Accounting Standards | Discussion

Question 1.

The question is whether to record the compensation cost during 10 years of CEO’s service of during 15 years agreed in the contract. According to ASC-710-10-25-9, if a deferred compensation arrangement attributes the benefits to an individual year of the employee’s work, the benefits should be recognized in that individual year; if the deferred compensation arrangement includes a service period greater than 1 year, ” the cost of those benefits shall be accrued over that period of the employee’s service in a systematic and rational manner”. The organization might choose whether to account for the present value of the future deferred compensation or whether not to account for that.

Assuming that Daigle Company chooses not to take into account the present value of the future obligations, the company should record the total compensation cost ($200,000) and attribute it over the period of active Joseph’s service which is 10 years.

Question 2.

The bonds issued by Worldpark, Inc. have an interest rate and essentially represent a creditor relationship with Buffett, Inc. However, these bonds do not have a maturity date and can only be repaid if WorldPark, Inc goes bankrupt or is purchased; this characteristic is common to equity investments, so further guidance is required for classifying these bonds as equity or liability. These bonds can be referred to as perpetual bonds. The nature of the obligation created by Worldpark, Inc. is a liability; furthermore, according to ASC 480-10-55-3, these bonds cannot be recognized as mandatory redeemable financial instruments since the redemption relates to an event that is not certain to occur (bankruptcy or dissolution of Worldpark, Inc.). According to the table provided in ASC-480-10-55-63, the contract between the parties is to be resolved by a physical settlement (the issues repays cash to the bond holder), and therefore WorldPark should classify $20 million bonds issued to Buffett, Inc. as a liability.

Works Cited

FASB. Accounting Standards Codification. Web. 2016. Available at https://asc.fasb.org/home

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: November 27, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: November 27, 2021]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: November 27, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 27, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 27, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 27, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 27, 2021]
close
Haven't found the right essay?
Get an expert to write you the one you need!
print

Professional writers and researchers

quotes

Sources and citation are provided

clock

3 hour delivery

person