Question 10Q - Intermediate Accounting (Kieso)

Question

In its December 31, 2017, balance sheet Oakley Corporation reported as an asset, “Net notes and accounts receivable, $7,100,000.” What other disclosures are necessary?

Step-by-Step Solution

Answer

The business entity must report the amount of both notes and accounts receivables separately.

Meaning of Notes to Financial Statement

Notes to the financial statement can be defined as the additional information represented after the financial statements providing information about the assumptions made while preparing the financial statements.

Necessary Disclosure

Both of the receivables reported combined by the company must be reported separately. Accounts receivable must be reported at its gross amount, and then the business entity must make deductions for the allowance for doubtful accounts. Non-trade receivables must be reported separately by the business entity.