The Following Scenarios Might Constitute A Violation Of The AICPA’s Code Of Professional Conduct.
The following scenarios might constitute a violation of the AICPA’s Code of Professional Conduct. John, CPA, performs various management services for Blue Corporation including bookkeeping and preparing tax returns, but does not perform the audit function. One management service involved a needs assessment on computers and the identification of equipment to meet those needs. John recommended a product sold by a computer store, which has agreed to pay Murray a 15% commission if the Blue Company purchases it. Brad, CPA, was overbooked for the next few months. When a prospective client asked if he would conduct the next year’s audit, he declined but referred them to Fred, CPA. Fred paid Brad $3,000 for the referral. Betty, CPA, signed on to perform an inventory control study for a new client, ABC Company. Once the study is complete, she recommends a new inventory control system. Currently, ABC engages another audit firm to audit its financial statements. The financial arrangement is that ABC will implement the new systems and over the next 5 years, the will pay Betty 50% of the savings in inventory costs. Jeff, CPA, has served as the auditor for the XYZ Corporation for many years. In addition, Jeff has performed other services for the company. This year, the Chief Financial Officer has asked Timberlake to perform a major computer system evaluation. Due to the death of its CFO, an audit client had its external auditor, Derek, CPA, perform the CFO’s job for two months until a replacement was hired. Required: Knowing the AICPA Code of Professional Conduct, answer the following: For each of the five scenarios, indicate which principle or rule would be violated, or if none would be violated. State why the rule would be violated. Explain if there is a way to avoid breaking the rule by doing something different in these examples.
Madam Bose Has Been In Business For Many Years As Sole Trader. His Cash
Madam Bose has been in business for many years as sole trader. His cash at hand on 1st October, 2018 was N750,000 but there was no bank account.The following transactions took place during the month of October, 2018. Oct 1 Opened bank account and paid in cash N750,000 Oct 4 Rented premises and paid for 2 months by cheque N30,000 Oct 7 Bought furniture and fitting by cheque N90,000 Oct 11 Purchased goods for sale by cheque N120,000 Oct 14 Cash sales N525,000 Oct 16 Received cheque from Badmus on account of September sales N123,000 Oct 19 Paid cash into bank N190,000 Oct 20 Purchased goods from Gabriel
Explain Why A Foreign Owned Company Which Company Should Incorporate As A Resident Company
Explain why a foreign owned company which company should incorporate as a resident company after years of operations. [8 marks]
Based On The Following: The Estimated Purchase Price For The Equipment Required To Move
Based on the following: The estimated purchase price for the equipment required to move the operation in-house would be $500,000. Additional net working capital to support production (in the form of cash used in Inventory, AR net of AP) would be needed in the amount of $25,000 per year starting in year 0 and through all 5 years of the project to support production. The current spending on this component (i.e. annual spend pool) is $875,000. The estimated cash flow savings of bringing the process in-house is 20% or annual savings of $175,000. This includes the additional labor and overhead costs required. Your company has access to a credit line and could borrow the funds at a rate of 6%. Finally, the equipment required is anticipated to have a somewhat short useful life, as a new wave of technology is on the horizon. Therefore, it is anticipated that the equipment will be sold after five years for $25,000. (i.e. the terminal value). Your colleague from Sales is convinced that this capability would allow new revenue stream that could significantly offset operating expenses. He recommends savings that grow each year: 5-year project life, 10% discount rate, and a 10% compounded annual savings growth in years 2 through 5. In other words, instead of assuming savings stay flat, assume that they will grow by 10% in year 2, and then grow another 10% over year 2 in year 3, and so on. Using the data presented above (and ignoring the extraneous information), for this profit and supply chain improvement project, calculate each of the following (where applicable): Show Calculations o Nominal Payback o Discounted Payback o Net Present Value o Internal Rate of Return
Winrow Company Received Proceeds Of $754,000 On 10-year, 8% Bonds Issued On January 1,
Winrow Company received proceeds of $754,000 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $800,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2018?
