Accounting
What is my company’s journal entry for a judgment against an employee who committed fraud?
The company obtained a winning judgment against a former employee for fraud, involving future receipts and property recording in journal entries. This article analyzes how to recognize assets and income under the premise of no cash transactions and no adjustment to retained earnings, and provides specific accounting treatment ideas.
Following acquisition, do I need to convert cash basis accounting to GAAP basis pre-acquisition?
A company using cash-basis accounting is acquired by private equity and now needs to audit the opening balance after the acquisition. Core question: Should the pre-acquisition cash-basis accounting first be converted to GAAP basis, then adjust assets and recognize goodwill? Based on available information, this article outlines key considerations.
How should I record the value of an asset, net of a customer’s partial payment?
When a customer pays part of the cost of an asset that will be owned by the enterprise, how should the enterprise determine the carrying amount of that asset? Should this customer participation payment be recognized as revenue or other income? Based on the current accounting framework, this article provides analytical guidance on the above issues.
LLC divides into 3 entities; how do you divide retained earnings?
A bookkeeper takes on a client case: The original Master LLC (operating under the name XYZ) is split into three entities, where Master LLC wholly owns XYZ LLC and also establishes ABC LLC (with Master holding 50%). This article explores the principles for allocating retained earnings at the time of the split, noting that there is no unified legal standard, and it mainly depends on the decisions and agreements of the company's owners, while also needing to comply with relevant tax and corporate law regulations.
How do I incorporate foreign subsidiaries into a consolidated cash flows statement?
When all subsidiaries within a group use the same functional currency as the parent company, the consolidated cash flow statement can be prepared directly based on the consolidated balance sheet and income statement. However, if foreign-currency subsidiaries exist, practice often requires preparing their cash flow statements separately first, then consolidating them. This article reviews traditional consolidation steps and raises questions about how to reconcile separately prepared cash flow statements of foreign subsidiaries with the consolidated balance sheet.
How do I handle lease termination agreements under ASC 842?
Under the ASC 842 framework, lease termination agreements involve the recognition and allocation of termination payments. This article analyzes the lessor's accounting treatment through a specific case (a lease extension through 2020-2021, with the lessor paying termination fees in three installments totaling $80,000), emphasizing the need to determine whether the agreement constitutes a lease modification based on its substance and to recognize expenses appropriately.
How do I write off an unpaid balance to my vendors?
When a company decides to write off an unpaid balance owed to a supplier, it must follow proper accounting procedures. This article provides examples of accounting entries for writing off supplier balances and explains the relevant prerequisites and risks.
As a construction company preparing our own financials, what general ledger accounts should we add?
When construction companies prepare financial statements on their own, they often need to review their general ledger account system. This article focuses on three core issues: account addition, consolidation, and display order, providing reference suggestions based on industry practices, along with links to relevant statements.
I set up a new LLC in a new state; how do I update my accounting and book keeping?
An Amazon seller registered an LLC in Louisiana, then moved to Arizona and formed a new LLC while dissolving the old one. As the sole member, he faces questions about how to handle the books, inventory (approximately $6,000), and personal advances (approximately $5,000) between the old and new entities. Based on available information, this article outlines common practices and considerations for accounting transition.