Financial Reporting - General Purpose For Profit - BS/SFP

Question 1

How to account for unsold goods on consignment in accounts receivable on the balance sheet, when calculating current assets? (when given selling price, and it’s not in the ending inventory).

Answer 1

Subtract the selling price from the accounts receivable.

Take the selling price and divide it by the cost percentage

Then add step 2 to the inventory to get the updated current assets amount for the balance sheet.

Question 2

What are asset valuation accounts, and are they an asset or a liability?

Answer 2

Asset valuations accounts do not stand alone and are part of assets and liabilities; however, they are neither an asset nor a liability.

Instead, they reduce or increase receivables costs, present value, or collection amounts.

Example Accounts:

Accumulated Depreciation

Estimate of uncollectable Amounts

Premium on a Bond Receivable