Athina Building Supplies Limited
ACCOUNTING CASE ASSIGNMENT #1
ATHINA BUILDING ITEMS LTD.
October 4th, 2013
To: CFO of Athina Building Products Ltd.
Lso are: Issues and Recommendation Concerning Athina Building Supplies Ltd. ROLE
I am an expert to the CFO hired to gauge the events that occurred in the past year ended Dec 31st, 2017, and to make a report on an examination of the financial assertions, any issues with Athina's fresh management, and any conditions that could potentially have an effect on net income as well as the amount the national cycle is due. LIMITATIONS
Following a International Financial Reporting Specifications (IFRS) would be beneficial to both new buyers and the old owners seeing as how IFRS leaves significantly less up to reasoning and gives more uniformity. Under the presumption that the new investors need to grow and expand the business, using IFRS would be valuable if the company were to ever need more shareholders or a loan from the financial institution. Growth would mean that further investors and a possible mortgage could be required. Assuming that the corporation was already employing IFRS, it might be in their best interests to continue employing those requirements because turning to the Accounting Standards for Private Enterprises (ASPE) can be costly seeing as how they are certainly not a part of the national sequence of retailers anymore, and following zero standards at all is out of the question due to the fact that Athina's financial statements will be looked at by external parties and it is important that they are consistent, accurate and can present useful info. USERS AND OBJECTIVES
In this case, because an expert to the CFO, I are under the presumption that I have no power to make any decisions that will impact the financial transactions or the net gain. This means that not any stakeholders are directly or indirectly influenced by my own actions because all My spouse and i am carrying out is providing information to the CFO in regards to the issues presented to me. Therefore , you will discover no users in this situation. In terms of targets, it is possible that you just, as the CFO, may have wanted income maximization to get an objective since how the net income of the organization determines how much money the countrywide chain receives; but again, because we have simply no control over the financial transactions of Athina, the most we could do is speculate for the information offered and see what could have been carried out differently. ISSUES
Sales upon Collection of Cash from a Builder вЂ“ Revenue Recognition In regards to revenue on collection of cash coming from a constructor, the issue here was that the $150, 500 worth of expenses associated with the sales was incurred but the $275, 500 revenue received from the product sales on homes was not upon the profits statement. The IFRS conditions for earnings recognition will be as follows: A) Risks and rewards happen to be transferred. B) Amount of revenue may be estimated. C) Costs may be estimated. D) Collection is assured. Requirements a) is content because the homes have been distributed and the buyers have paid. Standards b) and c) will be satisfied mainly because both beliefs have been identified and provided. Criterion d) is essentially satisfied, as it says that none of the contractors have failed to pay back anything that they are obligated to pay. Athina should have recognized the sales about homes because revenue and thus should have attained revenue of $275, 500. This means that the reported net income before uncommon or nonrecurring items pertaining to the year finished December 23, 2017 can be understated by the same amount. Additionally , the assets within the balance sheet happen to be understated by simply said sum as well because of the lack of increase in the Accounts Receivable account. Kitchen Cabinetry вЂ“ Write-Off
Simply by writing off of the full unamortized portion of the cost, this means that there were a damage on the income statement (which would work out to be a great expense) and this would have decreased the net salary before unconventional or non-recurring items by $110, 250. [See Appendix A for computation. ] In...
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