acc_304_discussion_week_5.docx
Interest Cost during Construction and Various Accounting Topics
Discuss the most challenging topics that you encountered within Chapters 8-11, and briefly summarize the manner in which you overcame such challenges. Suggest the primary ways in which the challenges that you identified could impact the financial statements if they are recorded incorrectly. Justify your response.
You are the construction accountant for an organization, and management is unsure of the manner in which it should record interest cost during the construction of a new building that will take five (5) years to complete. Compare and contrast the three (3) approaches to account for interest cost during the five-year period, and give your opinion of the method that you believe would result in the lowest net income over the first three (3) years. Ascertain the overall impact that interest cost has on the balance sheet.
Chapter 8
|
Valuation of Inventories: A Cost-Basis Approach
|
|
|
8
|
|
|
After studying this chapter, you should be able to:
|
|
|
|
|
1.
|
Identify major classifications of inventory.
|
|
|
|
2.
|
Distinguish between perpetual and periodic inventory systems.
|
|
|
|
3.
|
Determine the goods included in inventory and the effects of inventory errors on the financial statements.
|
|
|
|
4.
|
Understand the items to include as inventory cost.
|
|
|
|
5.
|
Describe and compare the cost flow assumptions used to account for inventories.
|
|
|
|
6.
|
Explain the significance and use of a LIFO reserve.
|
|
|
|
7.
|
Understand the effect of LIFO liquidations.
|
|
|
|
8.
|
Explain the dollar-value LIFO method.
|
|
|
|
9.
|
Identify the major advantages and disadvantages of LIFO.
|
|
|
|
10.
|
Understand why companies select given inventory methods.
|
|
|
|
|
Chapter 9
|
Inventories: Additional Valuation Issues
|
|
|
9
|
|
|
After studying this chapter, you should be able to:
|
|
|
|
|
1.
|
Describe and apply the lower-of-cost-or-market rule.
|
|
|
|
2.
|
Explain when companies value inventories at net realizable value.
|
|
|
|
3.
|
Explain when companies use the relative sales value method to value inventories.
|
|
|
|
4.
|
Discuss accounting issues related to purchase commitments.
|
|
|
|
5.
|
Determine ending inventory by applying the gross profit method.
|
|
|
|
6.
|
Determine ending inventory by applying the retail inventory method.
|
|
|
|
7.
|
Explain how to report and analyze inventory.
|
|
|
|
|
Chapter 10
|
Acquisition and Disposition of Property, Plant, and Equipment
|
|
|
10
|
|
|
After studying this chapter, you should be able to:
|
|
|
|
|
1.
|
Describe property, plant, and equipment.
|
|
|
|
2.
|
Identify the costs to include in initial valuation of property, plant, and equipment.
|
|
|
|
3.
|
Describe the accounting problems associated with self-constructed assets.
|
|
|
|
4.
|
Describe the accounting problems associated with interest capitalization.
|
|
|
|
5.
|
Understand accounting issues related to acquiring and valuing plant assets.
|
|
|
|
6.
|
Describe the accounting treatment for costs subsequent to acquisition.
|
|
|
|
7.
|
Describe the accounting treatment for the disposal of property, plant, and equipment
|
|
|
|
|
Chapter 11
|
Depreciation, Impairments, and Depletion
|
|
|
11
|
|
|
After studying this chapter, you should be able to:
|
|
|
|
|
1.
|
Explain the concept of depreciation.
|
|
|
|
2.
|
Identify the factors involved in the depreciation process.
|
|
|
|
3.
|
Compare activity, straight-line, and decreasing-charge methods of depreciation.
|
|
|
|
4.
|
Explain special depreciation methods.
|
|
|
|
5.
|
Explain the accounting issues related to asset impairment.
|
|
|
|
6.
|
Explain the accounting procedures for depletion of natural resources.
|
|
|
|
7.
|
Explain how to report and analyze property, plant, equipment, and natural resources.
|
|
|
|
|
cheyl.1
