Accounting at Maccloud Winery - 851 Words

GSM 5301 Accounting for Decision Making ACCOUNTING AT MACCLOUD WINERY Syed Mohd Muhsin Sy Mohamad Mohd Khalis Mohd Asrar Norhelena Mansor Mohd Hezreey Onn Keywords to be used: A=Asset L=Liability OE=Owners’ Equity R=Revenue E=Expenses SOCI=Statement of Comprehensive Income SOFP=Statement of Financial Position PPE= Property, Plant Equipment NBV = Net Book Value Should the leased building be accounted for as an asset? No, leased building should be accounted for as an expenses (cost of sales) Why? Because: i) The lease contract signed was not mention on purchase bargain ii) Mike might not assume ownership of the building iii) The lease would be considered an operating lease (business expense) – expenses would be accrued†¦show more content†¦Ã¯Æ'Ëœ To provide allowance for losses on Pierce Disease ïÆ'Ëœ The allowance is in SOFP under liability A = Allowance for losses – expenses ïÆ'Ëœ To be used in the future to cover for future costsShow MoreRelatedMaccloud Winery Case Study Essay854 Words   |  4 PagesMacCloud Winery Case Study Due 11/17/13 1. Should the leased building be accounted for as an asset? No, the lease should be considered an operating lease. The building is the asset. The expense should be accrued on the building. The length of the lease should be less than 75% of the life of the asset leased. The lease is a ten year lease and the building has a 30-year economic life. Therefore this is an operating lease. The rental payments should be expensed as they are paid and offset