In what situation would the Athena controller be correct in her valuation of goodwill?

1) Provide an example of transaction that follows five-step revenue recognition principle. Please identify each revenue recognition steps. (100 words)

2)You have been hired as a consultant by a parts manufacturing firm to provide advice as to the proper accounting methods the company should use in some key areas. In the area of receivables, the company president does not understand your recommendation to use the allowance method for uncollectible accounts. She stated, Financial statements should be based on objective data rather than the guesswork required for the allowance method. Besides, since my uncollectibles are fairly constant from period to period, with significant variations occurring infrequently, the direct write-off method is just as good as the allowance method.

For full discussion credit, students will draft a response to the president in support of your recommendation for the company to use the allowance method. (300 word)

3)You have just been hired as a consultant to Tangier Industries, a newly formed company. The company president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should use to value its inventory and cost of goods sold. Mr. Meeks has narrowed the choice to LIFO and FIFO. He has heard that LIFO might be better for tax purposes, but FIFO has certain advantages for financial reporting to investors and creditors. You have been told that the company will be profitable in its first year and for the foreseeable future. Prepare a report for the president describing the factors that should be considered by Tangier in choosing between LIFO and FIFO.(300 words)

4)Athena Paper Corporation acquired for cash 100% of the outstanding common stock of Georgia, Inc., a supplier of wood pulp. The $4,500,000 amount paid was significantly higher than the book value of Georgias net assets (assets less liabilities) of $2,800,000. The Athena controller recorded the difference of $1,700,000 as an asset, goodwill.

For full discussion credit, students will discuss the meaning of the term goodwill and answer the question: In what situation would the Athena controller be correct in her valuation of goodwill? (125 words)

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