This is focusing in a written memorandum to the files, answeringDeloitte?s True Blood Case 15-11: Deal for a Dozer deals with lease accounting, under the current accounting guidance. The full requirements, the case & accounting memo temple are in the attachments. If you have any other question, please free to ask.

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ACC 602 Memo To: Files From: Student's Name Date: 4/5/17 Re: Writing an Accounting Memo Introduction/Purpose The purpose of this memo is to provide guidance on how to write an accounting issue memo for the files. Typically the memo starts with an introduction or purposes statement in order to identify why the memo is being written Background In the background section, you are expected to provide any background information that the reader needs to know in order to fully understand the memo's content. An example of what to include here are the situational facts for the company. For example, if you are determining how to account for a new investment, you would provide background information about the investment here. Accounting Guidance In this section, you would discuss the relevant accounting guidance on the topic and how it applies to the particular situation that you are reviewing. This section can have many different heading names (i.e. situation analysis). Recommendation Here you would state the recommendation for accounting treatment based on your analysis and discussion above. You can either end the memo here, or you can include a conclusion section to discuss next steps/action items as appropriate. Appendix - Finalizing the Document Before finalizing and submitting your memo, you should thoroughly proof the document. You may refer to the following guidelines when reviewing what you have written, and make changes as needed: Audience - appropriate: Ensure that the document is appropriate for the level of education, background, company status and needs of the recipients. As an accountant, many times you will be writing files for other people who do not have the same level of technical accounting knowledge, and your memos should be tailored accordingly. Concise: Remove needless words and keep it as short as possible. This is the most challenging piece of writing an accounting memo; you need to give a certain level of detail in order to support your recommendation, however you need to make it as concise as possible so that it is as easy to understand as possible. Coherent: Make sure that the memo structure is simple and logical. Paragraphs should be limited to one idea. Readability: Keep paragraphs short and use bullet points to list key points where appropriate. Consider using tables or flow charts if they add to the readability of the information/memo. Terminology: Use appropriate terminology that the audience can understand. You may have to \"translate\" some of the accounting guidance into laymen's terms! Factual Tone: Verify that the tone is professional Appearance: Ensure the finished document is visually appealing and easy to read. Check the format in print preview. Case 15-11 Deal for a Dozer Sable Inc. (Sable) is a company based in San Francisco that manufactures and supplies earthmoving and construction equipment. Sable either sells the equipment to customers or leases it under terms specific to a customer's needs. Buildit Inc. (Buildit) is a growing construction company in Los Angeles that specializes in building residential properties. Buildit recently entered into a contract with Sable to lease a bulldozer, which Buildit will use for a new project involving the construction of several condominiums in the Los Angeles area. The pertinent terms of the lease are as follows: The lease term is for 10 years, while the economic life of the bulldozer is estimated to be 15 years. The useful life of the bulldozer is also estimated to be 15 years. Annual lease payments of $16,000 are due at the end of each year. Buildit is also responsible for all maintenance, insurance, and taxes arising from the lease of the bulldozer. The residual value of the bulldozer is estimated to be $24,000 at the end of the lease term. Sable does not have a residual value guarantee. The lease does not transfer ownership of the bulldozer to Buildit by the end of the lease term or provide an option for Buildit to purchase the equipment. The bulldozer costs Sable $100,000 to manufacture, and this model is currently listed for sale at $135,000 should customers wish to purchase it outright. Sable believes that the lease payments from Buildit will be collected when they are due. In addition, the equipment is fully constructed and no additional costs will be incurred to complete production of the bulldozer before lease commencement. As a result of a recent economic downturn that has directly affected the construction industry, a number of companies in the industry have modified their sales or lease terms to maintain profitability. Some of Sable's direct competitors have negotiated lower lease payments or reduced their selling prices in an effort to stimulate sales. For example, several bulldozers with the same specifications as the one leased to Buildit have recently sold for an average sales price of $125,000, as opposed to Sable's current list price of $135,000. The rate implicit in the lease is 6.9336 percent assuming the fair value of the bulldozer is $125,000 at the beginning of the lease term and 5.45 percent assuming the fair value is $135,000. Required: 1. How should Sable classify the lease in its accounting records? 2. Provide the journal entries that Sable should record to: a. Initially record the lease. b. Account for the first lease payment made to Sable at the end of year 1. Copyright 2014 Deloitte Development LLC All Rights Reserved. Written Memorandum to the Files Written Report Your written report does not have a length requirement. It should be long enough to answer the case questions fully, however it should be concise and not overly \"wordy\". You may include any tables, graphs, or graphics either within the report, or as an appendix to the report. Any appendices should be appropriately referenced in the report and labeled. You can refer to the written assignment rubric for how your written report will be graded. Again, you may consult with your team members on the case, however you written report needs to be your own individual work. The following should be included in your memo. Memo Heading: To: Files, From: Your name, Date and Subject Introduction or Purpose This section states the purpose for the memo and briefly identifies the accounting issue that the memo will resolve. Background Briefly introduce the company and the accounting issue that you have been asked to review for the company. You are expected to provide any background information that the reader needs to know in order to fully understand the memo's content. An example of what to include here are the situational facts for the company that are relevant to the accounting issue(s) you are addressing. Accounting Guidance/Situation Analysis This section can have many different heading names. Here is where you need to identify the relevant accounting guidance on the topic and how it applies to the situation you are reviewing. You can organize this section however you think is best in order for the reader to easily understand the information being provided. You may answer the case questions in this section or in the next section (recommendation). Recommendation In this section you state your final recommendation for the appropriate accounting treatment that the company should apply based on the facts of the case. Content Deloitte's True Blood Case 15-11: Deal for a Dozer deals with lease accounting, under the current accounting guidance. In 2016, the FASB and IASB issued their final standards on lease accounting. The standards, issued as ASC 842 by the FASB and IFRS 16 by the IASB, address the deliberations that have occurred since the convergence project started in 2006. Although originally a convergence project, not all aspects of both final models are converged; some significant differences remain. For your written report, you are required to answer the 15-11 case questions as if the accounting requirements in ASC 842 were applied to the case. In addition, you should include a summary of how the accounting treatment under the new guidance is similar to, or differs from the current guidance for each of the questions in the case. Your written report should discuss the accounting alternatives that you reviewed, your thoughts process on how you analyzed your alternatives and which accounting treatment you recommend and why. You should be able to defend your recommendation through your analysis