Wallace Inc.

To: Peter and Samantha Wallace From: Accounting advisor Re: Accounting policies in advance recommending all accounting policies to be implemented, in that respect are some be assumption and key stakeholders that you mustiness recognize. The presumable buyer is currently your most important stakeholder, as he is interested in purchasing all your shares. He demand to determine whether spend in Wallace would be profitable by means of analyzing the companys monetary statements. Additionally, since Wallace is wholly owned by the two of you, I assume you would want the highest purchase price. In this way, income maximization is your monetary statement objective as it entrust also pull in to the prospective buyer. An important solution here is that the buyer is requesting GAAP-based financial statements. The first issue that should be taken into consideration is Wallaces client case. The company has tierce significant customers who account for 80% of total revenue s ($15M). This whitethorn give problems any time in the future if the company were to resort any of these accounts. A dismission of just one customer will have a great negative have-to doe with on Wallaces profitability. This issue could be disclosed in the nones to the financial statements, so prospective buyers are aware of this.

It would be important to note that Wallace should concenter on diversifying its customer base. This way, it may lead to a to a greater extent financially sound company, with a better cash prediction. The succeeding(prenominal) issue pertains to the $50,000 worth of chronicle that has been sitting in a factory for everypla! ce a year and currently not being manufactured. If this inventory has become obsolete, it should be indite run into and not include as an asset in the financial statements. On the otherwise hand, if this inventory is going to be used, there should be a note of this and most importantly, the inventory must be written down to its net realizable value. Because of the everlastingly changing purlieu of the auto industry, inventory that has not...If you want to remove a adequate essay, order it on our website: OrderCustomPaper.com

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