Case

Chapter 4

5) According to Codification, cash is described as a current assets and includes any paper currency, coins, accounts held in a bank and checks from customers. Also, any short-term investment held by the company with maturity less than three months is considered to cash equivalent. Short-term investments are called cash equivalents because their value is believed to remain stable until the maturity date. The associated archived standard for cash and cash equivalents is codification 305.

7) The Rule 10(b)(5) gives an interpretation of section 10(b)(5) under the Securities Act of 1934. It states that it is illegal for an individual or group of individuals to intentionally deceive another individual or entity in order to have some personal gain or harm another individual in transaction that involve stocks or other financial securities. Staff Accounting Bulletin (SAB) 99 states that it is not accurate to evaluate the materiality of transactions by using a quantitative benchmark.

13) The FASB Accounting Standards Codification (ASC) is used to identify the accounting authority governing each of the following issues:

a) The accounting for prepaid advertising is found in ASC 210-10-45-2.

b) The accounting for negative loan amortization is described in ASC 310-30.

c) The accounting for accelerated depreciation is discussed in ASC 360-10-35-7.

d) The accounting for the range of an estimated loss contingency located in ASC 450-20-25-1.

e) The accounting for a reporting period is found in ASC 205.

f) The accounting for factoring of trade receivables with recourse is described in ASC 310-10-45-2.

15) a) FASB Interpretation 36 discusses the accounting treatment of costs related to exploratory wells incurred by companies that operate in the production of oil and gas industry. This statement states that the costs of exploration should be expensed in the accounting period they are incurred.

b) FASB Interpretation No. 36 is located...