To Recognize or Not to Recognize Essay
Date: June 3, 2013
To: Shakespeare Inc.
From: Group 104
Re: Management’s Review
Shakespeare Inc. is a privately held book printing and publishing company with a December 31 year-end. There are five accounting issues that management must consider during the course of proper financial statement presentation. This memo will break down the accounting issues and provide guidance per section.
1. Should the information pertaining to actual claims incurred as of the balance sheet date that became available after the balance sheet date be considered in determining management’s best estimate of the medical benefits payable? If so, how does this information impact the amount recognized or disclosed?
Yes, the …show more content…
1. The name of the acquired company – Hamlet 2. The acquisition date – March 10, 2011 3. The percentage of voting equity – 100% 4. Primary reasons for the business combination and description of how they were able to acquire it. a. Shakespeare acquired by drawing $10 million on their line of credit b. Shakespeare presumably acquired Hamlet to increase their market share in the northeastern part of the United States.
4. What should Shakespeare state in its disclosure about the date through which the financial statements were evaluated for subsequent events? How would this disclosure change if Shakespeare were an SEC filer?
ASC 855-10-25-2 notes that Shakespeare, which is neither an SEC filer nor a conduit bong obligor, shall evaluate subsequent events through the date that the financial statements are available to be issued. Additionally, ASC 855-10-50-1 instructs that Shakespeare must disclose that March 18, 2011 is the date through which subsequent events were evaluated, and that this date is when the financial statements are available to be issued.
If Shakespeare were an SEC filer the disclosure would change slightly. ASC 855-10-25-1A notes that Shakespeare would have to evaluate subsequent events through the date the financial statements are issued, and not just available to be issued.
5. Shakespeare is contemplating adopting IFRSs in the coming year. What