November 18, 2019.
Amelia Emerson, Controller
350 Accounting Avenue
Northridge, CA 91330
Dear Ms. Emerson,
SIS consulting have analyzed your proposed plan to report the $15 million sales tax paid to State Z to settle the firmís obligation through December 31, 2019 in the year ended December 31, 2020 financial report. The firm suggests that Yukon, Inc. should include the funds in the 2020 financial year report as a liability.
As the companyís CPA, your role is to keep the firmís assets and liabilities in your balance sheet. The $15 million paid to State Z should be placed as a liability on January 2020. The company should disclose the transactions as tax remittance and include the inventory in its balance sheet, recorded as a liability (FASB, 2016, ASC para 740-10-30-2).
Based on the fact that State Z is Yukonís central distribution center, the construction of a new distribution center should overrun the liability. State Z will not be using the fu...