I need to submit this by midnight. Would you please provide an answer to the pdf file. I already attached an example document as well.

To: From: Date: Subject: The Audit Files of Fuzzy Dice Inc. Megan Cosgrove September 4, 2015 Accounting for the Acquisition of Tiny Tots LLC's Assets Executive Summary On August 28, 2015, Fuzzy Dice Inc. (\"Fuzzy\" or \"the Company\" or \"the Buyer\") acquired the rights to all of the assets of Tiny Tots LLC (\"Tiny\" or \"the Seller\"). The transaction is structured as a cash purchase, and it includes the acquisition of the Seller's sole manufacturing facility, its fleet of delivery vehicles, and its intangible assets which include licenses and product patents. The acquisition agreement does not include the Buyer's assumption of any employment relationships with the Tiny employees; however, Fuzzy expects to hire all the current Tiny employees. ASC 805, Business Combinations, specifies whether the purchase of assets should be accounted for as a business acquisition or as an asset acquisition. ASC 805 states that if the Buyer acquires the inputs and processes of the Seller, the transaction should be accounted for as a business acquisition. Since Fuzzy purchased the \"inputs and processes [of Tiny]...that have the ability to create outputs\" (ASC 805-10-55-4), the transaction constitutes a business acquisition and the Company should apply the acquisition method of accounting to the transaction. Analysis ASC 805, Business Combinations, specifies whether the purchase of assets should be accounted for as a business acquisition or as an asset acquisition. ASC 805-10-55-4 defines a business as \"inputs and processes applied to those inputs that have the ability to 1 create outputs.\" The paragraph further defines an input as \"any economic resources that creates, or has the ability to create, outputs when one or more processes are applied to it,\" and it defines a process as \"any system, standard, protocol, convention, or rule that when applied to an input or inputs, creates or has the ability to create outputs\" (ASC 805-1055-4). Through the transaction, Fuzzy acquired all of Tiny's inputs necessary to produce its children's toys, including its sole manufacturing facility, its fleet of delivery vehicles, its licenses and product patents, and the access to all materials and employees. ASC 80510-55-4 states that \"an organized workforce having the necessary skills and experience following rules and conventions may provide the necessary processes that are capable of being applied to inputs to create outputs.\" Therefore, since Fuzzy acquired the right to employ Tiny's previous employees, it effectively purchased all of the Seller's processes. ASC 805-10-55-4 defines an output as \"the result of inputs and processes applied to those inputs that provide or have the ability to provide a return.\" In the transaction, Fuzzy did not acquire Tiny's current outputs. However, ASC 805-10-55-4 states that \"outputs are not required for an integrated set to qualify as a business.\" The statement further states that \"an integrated set of activities and assets requires two essential elements - inputs and processes applied to those inputs\" (ASC 805-10-55-5). Therefore, although Fuzzy did not acquire Tiny's outputs, this fact does not preclude the transaction from being a business acquisition. At the time of the transaction, the Company's management was unsure whether it would (1) continue to operate Tiny's facility to manufacture children's toys or (2) renovate the factory in order to expand its current production capacity. ASC 805-10-55-8 2 states that in determining whether inputs and processes constitute a business, \"it is not relevant whether...the acquirer intends to operate the set as a business.\" Instead, the basis for the determination should be \"whether the integrated set is capable of being conducted and managed as a business by a market participant.\" Since \"market participants are capable of acquiring the business and continuing to produce outputs\" (ASC 805-10-55-5), the transaction should be accounted for as a business acquisition irrespective of the capacity in which Fuzzy uses the assets. Based on the definitions and criteria identified in ASC 805, Business Combinations, Fuzzy should account for its acquisition of Tiny's assets as a business combination. Therefore, the Company should apply the acquisition method when recording the transaction (ASC 805-10-25-1). Conclusion On August 28, 2015, Fuzzy acquired the rights to all of the assets of Tiny. The assets acquired included all of the Seller's inputs and processes that have the ability to generate outputs. Therefore, based on the guidance in ASC 805, Business Combinations, the transaction constitutes a business acquisition and the Company should apply the acquisition method of accounting to the transaction. 3 The Cable Guys - Revenue Recognition Case CoAx (the \"Company\"), a publicly traded company, manufactures and sells coaxial and fiberoptical cable. CoAx is contemplating two separate transactions for which it is evaluating the appropriate revenue recognition. Transaction 1 CableCo, a customer of CoAx, has entered into a binding written agreement to purchase 1,000 feet of 18 American wire gage (AWG) coaxial cable for $3 per foot. Because CableCo is constructing a new warehouse, it is unable to take delivery of the cable and has requested in writing that CoAx store the cable in its warehouse until construction of CableCo's warehouse is completed. CableCo's warehouse will be completed three months from the time of purchase, at which time CableCo is required to take delivery of the cable. CoAx stores 18 AWG coaxial cable in 10,000-foot spools (spools of cable are considered finished goods and ready for shipment). CoAx will not physically segregate the cable that CableCo will purchase; rather, the Company will designate the quantity in its inventory tracking system as \"sold,\" thereby preventing the use of the cable to fulfill other customer orders. In other words, CoAx will \"virtually\" segregate the inventory. CoAx and its auditors have concluded the following with respect to the arrangement with CableCo: Risks of ownership of the cable have passed to CableCo. CableCo has a substantial business purpose for requesting CoAx to hold the cable at its warehouse (waiting on completion of the warehouse). CoAx does not have additional performance obligations with respect to the cable purchased by CableCo. CoAx has concluded that it is appropriate to recognize revenue for Transaction 1 before the date on which CableCo takes delivery of the 1,000 feet of 18 AWG coaxial cable. Transaction 2 TeleCo, a customer of CoAx, entered into a binding written agreement to purchase 1,500 feet of fiber-optical cable for $3 per foot. TeleCo's shipping terms are freight on board (FOB) shipping point, and CoAx collected payment before the order shipped. Title transfers upon delivery to the carrier, and TeleCo will insure the product while it is in transit. Instead of using a third-party shipper (e.g., FedEx, UPS), CoAx has elected to use its own logistics subsidiary, DeliveryAx,* to deliver the cable to TeleCo. * CoAx acquired 100 percent ownership interest in DeliveryAx in the previous year. DeliveryAx provides an array of shipping services to third-party customers outside the cable industry. Only 2 percent of DeliveryAx's shipping revenue is expected to be derived from transactions with CoAx in the current year. Required: Is it appropriate for CoAx to recognize revenue associated with Transaction 1 before the date on which CableCo takes delivery of the 1,000 feet of 18 AWG coaxial cable? Is it appropriate to recognize revenue upon transfer of the inventory to the carrier in Transaction 2? ASC 606, Revenue From Contracts With Customers, which becomes effective for CoAx in 2018, provides five steps to recognizing revenue; step 5 requires an entity to \"recognize revenue when (or as) the entity satisfies a performance obligation.\" Describe in general the key principles of this step that would be relevant to determining how to recognize revenue for the transactions described in this case if the new revenue recognition standard had already become effective