Tdf Company Accounting Memo Case Solution
Our company is under tremendous pressure as it is trying to make a decision regarding the expansion of its influence in the virtual reality market. The managers have expressed the need for financial and accounting information based on the need to exchange the assets. Although these types of transactions have taken place with other competing companies, management is still facing problems in making financial decisions. Since GAAP accounting standards raise only one problem, paying close attention to the current situation. By writing this letter, my goal is to describe how the companies should consider buying MANA assets.
Under generally accepted accounting principles, an asset is an enterprise-owned resource that has measurable economic value and can be quantified in the US dollars. The company has accounted for its fixed assets in accordance with GAAP standards and all of our assets are valued with an effective financial reporting. However, the current decision applies to a single asset for which, GAAP does not provide direct accounting standards.
There are many types of assets, including: cash and cash, bonds and stocks. The current accounting system involves the purchase of intangible assets that can be classified
The main concept of GAAP financial accounting is to provide useful information to the investors, managers and other stakeholders, inside and outside the company. Therefore, this financial information must be easier to understand in order to make it useful in the decision-making process. This information allows the investors and lenders to make the recommended credit and investment decisions. Unclear or incomprehensible financial information can cause financial problems and waste a lot of time. The Financial Accounting Standards Board has developed features that describe the company’s high-quality financial information and how that information can help with the financial decisions. The main characteristics of quality accounting information are: reliability, consistency, relevance and comparability.(Nerissa C. Brown, 2018).
Financial accounting presents the financial position of an entity to the external stakeholders. Financial accounting technology serves directors, financial analysts, shareholders and investors. It displays the specified time period and allows people who are running the business to view and analyze the performance of their businesses(Nobes, 2014).
This is how TDF companies must explain MANA’s purchases in accordance with the U.S’s GAAP guidelines.
MANA as an Intangible Asset
MANA corresponds to the concept of cash equivalent of assets, and it is a current asset that companies can include in their balance sheet. It is a short-term commitment to temporarily retain the cash and convert it into cash, at a later date. MANA is usually accounted for as a cash equivalent due to its short duration. (less than 90 days). The asset is presented as a cash equivalent and a cash balance at the date of the purchase, as it represents an insignificant risk of changes in the value of the assets. As a cryptocurrency token, the MANA token is used to use a virtual land in Decentraland, which has been previously done by all the competitors in the market. It also has an additional benefit of being used to purchase goods and services in the Decentraland area, instead of other available-for-sale securities (FASB ASC 305‐10)…………
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