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The Basi of the Accounting System

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Added on  2020-03-16

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ACCOUNTING ACCOUNTING 15 15 Running Head: ACCOUNTING Accounting Authors Note: Answer to question 1: 2 Answer to question 2: 3 Part 1: 3 Part 2: 3 Part 3: 4 Part 4: 5 Answer to question 3: 7 Part 1: 7 Part 2: 7 Answer to question 4: 8 Answer to question 5: 10 Reference 16 Answer to question 1: The Annual Reports are prepared to show the basic information of an organization to help the stakeholders of an organization to assess the financial position and operating performance of such organization properly (May

The Basi of the Accounting System

   Added on 2020-03-16

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Running Head: ACCOUNTINGAccountingName of the Student:Name of the University:Authors Note:
The Basi of the Accounting System_1
ACCOUNTING1Table of ContentsAnswer to question 1:......................................................................................................................2Answer to question 2:......................................................................................................................3Part 1:...........................................................................................................................................3Part 2:...........................................................................................................................................3Part 3:...........................................................................................................................................4Part 4:...........................................................................................................................................5Answer to question 3:......................................................................................................................7Part 1:...........................................................................................................................................7Part 2:...........................................................................................................................................7Answer to question 4:......................................................................................................................8Answer to question 5:....................................................................................................................10Reference.......................................................................................................................................16
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ACCOUNTING2Answer to question 1: The Annual Reports are prepared to show the basic information of an organization to helpthe stakeholders of an organization to assess the financial position and operating performance ofsuch organization properly (May 2013). Settlement because of litigation outcome in a courtagainst a company or out of court settlement by a company to squash a litigation before, duringor after the court proceeding; it involves outflow of resources from an organization and inflow ofresources to another organization (Weil et al. 2013). Both the organizations need to disclose thematter in their annual reports, to be specific in the financial statements to ensure that thefinancial position and operating results are correctly reelected in the financial statements.The CBA has settled the “CBA in payout on toxic products” case with the investors for$50 Million in addition to $1.5 Million to the International Litigation Partners. It is imperativethat the effects of these payments are shown in the financial statements of the company to reflectthe true and correct picture of its financial position and operating performance in its financialstatements (Edwards 2013). Thus, the payment shall be shown in the Income statement of thecompany as litigation expenses and subsequently shall be shown in the form of reduced bankbalance in the Balance sheet of the company (Beatty and Liao 2014). Both these effects shall beprovided in the financial statements of the company in the year of payment. Apart from that, aseparate disclosure shall also be made in the notes to the accounts to let the users of the statementknow of the nature of this huge expenditure along with necessary explanation.
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ACCOUNTING3Answer to question 2: Part 1:Fair value of portable sound studioTotal Year 0123 Lease rent 50,000.00 50,000.00 50,000.00 50,000.00 PV factor @8% 1.00 0.93 0.86 0.79 Present value of leaserent 50,000.00 46,296.30 42,866.94 39,691.61 178,854.85 Add: Present value of guaranteed residual valued 27,223.33 Fair value of portable recording studio 206,078.18 Part 2:Schedule incorporating accrued interest in lease paymentsInstallment Outstanding Year Principal Interest @8% 0 50,000.00 128,854.85 1 39,691.61 10,308.39 89,163.24 2 42,866.94 7,133.06 46,296.30 3 46,296.30 3,703.70 - 178,854.85 21,145.15 Part 3:Journal entriesDate Particulars Debit ($)Credit ($)01.07.2019Leased asset A/C -------Dr. 178,854.85 Lessor Ltd 178,854.85 (Being the asset taken on lease from Lessor Ltd.)
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