You are the Manager of Financial Reporting for your company.Your company is facing a number of reporting challenges as a resultof an acquisition, COVID-19 and other activities. Although the CFOmakes the final decision on accounting standard applications, theCFO relies heavily on your expertise (acquired in the AuroraUniversity MSA program) and your years of research andexperience.
In a meeting (brainstorming session), a list of potentialreporting issues is developed and are listed below. You have beenasked to select the three you feel may be most important andprepare a memo to be reviewed and to guide proper accountingtreatment for each.
Your memo should include:
Organization-Appears neat and organized; logical; no spelling orgrammar errors; guides the reader to the point(s).
Facts/Issues-States area being reviewed and identifiesimportance (“issue”) to a company.
Applicable Literature-Identifies all applicable literature. Itis properly linked to the issue noted above. Citations are toadequate depth that it represents support, not the start of a newsearch. Please remember, some areas have guidance inmore than one area of ASC. Some topics have conflicting direction.These should all be identified.
Remember as you prepare your memo to be complete butconcise. Like most executives, the CFO has the attentionspan of an ant. Your goal is to get the key points summarize andsupported, having a significant impact on the decision-makingprocess.
Here is the list of topics developed in the brainstormingsession:
- Balance Sheet classifications
- Valuation of Assets and Liabilities in an acquisition
- Valuation accounts
- Impairment of long-term assets
- Contingent liabilities
- Non-recurring items
- Cash flow impact of refinancing
- Related party transactions
- Revenue recognition-over time (maintenance agreement)
- Principal/Agent definition
You can answer any three BUT your answers must be innumerical order (eg. 4, 7, 10). DO NOT submit your answers out oforder (eg. 7, 4 , 9).
