Question 1
Suppose that Wal-Mart Stores Inc. has decided to surface as well as maintain for 10 years a vacant lot next to one of its stores to serve as a parking lot for customers. Management is considering the following offers involving two different qualities of surfacing for a parking area of 12,800 square yards
Bid A) - A surface that costs $5 per square yard to install. This surface will have to be substituted at the end of 5 years. The annual maintenance cost on this surface is projected at 25 cents per square yard for each year except the last year of its service. The replacement surface will be alike to the initial surface
Bid B) - A surface that costs $10 per square yard to install. This surface has a likely useful life of 10 years and will require annual maintenance in each year except the last year at an estimated cost of 8 cents per square yard
Question 2
1) Accomplish your preparation to test accounts receivable by reviewing the FASB Accounting Standards Codification and identify any special presentation or disclosure issues applicable to the above defined situation. Be prepared to discuss the following-
a) Applicable Codification references
b) Related presentation and disclosure issues for the notes
c) Any additional clarifying information needed from company management
2) In anticipation of a continuation question from the engagement partner (who happens to be the local office expert on IFRS) what guidance can you find to address this situation from an international accounting standpoint?