Chapter 8 - Solution Manual

Receivables from officers employees affiliates and

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d. Receivables from officers, employees, affiliates, and others, if collectible in the ordinary course of business within a year e. Installment or deferred accounts and notes receivable if they conform generally to normal trade practices and terms within the business f. Marketable securities representing the investment of cash available for current operations, including investments in debt and equity securities classified as trading securities under Subtopic 320-10 g. Prepaid expenses such as the following: 1. Insurance 2. Interest 3. Rents
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158 4. Taxes 5. Unused royalties 6. Current paid advertising service not yet received 7. Operating supplies. FASB ASC 8-6 Classification of Current Liabilities From topic list select Presentation and Balance Sheet. Found under Other Classification of Current Liabilities 45-5 A total of current liabilities shall be presented in classified balance sheets. 45-6 The concept of current liabilities includes estimated or accrued amounts that are expected to be required to cover expenditures within the year for known obligations the amount of which can be determined only approximately (as in the case of provisions for accruing bonus payments) or where the specific person or persons to whom payment will be made cannot as yet be designated (as in the case of estimated costs to be incurred in connection with guaranteed servicing or repair of products already sold). 45-7 Section 470-10-45 includes guidance on various debt transactions that may result in current liability classification. These transactions are the following: a. Due on demand loan agreements b. Callable debt agreements c. Short-term obligations expected to be refinanced. FASB ASC 8- 7 Compensating Balances Found through Presentation-Balance Sheet – Other – SEC Materials SEC Staff Guidance > > Staff Accounting Bulletins > > > SAB Topic 6.H, Accounting Series Release 148—Disclosures of Compensating Balances and Short-Term Borrowing Arrangements S99-2 The following is the text of SAB Topic 6.H, Accounting Series Release 148—Disclosures of Compensating Balances and Short-Term Borrowing Arrangements. Facts: ASR 148 (as modified) amends Regulation S-X to include: 1. Disclosure of compensating balance arrangements. 2. Segregation of cash for compensating balance arrangements that are legal restrictions on the availability of cash. SAB Topic 6.H.1, Applicability a. Arrangements with other lending institutions.
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159 Question: In addition to banks, is ASR 148 applicable to arrangements with factors, commercial finance companies or other lending entities? Interpretive Response: Yes. b. Bank holding companies and brokerage firms. Question: Do the provisions of ASR 148 apply to bank holding companies and to brokerage firms filing under Rule 17a-5? Interpretive Response: Yes; however, brokerage firms are not expected to meet these requirements when filing Form X-17a-5.
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