The assets of Fonzarelli Corporation are presented on the next page (000s omitted). InstructionsIndicate the deficiencies, if
Question:
The assets of Fonzarelli Corporation are presented on the next page (000s omitted).
InstructionsIndicate the deficiencies, if any, in the foregoing presentation of Fonzarelli Corporation??sassets.
FONZARELLI CORPORATION BALANCE SHEET (PARTIAL) DECEMBER 31, 2012 Assets Current assets Cash Unclaimed payroll checks Debt investments (trading) (fair value $30,000) at cost Accounts receivable (less bad debt reserve) Inventory-at lower-of-cost- (determined by the next-in, $ 100,000 27,500 37,000 75,000 first-out method) or-market 240,000 Total current assets 479,500 Tangible assets Land (less accumulated depreciation) Bulldings and equipment Less: Accumulated depreciation 80,000 $800,000 250,000 550,000 Net tangible assets 630,000 Long-term investments Stocks and bonds 100,000 70,000 Treasury stock Total long-term investments 170,000 Other assets Discount on bonds payable Sinking fund 19,400 975,000 Total other assets 994,400 Total assets $2,273,900
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1 Unclaimed payroll checks should be shown as a current liability if these are claims by employees 2 ...View the full answer
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Treasury stock refers to shares of a company\'s own stock that the company has bought back from its shareholders and now holds as a form of asset on its balance sheet. When a company buys back its own stock, it reduces the number of outstanding shares in the market, which can potentially increase the value of the remaining shares. Treasury stock can be acquired through a variety of methods, such as open market purchases, negotiated transactions, or as a result of converting convertible securities. Companies may buy back their own shares for a number of reasons, including to return capital to shareholders, to signal confidence in the company\'s future, or to use the shares for employee stock option plans. While treasury stock does not pay dividends, it can be reissued by the company at a later time, which could dilute the value of the remaining shares. Companies are required to report their treasury stock holdings in their financial statements.
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