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Accounting project: Errors in West Corporation balance sheet

See attached file.

Find and understand errors for West Corporation Balance Sheet that is attached. The errors need to be listed and corrections shown.


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The description of the error is shown together with the correction that should be made. It seemed to make more sense to explain them together.

Balance sheet presentation errors for West Corporation

1. The period of time covered is not the 'year ending...' because a balance sheet is presented as of a point in time. It should correctly say 'December 31, 2010'.

2. Current Assets are listed in order of liquidity meaning that those which would normally turn to cash the quickest are first. The order is acceptable except for the investment of stock in a subsidiary which is not a current asset. It is an investment or long-term asset which may be reported at cost or equity, depending on the amount of ownership and/or control. If the sub is 80% or more owned, it should be consolidated with the parent and not shown separately as it is here.

3. Trading securities are those held as short term investments and should be adjusted to fair market value as of year-end. The difference between fair market value and cost is treated as current year income and reported as gain or loss on trading securities. The valuation adjustment amount may be disclosed in the current asset section or in ...

Solution Summary

The 773 word solution provides of list of 20 items for correction with short explanation of each.