Question

1. An entity invests in a security that is not, in form, common stock. Identify a characteristic of that security that would support a determination (even if not conclusively) that the security is in-substance common stock 2. Identify one condition that must be met for an asset group to be classified as held for sale. 3. What is the main condition for reporting a disposed component as a discontinued operation? 4. Company X leases property for 10 years under which it agrees to remove improvements at the end of the lease. I. At what amount does X recognize obligation to remove the improvements when it enters into the lease? il. Suppose it is highly unlikely that the landlord will require removal of the improvements. What is the effect on X's obligation? 5. Y, a segment of company X, carries goodwill on its balance sheet. Give an example of an event would cause X to assess whether the goodwill is impaired. 6. Y has Sim of goodwill on its balance sheet. Y's carrying value is $100m. Its fair value is $97m. How much of a write down of goodwill, if any, should it record? 7. A law has been passed that will require Stinko to remove hazardous waste after Stinko's year-end. Explain briefly Stinko's financial reporting obligation at year-end under U.S. GAAP. 8. What is the condition for deciding that an asset group is impaired under US GAAP?

please answer each question by order and asap.

Answer 1

1. In simple language, common stock means shares which entitles you for a part in profits of the company, that is dividends. This is one important characteristic which should be considered while determining common stock nature.

2. Asset classified as held for sale means those assets which would be sold in short term and the PURPOSE of buying this asset was selling it further to other party. so one condition for asset for sale would be that it is AVAILABLE for further sale.

3. The main condition would be that the disposal transaction will result in operation and cash flow of the component being eliminated from company operations.

only 3 questions shall be answered as multiple questions has been posted at a time.