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Unformatted text preview: Ev-MBAC 6020 Midterm solution, Spring 2006page 1Problem 1 (a) two assets: damage deposit $60,000 and prepaid rent $55,000 ($60,000 * 11/12)(b) leasehold improvement $24,000 ($9.000+$15,000)(c) display equipment $99,200 [( $100,000 * 98%)+$1,200](d) no asset no economic exchange(e) inventory $25,000(f) no asset, but reduce inventory by $500(g) no asset no economic exchange(h) cash $100(i) prepaid advertising $1,000Problem 2 Part A: Im sorry, ladies, but according to GAAP, your company could not recognize revenue until two criteria are met: (1) your company has received a measurable asset and (2) your company has done what the customer is paying it to do. It doesnt appear that those are met by what you are describing. May I introduce myself, . . . . Part B: a. nob. yes accountants assume that if the magazines are deliverd to the post office they are delivered to the customer.c. no, this is a liabilityd. noe. nof. yesg. yesh. noProblem 3Senvos Corporation Balance SheetAs of March 31, 2005ASSETSLIABILITIES AND OWNERS' EQUITYCurrent AssetsLIABILITIEScash...
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- Spring '08