IAF640_Wk1_AfterClass.pptx

IAF640_Wk1_AfterClass.pptx - IAF640 Business Cases I...

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IAF640 Business Cases I Timothy Ng
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Case Framework Approach Bronwyn Boats (P.15) Case fact and information
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Case Framework Approach – Bronwyn Boats Limited 1. Your role Enquiries from Bob Preparation of financial statement for private enterprise
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Case Framework Approach – Bronwyn Boats Limited 2. User’s Need / Preparer Objectives Bank Debt covenant Bob wants to prepare the financial statement to be qualified for the loan  need to be conservative in the analysis
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Case Framework Approach – Bronwyn Boats Limited 3. Constraints PART II GAAP ASPE Accrual basis of Actg
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Case Framework Approach – Bronwyn Boats Limited 4. Business environment Verbal contract but no history of bad debt Cash basis accounting Business risk – customers refuse to make final payment due to job quality Bob’s reputation is good
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Case Framework Approach – Bronwyn Boats Limited 5. Identify issues Revenue recognition Not a traditional earning process i. When to recognize the revenues When contract is signed? Percentage-of-completion? Payment received? ii. When to recognize the cost Direct cost? Indirect cost? Cost that can be deferred?
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Case Framework Approach – Bronwyn Boats Limited 6. Rank the issues Revenue recognition Not a traditional earning process i. When to recognize the revenues When contract is signed?
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