Fasb Barter Case

In: Business and Management

Submitted By tkhan
Words 414
Pages 2
Cases on Recognition Measurement
The Barter Case
"Will that be cash?"

Ben Sawyer had started handcrafting replicas of antique furniture as a retirement hobby, but at the urging of friends he later opened a small shop to sell his products. It proved an immediate success, first with the "summer people" and then with dealers, several of whom encouraged Ben to supplement his line of small tables and bookcases with larger pieces. Ben decided to give it a try. After closing the shop for the winter, he worked in the basement of his home designing an impressive mahogany sideboard and building two of them by the shop's spring reopening. Materials costs (for wood) amounted to $700 for each; Ben's labor, priced at the going wage rate was $500 for each. No overhead costs were incurred.

Although familiar with the market for casual "antique" furnishings, Ben was uncertain about an appropriate price for his sideboards. From a review of catalogues offering pieces mass-produced from cheaper woods, he concluded that a figure of $3,000 to $4,000 was about right for handcrafted mahogany. Accordingly, he priced each sideboard at $3,000 ("and I'm ready to haggle if somebody's ready to buy," he told Mrs. Sawyer).

Within one week, Ben sold both sideboards with no haggling. He sold the first one on reopening day to Will Bascomb, a dealer he knew well. "Beautiful work, Ben," said Will. "I want it, but I'm going to be short of cash for a while. How about $1,000 down and the balance in quarterly installments for a year?" Done. Cash, a non-interest-bearing note, and sideboard changed hands.

The second sale came two days later. Seth Forester, Ben's wood supplier since the hobby-only days, dropped by to see if Ben needed any materials and was captivated by the sideboard. "I don't remember when I last had $3,000 in one lump," said Seth, "and I don't reckon to have it anytime soon. But…...

Similar Documents

Fasb Case

...Part 1: Asset Group  An asset group is the unit of accounting for a long-lived asset or assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. http://asc.fasb.org/glossarysection&trid=2155835&id=SL2269348-110220 05-3     Property, plant, and equipment typically consist of long-lived tangible assets used to create and distribute an entity's products and services and include: * a.  Land and land improvements  * b.  Buildings  * c.  Machinery and equipment  * d.  Furniture and fixtures.  05-6     This Subsection provides guidance that focuses on developing estimates of future cash flows used to test for recoverability, including the: * a.  Cash flow estimation approach  * b.  Cash flow estimation period  * c.  Types of asset-related expenditures that should be considered in developing estimates of future cash flows.  Transactions 15-4     The guidance in the Impairment or Disposal of Long-Lived Assets Subsections applies to the following transactions and activities: * a.  Except as indicated in (b) and the following paragraph, all of the transactions and activities related to recognized long-lived assets of an entity to be held and used or to be disposed of, including:  * 1.  Capital leases of lessees  * 2.  Long-lived assets of lessors subject to operating leases  *......

Words: 1950 - Pages: 8


...Intermediate Accounting 1 -- Spring 2014 Financial Accounting Standards Codification Research Assignment Questions In order to complete this assignment, you will need to access the Financial Accounting Standards Board (FASB) Financial Accounting Standards Codification database. The related information for this is posted on Blackboard for this course. The UH copy of the FASB Financial Accounting Standards Codification (FASC) can be accessed at: http://aaahq.org/ascLogin.cfm. The FASC is the one and only source of the technical GAAP standards. Other sources are no longer accepted as GAAP. The student log in information is: Username: AAA51654 / Password: xY8Z67e. After you sign in – click on “FASB Accounting Standards Codification” on the screen and the database will open. There is a “search” box in the top right of the screen. If you scroll over the topics (Assets, Liabilities etc.) on the left side of the welcome page you will see the subtopics and contents – click on the subtopic and it will take you to the related Codification content. The class assignment/project that you are responsible for is comprised of researching several of the more current technical topics in accounting and responding to several specific related technical standard questions about the topics. For some of the topics (see below) you will also be asked and responsible for interpreting how the technical standard is applied or what the objective(s) of the related GAAP rules are attempting to address or......

