【正文】 No: If there is no active marketSOLUTIONS TO BRIEF EXERCISESBRIEF EXERCISE 11(a) $90 000 – $50 000 = $40 000 (Owner’s Equity).(b) $45 000 + $70 000 = $115 000 (Assets).(c) $94 000 – $65 000 = $29 000 (Liabilities).BRIEF EXERCISE 12(a) $100 000 + $232 000 = $332 000 (Total assets).(b) $190 000 – $80 000 = $110 000 (Total liabilities).(c) $600 000 – ($600 000) = $300 000 (Owner’s equity).BRIEF EXERCISE 13(a) ($870 000 + $150 000) – ($500 000 – $80 000) = $600 000 (Owner’s equity).(b) ($500 000 + $100 000) + ($870 000 – $500 000 – $70 000) = $900 000 (Assets).(c) ($870 000 – $80 000) – ($870 000 – $500 000 + $120 000) = $300 000 (Liabilities).BRIEF EXERCISE 14 A (a) Accounts receivable A (d) Office supplies L (b) Salaries payable OE (e) Owner’s investment A (c) Equipment L (f) Notes payableBRIEF EXERCISE 15(a) True(b) TrueBRIEF EXERCISE 16(a) Yes(b) No(c) YesBRIEF EXERCISE 17(a) Yes(b) No(c) YesBRIEF EXERCISE 18(a) Predictive(b) Confirmatory(c) Substance over form(d) Accuracy(e) Understandability(f) Timeliness(g) Materiality(h) Cost versus benefitBRIEF EXERCISE 19(a) Faithful representation(b) Comparability(c) RelevantBRIEF EXERCISE 110(a) 1(b) 2(c) 3(d) 4BRIEF EXERCISE 111 (a) For information to be recorded, it must first meet the definition and recognition criteria associated with the appropriate element in the balance sheet. Should the money spent on developing a new software be recorded as an Asset to Microsoft?Definition CriteriaYes/NoWhyFuture economic benefitsYesPast experience suggests this expenditure has led to mercial sales, unlike some research and development expenditure which may not lead to mercial outes.Controlled by the entityYesAssuming Microsoft has got the patent and exclusive right to the use of this program.Past transactionYesMoney has been spent on its developmentRecognition CriteriaYes/NoWhyProbable future economic benefitYesIt is more likely to generate benefits based on the past experience on development expenditure on previous Windows programs eg. XP and Vista.Can be measured reliablyYesYes: based on the amount that Microsoft has spent(b) For information to be recorded, it must first meet the definition and recognition criteria associated with the appropriate element in the balance sheet. Would an organisation report an employee’s sick leave entitlement? Definition CriteriaYes/NoWhyPresent obligationYesOnce an employee is contracted the organisation is legally bound to provide 10 days sick leave per annumPast eventYesThe employee and the organisation have signed a written work place agreement Outflow of resources embodying economic benefitsYesThe employee will be paid a salary (cash) to pensate for days lost due to sicknessRecognition CriteriaYes/NoWhyProbable future economic benefitYesIt is more likely rather than less likely that an employee will be sick during the course of the yearCan be measured reliablyYesYes: presumably past data can be sourced to provide an accurate estimate of the amount likely, on average ,to be paid to an employee who claims sick leave BRIEF EXERCISE 112I) Increase Cash $460 Increase Insurance revenue* $ 460 2) Increase Commission Exp ** $46??? Increase Commission Payable (L) $46???Meets element definition* Insurance revenue is increased as it represents an increase in an economic benefit in the form of an increase in an asset (cash) resulting in an increase in equity other than those relating to contributions from equity participants** Commission expense is increased as it represents an incurrence of a liability (mission payable) resulting in a decrease in equity ,other than those relating to distributions to equity participantsMeets recognition criteria(i) Measurable The contract will stipulate the insurance to be received and the mission to be paid(ii) Probable Once contract is signed revenue is guaranteed but mission to be paid may or may not be probable depending upon likelihood of client renewing their insurance ????Past data including industry averages could be gathered to provide a likely mission payable and expense amount to be included in the B/S and P/LBYP 11 FINANCIAL REPORTING PROBLEM(a) A framework is similar to a constitution in that it is a coherent system of interrelated objectives and fundamentals that can serve as the basis for resolving accounting and reporting problems.? The conceptual framework covers the general theory of accounting and is used as the basis for developing specific accounting rules and regulations.? It is a set of interrelated concepts which define the NATURE, SUBJECT and BROAD CONTENT of accounting”.? ie . a set of broad principles underlying accounting – “theory”.? It prises SAC1,SAC2 and the Framework. The Framework consists of Qualitative characteristics of accounting information and the Elements of financial statements both definition and recognition criteria. (b) Prior to a welldeveloped framework, accounting principles were developed on a problembyproblem basis. Thus, rulemaking bodies developed and issued accounting rules and methods to solve specific problems. Critics charged that the problembyproblem approach led to inconsistent rules and practices over time.? Business more plex today.? May be differences in opinion about how ‘new’ transactions should be measured, recorded and disclosed.? Eg Interpretation 13 Customer Loyalty Programs Interpretation 132 Intangible assets Web Site Costs Interpretation 1055 Accounting for Road Earthw