The Comparative Statements Of Wahlberg Company Are Presented Here. Wahlberg Company Income Statement For
The comparative statements of Wahlberg Company are presented here. Wahlberg Company Income Statement For the Years Ended December 31 2020 2019 Net sales $1,817,800 $1,753,700 Cost of goods sold 1,006,800 972,000 Gross profit 811,000 781,700 Selling and administrative expenses 511,800 476,400 Income from operations 299,200 305,300 Other expenses and losses Interest expense 17,400 13,900 Income before income taxes 281,800 291,400 Income tax expense 79,255 77,900 Net income $ 202,545 $ 213,500 Wahlberg Company Balance Sheets December 31 Assets 2020 2019 Current assets Cash $60,700 $63,400 Debt investments (short-term) 68,000 50,900 Accounts receivable 117,800 101,200 Inventory 122,000 114,400 Total current assets 368,500 329,900 Plant assets (net) 595,000 521,600 Total assets $963,500 $851,500 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $160,100 $144,700 Income taxes payable 43,300 41,400 Total current liabilities 203,400 186,100 Bonds payable 220,000 200,000 Total liabilities 423,400 386,100 Stockholders’ equity Common stock ($5 par) 278,000 300,700 Retained earnings 262,100 164,700 Total stockholders’ equity 540,100 465,400 Total liabilities and stockholders’ equity $963,500 $851,500 All sales were on account. Net cash provided by operating activities for 2020 was $247,000. Capital expenditures were $133,000, and cash dividends were $105,145. Compute the following ratios for 2020. (Round Earnings per share, Current ratio and Asset turnover to 2 decimal places, e.g. 1.65 or 1.65:1, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%. Use 365 days for calculation.) (a) Earnings per share $ (b) Return on common stockholders’ equity % (c) Return on assets % (d) Current ratio :1 (e) Accounts receivable turnover times (f) Average collection period days (g) Inventory turnover times (h) Days in inventory days (i) Times interest earned times (j) Asset turnover times (k) Debt to assets ratio % (l) Free cash flow $
Use The Following To Answer Questions 5 And 6 On November 1, 20×1 Smarty
Use the following to answer questions 5 and 6 On November 1, 20×1 Smarty Pants Company, a U.S. corporation, purchased diamonds from a Ukrainian company for 3,000,000 rubles, payable in 3 months. The relevant exchange rates between the U.S. and Russian currencies are given: Spot rate Forward rate (at February 1, 20×2) November 1, 20×1 $0.456 $0.456 December 31, 20×1 $0.489 $0.481 February 1, 20×2 $0.443 The company’s incremental borrowing rate provides a discount rate of 0.945 for three months. . 5.If Smarty Pants does not attempt to hedge this transaction, what is the gain or loss that should be shown on the company’s December 31, 20×1 financial statements? 6. Assume that on November 1, 20×1 Smarty Pants Company enters a forward contract to buy 3,000,000 rubles on February 1, 20×2. How should Smarty Pants report the forward contract on December 31, 20×1?
City Hospital Has Two Service Departments (Patient Records And Accounting) And Two Production Departments
City Hospital has two service departments (Patient Records and Accounting) and two production departments (Internal Medicine and Surgery). It uses the reciprocal-services method of cost allocation and should allocate Internal Medicine cost to Surgery. True or False?
Case 7-3 Cubbies Cable Ernie Binks Is A Big Baseball Fan, So It Is
Case 7-3 Cubbies Cable Ernie Binks is a big baseball fan, so it is quite natural for him, at a time like this, to recall a phrase attributed to Yogi Berra: “It was deja vu all over again.” Binks is the partner in charge of the Cubbies Cable audit for the accounting firm of Santos
If An Amount Of COD Is Excluded The First Attribute That Must Be Reduced
If an amount of COD is excluded the first attribute that must be reduced is..
On July 1, 2016, P Corporation Acquired All The Stock Of S Corporation For
On July 1, 2016, P Corporation acquired all the stock of S Corporation for $42,000 and included S Corporation in its US Consolidated tax return. On the acquisition date, S has accumulated earnings and profits of $14,000. During the period July1-December 31, 2016, S Corporation incurred a taxable loss of $9,000. S Corporation had earnings of $18,000 in 2017, and made a distribution of $5,000 to P Corporation on October 1. A) Determine P’s basis in S stock as of December 31, 2017. B) What are the requirements for S to be included in P Corporation’s US consolidated tax return?
