To: ACCT- 210-03, Spring 2013 Consulting Groups
From: Mystery Client
Subject: Request for Accounting Advice
We are a group of entrepreneurs interested in forming a business, and we need advice regarding several issues. Your consulting group comes highly recommended, and we want to enlist your services. The known issues we face include the following:
1. We are unsure of how we should organize our business. What are our options? What are the advantages and/or disadvantages for each option? 2. Our business will include making sales on credit. How and when will we recognize revenue? What are the potential costs associated with making sales on credit? How and when should these costs be recognized? 3. We will also buy and then resell products both online and through traditional storefront business centers. What will be the best way for our company to account for our inventory? What are our options? If we intend to operate in the international market, could this make a difference? 4. We will also own several buildings, some land, and quite a bit of equipment. How should these be valued on our financial reports? We have heard about something called depreciation; what is meant by this? How will depreciation affect the reported value of our assets? What are our options for recognizing depreciation?
Please provide us with a written report from your firm that addresses each of the issues identified above. The groups who will be providing us with capital require that all accounting information be supported by appropriate references to technical accounting standards.
Assignment Requirements: Use your Quiz Group
Each group member should review the FASB Accounting Standards Codification® online resource prior to developing responses to the case-related issues. The Codification can be accessed at http://aaahq.org/ascLogin.cfm.The associated username and password are:
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