What conditions allow for the use of the average market

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Reference no: EM132987010

Manning is a member of various campsites around the southwest. The firm offers camping spots, generally on a familiar tour and visit to new members. The campsites provide more amenities on-site than others. New members have signed a Multi-Year Agreement, paid a down payment and made monthly payments. Since no credit check is carried out and a large number of subscriptions are carried out in advance, cancelations are not unusual.

The company was very busy in its three initial years of existence and the market value of its shares has trebled since it was made public in 2000. When new sales decreased rapidly, the first indicator of concern was in 2011.

Patricia Howard, CEO, and Franco D. Lauritsen, Controller had a lively conversation in Lauritsen's office one lunchtime, two weeks prior to the actual end of the fiscal year.

Lauritsen: Lauritsen: Lauritsen:

Yesterday, I was thinking more about our debate. Perhaps some profit may be done.

Patricia: I hope so. I hope so. Our compensation and stock value depend on the success of this time.

Lauritsen: Lauritsen: Lauritsen:

When we registered new members, we recorded unearned revenues. I believe we can justify reporting sales income for all the memberships sold instead of recognizing liabilities when memberships are sold.

Patricia: What's the profit impact?

Lauritsen: Lauritsen: Lauritsen:

Well let's just say that very favorably, I haven't run the statistics yet.

Applicable:

1.Why do you believe liabilities were originally recorded?

2. Is it acceptable to propose?

3.When the idea is adopted, who will be influenced?

4. For certain pension calculations, the FASB authorizes the need for an average market value of plan assets. The fair market value at a specified measurement date must be utilized in other circumstances. What conditions allow for the use of the average market value?

5. By examining FASB ASC 460-10 and using that GAAP to determine if certain assurances constitute loss contingencies, students will be able to expand their understanding beyond the scope of the chapter. Refer to the FASB Codification for the applicable reference

Reference no: EM132987010

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