Business, 05.08.2020 02:01 sarahcn9876

Auto Inc. (Auto) is a company based in New York that manufactures automobiles and exports the finished vehicles to Europe. Auto manufactures two models; the most popular model is a four-door sedan (Sedan), and the other is a less common, highly customizable luxury sports car (Luxury Car). Auto contracts Trans-Atlantic Inc. (Atlantic) to ship its products to Europe. Atlantic has a fleet of 10 multi-use shipping vessels, each with capacity for 2,000 vehicles. The terms of the shipping contracts are as follows: • Sedan contract terms:

o The term is five years.
o MV Manhattan, a ship in Atlantic’s fleet, is dedicated to shipping Auto’s

Sedans for the term of the contract.

o Auto determines (1) which European ports receive shipments and (2) the order in which deliveries are made to the ports; Auto instructs Atlantic accordingly.

o Auto has the option to send the ship below capacity. If the ship is below capacity, Atlantic cannot use the excess capacity to ship products of its other customers.

• Luxury Car contract terms:
o The term is five years.

o Atlantic is required to deliver shipments of Luxury Cars within five weeks of notification from Auto that an order of Luxury Cars is ready for shipping.

o Atlantic may choose any ship from its fleet to complete the request.

o Auto may provide 250 to 2,000 Luxury Cars in a single request; however, shipping requests of Luxury Car generally do not exceed 500 vehicles in a single request because of the lower production volume and longer manufacturing time of Luxury Car.

o Atlantic has the option to use excess capacity to ship products of its other customers.

o After notification from Auto that Luxury Cars are ready to ship, Atlantic determines when within the five-week period to ship the cars, as well as the shipping route.

Auto’s CFO understands that the new leasing standard has certain provisions that may affect how the company treats contracts of this nature.

Required:

Analyze the above and prepare a memorandum addressing the impact (if any) of the new leasing standard on Auto’s shipping arrangements for the following considerations:

Determine whether each of Auto’s contracts with Atlantic for Sedan and Luxury Car contains an identified asset.

Determine whether each contract conveys the right to control the use of the identified asset to the lessee.

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 20:30

Juniper company uses a perpetual inventory system and the gross method of accounting for purchases. the company purchased $9,750 of merchandise on august 7 with terms 1/10, n/30. on august 11, it returned $1,500 worth of merchandise. on august 26, it paid the full amount due. the correct journal entry to record the merchandise return on august 11 is:

Answers: 3

Answer

Business, 21.06.2019 23:20

Which feature transfers a slide show into a word-processing document?

Answers: 2

Answer

Business, 22.06.2019 14:30

Amethod of allocating merchandise cost that assumes the first merchandise bought was the first merchandise sold is called the a. last-in, first-out method. b. first-in, first-out method. c. specific identification method. d. average cost method.

Answers: 3

Answer

Business, 22.06.2019 17:30

Costco wholesale corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 471 locations across the u.s. as well as in canada, mexico and puerto rico. as of its fiscal year-end 2005, costco had approximately 21.2 million members. selected fiscal-year information from the company's balance sheets follows. ($ millions). selected balance sheet data 2005 2004 merchandise inventories $4,015 $3,644 deferred membership income (liability) 501 454 (a) during fiscal 2005, costco collected $1,120 cash for membership fees. use the financial statement effectstemplate to record the cash collected for membership fees. (b) in 2005, costco recorded $46,347 million in merchandise costs (that is, cost of goods sold). record thistransaction in the financial statement effects template. (c) determine the value of merchandise that costco purchased during fiscal-year 2005. use the financial statementeffects template to record these merchandise purchases. assume all of costco's purchases are on credit.

Answers: 3

Answer

You know the right answer?

Auto Inc. (Auto) is a company based in New York that manufactures automobiles and exports the finish...

Questions