the doc. Sample financial letter (1).pdf is an example of how the financial letter should be. I need to use only authoritative sources such as FASB codification or IFRS for question 4(b)


William Jones, the controller for Ida Inc., is not familiar with the impairment rules, and he has asked your firm to research the issue. Write a letter to Mr.Jones explaining the proper accounting treatment. For the clients convenience,you should includeany required journal entries. The address of the company is 100International Boulevard, Brownsville, Texas 78520. You will need to come up with a name and address for your accounting firm.

– Assume the year in question is 2013 (not 2010).

– For Questions 1-4, only address the US GAAP accounting treatment (not IFRS).

– For Question 4(a), assume you and the company decided to bypass the qualitative assessment of goodwill.

– Do not answer Questions #3 and#5.

– Use todays date for the letter.

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Johnson and Johnson Certified Public Accountants 3030 Main Street Brownsville, TX 78521 August 28, 2010 Boris Kloden, CFO Daimler Auto Parts 800 Mercedes Street Munich, Germany 70327 Dear Mr. Kloden: Comment [ITS1]: I think “response” might be I am writing in reference to your previous inquiry about the proper treatment of research and more appropriate in this case. development costs. It is my understanding that Daimler Auto Parts intends to register with the SEC in order to list the stock on the New York Stock Exchange. However, in order to do so, Daimler must comply with the U.S. generally accepted accounting standards. The following is a Comment [ITS2]: Good introduction and summary of the standards regarding research and development (R&D). summary of the facts/issues. Internally Generated Research and Development Internally developed R&D should be expensed. As the future benefit of the incurred R&D costs is presently unknown and uncertain, the standards choose to be conservative and expense 1 these costs. R&D costs include cost of materials, purchased equipment, personnel wages and 2 Comment [ITS3]: You should only use a colon expenditures, and contracted services. Additional R&D costs that are also expensed include: after a complete sentence. See page 89 of the (1) conceptual formulation and design of possible products, (2) testing or evaluation of product, Effective Writing textbook. 3 and (3) design, construction or testing of preproduction prototypes. Comment [ITS4]: Excellent. Acquired or Internally Constructed R&D Comment [ITS5]: Missing the subject. R&D or Acquired or constructed (e.g. warehouse facility or equipment) for a particular research project materials, equipment, and facilities? 4 may be capitalized. In such a case, the capitalized costs would be subject to amortization Comment [ITS6]: I think you should explain that 5 similar to that of property, plant and equipment….