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    Iskra Vremec and Colin Mcfee Are Experienced Scuba Divers Who

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    Let's Talk With Hassan
    Iskra Vremec and Colin McFee started their own commercial salvage and treasure hunting company called Atlantic Explorations Limited (AEL). They have had success recovering sunken vessels and cargoes, but Iskra has also located potential underwater treasure sites that could require substantial investment to retrieve. They have asked for the auditor's advice on accounting for their ongoing operations and a recent discovery as they may seek additional financing.

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    Iskra Vremec and Colin Mcfee Are Experienced Scuba Divers Who

    Uploaded by

    Let's Talk With Hassan
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    Iskra Vremec and Colin McFee started their own commercial salvage and treasure hunting company called Atlantic Explorations Limited (AEL). They have had success recovering sunken vessels and cargoes, but Iskra has also located potential underwater treasure sites that could require substantial investment to retrieve. They have asked for the auditor's advice on accounting for their ongoing operations and a recent discovery as they may seek additional financing.

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    Iskra Vremec and Colin McFee started their own commercial salvage and treasure hunting company called Atlantic Explorations Limited (AEL). They have had success recovering sunken vessels and cargoes, but Iskra has also located potential underwater treasure sites that could require substantial investment to retrieve. They have asked for the auditor's advice on accounting for their ongoing operations and a recent discovery as they may seek additional financing.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    29 views2 pages

    Iskra Vremec and Colin Mcfee Are Experienced Scuba Divers Who

    Uploaded by

    Let's Talk With Hassan
    Iskra Vremec and Colin McFee started their own commercial salvage and treasure hunting company called Atlantic Explorations Limited (AEL). They have had success recovering sunken vessels and cargoes, but Iskra has also located potential underwater treasure sites that could require substantial investment to retrieve. They have asked for the auditor's advice on accounting for their ongoing operations and a recent discovery as they may seek additional financing.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Iskra Vremec and Colin McFee are experienced scuba

    divers who #2122


    Iskra Vremec and Colin McFee are experienced scuba divers who

    Iskra Vremec and Colin McFee are experienced scuba divers who have spent many years in the
    salvage business. About a year ago, they decided to start their own company to recover
    damaged and sunken vessels and their cargoes off the east coast of Canada. They
    incorporated Atlantic Explorations Limited (AEL) on February 1, 2016. Iskra (president) and
    Colin (vice-president) each own 30% of AEL's shares. The remaining 40% of the shares were
    purchased by a group of 10 investors who contributed $50,000 each so that AEL could acquire
    the necessary equipment and cover other start-up costs.

    AEL carries on two types of activities. The first is a commercial salvage operation. The second
    is treasure hunting. To date, commercial salvage operations have generated all of AEL's
    revenues. The demand for these services is strong, and there are few competitors because of
    the unpredictable nature of the business and the long hours. Colin manages the commercial
    salvage operations. Customers pay in three installments, including an upfront fee, a fee payable
    approximately midway through the contract, and a fee at the end once the items in question
    have been salvaged (found and brought to land). If the item is never found or AEL cannot bring
    the item to the surface and to land, then the final payment is not made.

    Iskra spends most of her time locating and recovering underwater artifacts and, where possible,
    sunken treasure. Her research shows that numerous vessels carrying gold, silver, and other
    valuables to the "Old World" were wrecked off the shores of Nova Scotia. AEL has permits to
    investigate three target areas. As compensation for the permits, AEL agrees to remit 1% of the
    fair value of any treasure found. These funds are to be invested in the local economy by AEL
    (subject to government approval). The company also pays an upfront fee that allows it to search
    a given area. There has been a discovery in the first of these target areas.

    It is now September 5, 2016. AEL has engaged your auditing firm to provide advice on the
    accounting for the ongoing operations and the discovery that AEL has just made. You (as audit
    manager) and Alex Green, the partner assigned to the engagement, met with Colin and Iskra.

    During your meeting, Iskra said that she believes that finding treasure is like winning a lottery,
    as all revenues would accrue to AEL and thus should be treated accordingly. If this discovery
    proves to be as substantial as preliminary results suggest, AEL will require additional financing
    of $1.5 million to acquire equipment and an on-shore laboratory, and lease a specially equipped
    vessel needed to salvage the wreck and its treasures. The bank has said that it is not willing to
    advance further funds. However, Iskra and Colin know of other individuals who are interested in
    investing in AEL.

    AEL receives grants from the government to assist in the process of finding treasure and
    salvaging sunken vessels. Iskra and Colin have just found out that they are likely to receive a
    1/2
    grant in connection with the recent discovery.

    Instructions

    Draft a memo for auditor Alex Green, analyzing all financial reporting issues and providing
    recommendations.

    Iskra Vremec and Colin McFee are experienced scuba divers who

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