Polling Questions – by Dr. Andrei Belonogov

The Company currently recognizes obligations to safeguard crypto-assets it holds for users following the requirements of SEC Staff Accounting Bulletin No. 121 (SAB 121). The Company presents on its balance sheet “Customer custodial funds” as current assets and “Custodial funds due to customers” as current liabilities.

The company has a milestone-based engineering service contract that can be terminated by either party without substantive penalties.

The company terminated the agreement with a Luxemburg distributor who is currently being treated as its customer for accounting purposes. Under local law, the distributor is entitled to an indemnification payment for costs previously incurred to build brand and customer relationships.

The company maintains a summary of unposted adjustments to assess all unposted entries and known errors in the financial statements to assess the materiality and determine whether the books need to be reopened. During the review of the financial statements as of March 31, 2022, the management team discovered a material error related to the omitted accrued expenses entry as of December 31, 2023. Management included in the summary of unposted adjustments the following proposed adjustments:

Debit Expense

Credit Accrued Expense

The amount of misstatement by itself is close to, but does not exceed the materiality ascertained when taken individually. The management entry is recorded in the summary of unposted adjustments as a current period entry. No correction of the prior period balances is recorded due to the immateriality of an error.

FASB Glossary defines a legal entity as:

“Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.”

Under Delaware Series LLC Law, businesses may be formed as a limited liability company that serves as an umbrella for several associated series. There are two types of series – Sec. 18-215(b) Protected series and Sec. 18-218 Registered series. Both Registered and Protected series are protected against liabilities and obligations of the LLC itself and other series as long as:

The Company has a debt agreement in place with a maturity date of June 30, 2024. The Company modifies the agreement to extend a maturity date to December 31, 2026, for an additional fee of 10% of the nominal payable to the lender at maturity.

Answers to some of the questions above may be correct or incorrect depending on certain assumptions that the author made but did not explicitly state.

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