Fundamentals Of Accounting

Components of Financial Statements: Assets and Liabilities

Asset Recognition and Valuation: The transactions listed below relate to Buenos Aires Cattle Company, a regional meat distributer of highquality beef. Indicate whether each transaction immediately gives rise to an asset for Buenos Aires Cattle Company under standard accounting practices. If accounting recognizes an asset, give theaccount title and amount. All transactions take place in the currency of Argentina - the Argentine Peso - denoted ARS.
1. The company places an order with a cattle supplier for 10 extremely highquality calves, costing 10 thousand ARS each. NOT AN ASSET. NOT AN ACCOUNTING SYSTEM EVENT.
2. Buenos Aires Cattle Company writes a check 5 thousand ARS as a deposit on the calves ordered in part 1.WE HAVE AN ASSET. (PAY IN ADVANCED)
3. 400 thousand ARS is spent to lease a large warehouse to store meat until it is distributed.
4. Buenos Aires Cattle Company writes a check for 150thousand ARS and accepts a loan for 850 thousand ARS to purchase a piece of equipment, a new meat locker, costing 1 million ARS. EQUIPMENT 1 MILLION
5. The firm signs a one-year employment agreementwith a local rancher for 250 thousand ARS per year. NO ASSETS
6. Common Stock in Buenos Aires Cattle Company with a market value of 60 thousand ARS is issued in exchange for used equipment from abankrupt competitor. The equipment had a book value in the competitor’s books of 75 thousand ARS. VALUE ASSET 60
7. The firm spends 2 thousand ARS to advertise in a trade publication. NO ASSET8. 40 thousand ARS is invested in a bond. The bond has a maturity value of 50 thousand ARS in 3 years and Buenos Aires Cattle Company intends to hold the bond to maturity. ASSET VALUE 40 THOUSANDLiability Recognition and Valuation: The events below relate to the Brickell Palace Hotel in Miami. Indicate whether each transaction immediately gives rise to a liability for the Brickell Palace...