| Course | ACC 610 Financial Reporting I |
|---|---|
| Module | Module 10 |
| Paper type | graduate final project technical accounting memo to an audit committee |
| Length | About 770 words, 4 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | MS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 610 Module 10
Memorandum
To: Audit Committee
From: Corporate Controller
Date: February 18, 2026
Re: Significant accounting matters for the year ended December 31, 2025
Purpose and Summary
This memo summarizes the six significant accounting matters the company resolved for 2025, the guidance applied, the judgments involved and their effects. Detailed analyses are in the supporting workpapers. All conclusions have been discussed with the external auditors, who have not raised disagreements.
Significant matters and effects, 2025
| Matter | Conclusion | Effect on 2025 |
|---|---|---|
| Spraying services | Principal, revenue reported gross | Revenue and cost of services each up $2.2 million |
| Cooperative fleet contract | Four obligations, discount allocated pro rata | Revenue $452,449; contract liability $107,551 |
| Sensor earnout | Level 3 liability remeasured | $1.71 million loss in operating expense |
| Investment portfolio | One bond credit loss; startup stake written up | $72,000 credit losses; $420,000 gains |
| Impairments | Service center and sensor goodwill | $1.3 million and $2.6 million losses |
| Software and cloud costs | Capitalized by stage | $3.03 million capitalized; $4.17 million of development costs expensed |
Revenue Matters
Spraying booked through the app is reported gross because the company controls the service before it reaches the farmer: it directs pilots, guarantees coverage and sets the price, under the principal and agent paragraphs of Topic 606 (Financial Accounting Standards Board, 2014). The judgment is the specified service; if the company stopped guaranteeing coverage, the answer could change to net. The cooperative fleet contract contains four distinct obligations. The $114,800 discount is allocated by relative standalone selling price, with only training estimated; revenue was recognized for drones and training on delivery, spraying as acres were covered and subscriptions over 36 months.
Fair Value and Investments
Once sensor revenue passed its target, the earnout liability climbed to $2.97 million, a $1.71 million charge for the year. The measurement was Level 3 until the target was met, and Song et al. (2010) show that investors discount such estimates, which is why the note now discloses the probability and range used during the year. In the portfolio, one corporate bond issuer was downgraded, producing a $60,000 credit loss, while $180,000 of rate-driven declines stays in other comprehensive income. A $300,000 gain on the battery startup stake reflects an observable price in its later funding round under the measurement alternative.
Impairments
The Grand Island service center failed the undiscounted cash flow test and was written down $1.3 million to its $2.1 million fair value. Sensor unit goodwill was impaired $2.6 million under the one-step test after a competitor began bundling a free camera (Financial Accounting Standards Board, 2017). The key assumption is a 25 percent cut in camera prices; at 15 percent the loss would be $1.1 million. Ramanna and Watts (2012) found that managers sometimes use unverifiable estimates to delay impairments, so we chose the price assumption from the competitor's announced terms rather than management's hopes. The committee should note that the earnout charge and the impairment come from the same competitive event viewed over different periods.
Software and Cloud Costs
Firmware sold with drones was capitalized only after technological feasibility, $380,000; the hosted mapping platform is internal-use software, with $2.2 million of application development capitalized; and $450,000 of cloud ERP implementation was capitalized under ASU 2018-15 (Kieso et al., 2019). The judgments are the feasibility date and the reasonably certain ERP renewal.
Matters Most Exposed to Challenge
Three judgments would draw the most audit and regulatory attention if the company prepares for an initial public offering. First, the goodwill price assumption, which moves the impairment by more than $1 million across a plausible range. Second, the principal conclusion for spraying, which adds $2.2 million of revenue and affects the growth rate investors will price. Third, the firmware feasibility date, which is small this year but will grow with each release. We recommend that the committee review the evidence for each before approving the statements.
Standards Taking Effect
ASU 2023-09 expands income tax disclosures, including a rate reconciliation by category and taxes paid by jurisdiction, for the company's 2026 statements. ASU 2023-07 expands segment expense disclosures for public entities and would apply if the company files with the SEC. Neither changes recognition or measurement, but both require new data from the tax and management reporting systems, which should be built during 2026.
Recommendations
We recommend five controls. A quarterly principal-agent review whenever pilot contract terms change. A standalone selling price study each year, with training prices refreshed from market data. A documented quarterly earnout and Level 3 review signed by the CFO. Time-tracking codes that separate software development from maintenance, with quarterly testing. And an impairment indicator checklist reviewed with each quarterly close, including competitor pricing. Each addresses one of the judgments above and will reduce the risk of a late adjustment in a future audit.
