According to the Generally Accepted Accounting Principles, T-Shirts by Tommy can account for the accident is to record an extraordinary item. Using the definition from our Intermediate Accounting textbook, extraordinary events are defined as, "Â…events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence" (Keiso). Because of the nature of the plane crash, and the fact that these types of accidents happen very rarely, it can definitely be categorized as extraordinary. Tommy needs to estimate how much to expense for the loss of the building and other losses associated with the crash. Then he must record this item on his yearly income statement.
If Tommy's business was not going to be operating soon at another location the smart thing to do would be to end the lease so that they would no longer have to pay for the equipment. Tommy, however, has a location where he can be operating shortly so he should consider not recording......
Join Now or Login to view the rest of this paper.
Approximate Word Count: 1607
Approximate Pages: 7 (260 words per double-spaced page) |