1. Your company purchases another business at a bargain purchase properly accounted for as a business combination. They pay $1,000,000 for net assets that have a fair market value of $1,050,000. You are not certain how to account for the difference of $50,000.
2. Your company is developing computer software which will be sold directly to consumers. What activities make-up technological feasibility to determine which of the costs incurred can be capitalized?
3. Justify why you valued the inventory (goods for resale) at lower-of-cost or-market.
4. As the accountant for the Shoe-Horse Casino, you have been asked to determine if it is necessary to make an adjustment to the casino’s liability account for the outstanding gaming chips if it is believed that some will be unredeemable.
5. What financial instruments (financial assets and financial liabilities) are not eligible for an entity to use the fair value option of accounting?
6. Your business has closed for two weeks due to flooding, but fortunately you have business interruption insurance which covers the estimated lost gross margin (profit) due to the flooding. In the period the insurance recovery is recognized, what information should you disclose, if any, in the notes to the financial statements?