Description Using the Super-T approach discussed in class, prepare an income statement and balance sheet for presentation to UFP’s shareholders’ and bankers following generally accepted accounting principles (follow the GAAP principles which have been covered in the course to date and are common between IFRS and U.S. GAAP). If there is something that you believe is unclear, write a note to the financial statements explaining how you decided to record the answer. Please note that this is a team assignment and there is no single correct answer.Also prepare a basic cash flow statement following the “direct” approach. An example of that form of Statement of Cash Flows is included in the solutions to the Good Vibrations, Inc. exercise we did in class. Later in the course, we will learn how to put together a cash flow statement using the “indirect” (i.e., reconciliation) approach. Classify each entry as being operating, financing or investing and use these classifications to construct the cash flow statement.please see attached the questions . Thank you 1 attachmentsSlide 1 of 1attachment_1attachment_1.slider-slide > img { width: 100%; display: block; } .slider-slide > img:focus { margin: auto; } Unformatted Attachment Preview Financial Accounting Please note that I hope that each person on your team will complete this assignment on his or her own. The team members should then discuss their different answers before submitting one final copy for evaluation. Please also note that many of the topics and transactions raised in Question 2 will be discussed in greater detail with more sophisticated treatment as we move through the remaining classes in the course. For the purpose of this assignment, attempt to process the transactions in a manner consistent with what we have covered in the course by the end of Session 2. Question 1 (10 marks) In two hundred and fifty (250) words or less, describe the most aggressive example of revenue recognition that you have encountered in your team’s collective business careers. Then describe why this activity was aggressive and what would have been a more appropriate revenue recognition procedure under IFRS / U.S. GAAP. It is not necessary to name the company involved in this transgression, but I would appreciate a brief description of the industry and the nature of the sales activity involved in order to put your description in context. Question 2 (90 marks) The United Federation of Planets, Inc., (UFP) offers its clients security systems and alarm monitoring services on a retail basis. UFP specializes in offering the most upto-date services with the most technologically advanced equipment. For example, the high-end alarm system, called “The Enterprise”, is widely recognized as an industry leader. Because of the customized nature of many of the security systems installed by UFP, the firm often collects deposits from its customers before any work is started. All of the balance sheet items from December 31, 2018, are shown below along with the events that occurred during 2019. Please ignore all taxes (income and sales) in preparing your answer. United Federation of Planets, Inc. Balance Sheet Items in Random Order As of December 31, 2018 Accounts payable $380,000 Accounts receivable $611,000 Accumulated depreciation (on PP&E) $1,245,000 Cash $267,000 Common shares $1,152,000 Short-term bank loan $125,000 Plant, property, and equipment $2,111,000 Interest payable $37,000 Inventory $850,000 License (net) $180,000 Long-term bank loan $525,000 Goodwill (an intangible asset) $80,000 Retained earnings $304,000 Advances from customers $340,000 Salaries payable $180,000 Short-term investments $180,000 Office supplies $9,000 The following events occurred during 2019: (a) (b) (c) New credit sales for the year were $1,910,000. Sales of $272,000 were earned from prior period advances (deposits) from customers. Old equipment, which had originally cost $147,000 and was fully depreciated (amortized), was scrapped and written off on the first day of business of the year. (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) (s) (t) (u) (v) (w) (x) (y) New cash sales for the year were $333,000. UFP acquired all of the assets and liabilities of Vulcan LLC for $353,000 cash. The assets included equipment valued at $425,000 (this equipment was carried on the books of Vulcan LLC at $300,000 net), accounts receivable of $230,000, accounts payable of $250,000, and a short-term bank loan of $52,000. There were no intangible assets. UFP acquired office supplies on credit for $32,000. UFP paid salaries to employees of $390,000 in cash. Cash collections from credit sales were $1,720,000. Cash payments for items purchased on credit during the year were $344,000. Paid $363,000 cash for administrative expenses during the year. Paid the bank $58,000 cash towards interest payments during the year. At the end of the year, owed the bank $19,000 in interest. At the end of the year, the market value of the short-term investments was $157,000. A total of $3,000 in office supplies remained on hand at the end of the year. Depreciation (amortization) on plant, property, and equipment for the year was determined to be $123,000. UFP collected $327,000 of cash advances (deposits) from customers. UFP acquired $212,000 of inventory on credit. UFP’s policy is to write off the license it holds over 3 years using straight-line depreciation (amortization). 2019 is the second year for amortizing the license. UFP offers a “satisfaction guarantee” to its clients for security services. If clients are unhappy with the services they purchased, they are eligible for free additional security services (i.e., this is a form of “after sales warranty” service). The company estimates that future expenditures of approximately $67,000 will be required to perform these “after sales warranty” activities to keep clients satisfied for services originally rendered to clients in 2019. UFP spent $125,000 during 2019 on “research and development” activities related to new services the company could offer clients. It is expected that some of this will lead to products may be marketable in the future, but nobody is certain which products will be successful. During the year, customers owing UFP a total of $22,000 declared bankruptcy. On the last day of business, UFP declared an $80,000 dividend, which will be paid sometime in the next year. At the end of the year, UFP owed its employees a total of $66,000 in salaries. UFP paid down the long-term loan by $140,000. At the end of the year, it was determined that $513,000 of inventory remained on-hand. (z) At the end of the year, it was determined that the carrying value of goodwill had declined by $28,000. Required: Using the Super-T approach discussed in class, prepare an income statement and balance sheet for presentation to UFP’s shareholders’ and bankers following generally accepted accounting principles (follow the GAAP principles which have been covered in the course to date and are common between IFRS and U.S. GAAP). If there is something that you believe is unclear, write a note to the financial statements explaining how you decided to record the answer. Please note that this is a team assignment and there is no single correct answer. Also prepare a basic cash flow statement following the “direct” approach. An example of that form of Statement of Cash Flows is included in the solutions to the Good Vibrations, Inc. exercise we did in class. Later in the course, we will learn how to put together a cash flow statement using the “indirect” (i.e., reconciliation) approach. Classify each entry as being operating, financing or investing and use these classifications to construct the cash flow statement. Purchase answer to see full attachment Tags: accounting financial accounting revenue recognition GAAP principles Aggressive Revenue Recognition User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.

