Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 2C
To determine
Identify whether employees are considered assets in financial statement and give reason. Describe the sense that southwest considers its employees to be assets.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
18. The following are examples of corporate expenses deductible from gross income, except one
a. Expenses paid to an advertising firm in order to create a favorable image for the corporation
b. Contribution to drum up business like contribution of softdrinks to barrio fiesta
c. Premiums on life insurance covering the life of an employee if the beneficiary is his heir
d. Representation expenses designed to promote business
2. Consider yourself the financial controller of Alpha. The managing director, who is not an accountant, has recently attended a seminar and has raised the following questions for you concerning issues discussed at the seminar:
The notes to the financial statements say that plant and equipment is held under the ‘cost model’. However, property which is owner occupied is revalued annually to fair value. Changes in fair value are sometimes reported in profit or loss but usually in ‘other comprehensive income’. Please explain how all these treatments comply with relevant reporting standards. The manager director also added “I wonder how the revaluation model can affect the information relevancy and reliability”.
“When I looked at the note detailing the intangible assets we include in our consolidated statement of financial position, I noticed that several brand names associated with subsidiaries we acquired recently were included in this figure. Therefore, I also expected to see a…
You are a member of the board of directors of ABC Co. Your company acquired a building to be held solely for rentals. You are tasked in selecting an appropriate accounting policy for the building. In this regard, you will most likely refer to which of the following standards? PAS 17
PAS 39
PAS 40
PAS 41
Chapter 1 Solutions
Principles of Accounting
Ch. 1 - What makes accounting a valuable discipline?Ch. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - How are expenses and withdrawals similar, and how...Ch. 1 - How do generally accepted accounting principles...Ch. 1 - Why do managers in governmental and not-for-profit...Ch. 1 - Prob. 1SECh. 1 - Match the descriptions that follow with the...Ch. 1 - Determine the amount missing from each accounting...Ch. 1 - Use the accounting equation to answer each...
Ch. 1 - Use the accounting equation to answer each...Ch. 1 - Prob. 6SECh. 1 - Use the following accounts and balances to prepare...Ch. 1 - Randall Company engaged in activities during the...Ch. 1 - Prob. 9SECh. 1 - Prob. 10SECh. 1 - Prob. 1EACh. 1 - Financial accounting uses money measures to gauge...Ch. 1 - You have been asked to compare the sales and...Ch. 1 - Use the accounting equation to answer each...Ch. 1 - Daiichi Companys total assets and liabilities at...Ch. 1 - 1. Indicate whether each of the following accounts...Ch. 1 - Listed in random order are some of Oxford Services...Ch. 1 - Dukakis Company had the following accounts and...Ch. 1 - Prob. 9EACh. 1 - Prob. 10EACh. 1 - Complete the financial statements that follow by...Ch. 1 - Prob. 12EACh. 1 - Match the terms that follow with the appropriate...Ch. 1 - Prob. 14EACh. 1 - Prob. 15EACh. 1 - Prob. 1PCh. 1 - The following three independent sets of financial...Ch. 1 - Fuel Designs financial accounts follow. The...Ch. 1 - The accounts of Frequent Ad, an agency that...Ch. 1 - Athena Riding Clubs financial statements follow.Ch. 1 - A list of financial statement items follows....Ch. 1 - Three independent sets of financial statements...Ch. 1 - Prob. 8APCh. 1 - Prob. 9APCh. 1 - Aqua Swimming Clubs financial statements follow....Ch. 1 - Costco Wholesale Corporation is Americas largest...Ch. 1 - Prob. 2CCh. 1 - Prob. 3CCh. 1 - Prob. 4CCh. 1 - Refer to the CVS annual report and the financial...
Knowledge Booster
Similar questions
- Sam Short, CFA, has recently joined the investment management firm of Green, Spence, and Smith (GSS). For several years, GSS has worked for a broad array of clients, including employee benefit plans, wealthy individuals, and charitable organizations. Also, the firm expresses expertise in managing stocks, bonds, cash reserves, real estate, venture capital, and international securities. To date, the firm has not utilized a formal asset allocation process but instead has relied on the individual wishes of clients or the particular preferences of its portfolio managers. Short recommends to GSS management that a formal asset allocation process would be beneficial and emphasizes that a large part of a portfolio’s ultimate return depends on asset allocation. He is asked to take his conviction an additional step by making a proposal to executive management.a. Recommend and justify an approach to asset allocation that could be used by GSS.b. Apply the approach to a middle-aged, wealthy…arrow_forwardThe annual reports of public corporations normally include a section on Management Discussion and Analysis (MD&A). Please examine the MD&A section of your selected company and let us know about any comments included regarding management's assessment of the company's liquidity and the availability of capital to the company. Also, please select one of the profitability ratios and calculate or find it for your company. Please let us know what this profitability ratio indicates about the financial health of your company.arrow_forwardPotter and Partners are a chartered accounting firm with offices in capital cities in most states. The head of the business development department is seeking to grow the firm’s revenue from non-audit services. Required: What non-audit services could a chartered accounting firm provide to its listed company clients? Explain why a company would buy these services from its audit firm instead of another consulting firm.arrow_forward
