Description of this paper

Accounting and audit research project




Question;CASE #3Lowland Appliances Stores offers customers purchasing its appliances separately priced (extended)warranties. Lowland services these extended warranties. Its customers can receive no refunds for notusing these warranties, and, of course, Lowland must honor these contracts?regardless of any futurecosts in doing so. Lowland also ?tracks? the profits and losses these types of warranties generate byappliance category?in order to help maintain a competitive price and costing structure.How should Lowland recognize the revenues and expenses of such extended warranties?CASE #5On January1, year 1, Melvin Corporation promises to ?unconditionally? transfer a building that cost$100,000 (appraised recently at $300,000) to the Vivian Company on January 1, year 2, in exchangefor a boat that Vivian Company bought for $250,000. As of December 31, year 2, Melvin Corporationstill has not transferred title to the building, although Melvin Corporation has received title to the boat.How should Vivian Company record these transactions?How should Melvin Corporation record these transactions?CASE #7In order to help induce Jill Gregory to remain as president of the Reed Company, in year 2000 ReedCompany promises to pay Jill (or her estate) $200,000 per year for the next 15 years?even if sheleaves the company or dies. Reed Company wants to properly record this transaction as deferredcompensation, but is insure of how many years it should use to amortize this cost.Over how many years should Reed Company amortize these payments?Reed Company also purchased a ?whole life? life insurance policy on Jill, naming the company as thesole beneficiary.Can Reed Company offset the cash surrender value of the life insurance policy against the deferredcompensation liability?CASE #14In year 1, Joe Josephs, CPA, reviewed Lander Company?s financial statements. However, in year 2, theLander Company hired Tom Holstrum, CPA, to audit its financial statements.Should Tom meet with Joe?Would Joe be considered a predecessor auditor?


Paper#40178 | Written in 18-Jul-2015

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