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Using the Super-T approach discussed in class, prepare an income statement and balance sheet for presentation to UFP’s shareholders’ and bankers following generally accepted accounting principles (follow the GAAP principles which have been covered in the course to date and are common between IFRS and U.S. GAAP). If there is something that you believe is unclear, write a note to the financial statements explaining how you decided to record the answer. Please note that this is a team assignment and there is no single correct answer.Also prepare a basic cash flow statement following the “direct” approach. An example of that form of Statement of Cash Flows is included in the solutions to the Good Vibrations, Inc. exercise we did in class. Later in the course, we will learn how to put together a cash flow statement using the “indirect” (i.e., reconciliation) approach. Classify each entry as being operating, financing or investing and use these classifications to construct the cash flow statement.please see attached the questions . Thank you

1 attachmentsSlide 1 of 1attachment_1attachment_1.slider-slide > img { width: 100%; display: block; }
.slider-slide > img:focus { margin: auto; }

Unformatted Attachment Preview

Financial Accounting
Please note that I hope that each person on your team will complete this
assignment on his or her own. The team members should then discuss their
different answers before submitting one final copy for evaluation. Please also note
that many of the topics and transactions raised in Question 2 will be discussed in
greater detail with more sophisticated treatment as we move through the
remaining classes in the course. For the purpose of this assignment, attempt to
process the transactions in a manner consistent with what we have covered in the
course by the end of Session 2.
Question 1 (10 marks)
In two hundred and fifty (250) words or less, describe the most aggressive example
of revenue recognition that you have encountered in your team’s collective business
careers. Then describe why this activity was aggressive and what would have been
a more appropriate revenue recognition procedure under IFRS / U.S. GAAP.
It is not necessary to name the company involved in this transgression, but I would
appreciate a brief description of the industry and the nature of the sales activity
involved in order to put your description in context.
Question 2 (90 marks)
The United Federation of Planets, Inc., (UFP) offers its clients security systems and
alarm monitoring services on a retail basis. UFP specializes in offering the most upto-date services with the most technologically advanced equipment. For example,
the high-end alarm system, called “The Enterprise”, is widely recognized as an
industry leader. Because of the customized nature of many of the security systems
installed by UFP, the firm often collects deposits from its customers before any work
is started. All of the balance sheet items from December 31, 2018, are shown below
along with the events that occurred during 2019. Please ignore all taxes (income and
sales) in preparing your answer.
United Federation of Planets, Inc.
Balance Sheet Items in Random Order
As of December 31, 2018
Accounts payable
$380,000
Accounts receivable
$611,000
Accumulated depreciation (on PP&E)
$1,245,000
Cash
$267,000
Common shares
$1,152,000
Short-term bank loan
$125,000
Plant, property, and equipment
$2,111,000
Interest payable
$37,000
Inventory
$850,000
License (net)
$180,000
Long-term bank loan
$525,000
Goodwill (an intangible asset)
$80,000
Retained earnings
$304,000
Advances from customers
$340,000
Salaries payable
$180,000
Short-term investments
$180,000
Office supplies
$9,000
The following events occurred during 2019:
(a)
(b)
(c)
New credit sales for the year were $1,910,000.
Sales of $272,000 were earned from prior period advances (deposits) from
customers.
