I'm uploading my latest case. It's the same kind of research as the last two cases. Can you look it over and answer my questions and tell me if I have the correct answers and fill in any gaps? I'm attaching the case and the research guidelines with the grading criteria updated. Thanks for your help as always Sarah.

Running head: CASE 3 1 Case 3 Kana Ng A&M CT CASE 3 2 Case 3 Rosie Corporation has 70% of the outstanding voting stock of Smith Corporation and 10% of the voting stock of Tommy Corporation. Smith also just spent $10,000 to acquire 20% of Tommy's voting stock. Smith has issued irrevocable letters of credit to guarantee Tommy's notes payable. In the current year, Tommy lost $100,000. How should the parties report the above arrangements in its consolidated financial statements? Research Ernst & Young Financial Reporting Developments: Consolidated and other financial statements. Home - EY - United States FASB ASC: U.S. GAAP, Codification of Accounting Standards, ASC Accounting Standards Codification by FASB Industry Insights by BKD: A Facelift to Equity May Affect Your Financial Statements - BKD Evaluation Rosie Corporation has 70% of the outstanding voting stock of Smith Corporation. Per FASB ASC 810-10-45-1 because Rosie has acquired enough shares to influence operations for Smith Corporation Rosie must use Consolidation of Financials Statements for Rosie Corporation and Smith Corporation. Rosie Corporation has 10% of the voting stock of Tommy Corporation: Fair-Value Method Smith Corporation has acquired 20% of Tommy's voting stock: Fair-Value Method {However, is it considered 30% because I am supposed to combine Rosie and Tommy because that would make it the Equity method 323-10? Or 810-10-45-16?} CASE 3 Smith has issued irrevocable letters of credit to guarantee Tommy's notes payable. 3 {460-???} In the current year, Tommy lost $100,000. Per FASB 810-10-45-4 when a subsidiary is initially consolidated during the year, the consolidated financial statements shall include the subsidiary's revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated. Conclusion Based on how correct my research and answers are and your suggestions, I will formulate a conclusion. Kindly follow the guidelines in the same order. 1. Identify the issues: In this topic, you should explain about the actual problem faced by the company. Under this topic you have to first describe about the business nature that is \"Bo Broker Company charges a fee for bringing together the Acme Construction Company and the First Bank Company. The parties agree that Bo earns her fee when Acme and First \"agree\" to the terms of the construction mortgage\". The above mentioned point is essential to understand about the real issue. So mention in your own words about the nature of their business. Next explain about the revenue collection methods that is the four methods discussed in the case. Then mention about the problem that is the difficulty faced by the company in recording the revenue under each method briefly. All these points will cover the actual problem of the research. 2. Collect evidence: Under this topic first refer to the related accounting standards that is FASB, US GAAP related to the revenue recognition concept. Try to provide for some literary review that is some scholarly research paper about the revenue recognition. In this case, for each and every scenario first understands when the actual revenue is being generated and is being recognized accordingly provide for appropriate examples. In this case, you ensure that from auditor point of view that is which method will be appropriate under each scenario to record the revenues in the books. How it has to be mentioned? Try including the details to be mentioned in the notes (financial account notes). Try to search and get some companies who are into the same business line. Search for some brokerage firm. Analyse their financial recording practices that is how they are recognizing revenues and what method they are following. In this case, try to refer at least two to three companies from the same industry so that you will get an idea as how most of the company are recognizing the revenue. Provide in-text citation. 3. Evaluate the results and identifying the alternatives. Under this topic you have to evaluate each and every method of revenue recognition which was mentioned in the above topic. The previous topic will just provide for information about the recording method alone. In this you should analyse about both advantage and disadvantage of every recording method. This will enable you to understand which method will be more appropriate for the company to follow for its accounting purposes. If possible with your own understanding provide for some alternative methods for recognizing the revenue or new revenue collection method apart from the above mentioned four. Hint: In this case try to research about some company which has a different revenue collection and recognition method and mention that as your alternative method. In this case do not provide for in-text citation as this will be expected to be your own idea. (But this is for your benefit). Similarly, ensure that you don't mention about this company or method in the second topic. This should be completely new as you have asked to provide for an alternative. 4. Develop conclusion: Under this topic you have to make an elaborate discussion about the method which you will be recommending. In this case you should justify your answer as why you chosen this method? You have to discuss about the advantage of the method that you chose over the other methods. Try to justify the chosen method using the accounting standards that you discussed in the second topic. 5. Communicate results. Under this topic, narrate as what the company should do that is again mention the method that the company should follow, but do not copy paste the same sentence of topic four. Try to write the same point in a different manner. Explain as how the company has to make the final contract related to the revenue recognition so that it will be beneficial for the company. Finally, conclude by stating that \"My recommendation is....which will be beneficial for both business and will satisfy the accounting standard requirements\". GRADING CRITERIA FORMAT, ORGANIZATION & WRITING STANDARDS All ideas are presented in a logical order. Ideas are clearly introduced and connected. Body includes sufficient level of detail, and conclusion summarizes main idea or effectively closes the presentation. Impeccable spelling, grammar, word usage, sentence structure, punctuation, and citation format. ISSUE IDENTIFICATION & KEY WORDS All issues are properly identified and proper key words are identified which will lead to a defensible position in the conclusion RESEARCH AND CITATIONS Three separate online sources are utilized in the collection of evidence and are properly cited. All issues are identified, because of the research, and sufficient authoritative sources are identified to support a correct decision. Multiple examples of case data clearly used to support concept applications. Running head: CONSOLIDATION AND CONTINGENCY Consolidation and Contingency Kana Ng A&M CT 1 CONSOLIDATION AND CONTINGENCY Consolidation and Contingency 2 Rosie Corporation has 70% of the outstanding voting stock of Smith Corporation and 10% of the voting stock of Tommy Corporation. Smith also just spent $10,000 to acquire 20% of Tommy's voting stock. Smith has issued irrevocable letters of credit to guarantee Tommy's notes payable. In the current year, Tommy lost $100,000. We need to address how the company will report and record for guarantees among the related but not fully owned entities. We also need to address how the parties must disclose both the consolidated and the separate statements. Consolidation and Contingency Research Research Ernst & Young Financial Reporting Developments: Home - EY - United States FASB ASC 450-30-25-1, 810-10-45-1, 810-10-45-21 AccountingWeb: Minority Interest become Non-controlling interest with FAS 160 Legal Resource SEC General Rule 450-30-25-1- A contingency that might result in a gain usually should not be reflected in the financial statements because to do so might be to recognize revenue before its realization. 810-10-45-16 The noncontrolling interest shall be reported in the consolidated statement of financial position within equity (net assets), separately from the parent's equity (or net assets). That amount shall be clearly identified and labeled, for example, as noncontrolling interest in subsidiaries (see paragraph 810-10-55-4I). An CONSOLIDATION AND CONTINGENCY entity with noncontrolling interests in more than one subsidiary may present those 3 interests in aggregate in the consolidated financial statements 810-10-45-21-Losses attributable to the parent and the noncontrolling interest in a subsidiary may exceed their interests in the subsidiary's equity. The excess, and any further losses attributable to the parent and the noncontrolling interest, shall be attributed to those interests. That is, the noncontrolling interest shall continue to attribute its share of losses even if that attribution results in a deficit noncontrolling interest balance. Further evaluation: The alternative methods, employed prior to 2009, are no longer acceptable. Conclusion Rosie Corporation has 70% of the outstanding voting stock of Smith Corporation. Because Rosie has acquired enough shares to influence operations for Smith Corporation Rosie must use Consolidation of Financials Statements for Rosie Corporation and Smith Corporation. Per 810-10-45-21 and 810-10-45-16, because Rosie and Smith own a noncontrolling interest in Tommy, recording of excess losses and further losses will be attributed to the interest even if that attribution results in a deficit noncontrolling interest balance and reported in the consolidated statement of financial position within equity (net assets), separately from the parent's equity (or net assets). Smith has issued irrevocable letters of credit to guarantee Tommy's notes payable. In the current year, Tommy lost $100,000. In this case, Smith's share in Tommy's net loss will be $20,000 ($100,000*20%) that amount exceeds the cost basis of Tommy $10,000. As per 450-3025-1, a contingency that might result in a gain should not be reflected in the financial statements CONSOLIDATION AND CONTINGENCY 4 because it might recognize revenue before its realization. Therefore, the guarantee must not be recognized in the financial statements. However, they must be disclosed in the footnotes. Running head: CONSOLIDATION AND CONTINGENCY Consolidation and Contingency Kana Ng A&M CT 1 CONSOLIDATION AND CONTINGENCY Consolidation and Contingency 2 Rosie Corporation has 70% of the outstanding voting stock of Smith Corporation and 10% of the voting stock of Tommy Corporation. Smith also just spent $10,000 to acquire 20% of Tommy's voting stock. Smith has issued irrevocable letters of credit to guarantee Tommy's notes payable. In the current year, Tommy lost $100,000. We need to address how the company will report and record for guarantees among the related but not fully owned entities. We also need to address how the parties must disclose both the consolidated and the separate statements. Consolidation and Contingency Research Research Ernst & Young Financial Reporting Developments: Home - EY - United States FASB ASC 450-30-25-1, 810-10-45-1, 810-10-45-21 AccountingWeb: Minority Interest become Non-controlling interest with FAS 160 Legal Resource SEC General Rule 450-30-25-1- A contingency that might result in a gain usually should not be reflected in the financial statements because to do so might be to recognize revenue before its realization. 810-10-45-16 The noncontrolling interest shall be reported in the consolidated statement of financial position within equity (net assets), separately from the parent's equity (or net assets). That amount shall be clearly identified and labeled, for example, as noncontrolling interest in subsidiaries (see paragraph 810-10-55-4I). An CONSOLIDATION AND CONTINGENCY entity with noncontrolling interests in more than one subsidiary may present those 3 interests in aggregate in the consolidated financial statements 810-10-45-21-Losses attributable to the parent and the noncontrolling interest in a subsidiary may exceed their interests in the subsidiary's equity. The excess, and any further losses attributable to the parent and the noncontrolling interest, shall be attributed to those interests. That is, the noncontrolling interest shall continue to attribute its share of losses even if that attribution results in a deficit noncontrolling interest balance. Further evaluation: The alternative methods, employed prior to 2009, are no longer acceptable. Conclusion Rosie Corporation has 70% of the outstanding voting stock of Smith Corporation. Because Rosie has acquired enough shares to influence operations for Smith Corporation Rosie must use Consolidation of Financials Statements for Rosie Corporation and Smith Corporation. Per 810-10-45-21 and 810-10-45-16, because Rosie and Smith own a noncontrolling interest in Tommy, recording of excess losses and further losses will be attributed to the interest even if that attribution results in a deficit noncontrolling interest balance and reported in the consolidated statement of financial position within equity (net assets), separately from the parent's equity (or net assets). Smith has issued irrevocable letters of credit to guarantee Tommy's notes payable. In the current year, Tommy lost $100,000. In this case, Smith's share in Tommy's net loss will be $20,000 ($100,000*20%) that amount exceeds the cost basis of Tommy $10,000. As per 450-3025-1, a contingency that might result in a gain should not be reflected in the financial statements CONSOLIDATION AND CONTINGENCY 4 because it might recognize revenue before its realization. Therefore, the guarantee must not be recognized in the financial statements. However, they must be disclosed in the footnotes