References
Financial Accounting Standards Board. (2014). Revenue from contracts with customers (Topic 606) (Accounting Standards Update No. 2014-09). Author.
Financial Accounting Standards Board. (2017). Intangibles: Goodwill and other (Topic 350): Simplifying the test for goodwill impairment (Accounting Standards Update No. 2017-04). Author.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (17th ed.). Wiley.
Ramanna, K., & Watts, R. L. (2012). Evidence on the use of unverifiable estimates in required goodwill impairment. Review of Accounting Studies, 17(4), 749-780. https://doi.org/10.1007/s11142-012-9188-5
Song, C. J., Thomas, W. B., & Yi, H. (2010). Value relevance of FAS No. 157 fair value hierarchy information and the impact of corporate governance mechanisms. The Accounting Review, 85(4), 1375-1410. https://doi.org/10.2308/accr.2010.85.4.1375
What the ACC 610 Module 10 instructions ask for
The ACC 610 final project usually asks you to present the technical accounting conclusions for your case company in a professional format, often memos or a report to an audit committee or CFO. Plan to cover each significant issue from the milestones: the facts, the authoritative guidance, the analysis, the conclusion and the effect on the financial statements and disclosures. Incorporate instructor feedback from the milestones rather than resubmitting them. Many versions also ask for a summary of judgments and estimates, upcoming standards and recommendations. Write for a reader who is informed but not a technical accountant, and keep each issue short enough to read in a few minutes, with detail left to workpapers.
How this ACC 610 Module 10 final project example is built
The memo opens with a summary table of six issues and their effects, then gives a short section for each. Spraying services are reported gross under the principal guidance in ASC 606. The cooperative contract's $114,800 discount is allocated across four obligations. The earnout is a Level 3 liability remeasured to $2.97 million. A $60,000 credit loss on one bond goes to earnings, and a startup stake is written up $300,000. The service center and sensor goodwill are impaired by $1.3 million and $2.6 million. Software costs of $3.03 million are capitalized. The memo closes with the judgments most exposed to challenge, standards taking effect in 2026 and five control recommendations, each tied to one of the six matters.
Where the ACC 610 Module 10 rubric puts the points
Rubrics for the ACC 610 final project typically score the technical accuracy of each position, use of authoritative guidance, analysis of alternatives and judgments, the statement of effects, integration of milestone feedback, professional format and writing for the intended audience. Top submissions are concise, lead with conclusions, state each key assumption and its sensitivity and connect the issues where they interact, such as the earnout and the goodwill impairment. Graders also reward recommendations tied to specific weaknesses and a short list of standards taking effect that the company must prepare for. Common deductions include pasting milestones together without revision, burying conclusions, omitting effects and recommending controls that do not address the issues raised.
ACC 610 Module 10 help: the mistakes that cost points
Final projects most often lose points by reading like the milestones stapled together, with repeated background and no overall view. A second weak spot is writing for the instructor rather than the stated audience; an audit committee needs the conclusion, the judgment and the effect, not a tutorial on the standard. If your guidelines ask for separate memos instead of one package, keep the same issue structure and add a cover summary. Start with the summary table and write every section to support one row of it; it forces you to state each effect in numbers and keeps the package short enough to be read. Then cut any paragraph that only repeats background from an earlier section.
Get ACC 610 Module 10 written to your instructions
Send the ACC 610 final project guidelines and your milestone feedback. The package will revise the milestones into concise technical positions with Codification support, state each judgment and its effect and add the summary sections the rubric requires. The first is free; plan on about two days. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
More ACC 610 papers and related MS Accounting samples
- ACC 610 Module 1 Discussion: Who Writes the Rules, and How
- ACC 610 Module 2 Codification Research Assignment: Principal or Agent for Spraying Services
- ACC 610 Module 3 Milestone One: A Bundled Drone Contract Under ASC 606
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ACC 610 Module 10 questions, answered
Where can I find a free ACC 610 Module 10 Final Project sample?
This page includes a full ACC 610 final project memo package summarizing six technical accounting conclusions for an audit committee.
What should an ACC 610 final project include?
Typically the significant accounting issues from the milestones, each with facts, guidance, analysis, conclusion and effects, plus a summary of judgments, upcoming standards and recommendations, revised for feedback.
How long should each technical issue be in a memo package?
Short enough to read in a few minutes, usually a few paragraphs leading with the conclusion, with detailed analysis left in supporting workpapers or appendices.
Why include sensitivity in an audit committee memo?
Because the committee must understand which assumptions drive estimates and how much results would change, which is central to its oversight of financial reporting judgments.
What are critical audit matters?
Matters communicated to the audit committee that relate to material accounts or disclosures and involved especially challenging, subjective or complex auditor judgment, reported in public company audit opinions.