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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
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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Case Study Number 2: Infinity Challenge Infinity Challenge was taken over by its present three directors just over a year ago. They met to decide upon their accounting policies but there are various areas over which there is some disagreement. As part of your interview for the role of Chief Financial Officer, you've been asked to assess their different proposals below. Item Advertising Stationery and supplies Research and Development Costs Provision/Allowance for Bad and Doubtful Debts Land and Buildings Amount £ 18,000 Company stamp 6,700 224,000 to be decided 570,000 historic cost Equipment and Machinery 180,000 historic cost 150 Admin Director Expense full amount Expense full amount Expense full amount Provision against specific accounts receivable (£30,100) Leave at cost Marketing Director Defer £8,000 to Expense full amount next year Carry £1,800 of stock to next year Expense over 5 years General provision of 10% of total receivables (£96,200) Include at market value £2,000,000 Depreciate over 5 Depreciate over years. 10 years Depreciate over 10 years Technical Director No opinion No opinion Carry as asset on Balance Sheet Make no provision Include at market value £2,000,000 and depreciate over 50 years Depreciate over 6 years No opinion 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.
Transcribed Image Text:Case Study Number 2: Infinity Challenge Infinity Challenge was taken over by its present three directors just over a year ago. They met to decide upon their accounting policies but there are various areas over which there is some disagreement. As part of your interview for the role of Chief Financial Officer, you've been asked to assess their different proposals below. Item Advertising Stationery and supplies Research and Development Costs Provision/Allowance for Bad and Doubtful Debts Land and Buildings Amount £ 18,000 Company stamp 6,700 224,000 to be decided 570,000 historic cost Equipment and Machinery 180,000 historic cost 150 Admin Director Expense full amount Expense full amount Expense full amount Provision against specific accounts receivable (£30,100) Leave at cost Marketing Director Defer £8,000 to Expense full amount next year Carry £1,800 of stock to next year Expense over 5 years General provision of 10% of total receivables (£96,200) Include at market value £2,000,000 Depreciate over 5 Depreciate over years. 10 years Depreciate over 10 years Technical Director No opinion No opinion Carry as asset on Balance Sheet Make no provision Include at market value £2,000,000 and depreciate over 50 years Depreciate over 6 years No opinion 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.
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