The accounting staff of Brooks and Dunn Corporation is preparing the annual report for the current fiscal year. The staff member in charge of developing the footnotes has requested assistance with classifying the following information:
1. The depreciable lives of the company's assets range from 5 to 10 years.
2. The corporation acquired Miley Cyrus Corporation by issuing 100,000 shares of common stock two weeks after the end of the current fiscal year.
3. The total amount, interest rate, and maturity dates of all leases.
4. The company uses FIFO and lower of cost or market to value its inventory.
5. The allowance for uncollectible accounts is $16,000.
6. Structure of the company's pension plan.
7. The company uses the percentage of completion method to account for construction contracts.
8. Accrued liabilities are composed of salaries payable, taxes payable, and interest payable.
9. Cash equivalents are defined as those financial instruments that can be converted into cash in 90 days or less.
10. The corporation leases a building from a majority shareholder at a rate that is comparable to market rates.
Required:
Indicate whether the above items should be disclosed in (a) the summary of significant accounting policies note, (b) in a separate disclosure note, or (c) on the face of the balance sheet.
What will be an ideal response?
Answer:
1. a
2. b
3. b
4. a
5. c
6. b
7. a
8. c
9. a
10. b
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