Questiong The following items are considered in the preparation of financial statements for Forde ine. for the year ended December 31,2020 . 1. The company is currently investignting whether a foreign drvision paid bribes to goverumental officials in the Bahamas in order to obtain a sales contract with the govemment. The company is working with the SEC to resolve the matter. 2. A loan to a 5% shareholder was made on June 30,2020 , for $10 , 000 . Interest is due annually beginning one year from the origination of the loan. 3. Short-term investments are valued at Level 1 in the fair value hierarchy for $40 , 550 . The total net unrealized gain (affecting net income) related to the investments is $1 , 500 . 4. Depreciation is determined on a straight-line basis for buildings and leasehold improvements over 2 to 40 years. 5. On February 1, 2021, the company declared a quarterly cash dividend of $0.40 per share, payable on March 15, 2021, for shareholders of record on March 10, 2021. 6. Equipment is measured at the fair value of $27 , 000 on a nonrecurring basis using significant unobservable inputs (Level 3). The total related impairment loss is $3 , 000 . 7. Land was sold to the company president at a price significantly under its appraised value. 8. All highly liquid investments with an original maturity of 90 days or less are considered to be cash equivalents. Requirements: a. For each of the items listed above, complete the following table. For the note disclosure category, choose from the following items: (1) summary of significant accounting policies, (2) fair value measurement, (3) related party transactions, (4) subsequent events, (5) errors, fraud, and illegal acts. For each item, indicate whether we would expect to potentially see an item affected on the face of the balance sheet and/or on the face of the income statement. b. For the note disclosure category, what treatment is required to present financial statements in accordance with the applicable financial reporting framework?
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Questiong The following items are considered in the preparation of fin.docx
1. Questiong The following items are considered in the preparation of financial statements for
Forde ine. for the year ended December 31,2020 . 1. The company is currently investignting
whether a foreign drvision paid bribes to goverumental officials in the Bahamas in order to
obtain a sales contract with the govemment. The company is working with the SEC to resolve
the matter. 2. A loan to a 5% shareholder was made on June 30,2020 , for $10 , 000 . Interest is
due annually beginning one year from the origination of the loan. 3. Short-term investments are
valued at Level 1 in the fair value hierarchy for $40 , 550 . The total net unrealized gain
(affecting net income) related to the investments is $1 , 500 . 4. Depreciation is determined on a
straight-line basis for buildings and leasehold improvements over 2 to 40 years. 5. On February
1, 2021, the company declared a quarterly cash dividend of $0.40 per share, payable on March
15, 2021, for shareholders of record on March 10, 2021. 6. Equipment is measured at the fair
value of $27 , 000 on a nonrecurring basis using significant unobservable inputs (Level 3). The
total related impairment loss is $3 , 000 . 7. Land was sold to the company president at a price
significantly under its appraised value. 8. All highly liquid investments with an original maturity
of 90 days or less are considered to be cash equivalents. Requirements: a. For each of the items
listed above, complete the following table. For the note disclosure category, choose from the
following items: (1) summary of significant accounting policies, (2) fair value measurement, (3)
related party transactions, (4) subsequent events, (5) errors, fraud, and illegal acts. For each item,
indicate whether we would expect to potentially see an item affected on the face of the balance
sheet and/or on the face of the income statement. b. For the note disclosure category, what
treatment is required to present financial statements in accordance with the applicable financial
reporting framework?
