You are the independent accountant assigned to the audit of Neophyte Company. The company's accountant, a graduate of Rival State University, has prepared financial statements that contained the following questionable items:
a. The balance sheet reports land at $100,000. Included in this amount is a property held for speculation at a cost of $30,000.
b. Current liabilities include $50,000 for long-term debt that is due in three months. The company has received a suitable firm commitment to refinance the debt for five years and intends to do so.
c. Investments in marketable securities include $20,000 in short-term, high-grade commercial paper, which is a cash equivalent.

Required. Describe the appropriate balance sheet presentation for the above items.

Question

You are the independent accountant assigned to the audit of Neophyte Company. The company's accountant, a graduate of Rival State University, has prepared financial statements that contained the following questionable items:
a. The balance sheet reports land at $100,000. Included in this amount is a property held for speculation at a cost of $30,000.
b. Current liabilities include $50,000 for long-term debt that is due in three months. The company has received a suitable firm commitment to refinance the debt for five years and intends to do so.
c. Investments in marketable securities include $20,000 in short-term, high-grade commercial paper, which is a cash equivalent.

Required. Describe the appropriate balance sheet presentation for the above items.

Quizplus · Accepted Answer

The Answer of You are the independent accountant assigned to the audit of Neophyte Company. The company's accountant, a graduate of Rival State University, has prepared financial statements that contained the following questionable items:
a. The balance sheet reports land at $100,000. Included in this amount is a property held for speculation at a cost of $30,000.
b. Current liabilities include $50,000 for long-term debt that is due in three months. The company has received a suitable firm commitment to refinance the debt for five years and intends to do so.
c. Investments in marketable securities include $20,000 in short-term, high-grade commercial paper, which is a cash equivalent.

Required. Describe the appropriate balance sheet presentation for the above items.

You Are the Independent Accountant Assigned to the Audit of Neophyte