The Following Balances Were Taken From The Books Of Whispering Corp. On December 31,
The following balances were taken from the books of Whispering Corp. on December 31, 2017. Interest revenue $87,700 Accumulated depreciation—equipment $41,700 Cash 52,700 Accumulated depreciation—buildings 29,700 Sales revenue 1,381,700 Notes receivable 156,700 Accounts receivable 151,700 Selling expenses 195,700 Prepaid insurance 21,700 Accounts payable 171,700 Sales returns and allowances 151,700 Bonds payable 101,700 Allowance for doubtful accounts 8,700 Administrative and general expenses 98,700 Sales discounts 46,700 Accrued liabilities 33,700 Land 101,700 Interest expense 61,700 Equipment 201,700 Notes payable 101,700 Buildings 141,700 Loss from earthquake damage 151,700 Cost of goods sold 622,700 Common stock 501,700 Retained earnings 22,700 Assume the total effective tax rate on all items is 34%. Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.
Two Accountants For The Firm Of Elwes And Wright Are Arguing About The
Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2017 information related to Martinez Company ($000 omitted). Administrative expense Officers’ salaries $5,587 Depreciation of office furniture and equipment 4,647 Cost of goods sold 61,257 Rent revenue 17,917 Selling expense Delivery expense 3,377 Sales commissions 8,667 Depreciation of sales equipment 7,167 Sales revenue 97,187 Income tax 9,757 Interest expense 2,547 Common shares outstanding for 2017 total 40,550 (000 omitted). Prepare an income statement for the year 2017 using the multiple-step form.
From The Listed Information For Acme Co., Complete The Following: This Problem Is Worth
From the listed information for Acme Co., complete the following: This problem is worth 10 points. 52 weeks Yld Vol Net Hi Low Stock SYM Div % PE 100s High Low Close Chg 42.88 27.51 Acme ACM .31 .9 49 48633 26.69 23.50 25.69 0.65 A. _______ was the highest price Acme traded during the year. B.________was the lowest price Acme traded during the last year. C.________was the amount of the dividend Acme paid to shareholders last year. D.________is the dividend amount a shareholder with 100 shares would receive. E.________is the rate of return the stock yielded to its stockholders. F.________is the number of shares traded on the day of this stock quote. G.________is the highest price paid for Acme stock on this day. H.________is the lowest price paid for Acme stock on this day. I.________is the change in price from yesterdays closing price. J.________was the price of the last trade of Acme stock yesterday.
On The 1 July, 2016 Johnson Ltd Acquired All The Shares In Mason Ltd
On the 1 July, 2016 Johnson Ltd acquired all the shares in Mason Ltd (cum div.), for $3,200,000. Equity at that date was: $ Share Capital 1,750,000 General Reserve 700,000 Retained Earnings 900,000 Dividend Payable 80,000 At acquisition date, all the identifiable assets and liabilities of Mason Ltd were recorded at amounts equal to fair value except for: Carrying Amount Fair Value $ $ Inventory 900,000 950,000 Land 1,400,000 1,600,000 Plant (accumulated depreciation $1,260,000) 2,340,000 2,210,000 Johnson Ltd also identified a $75,000 contingent liability for a pending court ruling on patent infringements, which was recognised as a provision for consolidation purposes. Additional information regarding the acquired assets and liabilities. 1. The revalued inventory was all sold in August 2016. 2. The plant had a remaining useful life of 13 years and was still retained as at 30 June 2019. Depreciation is calculated on a straight-line basis. 3. Mason Ltd settled the patent infringement case on 25 January 2019 for $90,000. Additional information regarding the intragroup transactions. Transactions for the financial year 2016-2017: a. On 31 March 2017, Johnson Ltd sold machinery, with a carrying value of $435,000, to Mason Ltd for $471,250. The plant, which had a useful life of ten years, was purchased for $600,000. The remaining useful life of the plant was seven years and three months (7.25 years). Transactions for the financial year 2017-2018: a. Mason Ltd sold Inventory to Johnson Ltd for $17,000, which included a mark-up of 25%. As of 30 June 2018, 40% of that inventory was still held by Johnson Ltd. b. Johnson Ltd sold some plant, with a carrying amount of $12,000, to Mason Ltd for $8,000 on 31 December 2017. The remaining useful life of the plant was six years. Transactions for the financial year 2018-2019: a. Inventory still on hand as at 30 