In this assignment, you will use the Accounting Standards Codification (ASC) to research an accounting issue. In the Website Links folder on Blackboard, I have included the link to the ASC along with the username and password you will need to login.
Assume you are a staff accountant working for ABC Company. Matt Rogers, CFO of ABC Company, has asked you to research anissue related to ABC Company’s financial statements. ABC has six major divisions, and the company recently decided to sell off its Mining Division. The company is actively seeking a buyer, has priced the division at the fair value of the division’s asset and liabilities,and expects that the division will be sold during the nextfiscal year. Rogers would like to know how to report the Mining Division in the income statement for the current fiscal year as well as the balance sheet for thecurrent yearend. The division is considered an operating segment, and separate information about the division is tracked for reporting in the segment note.After the division is sold, ABC will have no involvement with the division’s operations.
Rogers would like to know:
How does the ASC define a component of an entity?
Are there any conditions that must be met before a component of an entity can be considered discontinued operations?If so, what are those conditions?
Would recommend reporting the Mining Division as discontinued operations? He would like a detailed rationale supporting your recommendation.
Would it be appropriate to consider the Mining Division as held for sale? If so, explain why.
What information would be reported in the income statement for the Mining Division?
How would the assets and liabilities of the Mining Division be reported in the balance sheet?
Access the ASC and research this issue. Hint: Use the index on the side of the ASC to find the Discontinued Operations It can be found under Presentation. Once you find the guidance on Discontinued Operations, use the Join All Subtopics feature to make the guidance easier to read.
Hint: To answer question 4 above, you will need to read a paragraph in another section of the ASC. You will find a link to that paragraph in the Discontinued Operations
Write a memo from you (a staff accountant) to Matt Rogers (CFO). The memo should include an appropriate introduction, body, and conclusion, and the memo must answer each of the questions that Rogers asked.
For help with the format of the memo, refer to Chapter 10 in the May & May writing handbook.
For help in writing concisely, refer to Chapter 4 in the May & May writing handbook.
If you have trouble with grammar, refer to Chapter 5 in the May & May writing text.
To ensure that your memo fits what I expect, refer to my GUIDELINES FOR WRITING BUSINESS MEMOS that I have posted on Blackboard.
As you write your memo, keep in mind that you are writing to your superior, the CFO of ABC Company. The tone and the terminology you use should be appropriate for a memo to a corporate CFO.
You must USE THE ASC as the basis for this memo. Do not pull information from other sources (such as your textbook) if the information is available in the ASC. Cite the sources of any information you use in your memo. Because this is a memo, I recommend using endnotes to cite your sources. Refer to Appendix 8 – E in the May & May text for guidance on using endnotes. Remember that the ASC is referenced by topic – subtopic – section – subsection. For example, if you were citing where you found the definition of a component of entity, you would cite the source as ASC 205-20-20. (That definition is topic 205 Presentation of Financial Statements, subtopic 20 Discontinued Operations, Section 20 Glossary.)
The maximum length of the memo (excluding endnotes) is two, single-spaced pages.
Your score on this assignment will be based on the quality of your communication as well as the quality of your content.
The post Accounting Standards Codification (ASC)
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