Question

For each of the following questions, (1) cut and paste the appropriate paragraph(s) from the Accounting Standards Codification to answer the question and (2) give the full citation for each paragraph.

1.      Company A, a calendar-year public company, acquired common shares of Company B in 2018 as an investment. The investment does not give Company A control or significant influence over Company B. Company B is a private company and its shares are rarely bought or sold. How should Company A account for its investment in Company B?

2.      Company A acquired an asset that qualifies for interest capitalization. What interest rate or rates should the company apply to the weighted-average-accumulated expenditures to determine the appropriate amount of interest to capitalize?

3.      Company A is lessee on a lease that qualifies as a capital lease. What interest rate should Company A use to calculate the present value of the minimum lease payments. Company A has not elected to early adopt ASC 842.

4.      Company A holds a financial instrument that is not a derivative financial instrument but contains a separate financial instrument that is a derivative financial instrument. Under what circumstances must Company A account for the two financial instruments separately?

5.      Company A sponsors a defined-benefit pension plan that creates pension gains and/or losses each year. How do these pension gains and/or losses affect the calculation of the net periodic pension cost (pension expense)?

Answer 1

ACCOUNTING STADARDS USED FOR THE BELOW MENTIONED QUESTIONS

1

ASC 320 INVESTMENTS AND EQUITY

Even though company didn't received investments it can shown it as invetsmnets

2

For fixed assets ASC 360 property plant and equipment and for borrowing cost IAS 23

For weighted average interest calculation company has to calculate interest based on its normal rate of interesta and based on EMI paid by the company

3

ASC 840 is used for leases

If it is capital lease then the lessee has to capitalise that lease amount and can claim depreciation

4

ASC 825 is used for accounting of financial instruments

If the financial instrument is other than derivate financial instruments then it will traeted as cost of instrument as investment

If the financial instrument is derivate financial instruments then it will traeted as only the premium paid as cost of investment

5

ASC 715 Accounting for retirement benefits

what ever the amount received by way of the pension it will treated as other income