Audit Conclusions or Situations 1. The choice of eight years for straight-line depreciation of the company's trucks appears unreasonable. I would suggest that the client change to a six-year life and use DDB depreciation. 2. Insurance coverage appears to be inadequate, because the client has chosen to carry only liability
E4-6 Eliminating Entries with Negative Goodwill Snow Corporation purchased all of Cogner Corporation's voting shares on January 1, 2002, for $365,000. At that time Cogner reported common stock outstanding of $80,000 and retained earnings of $130,000. The book value of Cogner's assets and liabilities approximated their fair
Samli Company has the following information: Estimated Actual Manufacturing Overhead 600,000 602,000 Direct Labor cost 460,000 456,000 Direct Labor hours 40,000
A company is considering an investment that costs $785, 000 and has a salvage value in ten years of $137, 714, but the company is not sure how much net annual cash inflow will be provided by the investment. The company has a discount rate of 70%. Compute the net amount of annual cash flow required to break even.
Consolidating an Unprofitable Subsidiary Amazing Chemical Corporation's president had always wanted his own yacht and crew and concluded that Amazing Chemical should diversity its investments by purchasing an existing boatyard and repair facility on the lake shore near his summer home. He could then purchase a yacht and have
When would a firm use different costs of capital for different divisions with the firm? If the firm was to try to determine cost of capital for different divisions, what problems could occur? What techniques could you use to estimate each divisions cost of capital?
I need the following ratios solved on Target Corporation assuming that their is a 15% increase from last years annual report. I have attached a worksheet to use as the template(these figures are before the 15 % increase). However, it does show figures for Walmart as well. I don't need Walmart figures, just target. Here are the
The four "maxims" of tax planning are relatively straightforward, and don't need rehashing here. The text also mentions considering "nontax" factors, which is often times a very important and very overlooked aspect of the decision making process. There is a saying common among CPAs that goes "don't let the tax tail wag the
Does a company receive money when its stock is traded in the secondary market? How does the company affect the price of its stock? Why is a company concerned about its stock price in the secondary market?
1. Trade credit terms quoted as "3/15, net 45" means the customer: A. Would receive a 3% discount if payment is made within 15 days. B. Would receive a 3/15 or one-fifth discount if payment is made immediately after receiving the shipment. C. Would receive a 3% discount if the net amount is paid
Based of the following attachment, how can I determine where the gap begins? How can I close the gap between the current situation and the end state goals?
6.47 Employee Embezzlement via Cash Receipts and Payment of Personal Expenses. This case gives the problem, the method, the audit trail, and the amount. In this case, you can assume you have received the informant's message. Your task is to write the "audit approach" portion of the case, organized around these sections: Objec
What is a Gap Analysis ? How do you determine the gap between the current situation and the end state goals? What is an end state goal?? What are some tentative possibilities? Please give some examples and site any references if using any.
BE8-1. Included in the December 31 trial balance of Billie Joel Company are the following assets. Cash 190,000 Equipment (net) 1,100,000 Work in process 200,000 Receivable (net) 400,000 Prepaid insurance 41,000 Patents 110,000 Raw material 335,000 Finished Goods 150,000 Prepare the current assets section of the Decembe
Income Tax Payable. See attached file for full problem description.
The Glades Corporation has located a building that it would like to have for its new warehouse. The corporation has contacted the owner about making a trade for its existing property. The owner of the desired property is only willing to sell the building for cash as he will have little gain on the sale and has no use for the Gla
American Physical and Social Programs for Children, Inc: Case C10-8 Harvey Acker and Jane Clemens, child psychologists, have started and are operating American Physical and Social Programs for Children, Inc., a sports-orientated school year and summer camp program for children. The program was started one year ago and has four
Geraldo, a calendar-year, accrual basis corporation, reported $931,000 net income before tax on its audited financial statements. Its records reveal the following information. ? On February 1, Geraldo purchased a business and capitalized $500,000 of the cost to goodwill. ? Book depreciation expense was $66,100, and MACRS de
Columbo Corporation, a calendar-year corporation, began business in 2003. With the initial capital contributions from its sole shareholder, it purchased a building on March 12 for $250,000. It also purchased the following items for use in the business. Item Purchase Date Acquisition Cost Office Furniture April 1
16. Mossfeet Shoe Company is a single product firm. Mossfeet is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year? Contribution Break-Even Margin Ratio Point A) Increase Decrease B) Decrease Decrease
The Assembly Department started the month with 78,000 units in its beginning work in processing inventory. An additional 254,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending work in processing inventory of the Assembly
20. The following information pertains to Nova Company's Cost-Volume-Profit relationships: Breakeven Point in Units Sold 1,000 Variable Expenses per Unit $500 Total Fixed Costs $150,000 How much will be contributed to Net Operating Income by the 1,001st unit sold? A) $650. B) $500. C) $150. D) $ 0.
Why would a CFO be interested in evaluating the employees and employee compensation plans during a due diligence process?"
9. At the date of an acquisition which is not a bargain purchase, the purchase method A) consolidates the subsidiary's assets at fair market value and the liabilities at book value. B) consolidates all subsidiary assets and liabilities at book value. C) consolidates all subsidiary assets and liabilities at fair market valu
6. Club Co. appropriately uses the equity method to account for its investment in Chip Corp. As of the end of 2004, Chip's common stock had suffered a significant decline in market value, which is expected to be recovered over the next several months. How should Club account for the decline in value? A) Club should switch to
38. On November 8, 2003, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized? A) Proportionately over a designated period of years B) When Wood Co. sells the land to
17. In a purchase transaction where cost exceeds book value, which statement is true? A) Net assets of the acquired company are revalued to their fair market values and any excess of cost over fair market value is allocated to goodwill. B) Net assets of the acquired company are maintained at book value and any excess of cost
Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future, but increasing demand for services. In order to plan for reduce budgets, she must first identify where costs can be cut or reduc
1. Complete liquidation - open transaction ABC,Inc. adopts a plan of complete liquidation on July 3, 10*1 and pursuant to the plan makes the following distributions to Anne Able, its sole shareholders, who has a basis of $26,000 for her stock: July 23,20*1 $9,000 Mar 11,20*2
1. Subsidiary liquidation ABC, Inc. owns 95% of the outstanding capital stock of XYZ, Inc. liquidates pursuant to IRC 332 and distributes property, as follows: To ABC, Inc. FMV $95,000, Basis $40,000 To 5% shareholders FMV $ 5,000, Basis $2,000 Will XYZ,