Question

Entities may have a variety of corporate reporting objectives specific to their circumstances, such as:
a. Assessing and predicting cash flows;
b. Minimizing current income taxes;
c. Complying with restrictive covenants (specifically, debt covenants that specify minimum levels of shareholders’ equity); and
d. Evaluating management’s performance.

Required:
For each of the accounting policies listed below, indicate which objectives of corporate reporting is best served. Each policy may serve more than one objective.
1. Capitalize and amortize start- up costs.
2. Disclose proposed environmental protection efforts.
3. Defer expenses to match them against revenue generated from the activity.
4. Delay recognizing revenue as long as possible.
5. Recognize each period’s payments on long- term finance leases as expense when incurred ( i. e., rather than capitalizing and amortizing the payments).



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  • CreatedFebruary 17, 2015
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