Questions from Financial Reporting

Q: One of the practical expedients included in ASC Topic 606 relates to

One of the practical expedients included in ASC Topic 606 relates to retroactive application of the standard when there is variable consideration. Generally, firms must revise their estimates of the a...

Q: What is a debt covenant? Why do lenders include them in

What is a debt covenant? Why do lenders include them in loan agreements? Why do borrowers agree to include covenants in loan agreements?

Q: Suppose you and two friends each invested $100,000 in

Suppose you and two friends each invested $100,000 in an oil and gas partnership. The general partner, Huge Gamble, Inc., invests no cash but makes all operating decisions for the partnership, includi...

Q: Krafty Kris, Inc., discovered the following errors after the 2017

Krafty Kris, Inc., discovered the following errors after the 2017 financial statements were issued: a. A major supplier shipped inventory valued at $8,550 to Krafty Kris on consignment. This merchandi...

Q: For each of the following independent scenarios, determine whether Van Allen

For each of the following independent scenarios, determine whether Van Allen Corporation is a principal or an agent for purposes of applying the 5-step revenue recognition model. 1. Van Allen is a bro...

Q: What are the advantages of loan agreements that contain covenants tied to

What are the advantages of loan agreements that contain covenants tied to accounting numbers? Are there any disadvantages? Explain.

Q: The debt covenants in TCBY’s loan agreement do not mention explicitly the

The debt covenants in TCBY’s loan agreement do not mention explicitly the accounting methods the company must use when it prepares financial statements for submission to the lender. Why don’t lenders...

Q: Sunshine Groceries operates a rapidly expanding chain of retail grocery stores in

Sunshine Groceries operates a rapidly expanding chain of retail grocery stores in Europe. The company has grown from 10 stores in 2015 to 50 stores in 2017 and plans to add at least 10 stores each yea...

Q: McDonald’s, the global fast-food restaurant giant, was sued

McDonald’s, the global fast-food restaurant giant, was sued in 2009 by a former employee who said she was dismissed because, as a senior director of executive compensation, she objected to a complex s...

Q: What are regulatory costs, and why are they important for understanding

What are regulatory costs, and why are they important for understanding a company’s financial reporting choices?