- Maurice Ltd. is a private Canadian company. It has been preparing its financial statements in accordance with IFRS but is now considering a change to ASPE. For its Year 6 financial statements, Maurice reported the following in accordance with IFRS: Net income $3,700 Total debt $25,900 Current assets 14,300 Total shareholders’ equity 22,200 Current liabilities 11,400 You have identified the following three areas in which Maurice’s accounting policies have differences between IFRS and ASPE: Impairment losses Convertible bonds Income taxes The controller at Maurice provides the following information with respect to each of these accounting differences and indicates that the Year 6 financial statements reflect the proper accounting for these items in accordance with IFRS: Impairment Losses Impairment tests were performed on the company’s equipment for Years 5 and 6 with the following results: December 31, Year 5 December 31, Year 6 Cost of…arrow_forwardThe following article appeared in the Wall Street Journal. Washington—The Securities and Exchange Commission staff issued guidelines for companies grappling with the problem of dividing up their business into industry segments for their annual reports. An industry segment is defined by the Financial Accounting Standards Board as a part of an enterprise engaged in providing a product or service or a group of related products or services primarily to unaffiliated customers for a profit. Although conceding that the process is a “subjective task” that “to a considerable extent, depends on the judgment of management,” the SEC staff said companies should consider … various factors … to determine whether products and services should be grouped together or reported as segments. Instructions What does financial reporting for segments of a business enterprise involve? Identify the reasons for requiring financial data to be reported by segments. Identify the possible disadvantages of requiring…arrow_forwardGabel Company spent money to train its employees so that they can be productive workers. Such expenditures are often referred to as investments in human capital. Required:A. Do you think that Gabel Company’s trained employees meet the definition of an asset? Explain. In your answer, discuss the characteristics of an asset and whether you think they meet each of those characteristics.B. Most accountants would say that human capital is valuable but that it is difficult, or even impossible, to measure the value of human capital. Given that you cannot determine an amount to place a value on the Gabel Company’s employees, but you think that they are assets, what would SFAC No. 5 tell you to do? Should you report them as an asset in the company’s balance sheet? Explain.C. If a value can be estimated for Gabel Company’s trained employees, I.) Would that value be more relevant or more reliable to a prospective investor? Explain. II.) Would the company’s assets reported in its balance…arrow_forward
- Select from the following list the qualitative characteristic of useful information that best describes each of the following items: 1. 2. 3. 4. 5. In order to keep the financial statements simple, Carlaw Consulting shows three items on its income statement: Revenue, Expenses and Net income. The financial statements of Belbach Industries are audited on an annual basis by public accountants. Rydell Corporation is contemplating an investment in Fryan Ltd. Rydell has requested a copy of the company's year-end financial statements to assist them in their investment decision. Chemical Reaction Inc. operates in both the US and Canada and restates its US financial statements according to Canadian GAAP for its Canadian investors. The Controller for Location Inc. emphasizes that factual and unbiased information prevails in the preparation of the company financial statements. Predictive value Confirmatory value Materiality Completeness Neutrality Freedom from error Verifiability Comparability 2arrow_forwardMthembu is a financial accounting student at Mancosa involved in an internship at Inca Financial Company. The supervisor want to test his knowledge of the financial statements and asked him to identify which of the statements below is false? OA. The financial result of an enterprise is a measure of the profit or loss that the enterprise made over a certain period of time O B. Assels are the possessions of a business that have monetary value OC. A Statement of Comprehensive income shows the financial position of an entity on a certain date O D. Liabilities are the obligations of an entityarrow_forwardGlaxoSmithKline is a global pharmaceutical and consumer health-related products company located in the UnitedKingdom. The company prepares its financial statements in accordance with International Financial ReportingStandards.Required:1. Use the Internet to locate GlaxoSmithKline’s most recent annual report. The address is www.gsk.com/en-gb/investors/. Locate the significant accounting policies disclosure note.2. How does the company value its property, plant, and equipment? Does the company have any other optionsunder IFRS for valuing these assets? How do these options differ from U.S. GAAP?3. What are the company’s policies for possible reversals of impairment losses for goodwill and for othernon-current assets? How do these policies differ from U.S. GAAP?arrow_forward
- Consumer Ltd, a retail company, started its operation on 1 January 2021. You have been appointed as the Chief Financial Officer of the company. To make its name familiar to the consumers, Consumer Ltd spent millions of dollars on advertising in the first year. The company CEO was worried about the negative impact of the advertising expenditure on profit of the first year. He argued for the capitalisation of the advertising expenditure as an intangible asset on the argument that advertising helps consumers to familiarised themselves with the name of the company, and the company will benefit from this. Required Evaluate whether capitalising the advertising expenditure would be the correct accounting policy under NZ IAS 38.arrow_forwardYou are conducting an accounting research project for your manager. Your manager has asked you to determine the appropriate U.S. GAAP that specifies how your company should recognize and value a newly purchased piece of equipment on the company's balance sheet. Your manager also wants you to determine the GAAP guidance for how the equipment should be depreciated. Your manager has a lot of knowledge and experience in accounting, and has heard about, but has never used. Directions Use the FASB Accounting Standards Codification system to conduct the research your manager has assigned to you. Use the Codification to determine how to recognize, value, and depreciate a piece of equipment. Be prepared to show your manager the specific FASB ASC references that provide the appropriate guidance Also prepare a brief memo explaining to your manager the different levels of the Codification and how to use the Codification system.arrow_forwardSwansong plc specialises in technological products deployed by companies in the automotive and electronics sectors around the world. The board of directors has convened a meeting to discuss the draft accounts for the year ended 31 March 2021, a period which has seen the company continue to invest in its infrastructure and operations. Chris, one of the directors has sent you, the Financial Accountant, the following note: “I’ve had a quick look at these accounts. Whilst it’s good to see attributable profit up, it could have been twice the size if operating costs hadn’t got out of hand. On top of that, current assets have slumped and long-term borrowings are up by over £15m”. You are required to: analyse the company’s profitability, liquidity, working capital management and gearing as portrayed in the company’s draft accounts reproduced below. Your evaluation should be supported by appropriate calculations (rounded to one decimal place) and should include a response to the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,