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2-23-11 Three ways to disclose things _ex. allowance for bad debts

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2-23-11 Three ways to disclose things _ex. allowance for bad debts Powered By Docstoc
					                                                                                                    2-23-11
Three ways to disclose things (ex. allowance for bad debts) on a financial report
    1. Account balance
           a. Cash
           b. Short-term loans
           c. Accounts receivable
       *has to be on the statement but it is not specified where

        Ex. Accounts Receivable                           1,000
                Less Allowance for Bad Debts                       (19)    981

    2. Parenthetical disclosure – sticking something in parenthesis

        Ex. Accounts Receivable (net of 19 allowance for bad debts)        981

    3. Footnotes disclosure – dig into the notes to find out what happened

        Ex. Accounts Receivable (net)                                      981



April 1, 2009 buy goods on account for 1,000,000 zitars
         Payment is due April 1, 2010

        1 zitar = $1.50 USD on April 1, 2009
        1 zitar = $1.47 USD on December 31, 2009
        1 zitar = $1.51 USD on April 1, 2010

April 1, 2009   Purchases                                 $1,500,000
                        Accounts Payable                                   $1,500,000 <- monetary liability
Dec. 31, 2009   Accounts Payable                          $30,000
                        Unrealized gain on FX                              $30,000
April 1, 2010   Accounts Payable                          $1,470,000
                Unrealized gain on FX                     $30,000
                Realized loss                             $10,000
                        Cash                                               $1,510,000

Monetary liability - tied to a specific currency, it can fluctuate – have to value them at the current
exchange rate

   Accounts Payable
          1,500,000
30,000
          1,470,000

				
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