Writing assignment
Financial/Theory:
Your client, Smooth Brew Company, has just purchased a brewery known for the unique taste of its beer. This taste is primarily the result of using sparkling spring water that flows from a particular stream made famous in the brewery\’s advertisements. The brewery is located on 20 acres at the foot of a large mountain. The famous stream flows down the mountain out of North Carolina and through the brewery\’s property in Georgia.
Your client paid a high price for this brewery operations — $1 million above the fair market value of the tangible assets acquired. The president of Smooth Brew has made it clear that the main reason he agreed to pay the price is to get access to the special water. Accordingly, he has requested that an account entitled Water be set up in the balance sheet and valued at $1 million.
Questions to answer:
As Smooth Brews CPA, you know your firm will have to take a position on this issue. Should the firm allow the client to account for the $1 million the way he suggested? If not, what will be the position of your firm on how the transaction should be accounted for?
Write a memo to your boss, Claire Sanders, recommending what position your firm should take with this client and why.
All sources used for this assignment must be from the internet with the link of the website so that I have access to the website.
Instruction files
writing_assignment_2.docx(15,34 KiB)
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