. This arrangement facilitates review of the balance sheet information by interested parties. The categories (or subgroups) included in the classified balance sheet may be as follows: Assets | Liabilities and Equity | Current assets: Cash Accounts Receivable Notes Receivables Prepaid AssetsNon-current Assets: Long-term Investments Property, Plant and Equipment Intangible Assets | Current Liabilities: Accounts Payable Accrued Expenses Customer Deposits Current Maturities of Long-term DebtLong-term Liabilities: Bank Loan Deferred Tax LiabilityOwner 's (or Shareholder 's) Equity |
Of course, other categories may be presented on the balance sheet. For example, a category called