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Worldcom

 Essay about Worldcom

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a. (i. ) In respect to FASB Statement of Concepts Number 6, paragraph 25, property are likely future monetary benefits obtained or controlled by a particular entity due to past transactions or events. They symbolize probable long term economic rewards controlled by the venture. According to FASB Declaration of Principles No six, paragraph 85, expenses will be outflows or perhaps other burning up of assets or incurrences of debts (or a mixture of both) during a period via delivering or producing goods, rendering providers, or undertaking other activities that constitute the entity's recurring major, or central, procedures. Expenses will be gross outflows incurred in generating income. (ii. ) SCON Number 6, paragraph 148, declares that costs needs to be expensed if they are used up or have expired and when they have not any future economic value which can be measured. SCON No . six, paragraph 178-181, states costs should be capitalized or registered as assets when the costs have not out of date and they have got future economic value.

b. According to GAAP Accounting Principles, expense capitalization is observed when a major price merits recognition as an investment of capital funds instead of being named an expense pertaining to the year. A capitalized cost does not appear on the cash flow statement, nevertheless instead looks as a debit on the long term assets bank account and a credit on the cash account of the "balance sheet". However , the depreciation charge related to the capitalized cost will appear because an expense around the income statement. Since the long lasting assets account is larger due to the a result of capitalization, the depreciation costs are also proportionately larger. As a result, the time of expense recognition is usually changed, although eventually most expenses do get recognized around the income affirmation. Process

c. The company reported line costs of $14, 739 mil for 2001. The diary entry for the transactions is definitely debit to Line Costs Expense to get $14, 739 million and a credit rating to Funds for the...

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