Words: 1323 - Pages: 6


...Using the FASB Codification of Accounting Standards The Financial Accounting Standards Board (FASB) Codification of Accounting Standards is the current single source of the United States Generally Accepted Accounting Principles (GAAP). The Codification of Accounting Standards is a database and research system created by the Financial Accounting Standards Board that combines many of the authoritative resources about accounting standards into one searchable system. Some of the people who would use the Codification are accounting and reporting professionals, financial analysts, and investors. The FASB Codification allows users to easily search and navigate the content, cutting back on research time and making access to information quicker and more efficient. It was created with the goal to simplify user access to all authoritative U.S. GAAP, reduce the amount of time and effort required to solve an accounting research issue, mitigate the risk of noncompliance, and provide real-time updates as new standards are released. The FASB Codification includes all level A through D generally accepted accounting principles (GAAP) issued by a standard setter and pronouncements issued by the FASB, the Emerging Issues Task Force (EITF), Accounting Standards Executive Committee (AcSEC), Accounting Principles Board, and relevant portion of authoritative content issued by the Securities and Exchange Commission (SEC). The Codification reorganizes the thousands of U.S. GAAP...

Words: 2128 - Pages: 9


...destroyed many businesses and caused major devastation to others. The Emerging Issues Task Force is a component within the Financial Accounting Standards Board whose purpose is to provide guidance for implementation of FASB standards. The EITF was responsible for determining how business losses incurred as a result of the attack should be reported. After much consideration, the task force ruled that the losses could not be reported as extraordinary items, citing that measuring the losses would ne too difficult (Isodore, 2001). By definition, extraordinary items are unusual and infrequent. Based solely on the definition, the attack on the World Trade Center certainly met the criterion for extraordinary items. The attack was certainly unusual and infrequent. The attack had nothing at all to do with business activities, and nothing of that magnitude had ever occurred before, and there was no likelihood of it occurring again. The task force defended its decision by saying that companies could take advantage of the reporting by including losses that had no relationship to the attack Henry, Holtzman, 2007). Companies should have been allowed to utilize the extraordinary items rule. If companies are expected to follow the guidelines and standards of FASB, those guidelines and standards should be applicable at all times. If there is concern that companies will abuse the rule, then the rule needs to be amended or changed. What would prevent it from being abused at any......

Words: 479 - Pages: 2


...financial statement information that is useful for a particular kind of decision. • The parts of a financial statement also contribute to meeting the objectives of financial reporting and may be more useful to those who make investment, credit, and similar decisions than the whole. • Financial statements result from simplifying, condensing, and aggregating masses of data. As a result, they convey information that would be obscured if great detail were provided. Although those simplifications, condensations, and aggregations are both necessary and useful, the Board believes that it is important to avoid focusing attention almost exclusively on “the bottom line,” earnings per share, or other highly simplified condensations. CON5–1 CON5 FASB Statement of Concepts • A statement of financial position provides information about an entity’s assets, liabilities, and equity and their relationships to each other at a moment in time. The statement delineates the entity’s resource structure—major classes and amounts of assets—and its financing structure—major classes and amounts of liabilities and equity. • A statement of financial position does not purport to show the value of a business enterprise but, together with other financial statements and other information, should provide information that is useful to those who desire to make their own estimates of the enterprise’s value. Those estimates are part of financial analysis, not of financial reporting, but financial accounting aids......

