Financial Accounting Standards Boards’ Codification Essay

For my role as a staff accountant, I was assigned to research the appropriate accounting for revenue treatment of construction contracts for a client, LabCo. In specific, I was assigned to oversee LabCos’ contract involving a six-axis laser-cutting machine with Halibut Co. After researching and developing a theory based on the Financial Accounting Standards Boards’ Codification, I have concluded that LabCos’ treatment of revenue was reasonable; however, they should have changed revenue recognition principles sooner. In this situation, there are three possible ways they can handle changing their accounting method: Retrospective Application, Change in Accounting Estimate Method, or Change in Estimate Affected by Accounting Principle. The revenue treatment principle for a construction type principle states, â€Å"In accounting for contracts, the basic accounting policy decision is the choice between two generally accepted methods: the percentage-of-completion method including units of delivery and the completed-contract method. The determination of which of the two methods is preferable is based on a careful evaluation of circumstances because the two methods should not be acceptable alternatives for the same circumstances (ASC 605-35-25-1).† LabCo agreed to build a six-axis laser-cutting machine for Halibut. The contract entered into was a fixed price contract. A fixed price contract is, â€Å"An agreement to perform all acts under the contract for a stated price† (ASC 605-35-15-4). LabCo decided to use the percentage of completion method for recognizing income. â€Å"The percentage of completion method recognizes income as work on a contracts progress† (ASC 605-35-25-51). Income recognized shall be that percentage of estimated total income, either: â€Å"That incurred costs to date bear to estimated total costs after giving effect to estimates of costs to complete based on most recent information, or that may be indicated by such other measure of progress toward completion as may be appropriate having due regard to work performed (ASC 605-32-25-52).† It is appropriate to use the percentage of completion method when, â€Å"The ability to make reasonably dependable estimates, which, for purposes of this Subtopic, relates to estimates of the extent of progress toward completion, contract revenues, and contract costs (ASC 605-35-25-56.)† LabCo believed they could correctly estimate the cost to build a laser cutting machine because they had completed similar contracts in the past for Halibut. After the contract went into effect, LabCo experienced difficulties designing and manufacturing the laser cutting machine. They were forced to redo initial designs, outsource engineering costs, and the price of steel used to construct the cutting machine unexpectedly rose. LabCo had to re-estimate their costs to complete the project and concluded that the excess costs would exceed the total fixed fee contract price they negotiated with Halibut. To update their estimated costs, LabCo continued using the percentage of completion method. LabCo appropriately recorded a loss in the period in which they became aware. â€Å"When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract shall be made. Provisions for losses shall be made in the period in which they become evident under either the percentage-of-completion method or the completed-contract method (ASC 605-35-25-46.)† LabCo experienced another setback which delayed their process six more months. When the cutting machine was finally complete, they delivered it to Halibut to have it tested. During the final test, the machine failed to meet the specifications of Halibut. LabCo was forced to redesign and fix the various problems with the machine. At this point, LabCos’ chief accounting officer decided to switch to the completed contract method, which says, â€Å"Under the completed-contract method, income is recognized only when a contract is completed or substantially completed. Accordingly, during the period of performance, billings and costs are accumulated on the balance sheet, but no profit or income is recorded before completion or substantial completion of the work (ASC 605-35-25-88).† â€Å"The completed contract method is preferable when lack of dependable estimates or inherent hazards cause forecasts to be doubtful (ASC 605-35-25-90)†, which was the case in the situation. The two methods, percentage of completion and completed contract, are not acceptable alternatives for the same situation (ASC 605-35-25-1). LabCo should have realized after running into unexpected costs the first time that they should have switched to the completed contract method. â€Å"An entity using the percentage-of-completion method as its basic accounting policy shall use the completed-contract method for a single contract or a group of contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates doubtful (ASC 605-35-25-61).† LabCo is able to handle this change in of accounting principle in one of the three methods; Retrospective Application, Change in Accounting Estimate, or Change in Accounting Estimate Affected by Accounting Principle. It is clear that the percentage of completion method was not the acceptable alternative because LabCo could not effectively estimate costs. The completed contract method is the preferable method because there was a lack of dependable estimates. LabCos’ decision to switch from percentage of completion to completed contract method is in accordance with FASB Codification because this transition can be handled by the Accounting Staff to apply a retrospective application to the previous year’s financial information. â€Å"The application of a different accounting principle to one or more previously issued financial statements, or to the statement of financial position at the beginning of the current period, as if that principle had always been used, or a change to financial statements of prior accounting periods to present the financial statements of a new reporting entity as if it had existed in those prior years. (ASC 250-10-20)† Since the retrospective application is applied to this situation to show the effect of the change to completed contract method; the estimated contract costs were no longer reliably determinable, therefore, disclosure for the reasons behind this change must be included within the year’s financial statements when the change actually is incurred. The situation can also be handled with a Change in Accounting Estimate approach. When LabCo incurred significant difficulties with the design and manufacturing of the laser machine, they decided to update their estimates used in the percentage of completion method to reflect both the cost overruns incurred as well as the cost overruns expected to be incurred. Handling it with this approach prohibits the retrospective treatment to the situation. It will affect only the period of change and future periods, if the change affects both, in which case it does. â€Å"The effect on income from continuing operations, net income (or other appropriate captions of changes in the applicable net assets or performance indicator), and any related per-share amounts of the current period shall be disclosed for a change in estimate that affects several future periods.† (ASC 250-10-50-4) The final approach that could have handled this situation is the Change in Estimate Affected by a Change in Accounting Principle. Due to LabCo dealing with continued problems with the Halibut contract, and prior estimates adjusted previously during the contract period, it forced the Chief Accountant of LabCo to allow the change in accounting principle from percentage of completion method to completed contract method. LabCo can make this change by it being impossible to determine whether a change in principle or a change in estimate has occurred. â€Å"If it is impracticable to determine the cumulative effect of applying a change in accounting principle to any prior period, the new accounting principle shall be applied as if the change was made prospectively as of the earliest date practicable.† (ASC 250-10-45-7) After much continued research and intellectual thought, we have concluded that the Retrospective Application is not sufficient in this matter because the estimates have been altered drastically; to retrospectively apply the changes this year would distort Net Income figures to the point where timeliness and consistency will no longer apply. The Change in Accounting Estimate would seem sufficient to apply to this situation, but it will not work because a change in estimate cannot be applied retrospectively. Therefore, I have concluded that the best way to handle this issue is the Change in Accounting Estimate affected by the Change in Accounting Principle approach. I have come to this conclusion based on the facts that due to a change in accounting principle and change in accounting estimate both being involved in this situation, and retrospective application not being applicable, the entire effect of the two changes should be applied in a prospective method. This free SWOT analysis shows strengths, weaknesses, opportunities and threats. We cover over 40,000 companies and industries. This SWOT analysis for Labco can provide a competitive advantage. Strengths|

