Essay on Should We Invest in Virtual Reality? Evaluation of Risks & Benefits

Our organization has been going through immense desire while deciding on whether to invest or venture into expanding its operations in the virtual reality industry or market. The organization management has shown its interest in having the company's financial account data on the requirement of trade properties. Although this kind of trade has been ventured in by other rival organizations, the company management is caught in the decision-making process, and the situation at hand need keen attention as it involves an exceptional matter in the generally accepted accounting principles (GAAP) accounting principles (Decentraland MANA). The main reason for drafting this memo is to outline in what way the organization ought to account for the purchase of MANA properties.

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According to the generally accepted account principles, an asset can be described as any resources owned by the organization or firm, and that has a measurable fiscal value as well as can be quantified in terms of dollars or money. According to the GAAP guidelines, the organization has efficiently been accounting for all the fixed assets, and the rest of the company assets are valued for efficient financial statements or reporting. Nevertheless, the decision at hand comprises of an exemptional asset that the accounting principle guidelines do not provide its direct accounting guidelines.

There are several categories of assets, which include the cash as well as cash equivalents, the inventory, and the marketable security, just to name a few. However, the account case at hand comprises the company purchase of an intangible asset. An intangible asset can, therefore, be defined as any property that is not physical. These kinds of assets include the intellectual properties, the goodwill, company patent, or trademark.

The primary goal of the GAAP concept ion financial accounting is to offer useful data or information to the investors, company managers other shareholders in or outside the business entity. In this regard, the financial statement ought to be easy to understand so that it can be beneficial in the decision-making process. The information in the business account makes their investors, as well as the creditors, make informed decisions concerning their lending and investment decisions. In the case of the financial information that is not clear or very hard to understand presents financial dilemma or confusion, and it can contribute to time wastage (AAA > Meetings > 2017). In light of this, the financial accounting standard board has drafted the guidelines that categorize or distinguish between the quality financial information or data for organizations and the various ways in which this information can be used in active business decision making. The primary characteristics of quality accounting information comprise of consistency, comparability, reliable as well as relevance.

The financial account is a representation of the current financial position of an organization with its external shareholders. The economic accounting methods serve the management, the directors, the investors, the business analysts, as well as the stockholders as of the audiences (Nobes, 2014). The financial statement represents a specific span and, in this way, it allows the organization or the business owner to analyze the performance of their company.

Similarly, this is the same way the TDF enterprises should account for the MANA purchase following the united states generally accepted accounting principles.

MANA as an intangible property

MANA effectively meets all the requirements of an asset as a cash equivalent, as well as being a liquid cash asset that can be included in the organization balance sheet. MANA is a short-term commitment that the organization can easily convert into cash soon usually in a single fiscal year. MANA is considered a cash equivalent is owing to the fact that it has a short-term maturity period of less than ninety days. In this regard, the asset will be included as a cash balance and cash equivalents as from the date required, as it will carry the insignificant risk on changes in the value of an asset. MANA being a cryptocurrency token, it will be used to claim a virtual parcel of land in Decentraland, which is a venture that all the rivals in the industry are taking or involving in.

The record of the purchase of MANA in a journal entry

According to the data provided, the enterprise already has the purchase of a total of 250, 000.00 dollars units of MASNA, which a significant material quantity to the organization. Considering that the charge for a single unit of MANA is 0.078150 dollars, therefore the journal entry of 19,537.5 dollars will be made on the debit side of the cash equivalent journal. However according to the generally accepted accounting principles.

References

Decentraland (MANA) price, charts, market cap, and other metrics. (n.d.). Retrieved from https://coinmarketcap.com/currencies/decentraland/markets/reported/AAA > Meetings > 2017 > Financial-Accounting-And-Reporting-Section > Program. (n.d.). Retrieved from https://aaahq.org/Meetings/2017/Financial-Accounting-And-Reporting-Section/Program

Nobes, C. (2014). International classification of financial reporting. Routledge. doi: 10.4324/9781315818276