Assignment 2USE GAAPINCLUDE US GAAP CODIFICATION (CITATIONS)In 2010, the No-slice Golf Company decided...Assignment 2USE...

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Accounting

Assignment 2
USE GAAP
INCLUDE US GAAP CODIFICATION (CITATIONS)
In 2010, the No-slice Golf Company decided to augment their verysuccessful line of golf clubs with a new line of professionalcaliber golf balls. The executives at No-Slice were aware of thedifficulty of penetrating the golf ball market but feel, with theirname recognition and the possibility of receiving endorsements fromtour professionals that were playing No-Slice clubs, chances forsuccess were substantial. The company purchased $175 million ofequipment and buildings in 2011 to begin production. The No-Slicegolf ball has not performed up to expectations. The tourprofessionals did not care for the ball and did not endorse it.Significant improvements in golf balls by Callaway and Nike and thecontinued dominance of the Titleist ProV1 series made entering themarket very difficult.
On July 1, 2017, the Board of Directors voted to sell off thegolf ball manufacturing division. The company continued to operatethe facility at current levels of production until the sale of thedivision was completed on June 1, 2018. No-Slice has a April 30year end and the controller and CEO are concerned about the properreporting for the disposal of the golf ball manufacturing divisionin the year-end April 30, 2018 financials. The company wants toissue the financial statements to the public by the end of June2018. You are to draft a report to the controller andCEO identifying the issues and accounting choices associated withreporting the disposal and the authoritative guidance that existsto determine the proper manner of reporting the assets,liabilities, and results of operation for the division.

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LEGAL REQUIREMENTS Generally accepted accounting principles are a set of 10 accounting standards and guidelines created and maintained by the US Financial Accounting Standards Board Principle of regularity GAAPcompliant accountants strictly adhere to established rules and regulations Principle of consistency Consistent standards are applied throughout the financial reporting process Principle of sincerity GAAPcompliant accountants are committed to accuracy and impartiality Principle of permanence of methods Consistent procedures are used in the preparation of all financial reports Principle of noncompensation All aspects of an organizations performance whether positive or negative are fully reported with no prospect of debt compensation Principle of prudence Speculation does not influence the reporting of financial data Principle of continuity Asset valuations assume the organizations operations will continue Principle of periodicity Reporting of revenues is divided by standard accounting time periods such as fiscal quarters or fiscal years Principle of materiality Financial reports fully disclose the organizations monetary situation Principle of utmost good faith All involved parties are assumed to be acting honestly GAAP compliance makes the financial reporting process transparent and standardizes assumptions terminology definitions and methods External parties can easily compare financial statements issued by GAAPcompliant entities and safely assume consistency which allows for quick and accurate crosscompany comparisons Beyond the 10 principles GAAP compliance is built on three rules that eliminate misleading accounting and financial See Answer

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