Central school district vs. Rowley 458 US 176 (1982) Essay

Central school district vs. Rowley 458 US 176 (1982) - Essay Example These helped to increase the amount of training and funding individuals that were responsible for education could receive; specifically with regard to learning and understanding how to educate children with mental retardation and issues pertaining to blindness/disabilities with sight. Further, the State School’s Act of 1965 provided additional grant funding from the federal government as a means of accomplishing the tasks that have thus far been denoted with respect to the provisions made available for those with distinct disabilities within the educational system. As one can adequately note, the purpose of all of this legislation was to provide a more fair and equitable distribution of education; one did not favor or preference one specific of individuals. As this served as the fundamental backbone of what came to be known as FAPE (Free Appropriate Public Education), it had a profound impact with regard to the way in which educators came to understand their role and allocated funding based upon the unique disabilities that were exhibited within their student body. The context of education at the time was one that of course placed a higher emphasis upon the average student and most often ignored the needs and requirements of those that had what were referred to as special needs. As a means of seeking to make this reality a distant memory, Congress and stakeholders within the educational system sought to effect a more reasonable and ethical approach whereby students with disabilities would have their educational needs determined and provided for in a similar degree as compared to those that were considered as average. The core challenge to FAPE came as a Supreme Court case that challenged that Free Appropriate Public Education was not being provided to a deaf girl within a particular school district; as the district had denied her parents request for a deaf translator. Seeing this as an egregious denial of FAPE, the suit

"engaging" your employees on the implementation of a Essay

"engaging" your employees on the implementation of a strategic plan - Essay Example Strategic Planning, as it is known, is not an event but a process. A key feature of the process is the employees ’engagement at all levels of. Employee’s engagement creates additional input and assists in build their active commitment to the end plan. Thus, strategic planning processes can be considered successful in any organization when a bottom up and top down communication technique is taken to communicate strategic plans from initiation stage. By following this, the organization is in a position to define to the employees what winning clearly looks like. It starts off with informing all levels of employees that a particular strategic planning process will be undertaken. These should be clear processes that are achievable, and all employees can give their feedback. Strategic planning process provides organizations with a clear direction and purpose. A good strategy will balance gains and productivity initiatives, and this is achievable through actively involving employees in strategic planning. Organizations that dont involve employees in planning have exponentially higher probability of

Why have international initiatives to share responsibilities for Essay

Why have international initiatives to share responsibilities for forced migrants not been more effective - Essay Example International migration envisages occupied a various series of different stakeholders that have diverse and occasionally conflicting welfare, and is progressively associated with other vital global problems such as growth, employment, human rights and safety measures. National governance of worldwide migration has faced different types of disputes. International initiatives to share responsibilities for forced migrants have not been as effective as these should be because of various reasons. International initiatives to share responsibilities for forced migrants have emerged among the various nations. This paper argues that these efforts have registered failure in most cases because of the lack of coordination between the State and the Federal governments, absence of international support, scarcity of funds besides the identity crisis of the migrants. The primary and important reason for the failure of initiatives is a lack of consistency in policy making and the execution of various rehabilitation programs. Policy makers and authorities often fail to describe the scope, consistency, possibility and international support of their initiatives in the issue of rehabilitating forced migrants. Researcher can have stated that the second one is the management of policy-making and its accomplishment. Severe administrative problems in the field of policy making have paved the way for conflict between the Federal government and State governments. International initiatives have often failed to ensure the fortification of the human rights and restore the dignity of migrants. This has become a cause for the failure of international initiatives to share responsibilities for forced migrants. A report by United Nations Dept. of Economic and Social state that â€Å"Governments were also urged to intensify efforts to provide basic social services , facilities family reunification, of documented migrants, promote social and economic