Words: 16879 - Pages: 68


...Part I: Know the FASB I. As discussed many times in ACC 310, the FASB is the current accounting standard setters in the U.S. as they are empowered by the SEC. Visit the FASB website at www.fasb.org and answer the following questions: (Do not cut and paste but answer in your own words. Any material quoted should be cited). 1. What is the FASB mission? 1pts The FASB mission is to establish and improve financial accounting standards and reporting. This sets the guidance for nongovernmental entities that provide decision-useful information to users. Users include issuers, auditors, and other users of financial information. 2. Who are the current FASB Board members and what are their backgrounds? 2pts a. Russel G. Golden, Chariman. Mr. Golden has an extensive background with the FASB holding different positions ranging from the FASB’s Emerging Issues Task Force, Technical Director of the FASB, and served 6 years as an FASB staff member. b. James L. Kroeker, Vice Chariman. Mr. Kroeker used to work for Deloitte as the Deputy Managing Partner for Profession Practice. He also worked for the Securities and Exchange Commission as the Chief Accountant. c. Daryl E. Buck, Board Member. Mr. Buck worked at Reasor’s Holding Company for 18 years. It is a privately-owned retail grocery company. d. Thomas J. Linsmeier, Board Member. Mr. Linsmeier was a professor at Michigan State University. He also worked for the...

Words: 1244 - Pages: 5


...relationship in every stage. They are relying on each other and therefore a cycle is formed with participators like consumers and producers or distributors, the absence of any elements would ruin the flow. This is exactly how a market works. For example, ] Miller emphasized one of the important concepts of environmental economics: The importance of materials exchange for growth. (1991) The concept states that one thing is a by-product for a person is a resource for another. Therefore, there are nothing should be discarded, which totally match the concept of bartering. It is the way to sustain long-term operating balance due to scarcity of resources. [by米爾茲 p.36] Generally, there must be society cost produced by any production. Take the case of goods transaction into consideration, the main economic activity of human being is initiated by production. The process of production is to make goods more aesthetic and befitted to be used by manufacturing. Unfortunately, this kind of economic activity is accompanied by the discard of trash. For profit-making organizations, they would choose the cheapest way to handle the trash without the intervention of public institutions since enterprises would not think about the scarce resource – environment will be depleted, which induce the problem of environmental pollution directly. Environmental economists suggested that one is supposed to estimate the situation by substituting materials balance into an economic equation. The equation......

Words: 1453 - Pages: 6


...How much does happiness cost “Barter” by Sara Teasdale is about what we take for granted in our lives. We don’t realize the full beauty that Mother Nature has to offer. Teasdale is referring to the people, the reader, in her use of “you” in the poem. Her general tone of “Barter,” is one of hopefulness and peace. She talks about how beautiful the “blue waves’ are crashing on the cliff and the ‘soaring fire’ on how it moves in the night. All these things are beautiful in their own way. We just overlook the simple things in life. Teasdale poem is one that yields layers of meaning in each time one reads it. It depicts different parts each time you emphasize certain parts, and get different meanings each time. Teasdale is saying in “Barter,” you should give all your worthless possessions for the beauty or loveliness for nature. “For one white singing hour of peace / Count many a year of strife well lost.’ Means spending one hour in the beauty of nature can take away one year of anger and pain. Teasdale uses poetic devices to give deeper meaning to her words. Her rhyme scheme is ABCBDD AEFEGG HIJIKK. It is considered to be an end rhyme. “Life has liveliness to sell” has three poetic devices in one single line. The line is repeated at the beginning of the second stanza which is called a repetition, and it also contains a euphony and alliteration. A simile is used in the line, “Music like a curve of gold.” She uses personification of the fire in the line ‘…Soaring fire that......

