Intercity Bus Lines (Intercity) is a Canadian company that provides bus transportation between communities throughout Canada. In
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At a recent planning meeting, Intercity's CFO raised some questions about the frequent travel programs. He wondered if there would be any impact on the company's financial statements. After the meeting, the CFO asked you to prepare a report discussing the proposed program and the financial reporting impact it would have. He asked you to consider the following:
• Would frequent travel points be considered liabilities?
• If they are liabilities, how are they measured?
• What effect would the plan have on the financial statements and should management be concerned about these impacts?
• What types of concerns should management have in operating such a program?
Required:
Prepare the report requested by the CFO.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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