FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof. To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

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Answer 1

Question

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

Accounting Question

REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

Question

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

Answer 6

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

Answer 7

Chapter 8, Problem 8.11BYP

1.

To determine

FASB Accounting Standards Codification: It simplifies user access to all the authoritative US GAAP by providing all the information related to a particular topic under one roof.

To state: the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is “in substance” a financing arrangement.

Answer 8

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

Answer 9

2.

To determine

To state: the specific citation that addresses the recognition of a product financing arrangement.

Answer 10

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

Answer 11

3.

To determine

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

Answer 12

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

Answer 13

4.

To determine

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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Solution Summary: The author states the specific citation that provides guidance for determining whether an arrangement involving the sale of inventory is "in substance" a financing arrangement.

To state: the specific citation that addresses the recognition of a product financing arrangement.

the appropriate treatment of product financing arrangements like the one proposed by Mr. E.

To Prepare: the journal entry for Company B to record the “sale” of the inventory and subsequent repurchase.

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Chapter 8 Solutions