Business of selling antique cars

Assignment Help Accounting Basics
Reference no: EM13256939

ABC Inc. has just entered into the business of selling antique cars. The company management decided to lease the premises for the business instead of buying the office premises. They ended up paying an advance rent of $5 million dollars for the initial period of 5 years. The entire amount was recorded as an asset in the form of prepaid expense. When questioned by the auditors, the CFO of ABC Inc. mentioned "An asset is just an expense waiting to happen." Discuss the validity and implications of this statement.

Reference no: EM13256939

Questions Cloud

Explain magnesium sulfate heptahydrate in water : if a solution of epsom salts prepared by dissolving magnesium sulfate heptahydrate in water is added to a solution containing sodium lauryl sulfate, will a precipitate form
Contrast the mechanistic and organic approaches : Compare and contrast the mechanistic and organic approaches to organizational design. How might an employee’s experiences differ working in these two types of organizations?
Find the magnetic force on segment of wire : Show that the force between parallel wires carrying currents I1 and I2, both in the same direction, find the magnetic force on segment dI2 of wire 2.
What is the net advantage of leasing : The lease terms, which include maintenance, call for a $10,000 lease payment (4 payments total) at the beginning of each year. DTC's tax rate is 40%.
Business of selling antique cars : ABC Inc. has just entered into the business of selling antique cars. The company management decided to lease the premises for the business instead of buying the office premises.
Explain how many grams of ag can be formed : How many grams of Ag can be formed from 9.50 grams of Ag2O in the equation: 2Ag2O (s) ? 4Ag (s) + O2 (g)?
What is the risk management plan : Why each of the following components must be considered in plan implementation: Rehearsal Maintenance Benchmarking Assurance and Audit.
Explain what is the final pressure at a volume : At 570. mm Hg and 25C, a gas sample has a volume of 2270 mL. What is the final pressure (in mm Hg) at a volume of 1250 mL and a temp of 175C?
Compute working capital and the current ratio : To what extent was Dumaine Equip co able to show a morefavorable balance sheet at Dec 31 by holding its cash bookopen?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Effect on fund balance unreserved

The City of Southern Pines reported the following at year-end, prior to closing entries: Revenues, $11,000,000; Expenditures, $10,100,000; Other Financing Uses, $500,000;

  Problem regarding payment and invoice

Merchandise is sold for $3,600, terms FOB destination, 2/10, n/30, with prepaid freight costs of $150. If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is ..

  Variable utility cost per unit

Conan Company's monthly activity level ranged from a low of 17,000 units in May to a high of 26,000 units in October. Average production was 20,000 units per month. Utilities cost was $8,250 in May and $10,500 in October. The variable utility cost..

  Empirical studies of the dividend theories

What results have empirical studies of the dividend theories produced? How does all this affect what we can tell managers about dividend payouts?

  Evaluating earnings quality

Which one is not a main question when you evaluate earnings' quality?

  What stakeholder interests are in conflict

Besides, she says, net income is negatively impacted by additional depreciation and will cause the company's stock price to go down. What stakeholder interests are in conflict?

  Average market price of venz stock

Venz Company's net income for 20x1 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issued during 20x0, each exercisable for one share at $6. None has been exercised, and 10,000 shares of common were outstanding ..

  Company forecasts the total overhead

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $15,500,000 and the actual machine hours are 220,000 hours.

  What conclusion can be drawn from the calculations?

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios.

  Market rate of return for type of security

If you are planning on buying 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 9 percent at the time of your purchase?

  Share of the cost of a fishing trip

Don, who owed Dan $1,000 for his share of the cost of a fishing trip they took together 2 years ago, transferred to Dan a check for $700 that he had just received from a customer. Has Dan given value for holder in due course purposes?

  Evaluate the accounting ethics of creating, initiating

Evaluate the accounting ethics of creating, initiating, or adjusting transactions to repatriate excess cash for multinational firms in transfer pricing decisions and suggest a way that this practice may be implemented.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd