Scenrio
Computrain company’ was establisthd five years ago to train employees of companies to use software programs for creating Web pages and providing education over the pnternet. Travis Warren, founder and president, saw his company grow from his own occasional consulting with professors at the local university into a company that employed nine people and sales of $ 1 million annually. Travis was excited by the growth of his company and saw additional opportunities to provide training at Computrain’s headquarters. To accomplish that, he added a state-of-the-art training complex. The complex could accommodate 24 trainees, each with his/her own work station consisting of an instructor ‘s podium with computer ,VCD and audio capabilities .
One sunny Monday afternoon, Travis invited his accountant, Miranda spade, to take a tour of the new complex.
Miranda : ‘’Travis, this is wonderfull I really like the special touches – the anack area and the lounge with access to phones and e-mail hook-ups.This will be very appealing to Human Resource department heads. Their people will love coming here for training
Travis : That’s the idea, Miranda , to become the premier training faciling facility in the four-state region I know this expansion project was expensive, but I think it is worth it
Miranda: “You know, that ref-erence to being worth it started me thinking. randa: You know, that ref-erence to being worth it started me thinking. Maybe your accounting system will need to be revamped to keep up with the expanded vari-ety of services you are offering.”
Travis: “What do you mean? Why would adding on to the building cause us to change our accounting system? Won’t we just add the value of the project to the property, plant, and equipment account on the balance sheet?”
Miranda: “Oh, for sure we’ll do that. But what I meant was that you are expanding the scope of your company as well as the variation in the services you offer. Sometimes. You call me to help budget the cost of a proposed job in order to sub- mit a bid. It’s been pretty simple in the past – just add up the hours we