Questions from Financial Accounting

Q: Accountants generally follow the lower of cost or market (LCM)

Accountants generally follow the lower of cost or market (LCM) basis of inventory valuations. Required: a. Define cost as applied to the valuation of inventories. b. Define market as applied to the va...

Q: On December 31, 2016, Carme Company had significant amounts of

On December 31, 2016, Carme Company had significant amounts of accounts receivables as a result of credit sales to its customers. Carme uses the allowance method based on credit sales to estimate bad...

Q: At the end of the first year of operations, Key Company

At the end of the first year of operations, Key Company had a current equity securities portfolio classified as available‐for‐sale securities with a cost of $500,000 and a fair value of $550,000. At t...

Q: Duffner Corporation is a medium-sized manufacturer of paperboard containers and

Duffner Corporation is a medium-sized manufacturer of paperboard containers and boxes. The corporation sponsors a noncontributory, defined benefit pension plan that covers its 250 employees. Sid Caesa...

Q: Specific identification is sometimes said to be the ideal method for assigning

Specific identification is sometimes said to be the ideal method for assigning cost to inventory and to cost of goods sold. Required: a. List the arguments for and against the foregoing statement. b....

Q: The theoretical valuation of receivables is the present value of expected future

The theoretical valuation of receivables is the present value of expected future cash flows. However, trade receivables are not discounted owing to materiality considerations; hence, their net realiza...

Q: Short‐term deferrals (prepaids and unearned revenues) are classified

Short‐term deferrals (prepaids and unearned revenues) are classified as current assets and current liabilities. As such, they are included in working capital. Required: a. Some argue that prepaids wil...

Q: FASB ASC 320 (generally effective until 2018) requires companies to

FASB ASC 320 (generally effective until 2018) requires companies to assign their portfolio of investment securities into 1. Trading securities 2. Securities available for sale 3. Held‐to‐maturity secu...

Q: Recent pronouncements of the FASB indicate that the FASB is moving away

Recent pronouncements of the FASB indicate that the FASB is moving away from historical cost accounting toward the use of current, or fair, value. In your debate on this issue, support your position w...

Q: APB Opinion No. 20 was concerned with accounting changes. SFAS

APB Opinion No. 20 was concerned with accounting changes. SFAS No. 154 (see FASB ASC 250) changes the accounting treatment for some accounting changes. Required: a. Define, discuss, and illustrate eac...