June 2018, was all on sold by Johnson Ltd in August 2018. b. Inventory worth $90,000 that was sold by Johnson Ltd to Mason Ltd for $120,000 during June 2019 was still on hand as at 30 June 2019. c. Mason Ltd also sold Johnson Ltd inventory for $55,000, at a mark-up of 25%. Only 20% of that inventory had been sold outside the group by 30 June 2019. d. On 1 October 2018 Johnson Ltd provided Mason Ltd with a loan for $200,000, on an interest-only basis for two years. The interest rate applicable to the loan was 5% per year. Interest is due on the last day of each quarter and paid by the 15th of the following month. Loan repayments will not commence until 2020. e. During 2019 Johnson Ltd provided management consulting services to Mason Ltd. The amount due as at 30 June was $115,000. f. Johnson Ltd recognises dividends when declared. g. Both Johnson Ltd and Mason Ltd revalued post-acquisition equipment assets as at 30 June 2018. The tax rate for the entities is 30%, and all depreciation is on a straight-line basis. A consolidation worksheet has been partially prepared using the 30 June 2019 draft trial income statement and statement of financial position of Johnson Ltd and Mason Ltd as follows: Johnson Ltd Mason Ltd Sales Revenue 4,200,000 1,400,000 Cost of goods sold (1,750,000) (490,000) Other operating expenses (210,000) (105,000) Other revenue 245,000 87,500 Operating Profit 2,485,000 892,500 Income tax expense (700,000) (750,000) Profit after tax 1,785,000 542,500 Retained Earnings – 1 July 2018 3,500,000 1,200,000 Dividend paid (300,000) (60,000) Dividend declared (400,000) (80,000) Retained earnings – 30 June 2019 4,585,000 1,602,500 Share Capital 14,000,000 1,750,000 Asset revaluation surplus 35,000 10,500 General Reserve 900,000 Total Equity 18,620,000 4,263,000 Current Liabilities Trade and other payable 350,000 297,500 Non-current liabilities Deferred tax liability 130,000 24,500 Loans 2,100,000 375,000 Loan from Johnson Ltd 200,000 Total non-current liabilities 2,230,000 599,500 Total Liabilities 2,580,000 897,000 Total Liabilities and Equity 21,200,000 5,160,000 Current Assets Cash 925,000 87,500 Trade and other receivables 535,500 219,000 Impairment – trade receivables (10,500) (6,500) Inventory 2,100,000 985,000 Total current assets 3,550,000 1,285,000 Non-current assets Land 5,340,000 1,400,000 Plant 11,466,000 4,079,000 Accumulated depreciation – Plant (3,276,000) (1,944,000) Equipment 615,000 207,000 Accumulated depreciation – Equipment (165,000) (42,000) Loan to Mason Ltd 200,000 Investment in Mason Ltd 3,120,000 Deferred tax asset 350,000 175,000 Total non-current assets 17,650,000 3,875,000 Total assets 21,200,000 5,160,000 Required: 1. Determine the gain on bargain purchase or goodwill as at acquisition date. (4 marks) 2. Prepare the consolidation journal entries for Johnson Ltd immediately after acquisition on 1 July 2016. (10 marks) 3. Prepare the consolidation journal entries for Johnson Ltd as at 30 June 2017. (17 marks) 4. Prepare the pre-acquisition entries only as at 30 June 2018. (5 marks) 5. Prepare the consolidation journal entries for Johnson Ltd as at 30 June 2019. (34 marks) 6. Prepare the consolidation worksheet for the preparation of the consolidated financial statements for the year ended 30 June 2019. (20 marks)
In The Preparation Of Consolidated Financial Statements, Why Are Adjustments Required To The Subsidiaries
In the preparation of consolidated financial statements, why are adjustments required to the subsidiaries assets and liabilities if the carrying amounts are not equal to fair value? Using the following example, demonstrate the adjustment required when the subsidiary has a contingent liability for damages disclosed, for which the fair value is determined to be $10,000. Explain in detail the journal entry, line by line. Then show how this would be posted in the consolidation worksheet, highlighting the effect to the group’s financial statements.
What Is The Total Assets And What Is The Total Liabilities Equity?
What is the total assets and What is the total liabilities equity?
Becton Labs, Inc., Produces Various Chemical Compounds For Industrial Use. One Compound, Called Fludex,
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:
Recher Corporation Uses Part Q89 In One Of Its Products. The Company’s Accounting Department
Recher Corporation uses part Q89 in one of its products. The company’s Accounting Department reports the following costs of producing the 9,500 units of the part that are needed every year.
