PLEASE MAKE SURE TO ANSWER ALL! THERE IS MORE THEN ONE QUESTION.2.3 Hazardous Chemical Leak A manufacturing plant has leaked hazardous chemicals into a pond on the plant’s property. The leaking of these chemicals violates state environmental protection regulations. What accounting is required for this leakage? Does the government need to be aware of the leak before the company must account for the cost of remediation?2.5 Goodwill Accounting Alternative An “accounting alternative” is available within the Goodwill topic of the Codification (ASC 350-20), specifically as it relates to the subsequent measurement of goodwill. Locate this alternative, and explain: 1) What measurement approach does the accounting alternative permit? 2) What types of companies are eligible to apply this accounting alternative, and where did you locate this information? 3) How does the accounting alternative differ from the measurement requirements for companies that do not (or cannot) elect this treatment?; 4) What was the effective date for this guidance, and where did you locate this information?2.7 Early Payment Discount Jones Equipment is a private company that sells and installs HVAC systems. Jones offers payment terms of 2/10, n/30, where customers making payment within 10 days of installation will receive a discount of 2% off the purchase price or must pay the full balance due within 30 days. Jones has just received payment from a new customer who paid within the 10-day window and is thus entitled to the 2% discount. The gross sales price of the equipment and installation, before discount, was $10,000. This discount will not result in a loss to Jones on the sale of the product and service. Jones needs your help to determine when the 2% early-payment discount should be recognized and how it should be recorded—for example, as a reduction in revenue or as a cost of sales?2.9 Purchase of a Vineyard Your client has just purchased land onwhich it intends to build a vineyard. In doing so, theclient incurs the following costs: 1) land surveys; 2)costs of leveling the land; 3) installation of fencing;4) instal-lation of a sprinkler system. Refer to industryguidance in the Codification to determine whetherthese costs shouldbe capitalized and whether there are restrictionssurrounding the capitalization period. Also, educateyour client onhow the Codification classifies these different typesof costs. Finally, locate one other example of a costthat may becapitalized and explain any restrictions on the periodduring which the cost may be capitalized2.9 Purchase of a Vineyard Your client has just purchased land on which it intends to build a vineyard. In doing so, the client incurs the following costs: 1) land surveys; 2) costs of leveling the land; 3) installation of fencing; 4) instal-lation of a sprinkler system. Refer to industry guidance in the Codification to determine whether these costs should be capitalized and whether there are restrictions surrounding the capitalization period. Also, educate your client on how the Codification classifies these different types of costs. Finally, locate one other example of a cost that may be capitalized and explain any restrictions on the period during which the cost may be capitalized5. For those question: identify the ASC reference down at the paragraph level of detail would you will look for the guidance of each issue 5.1For the next set of questions, identify the ASC reference—down to the paragraph level of detail—that you would look to for guidance on each issue5.2 Guidance on whether equity spinoff transaction guidance in the Codification applies to nonpublic entities.5.3 Criteria for determining whether a lease should be classified as a finance lease or an operating lease.5.4 Criteria for determining whether information about an operating segment should be reported separately (i.e., as a reportable segment) in the notes to a company’s financial statements.5.5 SEC guidance describing required disclosures in the event of a LIFO liquidation, an inventory concept.5.6 Guidance stating that the issuance of stock after the balance sheet date should be treated as an nonrecognized subsequent event5.7 For number (5.6) above, describe the browse path you used (or would use) to locate this guidance.
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