Bus 205: Intermediate Accounting I - Project 2
You work as an accountant for regional CPA firm of Cash and Green. Your supervisor asked
you to conduct research for three unrelated clients.
1. Ditka Motors purchases an automobile for its new car inventory from Generous Motors,
which finances this transaction through its financial subsidiary, Generous Motors Credit
Company (GMCC). Ditka pays no funds to Generous Motors or GMCC until it sells the
automobile. Ditka must then repay the balance of the loan plus interest to GMCC. How
should Ditka report the acquisition and repayment transactions in its Statement of Cash
Flows?
2. On January 1, 2014, R. Gould Corporation promises to \"unconditionally\" transfer a
building that cost $100,000 (appraised recently at $300,000) to the M. Slauson Company
on January 1, 2015 for a boat she bought for $250,000. As of December 31, 2014, R.
Gould still has not transferred title to the building, although it received title to the boat.
How should M. Slauson and R. Gould record these transactions?
3. Payton Inc. has recently issued a 10% stock dividend to its existing stockholders. As a
result of the issuance of the stock dividend the market price of the stock declined 25%.
Payton has requested your assistance as to treating this stock dividend as a stock split.
Would this be acceptable under GAAP?
Required:
a) Provide responses for each independent case on the appropriate accounting treatment.
b) Support your responses with code sections from the FASB Accounting Standards
Codification (ASC).
