Intercompany inventory profits

4. How do unrealized intercompany inventory profits from a prior period affect the computation of consolidated net income when the inventory is resold in the current period? Is it important to know if the sale was upstream or downstream? Why or why not?
5. Two sole proprietors, L and M, agreed to form a partnership on January 1, 2013. The trial balance for each proprietorship is shown below as of January 1, 2013. Click here to access a spreadsheet containing information from both proprietors.

The LM partnership will take over the assets and assume the liabilities of the proprietors as of January 1, 2013.
Discuss the following:
1.    The steps required to form the partnership (by Tuesday)
2.    Prepare and post the financials for LM Partnership and discuss the differences that you have with your colleagues (by Wednesday)
3.    After Wednesday, consider the following: Assume that M agreed to recognize the goodwill generated by L’s business. Accordingly, M agreed to recognize an amount for L’s goodwill such that L’s capital equaled M’s capital on January 1, 2013. Given this alternative, how does the balance sheet prepared for #1 change?
6. Assume that because of a new law, the types of significant transactions a partnership engages in are no longer lawful. Two of the five partners wish to wind up and terminate the partnership. Discuss the following:
1.    Can these two partners require the partnership to be terminated?
2.    Discuss the accounting for a liquidation where there is no deficit.
3.    Discuss how the accounting differs if there is a deficit in one of the partner’s capital accounts
4.    How would the accounting for a liquidation differ for a lump-sum payment vs. installment payments?
7. Describe what you feel are the most important differences between private-sector entities and public-sector entities with respect to accounting objectives, authoritative sources, and bases.
Address both of the following requirements:
•    Defend your choice of accounting practices; why are the differences you identify important?
•    Explain why the differences matter in their respective (private- and public-sector) contexts. Explain why each difference in accounting practice is proper and necessary in its context, or critique any current practice that is not proper for its context.
8. Review GASB Statement 34. In your initial post:
•    Discuss the major contents of the fund financial statements and government wide financial statements. Address why those statements are necessary in the government annual report.
•    Specify what government financial statements are required to be included in the annual report. Then, compare and contrast the major contents of a selected fund financial statement or a government wide financial statement to a similar financial statement prepared under GAAP.
•    Compare and contrast the users, objectives, contents and format of the government financial statement you selected and its GAAP counterpart.
http://www.gasb.org/st/summary/gstsm34.html

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