Disclosure Notes & FASB Codification

E 3–11
Disclosure notes
● LO3–4
Hallergan Company produces car and truck batteries that it sells primarily to auto manufacturers. Dorothy Hawkins, the company’s controller, is preparing the financial statements for the year ended December 31, 2021. Hawkins asks for your advice concerning the following information that has not yet been included in the statements. The statements will be issued on February 28, 2022.
1. Hallergan leases its facilities from the brother of the chief executive officer.
2. On January 8, 2022, Hallergan entered into an agreement to sell a tract of land that it had been holding as an investment. The sale, which resulted in a material gain, was completed on February 2, 2022.
3. Hallergan uses the straight-line method to determine depreciation on all of the company’s depreciable assets.
4. On February 8, 2022, Hallergan completed negotiations with its bank for a $10,000,000 line of credit.
5. Hallergan uses the first-in, first-out (FIFO) method to value inventory.
Required:
For each of the above items, discuss any additional disclosures that Hawkins should include in Hallergan’s financial statements.

Research Case 3–9
FASB codification; locate and extract relevant information and cite authoritative support for a financial reporting issue; related-party disclosures; Enron Corporation
● LO3–4
Enron Corporation was a darling in the energy-provider arena, and in January 2001 its stock price rose above $100 per share. A collapse of investor confidence in 2001 and revelations of accounting fraud led to one of the largest bankruptcies in U.S. history. By the end of the year, Enron’s stock price had plummeted to less than $1 per share. Investigations and lawsuits followed. One problem area concerned transactions with related parties that were not adequately disclosed in the company’s financial statements. Critics stated that the lack of information about these transactions made it difficult for analysts following Enron to identify problems the company was experiencing.
Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine each of the following:
Real World Financials

1. The specific eight-digit Codification citation (XXX-XX-XX-X) that outlines the required information on related-party disclosures that must be included in the notes to the financial statements?
2. Describe the disclosures required for related-party transactions.

Spiceland, David. Intermediate Accounting.. [Bookshelf Ambassadored].