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    Winery

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    Raam Prakash
    This document discusses various accounting issues and decisions facing MacCloud winery regarding their assets and financial reporting. It outlines questions about how to account for a leased building, bank loan, land and grapevines, potential diseases, oak barrels, and other general accounting principles. The document emphasizes that accounting requires decisions due to accrual accounting and uncertainty, and that financial statements are shaped by the standards and choices made rather than just raw financial data.

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    Winery

    Uploaded by

    Raam Prakash
    471 views12 pages
    This document discusses various accounting issues and decisions facing MacCloud winery regarding their assets and financial reporting. It outlines questions about how to account for a leased building, bank loan, land and grapevines, potential diseases, oak barrels, and other general accounting principles. The document emphasizes that accounting requires decisions due to accrual accounting and uncertainty, and that financial statements are shaped by the standards and choices made rather than just raw financial data.

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    financial accounting

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    winery

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    This document discusses various accounting issues and decisions facing MacCloud winery regarding their assets and financial reporting. It outlines questions about how to account for a leased building, bank loan, land and grapevines, potential diseases, oak barrels, and other general accounting principles. The document emphasizes that accounting requires decisions due to accrual accounting and uncertainty, and that financial statements are shaped by the standards and choices made rather than just raw financial data.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    471 views12 pages

    Winery

    Uploaded by

    Raam Prakash
    This document discusses various accounting issues and decisions facing MacCloud winery regarding their assets and financial reporting. It outlines questions about how to account for a leased building, bank loan, land and grapevines, potential diseases, oak barrels, and other general accounting principles. The document emphasizes that accounting requires decisions due to accrual accounting and uncertainty, and that financial statements are shaped by the standards and choices made rather than just raw financial data.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    of 12

    Accounting decisions

    Case: Accounting at MacCloud winery

    Methodological note
    We want to distinguish between Economic facts/data
    No need to discuss them Taken for granted

    Accounting issues
    The topic of our discussion We will follow the order of the case questions

    Accounting at McCloud Winery

    The MacCloud winery


    5 acres of land One building

    Accounting at McCloud Winery

    1: The building
    Worth $32,000 Leased for 10 years for $5,000 per year How do we account for it?

    Accounting at McCloud Winery

    2: The bank loan


    $180,000 3 years maturity $ 10,000 annual repayment 10% interest rate

    Accounting at McCloud Winery

    3: The land and the grapevines


    The vineyard is certainly an asset Cost of this asset? Depreciation?

    Accounting at McCloud Winery

    4: Vines diseases
    Highly damaging event Possible, but not certain How do we account for this?

    Phylloxera

    Pierces disease
    Accounting at McCloud Winery

    5: The oak barrels


    Two types
    High quality (5 + 10 years of economic life) Low quality (10 years of economic life)

    Is it an asset? Depreciation?

    Accounting at McCloud Winery

    General questions that we have tackled today

    What do we mean by accounting decisions? Why is it necessary to make accounting decisions? What are the consequences of these decisions?
    Accounting at McCloud Winery

    The accrual principle: an example


    Balance Sheet Profit = 50

    Wealth
    300

    Accrual logic
    Wealth
    350 I/S day 1 I/S day 1

    Balance Sheet

    Profit = 10

    Balance Sheet

    Wealth
    360

    Begin. day 1

    Different!
    End of day 1

    End of day 2

    Cash 0

    Cash flow logic


    Cash flow day 1
    Cash 250

    Cash flow day 2

    Cash 360

    Cash increase = 250

    Cash increase = 110

    Accounting at McCloud Winery

    Accounting and Financial Analysis


    Double-entry Accounting decisions Raw data

    Financial Statements

    Financial Analysis

    Accounting at McCloud Winery

    Summing up
    The need to make accounting decisions because of
    Accrual principle Uncertainty

    Accounting standards guide these decisions, but never eliminate them Financial statements are chosen
    Ethical issues Communication strategy
    Accounting at McCloud Winery

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