7 Case Study Number 2: Infinity ChallengeInfinity Challenge was taken over by its present three directors just over a year ago. They metto decide upon their accounting policies but there are various areas over which there is somedisagreement. As part of your interview for the role of Chief Financial Officer, you've beenasked to assess their different proposals below.ItemAdvertisingStationery and suppliesResearch andDevelopment CostsProvision/Allowance forBad and Doubtful DebtsLand and BuildingsAmount£18,000Company stamp6,700224,000to bedecided570,000historiccostEquipment and Machinery 180,000historiccost150Admin DirectorExpense fullamountExpense fullamountExpense fullamountProvision againstspecific accountsreceivable(£30,100)Leave at costMarketingDirectorDefer £8,000 toExpense fullamountnext yearCarry £1,800 ofstock to next yearExpense over 5yearsGeneral provisionof 10% of totalreceivables(£96,200)Include at marketvalue £2,000,000Depreciate over 5 Depreciate overyears.10 yearsDepreciate over10 yearsTechnicalDirectorNo opinionNo opinionCarry as asseton BalanceSheetMake noprovisionInclude atmarket value£2,000,000 anddepreciate over50 yearsDepreciate over6 yearsNo opinionRequired: Prepare a report for the CEO of 1500 words maximum. Your report should include:1. Assessment of the impact of each of the 3 proposals on both the company's profit forthe year and its Balance Sheet.2. Comment on the suitability of the proposals, bearing in mind relevant accountingprinciples and assumptions as well as any other non-financial considerations.3. Note what, if any additional information you require and any circumstances underwhich your recommendations might change.

Here given the details of the proposal which are made by the head of the director and the opinion by…

Required: Prepare a report for the CEO of 1500 words maximum. Your report should include: 1. Assessment of the impact of each of the 3 proposals on both the company's profit for the year and its Balance Sheet. 2. Comment on the suitability of the proposals, bearing in mind relevant accounting principles and assumptions as well as any other non-financial considerations. 3. Note what, if any additional information you require and any circumstances under which your recommendations might change.

Required: Prepare a report for the CEO of 1500 words maximum. Your report should include: 1. Assessment of the impact of each of the 3 proposals on both the company's profit for the year and its Balance Sheet. 2. Comment on the suitability of the proposals, bearing in mind relevant accounting principles and assumptions as well as any other non-financial considerations. 3. Note what, if any additional information you require and any circumstances under which your recommendations might change.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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