Words: 361 - Pages: 2

Chapter 1-1 Fasb Research Case

...Case l 1 a. The FASB had three primary goals in developing the Codification: 1. Simplify user access by codifying all authoritative US GAAP in one spot. 2. Ensure that the codified content accurately represented authoritative US GAAP as of July1, 2009. 3. Create a codification research system that is up to date for the released results of standard-setting activity. b. The Codification is expected to improve accounting practice by: 1. Reducing the amount of time and effort required to solve an accounting research issue 2. Mitigating the risk of noncompliance through improved usability of the literature 3. Provide accurate information with real-time updates as Accounting Standards Updates are released 4. Assisting the FASB with the research and convergence efforts. c. The FASB ASC is composed of the following literature issued by various standard setters: 1. Financial Accounting Standards Board (FASB) a. Statements (FAS) b. Interpretations (FIN) c. Technical Bulletins (FTB) d. Staff Positions (FSP) e. Staff Implementation Guides (Q&A) f. Statement No. 138 Examples. 2. Emerging Issues Task Force (EITF) a. Abstracts b. Topic D. 3. Derivative Implementation Group (DIG) Issues 4. Accounting Principles Board (APB) Opinions 5. Accounting Research Bulletins (ARB) 6. Accounting Interpretations (AIN) 7. American Institute of Certified Public Accountants (AICPA) a. Statements of Position (SOP) b. Audit and Accounting......

Words: 477 - Pages: 2


...Maria Juarez Professor Muslu Accounting 3367 T-Thurs A. Identify relevant Codification section that addresses transfers of receivables. The relevant codification section for the transfers of receivables is the following: FASB ASC 860-10-05-15. C. Provide definitions for the following:  1) Transfer:  The conveyance of a noncash financial asset to someone other than the issuer of that financial asset. The following include transfers: selling a receivable, putting a receivable into securitization trust, and receivable as collateral.   2) Recourse:  The right of a transferee of receivables to receive payment from the transferor of those receivables for any of the following: failure of debtors to pay when due, the effects of prepayments and adjustments resulting from defects in eligibility of the transferred receivables. 3) Collateral -Personal or real property in which a security interest has been given. Provide other examples (besides recourse and collateral) that qualify as continuing involvement. •   Servicing arrangements •   Guarantee arrangements • Agreements to purchase or redeem transferred financial assets •   Options written or held •  Derivative financial instruments that are entered into contemporaneously with, or in contemplation of, the transfer • Arrangements to provide financial support • Pledges of collateral Jones Co. is in a technology-intensive industry. Recently, one of its competitors......

Words: 1419 - Pages: 6

Fasb Research Case Eagle Inc.

...list price of $135,000. The rate implicit in the lease is 6.93 percent assuming the fair value of the backhoe is $125,000 at the beginning of the lease term and 5.45 percent assuming the fair value is $135,000. For the purposes of this memorandum, the fair value of $125,000 will be assumed due to the recent economic downturn. Issues 1. How should the lease arrangement with Eagle be classified? 2. What journal entry or entries should be recorded at the beginning of the lease (if any are required)? Analysis of Issue 1: How should the lease arrangement with Eagle be classified? In order to classify this lease arrangement properly, Tiger’s initial step is to determine whether to record the lease as an operating or capital lease. The FASB Accounting Standard Codification (ASC) topic ASC 840-10-25-1 offers guidance on this matter. 25-1 A lessee and a lessor shall consider whether a lease meets any of the following four criteria as part of classifying the lease at its inception under the guidance in the Lessees Subsection of this Section (for the lessee) and the Lessors Subsection of this Section (for the lessor): a. Transfer of ownership. The lease transfers ownership of the property to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term in exchange for the payment of a nominal fee, for example, the minimum required by statutory......

Words: 3304 - Pages: 14


...The Financial Accounting Standards Board (FASB) is an autonomous board composed of accounting professionals who establish and communicate financial accounting and reporting standards in the United States. The FASB was formed in 1973 to create standards in the interest of the public; including issuers, auditors, and users of financial information. The mission of the FASB is to create accounting and reporting standards that will provide decision-useful information to investors and other users of financial statements. Such standards are necessary for the efficient performance of the financial system as decisions regarding the distribution of capital rely on transparent, credible, and comprehensible information. If accounting standards failed to enforce these qualities in financial reports, it would be impossible to objectively evaluate financial information. Members of the FASB and staff are collectively experienced and knowledgeable in a range of areas including finance, accounting, and investing. The Foundation’s Board of Trustees appoints the seven full-time FASB members who may serve up to two terms of five years. The Board is backed by a staff of over sixty professionals who perform research and assist in many due process activities. According to the FASB website, the Board and staff members “each have a concern for investors, other users, and the public interest in matters of financial accounting and reporting.” An independent structure is necessary to ensure that......

