Question

This part of the question is compulsory and must be answered. Your friend Mandy recently started a business in Dhaka. She prepared her first year of financial reports and realized that despite the business being very popular among the customers, her cashflow situation and profitability positions are weak. Mandy is not an Accounting major but still with whatever knowledge she possess, she maintains the records of the transactions in her business. She has recorded all her fixed assets in fair value. The fixed assets have been depreciated using the straight line method. She has also capitalized the research and development cost in her Balance Sheet. She has recognized all sales from services when she received orders from her customers. In the month of May, there was a sudden fire outbreak in her restaurant which damaged some of her equipment but she kept the value of those assets unchanged in her Balance Sheet. One of her customers who dined in her restaurant had a allergic reaction and decided to take legal action against her restaurant. It is probable that in the future she might have to pay some compensation to the customer for the damage. Mandy kaows that you have an Accounting Major from Southeast University so she is seeking your advice on how to resolve the above Accounting issues.
Using appropriate Accounting Standard Imowledge to provide your suggestions to Mandy on how to resolve the above issues in an appropriate manner.​

Answer 1

Answer:

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