During a discussion regarding the recent sale of a piece of equipment, your company president, Nanda Saloojee, stated: “I don’t understand what it means to ‘have a gain from the sale of equipment.’ Why do we call it a ‘gain’ and not ‘revenue’? Does the fact that we have a gain mean there was a problem with our prior years’ financial statements? If so, please explain what that was.” Prepare a brief response to the president’s statement.
Answer to relevant QuestionsAs a lender, discuss whether you would be more comfortable with a company having long-term assets in the form of (a) property, plant, and equipment, or (b) goodwill, when you consider making a long-term loan to the company. Dollarama Inc. is Canada’s largest dollar store operator. The following information is an extract from Dollarama’s consolidated financial statements for the year ended February 2, 2014: Dollarama’s depreciation ...List three essential characteristics of a liability. What is meant by the current portion of long-term debt? Why is it recorded with the current liabilities? Explain why warranty expenses and the actual costs incurred with respect to warranties often do not occur in the same period.
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