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    Accounting Scenarios Memo's

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    Consider the following scenario: While working on a consulting engagement, a supervisor in your team has given you an assignment. The client is a regional trucking company. A new customer has approached the client with an opportunity that will require it to utilize 120 trailers-20 more than the trucking company currently owns. The client is unclear how long the relationship with the customer may last, but the deal has the potential for significant growth. Your supervisor has asked you to research issues in the Financial Accounting Research System (FARS) relating to leases and lease structures, in particular the current practice and thought related to direct financing, sales type, and operating leases.

    Write a 700- to 1,050-word memo addressing your supervisor that summarizes your FARS research results. Keep the memo brief while exploring the issues. Remember, both the client and the supervisor have limited time, and you want to make a good impression. Recommend an approach the client can use to evaluate and capitalize on this opportunity.

    2. You are a controller in a midsized manufacturing company that has acquired 100% of another company. The acquired company includes two segments and two different pension plans. Both of these reporting issues are new to your CEO, and your CEO wants to eliminate the segments.

    Write a 700- to 1,050-word executive memo that explains the required reporting for defined contribution, defined benefit, and other postretirement plans. Also include an explanation of what must happen in order for the two segments to be eliminated. (You do not need to know details about the segments to answer this.)

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    The response addresses the queries posted in 706 words with references.
    //In the following paper, there is a discussion about research issues in the Financial Accounting Research System (FARS), relating to leases and lease structures. There is also a discussion about the approach that can be capitalized.//





    Financial accounting research system is basically an electronic tool, which is used for the purpose of conducting accounting research. It is used for the purpose of preparing the financial statements. The system is helpful for the accountants, as it provides such resources, which enable them to complete their research work effectively and efficiently (FASB Financial Accounting Research System, 2012). In this case, there is a requirement of highlighting the research issues in financial accounting research system in relation to the leases and lease structure. As clear from the case, the trucking company currently has 100 trailers and in order to meet the requirements of the new client, it has the requirement of 20 more trailers, which make the total of 120 trailers. As there is uncertainty involved, it raises the question to have a negative effect on the financial position. Hence, it is very clear that the contractor is required to make a choice that whether he should go for the lease of the trailer or should go for direct financing.

    Moving on, the next requirement is to obtain the required number of trailers. The company can either go for lease option or can opt for direct financing of the trailers in order to meet the requirements. It is very important for the company to understand the leases and related issues as laid by Financial Accounting Standards in statement number 13 (Accounting for Leases). It is very clear that this statement will have a significant impact on the related companies. In this statement, three types of leases have been highlighted, i.e. operating leases, sales type lease and direct financing lease. In sales type lease and direct financing leases, there is involvement of capital and there is a specific criterion, which must be fulfilled in order to opt for these leases. If these leases are able to meet the specific criteria, they are treated as investment. In comparison, the operating leases do not have any capital specifications (Otley, 2001). The financial accounting standard board has clearly stated the ...

    Solution Summary

    The response addresses the queries posted in 706 words with references.