Changes In Shareholders’ Equity On January 1, 2016, The Osgood Film Studios Reported The
Changes in Shareholders’ Equity On January 1, 2016, the Osgood Film Studios reported the following alphabetical list of shareholders’ equity items: Additional paid-in capital on common stock $135,575 Additional paid-in capital on preferred stock 14,200 Common stock, $2 par 63,800 Preferred stock, $100 par 71,000 Retained earnings 171,000 During 2016, the company sold 4,400 shares of common stock for $13 per share and 350 shares of preferred stock for $127 per share. It also earned income of $94,000 and paid dividends of $7 per share on the preferred stock and $1.20 per share on the common stock outstanding at the end of 2016. Required: The following partially completed schedule will help you to organize the information for this exercise. Preferred Stock $100 par Common Stock $2 par Additional Paid-in Capital on Preferred Stock Additional Paid-in Capital on Common Stock Retained Earnings Total Balances, 1/1/16 $71,000 $63,800 $14,200 $135,575 $171,000 $455,575 Common stock issued Preferred stock issued Net income Cash dividend paid on preferred Cash dividend paid on common Balances, 12/31/16 600,245
On 1 January 2016 Anderson Ltd Acquired 85% Of The Equity Of Trinity Ltd
On 1 January 2016 Anderson Ltd acquired 85% of the equity of Trinity Ltd at a cost of $430,000. $ Share Capital 300,000 General Reserve 50,000 Retained Earnings 90,000 At this date, Trinity Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets: Carrying amount Fair value $ $ Inventory 45,000 50,000 Plant (accumulated depreciation $300,000) 200,000 220,000 Additional information in relation to the acquisition a. All the inventory on hand at 1 January 2016 was sold by 31 December 2016. b. The plant has a remaining useful life of 12 years and will be depreciated on a straight-line basis. c. In December 2017 Anderson Ltd impaired the goodwill from the acquisition of Trinity Ltd by $10,000. A further impairment of $16,125 was made in December 2018. d. Trinity Ltd transferred $30,000 from its pre-acquisition retained earnings to the General reserve account, in December 2018. e. The tax rate is 30% Additional information regarding intragroup and other transactions Transactions for the 2016 financial year a. Trinity Ltd’s after-tax profit was $34,000. b. There were no intragroup transactions during the period. Transactions for the 2017 financial year a. Trinity Ltd’s after-tax profit was $30,000. b. In November 2017, Trinity Ltd sold inventory to Anderson Ltd for $27,000, and all inventory was still on hand as of 31 December 2017. The sale price included a 20% mark-up on the cost of sales. Transactions for the 2018 financial year a. Trinity Ltd’s after-tax profit was $33,000. b. Anderson Ltd on sold all the remaining inventory from December 2017 by the end of February 2018. c. Anderson Ltd sold inventory to Trinity Ltd that had cost $7,800 for $ 9,000. As of 31 December 2018, 20% of that inventory was still held by Trinity Ltd. d. On 1 January 2018, Trinity Ltd sold a piece of equipment to Anderson Ltd for $15,000. The carrying value for Trinity Ltd was $12,000. The remaining useful life of the equipment is five years. Anderson Ltd continued to depreciate the equipment on a straight-line basis. e. During 2018, Trinity Ltd revalued land acquired post-acquisition by $40,000. The financial information of both companies on 31 December 2018 has been uploaded to a consolidating worksheet as follows: Anderson Ltd Trinity Ltd Sales Revenue 80,000 20,000 Cost of Sales (20,000) (8,000) Other Expenses (12,000) (6,000) Other revenue 31,000 8,500 Operating Profit 79,000 14,500 Income tax expense (17,000) (3,500) Profit after tax 62,000 11,000 Retained earnings – 1 July 2018 200,000 160,000 Dividends declared (40,000) (8,000) Retained earnings – 30 June 2019 222,000 163,000 Share Capital 800,000 300,000 General Reserve 80,000 Asset revaluation surplus – 1 July 2018 64,000 Revaluation of assets 28,000 Asset revaluation surplus – 30 June 2019 64,000 28,000 Total equity 1,086,000 571,000 Current Liabilities Trade and other payable 21,000 8,000 Non-current liabilities Loans 120,000 55,000 Deferred tax liability 12,000 Total non-current liabilities 120,000 67,000 Total Liabilities 141,000 75,000 Total liabilities and equity 1,227,000 646,000 Current assets Cash 10,000 7,000 Trade and other receivables 40,000 48,000 Inventory 95,000 80,000 Total current assets 145,000 135,000 Non-current assets Land 300,000 221,000 Plant 600,000 500,000 Accumulated depreciation
Erie Company Manufactures A Mobile Fitness Device Called The Jogging Mate. The Company Uses
Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:
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