Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need the detailed solution for this required questions (i) and (ii). All information is in this picture QUESTION TWO ABT Security System Inc. (ABT)

image text in transcribed

i need the detailed solution for this required questions (i) and (ii).

All information is in this picture

QUESTION TWO ABT Security System Inc. (ABT) is a company known around the world for its state-of-the-art electronic surveillance and monitoring equipment, its alarm control centres and a full line of residential security systems including fire alarms, sprinkler systems and burglar protection devices. ABT has a December 31 accounting year-end and the company's headquarter is located in City of Burnaby in the Province of British Columbia. Any prospective customer is entitled to a free home visit by an ABT security consultant. The consultant will provide an assessment of the security needs at the prospective customer's home. If the customer decides to acquire the recommended security system, a formal contract will be prepared by the ABT consultant and signed by the customer. ABT incurs, on average, $400 for every visit conducted by its security consultants. The $400 covers travel costs and the time spent by the consultants on each visit. In the company's current fiscal year, ABT's security consultants conducted a total of 8,500 visits to prospective customers incurring a total cost of $3,400,000. You work in a large public accounting firm and ABT is a new client of your firm. The senior partner in charge of the ABT engagement has instructed you to start a file on ABT. The senior partner has also informed you that your first major responsibility in this engagement is to provide a recommendation to the client on the appropriate basis of financial reporting ABT management should use in the preparation of the company's financial statements. Required: (1) Describe carefully all the major factors you would consider in deciding on the appropriate basis of financial reporting ABT management should use in the preparation of the company's financial statements. (ii) Assume that ABT will prepare its financial statements in accordance with the International Financial Reporting Standards (IFRS) and use accounting policies developed based on the new 2018 IFRS Conceptual Framework. List and explain carefully the major issue you want to address and the important factors you need to consider in deciding how ABT should account for the $3,400,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ethical Obligations And Decision Making In Accounting Text And Cases

Authors: Steven Mintz

6th Edition

1264135947, 9781264135943

More Books

Students also viewed these Accounting questions