This is a project of accounting intermediate 1, so i need a person in this major accounting field to help me done this project.there will be 1 hard copy and one electronic copy.Due tomorrow 04/26 at 5pm.so i need this done asap before tomorrow noon for check upThanks
acct_3367_spring_project.pdf

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Intermediate Accounting 1 — Spring 2017
Financial Accounting Standards Codification Research Project
Students may (but are not required to) work in a group of up to 3 people. Turn in one hard
copy of the project for the group with all names attached. Each member of the group must
turn in an electronic copy of the project. Groups cannot work with each other or share
information with each other.
In order to complete this assignment, you will need to access the Financial Accounting Standards
Board (FASB) Financial Accounting Standards Codification database. The related information for
this is posted on Blackboard for this course. The UH copy of the FASB Financial Accounting
Standards Codification (FASC) can be accessed at: http://aaahq.org/ascLogin.cfm. The FASC is the
one and only source of the technical GAAP standards. Other sources are no longer accepted as
GAAP.
The student log in information is: Username: AAA51654 / Password: V8AEh4E
After you sign in – click on “FASB Accounting Standards Codification” on the screen and the
database will open. There is a “search” box in the top right of the screen. If you scroll over the
topics (Assets, Liabilities etc.) on the left side of the welcome page you will see the subtopics and
contents – click on the subtopic and it will take you to the related Codification content.
The class assignment/project that you are responsible for is comprised of researching two technical
topics in accounting: 1) Asset Impairments and 2) Loss Contingencies. You will respond to several
specific technical standard questions about the topics, as well as perform computations. For each
question and sub-question, you must cite the specific section of the FASC that applies to
receive credit (e.g. FASC 210-20-15-1). Use the following example for the format: ‘Based on
FASC 360-10-X, which states “***”, the firm should record ***’.
You can access each topic by either scrolling over the topics and subtopics until you find the related
content or topic or by using the search box. The required topics and related questions are listed
below.
Submissions:
Students will submit BOTH an electronic copy and a hard copy of their assignments:
1) Electronic Copy: The assignment will be submitted online through the UH Blackboard Learn
system, and all submissions will be checked for plagiarism (copying other students’ work) using
specific software developed to perform this task. If you cut and paste or copy another student’s
work, it will be detected, and you will receive a zero on this assignment and be subject to the UH
Policy on Academic Dishonesty. Also, you cannot “cut & paste” the answer from the FASC
database – use your own words. The electronic copy should be in an MS Word format and submitted
on Blackboard Learn through “FASB Codification Project” link under the Project folder. The
system will not allow submissions after the deadline, and any project that is not in the system will
get a grade of zero.
2) Hard Copy: A hard copy of the assignment will be submitted before the deadline stated below.
Failure to submit the hard copy before due date will result in a grade of zero in the project.
Submission deadline for BOTH electronic and hard copies is APRIL 26, 2017 (by 5 PM)
Case #1
Accounting for a Loss Contingency for a Verdict Overturned on Appeal
M International (“M”) and W Inc. (“W,” a competitor of M) have been engaged in longstanding litigation over a specific patent infringement matter. Below is a summary
timeline of specific events that have taken place related to this matter:
1. In May 2007, W filed a claim against M for patent infringement.
2. For the year ended December 31, 2007, management of M determined that a loss
for this matter was probable and represented that the estimate of loss was in the
range of $15 million to $20 million, with $17 million being the most likely
amount of loss within the range.
3. A jury trial took place in September 2009.
4. The jury reached a verdict on September 24, 2009, and a judgment was ordered in
favor of W. The judgment required M to pay W $18.5 million.
5. In November 2009, M filed a Notice of Appeal with the Court of Appeals.
6. In December 2010, the Court of Appeals issued a ruling in favor of M’s appeal
and reversed the lower court’s ruling on the matter. This meant that the Court of
Appeals overturned the jury verdict and the $18.5 million judgment against M.
7. On December 20, 2010, management of M determined this matter was closed
upon discussions with in-house legal counsel.
Required:
1. For the year-end December 31, 2007, financial statements, what amount should M
record as a liability?
2. For the year-end December 31, 2009, financial statements, should M adjust its
liability? If so, what amount should be recorded; and should the amount of the
adjustment be considered a 2009 event or a prior period adjustment?
3. For the year-end December 31, 2010, financial statements, what amount
should M record as a liability?
Case #2
Accounting for Asset Impairments when there are Rough Waters Ahead
Smooth Sailing is a private company that operates one cruise ship. Smooth Sailing’s
purchase of the cruise ship was financed with nonrecourse debt. (Nonrecourse debt is a
loan that is secured by a pledge of collateral, in this case the cruise ship, but for which the
borrower is not personally liable. If the borrower defaults, the lender can seize the
collateral, but the lender’s recovery is limited to the collateral.) The cruise ship has its
own identifiable cash flows that are largely independent of the cash flows of other asset
groups.
Because of an increased presence of pirates in the area in which Smooth Sailing cruises,
the cruise ship’s operating performance has significantly declined, which has directly
contributed to a decline in the ship’s overall fair value. In the current year (2010),
Smooth Sailing’s annual operating cash flows have declined by 30 percent to $1.0
million, and its annual operating cash flows are expected to continue to decline in the
near term. Because of this decline in the cruise ship’s fair value and operating
performance, Smooth Sailings’ management is evaluating the following possible options
for proceeding into 2011 and beyond:
Estimated Future Cash Inflows — Undiscounted
Option
Probability
of
Occurring
2011
2012
2013
2014
2015
Total
A
Continue operating the cruise
ship in the current area.
10%
$1.0M
$0.9M
$0.7M
$0.7M
$0.7M
$4.0M
B
Operate the cruise ship in a new
area where there are no pirates.
20%
$0.6M
$0.8M
$1.1M
$1.6M
$1.9M
$6.0M
70%
$1.0M
$3.0M*
$0
$0
$0
$4.0M
C
For 2011, operate the cruise ship
in the current area despite the
increased presence of pirates. On
December 31, 2011, turn the
cruise ship back to the lender
(e.g., foreclosure).
*Estimated
fair value of
cruise ship
These events indicate that the carrying amount of the asset group may not be recoverable
and, therefore, Smooth Sailing will test the asset group for recoverability and potential
impairment in accordance with ASC 360-10 as of the end of the current fiscal year,
December 31, 2010.
As of December 31, 2010, the cruise ship’s estimated fair value is $3.0 million, net book
value is $4.6 million, and estimated remaining useful life is five years. In addition, the net
carrying value of the nonrecourse debt is $4.0 million; there is $0.1 million of net
working capital (carried at fair value) directly attributable to the cruise ship; and Smooth
Sailing has determined that an annual discount rate of 7 percent is appropriate.
Required:
1) How should Smooth Sailings’ management perform the recoverability test for the
cruise ship as of December 31, 2010? In addressing this question, consider:
a) What assets and liabilities should be included in the “asset group” as defined by
ASC 360-10 for purposes of performing the recoverability test?
b) How should the multiple operating scenarios impact the recoverability test?
c) What impact should the potential foreclosure and extinguishment of debt have on
the cash flows used to perform the recoverability test?
2) What impairment loss, if any, should be recorded as of December 31, 2010?
Alternate Facts:
3) Would the outcome of the recoverability and impairment tests change if the probability
assessment was revised such that there was a 50 percent, 40 percent, and 10 percent
probability of scenarios A, B, and C occurring, respectively? If so, how?

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