Question

accounting question

Directions: Complete the table below: Do the items below lead to the recognition of a liability (Y/N)? If they do, what is the account name, measured amount, and classification as current or 1 noncurrent? 2 Item 1. X agrees to purchase a plot of land on which it 3 will build a factory for $5MM. Recognition of Liability (Y/N) Account Name Measurement Amount Current or Noncurrent 4 2. X places a $50MM order from one of its suppliers. The supplier is completing the manufacturing of the goods and will ship them within six months. 3. X signs a 5-year employment offer with an incoming CFO for $15MM salary and stock options. The CFO will start in two months. 4. X receives a check of $12MM from a store for merchandise that it will ship to the store in 90 days. 5 6 5. The supplier from above (with the $50MM order) ships the goods to X and sends an invoice. X obtains ownership of the goods when they arrive. The goods should arrive in less than 14 days. 7

Answer 1

1. No

2. No

3. No

4. Yes to be recognised as Liability, Advance from customer account, $12MM, Current Liability

5. Yes to be recognised as Liability, Accounts Payable account, $ 50 MM, Current Liability