Accounting Questions...

[hi]

Thanks all for helping out...

Question:
When should the following be recognized? Please correct my answers if
incorrect.

Answers can be:
a. recognized in the current year as an expense.
b. recognized in current year as a loss.
c. recognized in the current & future years as expense.
d. recognized as part of comprehensive income.
e. never recognized as an expense of loss
------------------

1. The cost incurred when the market value of stock owned in another
corporation declined.

-> d. Never recognized as an expense or loss.

2. The cost incurred when a terrorist attacked a plant.

->a. Recognized in current year as an expense.

3. The cost incurred when purchasing an automobile with a 5 year useful
life.

->c. Recognized as an expense this year and future years.

4. The cost incurred when the automobile in #3 was "totaled" in an
automobile accident.

->b. recognized in current year as a loss.

5. The cost of training employees.

->a. Recognized in the current year as an expense.

 

[Janice Davis]

2. The cost incurred when a terrorist attacked a plant.

->a. Recognized in current year as an expense.

This one is wrong. Under new GAAP guidelines this would have to be
recognized as "Other Gains or Losses." Before the WTC attacks such an item
like this could have been listed under the Extrodinary Items section on the
Multi-Step income statement. Too many companies were claiming losses due to
the terrorist attacks and so GAAP had to set up a new guideline. NOTE AGAIN:
This is not an expense, but a loss. This particular item would be listed
right after the administrative and operation expenses are listed. The
CORRECT answer is: b. recognized in the current year as a loss.

 

[tippy]

This one is wrong. Under new GAAP guidelines this would have to be
recognized as "Other Gains or Losses." Before the WTC attacks such an item
like this could have been listed under the Extrodinary Items section on the
Multi-Step income statement. Too many companies were claiming losses due to
the terrorist attacks and so GAAP had to set up a new guideline. NOTE AGAIN:
This is not an expense, but a loss. This particular item would be listed
right after the administrative and operation expenses are listed. The
CORRECT answer is: b. recognized in the current year as a loss.

How depressing! We have categorized terrorism in accounting
activities. When I was kid in Kansas, we had tornado drills. Today,
the kids have all kinds of worries. What's next. <sigh>
_____________

Tippy

 

[Duane Bozarth]

How depressing! We have categorized terrorism in accounting
activities.

Never underestimate what the bureaucrats can do to increase their
jurisdiction...nor, unfortunately, what business may do to try to reduce
reportable income.

When I was kid in Kansas, we had tornado drills. Today,
the kids have all kinds of worries. What's next. <sigh>

We still do...

I can't help it, where in KS are you from? I'm east of Dorothy's House,
80 mi SW of Marshall Matt's stompin' grounds...

 

[tippy]

Never underestimate what the bureaucrats can do to increase their
jurisdiction...nor, unfortunately, what business may do to try to reduce
reportable income.


We still do...

I can't help it, where in KS are you from? I'm east of Dorothy's House,
80 mi SW of Marshall Matt's stompin' grounds...

A wee east of that area, well maybe a lot east. I went to school in
Topeka and spent summers near Overbrook and Melvern (within 25 miles
of Topeka). Then off to Arizona with Gunsmoke-- never could figure
how Dodge City had Saguaro cacti. <chuckle>
_____________

Tippy

 

[Duane Bozarth]

A wee east of that area, well maybe a lot east. I went to school in
Topeka and spent summers near Overbrook and Melvern (within 25 miles
of Topeka). Then off to Arizona with Gunsmoke-- never could figure
how Dodge City had Saguaro cacti. <chuckle>

Yeah, we think of that as "back East" ... It's "only" 400 mi or a
little less, I think...I recall it being precisely 335 to Manhattan, but
I forget how much farther on over to Topeka.

WRT Dodge City and Gunsmoke, the episode I like was the one where the
Marshall rode to Matfield Green from Dodge and returned with a prisoner
in two days. Hell of a horse in those days!