Chapter 12, Problem 6CP

1.

To determine

Discuss whether the Nigerian barge transaction should have considered a loan rather than a sale, to find out whether the payment made by Company M to Company E at the time of the initial transaction automatically make it a sale, not a loan, to determine the aspects of transaction that are similar to loan and to determine the four criteria for revenue recognition that were not fulfilled.

2.

To determine

Describe the way the recording of transaction as a sale rather than as a loan would change the statement of cash flows.

3.

To determine

Describe the way the two different statements of cash flows affect the users of financial statement.