Question

In: Accounting

1 Please briefly discuss: a. methods of dealing with the allocation problem. b. the general rules...

1 Please briefly discuss: a. methods of dealing with the allocation problem. b. the general rules related to revenue recognition. c. the general rules for allocating tax expenses between periods.

Solutions

Expert Solution

a.

Resources (like land, labor, capital, and organization) are allocated to different units or production levels. Basically fixed costs out of the utilization of those factors (like interest on capital, rent for the land, etc) are allocated; and this removes allocation problem.

Methods are as below:

No. 1) Direct method: Under this method a base of allocation is chosen, like floor space occupied by various units, and then the related cost, like rent for the land, should be allocated.

No. 2) Step method: This is the process of allocating service department cost with the help of predetermined rates, like 30% and 70% to two different units.

No. 3) Reciprocal method: In this case relationship of units with cost should be established first and then the required allocation should be done; suppose a service department (ABC) uses more power than other departments; therefore, electricity cost for the whole factory should be allocated more in ABC.

b.

Revenue of a firm must be recognized if its required performance obligation is complete, such as delivery of goods to the buyer’s place.    

Revenue of a firm is realized if goods are delivered and cash is collected by seller.

Revenue is earned if goods are delivered but cash is not yet received.

Advance payment of cash must not be considered as revenue unless the required work is done.

c.

This is the intraperiod tax allocation, which indicates charging taxes on different fields and should be recorded the taxable amount as net of tax.

The rules are applicable to the following:

No. 1) continuous operating

No. 2) Discounted operation

No. 3) Adjustments of earlier periods

No. 4) Amount of effect for principle changes


Related Solutions

1 Please briefly discuss: a. methods of dealing with the allocation problem. b. the general rules...
1 Please briefly discuss: a. methods of dealing with the allocation problem. b. the general rules related to revenue recognition. c. the general rules for allocating tax expenses between periods.
1. Please briefly explain the following. a.) Discuss the sequence of events in the B-cell response...
1. Please briefly explain the following. a.) Discuss the sequence of events in the B-cell response to a thymus-dependent antigen. b.) Discuss the structure and function of class I and II MHC molecules. c.) Discuss the development of T cells in the thymus.
Please briefly discuss the following: A. What are general types of values used for external accounting....
Please briefly discuss the following: A. What are general types of values used for external accounting. B. Discuss the reasons why use historical cost accounting for some accounts while use fair value measure for other accounts.
There are two common methods used for analyzing a truss. Briefly discuss both methods with the...
There are two common methods used for analyzing a truss. Briefly discuss both methods with the aid of diagrams.
1. Briefly discuss the boundary between expressing an opinion and defamation. 2. Discuss methods other than...
1. Briefly discuss the boundary between expressing an opinion and defamation. 2. Discuss methods other than filtering to prevent employees from inappropriate use of the Internet at work and whether the approach taken by a large company would be as successful at a small company. 3. Explain the main disadvantages of allowing employees at a given organization to create their own personal blogs to reach out to partners, customers, and other employees, and to improve their corporate image.
Please briefly discuss what is "budgetary slack" please briefly discuss what is "earnings management and possible...
Please briefly discuss what is "budgetary slack" please briefly discuss what is "earnings management and possible ways to manage earnings Please briefly discuss what is off-balance sheet financing
Briefly discuss the employment problem with respect to economic growth and development. Briefly discuss the migration...
Briefly discuss the employment problem with respect to economic growth and development. Briefly discuss the migration problem in the economic development using the Harris-Todaro Migration Model.
Describe the PCAOB’s independence and ethics rules and briefly discuss whether they are different from the...
Describe the PCAOB’s independence and ethics rules and briefly discuss whether they are different from the AICPA rules.
discuss analyzing cost allocation methods? Explain the importance of computing ratios and their significance to investors...
discuss analyzing cost allocation methods? Explain the importance of computing ratios and their significance to investors ?
discuss and identify briefly the strategies and problem of BOEING
discuss and identify briefly the strategies and problem of BOEING
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT