Question
Summarized balances at the end of third quarter: Current Asset $6,500.00 Non-current Asset $23,500,00 Current liabilities $5,100,000 Non-current liabilities $13,100,000 Shareholders' equity $11,800,000 During the
Summarized balances at the end of third quarter:
Current Asset $6,500.00
Non-current Asset $23,500,00
Current liabilities $5,100,000
Non-current liabilities $13,100,000
Shareholders' equity $11,800,000
During the third quarter Square Co. spent $125,000 trying to win a large contract to supply a city in Denmark. The $125,000 includes costs for executives to meet and entertain representatives of the city, development of a sophisticated marketing campaign, and preparation of information packages for politicians in the city. A final decision is expected in late October, but the information being received from Square's advisor in the city isn't favourable. It appears that the city is going to select a Denish producer. Square Co. recorded the $125,000 as a non-current asset and is amortizing it over three years, beginning after the contract result is announced. Can Square Co. recognized 100% revenue in accordiance with aspe and does it affect with current ratio and debt to equity ratio.
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