Assignment Details and Rubric GEL 1.2: Demonstrate college-level communication through the…
Assignment Details and Rubric
GEL 1.2: Demonstrate college-level communication through the composition of original
materials in Standard English.
Assignment Directions:
In the study of accounting it is important to have the necessary skills to use electronic
libraries and databases for research purposes.
Professional Research
Students will complete the “Bridge to the Profession: Professional Research” case
scenario found on p. 77 of the Wiley text. Students will submit a written Assignment
addressing the required prompts.
BRIDGE TO THE PROFESSION
Professional Research: FASB Codification
Wie Company has been operating for just 2 years, producing specialty golf equipment
for women golfers. To date, the company has been able to finance its successful
operations with investments from its principal owner, Michelle Wie, and cash flows
from operations. However, current expansion plans will require some borrowing to
expand the company’s production line.
As part of the expansion plan, Wie will acquire some used equipment by signing a
zero-interest- bearing note. The note has a maturity value of $50,000 and matures in 5
years. A reliable fair value measure for the equipment is not available, given the age
and specialty nature of the equipment. As a result, Wie’s accounting staff is unable to
determine an established exchange price for recording the equipment (nor the interest
rate to be used to record interest expense on the long-term note). They have asked
you to conduct some accounting research on this topic.
Instructions
If your school has a subscription to the FASB Codification, go to
http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following.
Provide Codification references for your responses.
(a) Identify the authoritative literature that provides guidance on the zero-interest-
bearing note. Use some of the examples to explain how the standard applies in this
setting.
(b) How is present value determined when an established exchange price is not
determinable and a note has no ready market? What is the resulting interest rate
often called?
(c) Where should a discount or premium appear in the financial statements? What
about issue costs?
Case Scenario:
Your aunt recently received the annual report for a company in which she has
invested. The report notes that the statements have been prepared in accordance
with “generally accepted accounting principles.” She has also heard that certain terms
have special meanings in accounting relative to everyday use. She would like you to
explain the meaning of the terms she has come across related to accounting.
Go to http://www.fasb.org and access the FASB Concepts Statements and respond to the following
items. (Provide paragraph citations.) When you have accessed the documents, you can use the search
tool in your Internet browser.
a) How is “materiality” defined in the conceptual framework?
b) The concepts statements provide several examples in which specific quantitative materiality
guidelines are provided to firms. Identify at least two of these examples. Do you think materiality
guidelines should be quantified? Why or why not?
c) The concepts statements discuss the concept of “articulation” between financial statement elements.
Briefly summarize the meaning of this term and how it relates to an entity's financial statements.