Words: 527 - Pages: 3

Fasb Codification Case

...Case Study: FASB Codification Case Question 1: Access the FASB Codification and prepare responses to the following questions, providing Codification references as support for your answers. Access the glossary and give the definition for: Answer: A. Firm Fixed-Price Contract – A Fixed Price Contract is essentially a contract where an adjustment can’t be made because of the cost experience of the contractor or his or her performance under the contract. (FASB, 2012). So in another words, the price quoted is the final price—no extra hidden charges or fees can be added. B. Amortized Cost – Amortized Cost is where the sum of the initial investment minus the cash collected then minus the write-downs plus yield accreted to date. (FASB, 2012). So in another words, an Amortized Cost for a company, for example, is the cost of an asset that is written off as an asset that has depreciated in value. It represents the total accumulated depreciation, and thus the totally amortization, to date. C. Impairment – Impairment is the situation where an asset carries an amount that exceeds it fair market value. (FASB, 2012). So in another words, impairment is when an asset with a long lifespan is overpriced. Question 2: Are there SEC documents as a part of this Codification? If yes, where are they located? A. Was unable to locate any SEC documents for this Codification. B. Yes there are SEC documents as part of this codification, entitled Rule 2a-7 under the......

Words: 288 - Pages: 2


...The Financial Accounting Standards Board (FASB) governs the preparation of corporate financial reports. This paper will reflect on the FASB conception, its accountability, and members of the board. Furthermore, in many ways, the FASB standards known as generally accepted accounting principles (GAAP), places limitations on business practices and financial reporting requirements; but it is required since accounting standards are crucial in a market where financial information should be transparent, credible, and easy to understand but some would disagree. These standards help protect both the stakeholder and business communities. When and Why was the FASB created you may ask? In 1973, the FASB was created “ to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports” (FASB.org, 2012). Those standards are officially recognized as authoritative by the Securities and Exchange Commission (SEC) (Financial Reporting Release No. 1, Section 101, and reaffirmed in its April 2003 Policy Statement) and the American Institute of Certified Public Accountants (Rule 203, Rules of Professional Conduct, as amended May 1973 and May 1979), (FASB.org, 2012). Establishing these standards are extremely important because it effectively provides for an efficient economy when dealing with the allocation of resources to provide a......

Words: 2250 - Pages: 9


...interested parties wishing to comment on the Exposure Draft must be received in writing by July 16, 2010. Interested parties should submit their comments by email to director@fasb.org, File Reference No. 1770-100. Those without email may send their comments to the “Technical Director, File Reference No. 1770-100, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.” Do not send responses by fax. Please send only one comment letter to either the FASB or the International Accounting Standards Board (IASB), which is also requesting comments on this jointly issued Exposure Draft. The FASB and the IASB will share and consider jointly all comment letters received. Comments are most helpful if they: a. b. c. Indicate the specific paragraph or paragraphs to which the comments relate Contain a clear rationale Include any alternative the Boards should consider. All comments received constitute part of the FASB’s public file. The FASB will make all comments publicly available by posting them to its website and by making them available in its public reference room in Norwalk, Connecticut. An electronic copy of this Exposure Draft is available on the FASB’s website until the FASB issues a final document. Copyright © 2010 by Financial Accounting Foundation. All rights reserved. Permission is granted to make copies of this work provided that such copies are for personal or intraorganizational use only and are not sold or disseminated and provided further that each copy bears the......

Words: 4913 - Pages: 20