Old equipment, which had originally cost $147,000 and was fully depreciated
(amortized), was scrapped and written off on the first day of business of the
year.
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
(x)
(y)
New cash sales for the year were $333,000.
UFP acquired all of the assets and liabilities of Vulcan LLC for $353,000 cash.
The assets included equipment valued at $425,000 (this equipment was
carried on the books of Vulcan LLC at $300,000 net), accounts receivable of
$230,000, accounts payable of $250,000, and a short-term bank loan of
$52,000. There were no intangible assets.
UFP acquired office supplies on credit for $32,000.
UFP paid salaries to employees of $390,000 in cash.
Cash collections from credit sales were $1,720,000.
Cash payments for items purchased on credit during the year were $344,000.
Paid $363,000 cash for administrative expenses during the year.
Paid the bank $58,000 cash towards interest payments during the year.
At the end of the year, owed the bank $19,000 in interest.
At the end of the year, the market value of the short-term investments was
$157,000.
A total of $3,000 in office supplies remained on hand at the end of the year.
Depreciation (amortization) on plant, property, and equipment for the year
was determined to be $123,000.
UFP collected $327,000 of cash advances (deposits) from customers.
UFP acquired $212,000 of inventory on credit.
UFP’s policy is to write off the license it holds over 3 years using straight-line
depreciation (amortization). 2019 is the second year for amortizing the
license.
UFP offers a “satisfaction guarantee” to its clients for security services. If
clients are unhappy with the services they purchased, they are eligible for free
additional security services (i.e., this is a form of “after sales warranty”
service). The company estimates that future expenditures of approximately
$67,000 will be required to perform these “after sales warranty” activities to
keep clients satisfied for services originally rendered to clients in 2019.
UFP spent $125,000 during 2019 on “research and development” activities
related to new services the company could offer clients. It is expected that
some of this will lead to products may be marketable in the future, but nobody
is certain which products will be successful.
During the year, customers owing UFP a total of $22,000 declared
bankruptcy.
On the last day of business, UFP declared an $80,000 dividend, which will be
paid sometime in the next year.
At the end of the year, UFP owed its employees a total of $66,000 in salaries.
UFP paid down the long-term loan by $140,000.
At the end of the year, it was determined that $513,000 of inventory remained
on-hand.
(z)
At the end of the year, it was determined that the carrying value of goodwill
had declined by $28,000.
Required:
Using the Super-T approach discussed in class, prepare an income statement and
balance sheet for presentation to UFP’s shareholders’ and bankers following
generally accepted accounting principles (follow the GAAP principles which have
been covered in the course to date and are common between IFRS and U.S. GAAP).
If there is something that you believe is unclear, write a note to the financial
statements explaining how you decided to record the answer. Please note that this is
a team assignment and there is no single correct answer.
Also prepare a basic cash flow statement following the “direct” approach. An
example of that form of Statement of Cash Flows is included in the solutions to the
Good Vibrations, Inc. exercise we did in class. Later in the course, we will learn how
to put together a cash flow statement using the “indirect” (i.e., reconciliation)
approach. Classify each entry as being operating, financing or investing and use
these classifications to construct the cash flow statement.

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Aggressive Revenue Recognition

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