The clean-up costs of vacating the premises contingent on the contamination issue will also be needed to be evaluated and recognised. DCDL is a company with Dry clean depot ltd dry cleaning stores in southern Ontario.
This is a new program for DCDL, so these figures will not be used, as IFRS states that revenue needs to be reasonably measured before being recognised.
This amount must be recorded as a contra sales account in the financial statements and not as promotion expense. This statistic should not be taken into consideration unless the company has some historical evidence to back up these figures. The liability must be set up accordingly and discounted on the time value of money.
This will benefit the objective of lower debt-to-equity ratio. The covenants of the new loan are as follows: After the acquisition period the interest payments will be expensed. There is an obligation for the cost of remediation if there is a contamination issue in any of the sites.
This chemical is a hazardous air contaminant.
Prepaid Card Revenue Recognition: More essays like this: DCDL uses perchloroethylene perc in its cleaning process in eight of its operating sites. A note disclosure is also recommended regarding this liability and its possibility.
This idea of prepaid cards is basically the concept of a sales discount.
The following costs of the equipment will be capitalised, in accordance with IFRS: One of the eight sites may have a contamination issue, and may have some remediation work needed. This liability will worsen the covenant of debt-to-equity. According to the issues discussed above, the revenue recognition of the prepaid cards betters the covenant for the loan, but the lease issue worsen the ratio.
Dry Clean Depot is a private company, Max the CFO has asked me Professional Accountant to analyse any accounting implications with regarding a new loan and other issues within the company.
The recognition of the revenue and reduced expense both better the debt-to-equity ratio of DCDL and are aligned with the objectives of the company in acquiring the loan.
Capitalizing these costs will better the debt-to-equity ratio. Get Full Essay Get access to this section to get all help you need with your essay and educational issues.Dry Clean Depot is a dry cleaner business offering garment inspection, pressing services and other related services.
The shop offers dry cleaning services for 4/10(33). Dry Clean Depot Limited Essay Sample. Overview: Dry Clean Depot is a private company, Max the CFO has asked me (Professional Accountant) to analyse any accounting implications with regarding a new loan and other issues within the company.
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