Nursing simulated lesson plan Assignment Example | Topics and Well Written Essays - 750 words

Nursing simulated lesson plan - Assignment Example g lounge so that the rules stipulated in the memo can be reviewed and a thorough checking be conducted in order to ensure that the students have obeyed them to the letter. The historical exercise of â€Å"hands on† teaching in healthcare professions, whereby students learn through practicing on real patients under supervision, may not be justifiable as the principal model for preparing healthcare experts. This challenge could be aggravated by the advance of directed health plans; patients paying for their own healthcare may refuse to serve as â€Å"teaching material,† the price traditionally paid for receiving care at a teaching hospital or public clinic. Consequently, clinical simulation training is needed to avoid of caregivers shortages under such situations ( Riley, 2008). The instructor will listen to how the other clinical students respond to a given incident and provide guidance where needed. The observational notes will be look over during the next class with all students. Clinical students learn in two ways, through text books, and by being in a hospital environment, which allows them to familiarize themselves with real life situations; as such, clinical simulations provide a way for the students to practice in an environment that is comparable to a real life situation. This will better prepare the students for their upcoming healthcare clinical studies (Loyd, Lake, & Greenberg, 2004). The main challenge faced by clinical students is that they are not familiar with carrying out proper procedures during circumstances that are covered in their textbooks, and it is for that reason that clinical students need to be able to have a way to practically apply the proper procedures of the medical field’s practices. The practice of using role-playing scenarios at random throughout a course of study considerably helped students to be prepared to act on any situation as if they were in a real situation ( Sanchez, Ferrin, Ogazon, Sepà ºlveda, & Ward,

Enterprise in events Essay Example | Topics and Well Written Essays - 2500 words - 1

Enterprise in events - Essay Example There are also many theories that have come up and they are trying to discuss the real meaning of an entrepreneur. Reasons that have made it difficult to discuss this time is the fact like, why are some people able to start business while others cannot. Also what’s the reason why some businesses succeed while others selling the same products cannot? These are a few of the asked questions when defining who an entrepreneur is. However, this paper will focus on describing what an enterprise is. From the point of what is an enterprise, it will also discuss the possible theories that describing the meaning who is an entrepreneur. Finally this paper will also focus on the real meaning of entrepreneurship as from different literature reviews. Many people are currently managing very big enterprises. Most of these enterprises are successful and they are gaining a lot of profit from them. The main goal of every business is to gain profit. Before we talk about how this businesses are ran, it is important to describe what an enterprise is. From business point of view, enterprise is the measures that are used to encourage people on how to be good entrepreneurs. It also involve spotting ideas and looking for the best ways in which to transform these ideas into reality (King, 2002 p. 23). Therefore, it is important for every enterprise to ensure that profits are maximized. To achieve these goals, all forces of production have to be considered. These goals are achieved through entrepreneurs’ hard work and determination. However, entrepreneurs are the ones who make enterprises run. The big question is, â€Å"who are these entrepreneurs?† To describe who really is an entrepreneur, there are some factors that have to be considered first. There some approaches that can be used to describe an entrepreneur. One of the theories that can be used to describe entrepreneurs is the trait theory. This theory describes

Development economic Term Paper Example | Topics and Well Written Essays - 3750 words

Development economic - Term Paper Example In addition, corruption tends to increase with poverty. Thus, the richer countries tend to be significantly less corrupt than the poorer nations. It has been discerned that corruption is one of the cardinal causes for bringing about the downfall of economic progress in the developing nations. Some of the questions that naturally arise, with regard to corruption are given in the sequel. First, what is the damage caused by corruption and what constitute the best methods for eradicating corruption from institutions. Second, can the promotion of whistle-blowing lead to the desired consequences. Third, does the facilitation of transparency and the provision of advice to citizens regarding the submission of complaints, and the introduction of institutions to deal with the resulting cases, provide pragmatic and tangible solutions (Global Economic Symposium, 2014). As such, the system of corruption tends to be pervasive and very powerful in the developing nations. Any person who opposes corruption is sidelined. In fact, civil servants who oppose corrupt practices are dismissed from service, after being falsely implicated and charged for offences that they have not committed. A businessman who opposes the corrupt bureaucracy is compelled to overcome obstacles at every stage of his enterprise (Hors, 2000). It is in this milieu that the civil service of the developing nations is regarded as the least risky option for acquiring enormous wealth in a very short time. The majority of the citizens do not believe that the civil service has been constituted with the objective of implementing their rights. The developing nations have monolithic bureaucracies. The latter are governed by arcane procedures and rules that promote confusion and provide various interpretations. This leeway proves to be of great benefit to the corrupt bureaucracy, which takes decisions or