Questions from Financial Accounting

Q: The Fillups Company has been in the business of exploring for oil

The Fillups Company has been in the business of exploring for oil reserves. During 2017, $10 million was spent drilling wells that were dry holes. Under U.S. GAAP, Fillups has the option of accounting...

Q: The proponents of neoclassical, marginal economics (see Chapter 4)

The proponents of neoclassical, marginal economics (see Chapter 4) maintain that mandatory accounting and auditing standards inhibit contracting arrangements and the ability to report on company opera...

Q: In 2002 the SEC investigated Microsoft’s accounting practices that occurred during the

In 2002 the SEC investigated Microsoft’s accounting practices that occurred during the late 1990s. The Commission found that Microsoft typically reported budgeted marketing expenses in its interim rep...

Q: Investors, creditors, and other users of financial statements often argue

Investors, creditors, and other users of financial statements often argue that there should be more transparency in published financial statements. This argument is based, at least to some extent, on...

Q: Snappy Corporation enters into a lease agreement with Long Leasing. Long

Snappy Corporation enters into a lease agreement with Long Leasing. Long requires that the lease qualify as a sale. Snappy can fill this requirement by either guaranteeing the residual value itself or...

Q: In the 1990 discussion memorandum “Distinguishing between Liability and Equity Instruments

In the 1990 discussion memorandum “Distinguishing between Liability and Equity Instruments and Accounting for Instruments with Characteristics of Both,” the FASB presented arguments relating to the pr...

Q: On January 1, 2017, Lani Company entered into a noncancelable

On January 1, 2017, Lani Company entered into a noncancelable lease for a machine to be used in its manufacturing operations. The lease transfers ownership of the machine to Lani by the end of the lea...

Q: Doherty Company leased equipment from Lambert Company. The classification of the

Doherty Company leased equipment from Lambert Company. The classification of the lease makes a difference in the amounts reflected on the balance sheet and income statement of both Doherty and Lambert...

Q: On January 1, prior to the adoption of the FASB’s new

On January 1, prior to the adoption of the FASB’s new lease standard, Borman Company, a lessee, entered into three non-cancelable leases for brand‐new equipment: Lease J, Lease K, and Lease L. None of...

Q: Accounting Standards Update 2014-15 requires management to assess a company’s

Accounting Standards Update 2014-15 requires management to assess a company’s ability to continue as a going concern. This assessment involves the evaluation of whether there are conditions that give...