Questions
In April 2010, a gold mining company, Cahaya Emas was formed. Cahaya Emas had convinced numerous...

In April 2010, a gold mining company, Cahaya Emas was formed. Cahaya Emas had convinced numerous mining experts that they had rights to one of the largest gold deposits ever discovered. The gold mine, located on a remote island in the East Coast of Peninsula Malaysia, supposedly had so much gold that the actual price of gold on the open market dropped significantly due to the anticipation of an increased gold supply. Within a few months, thousands of Malaysian – big-time investors, pension and mutual fund, managers and many small investors, including factory workers – got caught up in “Gold fever”. The company’s stock price shot from pennies to more than $250 per share before a 10-for-1 stock split was announced. Thousands of investors believed they were on the verge of becoming millionaires.
Two years later, the president and CFO, who are also the founder of the company were found committing financial statement fraud which went on for about two years. The president and the CFO were the fraud perpetrators. Kate, the accountant was aware of the financial statement fraud being committed by the management of her company, but she never reported it.
As is the case with many frauds of this type, numerous class-action lawsuits were filed against Cahaya Emas management, alleging that they misled the shareholders.

REQUIRED:
A.   Discuss some of the possible reasons for Kate’s hesitance to come forward to report the financial statement fraud.
B.   What were some of the perpetrators’ motivations to commit financial statement fraud?

In: Accounting

The comparative balance sheet for company “Delta” in € for years 2017 and 2018 is given...

The comparative balance sheet for company “Delta” in € for years 2017 and 2018 is
given below:

Comparative Balance Sheet of “Delta”

Assets

2018

2017

Liabilities &
Stockholders' Equity

2018

2017

Fixed assets:
Property, plant & equipment
Less accumulated depreciation
Net property, plant and
equipment
Long-term investments
Total fixed assets
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivables
Inventory
Total current assets
Total current assets

Stockholders' equity:
Common stock
Retained earnings
Total stockholders'
equity
Long-term liabilities:
Long-term debt
Total long-term
liabilities
Current liabilities:
Accounts payable
Notes payable
Accrued Expenses
Taxes Payable
Wages Payable
Other current liabilities
Total current
liabilities
Total liabilities
Total liabilities &
stockholders' equity

1,900,000
(600,000)
1,300,000
85,000
1,385,000
100,000
175,000
235,000
290,000
800,000
2,185,000

1,600,000
(450,000)
1,150,000
105,000
1,255,000
65,000
175,000
240,000
230,000
710,000
1,965,000

350,000
700,000
1,050,000
950,000
950,000
90,000
30,000
20,000
20,000
10,000
15,000
185,000
1,135,000
2,185,000

400,000
550,000
950,000
750,000
750,000
120,000
80,000
40,000
10,000
5,000
10,000
265,000
1,015,000
1,965,000

The income statement of company “Delta” for 2018 is also given below:

Income Statement of “Delta” for 2018

Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Wages
Depreciation expense
Net operating income
Interest expense
Income before taxes
Income taxes
Net income

6,500,000
(4,500,000)
2,000,000
(550,000)
(50,000)
(150,000)
1,250,000
(150,000)
1,100,000
(500,000)
600,000


Required:
1. Prepare the cash flow statement using the indirect method. For your answer you need to consider that company “Delta” has repurchased shares and it has decreased respectively its share capital.

2. Which is the dividend payout ratio for “Delta” for year 2018? If the company increases the dividend payout ratio by 10%, what would the effect be to the retained earnings?

3. Is the increase of the dividend payout ratio a good signal and what is the impact on the free cash flows? What do you think that an analyst should consider when the dividend payout ratio increases? (max: 200 words)

4. What inferences can you draw from the analysis of “Delta” cash flows? Explain briefly (max: 300 words)

In: Accounting

You are an audit manager currently finalizing your 31 December 2013 audits. The following independent and...

You are an audit manager currently finalizing your 31 December 2013 audits. The following independent and material matters have come to your attention:
1.   The audit of the statutory records of Whale Ltd, a reporting entity, revealed the following problems:
•   Failure to update the members’ register for changes in shareholders;
•   Failure to obtain written consent from directors to act;
•   Directors’ minutes not prepared in respect of the current year;
•   Failure to hold the AGM in respect of the previous financial year.
The company made no comment in respect of either the failure to keep properly updated statutory registers or the holding of the AGM.

2.   Shark Ltd, a reporting entity, uses the last-in first-out basis in respect of valuation of closing inventory, which is one of the most significant balance sheet accounts. The difference between first-in first-out and last-in-first-out has a material effect on the closing inventory balance.

3.   ABC Ltd (ABC) is a holding company with a number of wholly owned subsidiaries. One of these, FX Ltd (FX), is a self-sustaining foreign subsidiary with manufacturing and distribution facilities throughout South-East Asia. The group accounts of ABC and its subsidiaries consist of the consolidated accounts of ABC and its subsidiaries and exclude the accounts of FX, which are attached separately.
The consolidated accounts include a note stating that the directors believe that it is misleading to consolidate FX as its operations are very different from those of the rest of the group and carried out under substantially different conditions. The note includes details of inter-company balances and transactions.

REQUIRED:
Critically discuss in relation to each of the above circumstances the audit and internal control issues to be considered and their likely impact on the audit report to be issued.

In: Accounting

Allocation: Direct Method and Step down Method Please show work Required: 1) Allocate the personnel and...

Allocation: Direct Method and Step down Method

Please show work

Required:
1) Allocate the personnel and engineering costs to the production departments using the direct method
2) Allocate the personnel and engineering costs to the production departments using the step down method

-company has Two production departments:
processing
assembly

-company also has Two service departments:
personnel
engineering

Company budget for August 2014 is:
Service departments:
Personnel:
direct costs is 64,000
square feet 4,000
# of employees 30
Engineering:
direct costs 140,000
square feet 2000
# of employees 60

Production:
Processing:
direct costs 1,200,000
Square feet 20,000
# of employees 400

Assembly:
direct costs 1,600,000
square feet 50,000
# of employees 500

the firm allocates their personnel costs based on:
# of employees
and
engineering costs based on square feet
column1 personnel
column 2 engineering
column 3 processing
column 4 assembly

Row 1 direct costs
Row 2 square feet
Row 3 # of employees

In: Accounting

Discuss the importance of auditing as it relates to the accounting profession and the business community....

Discuss the importance of auditing as it relates to the accounting profession and the business community. (2) Discuss the effects of technology as it relates to the future of the profession.

please cite references. thanks

what information needed? It is simply what is the importance of auditing as it relates to the profession and the business community.

In: Accounting

Federal Semiconductors issued 9% bonds, dated January 1, with a face amount of $860 million on...

Federal Semiconductors issued 9% bonds, dated January 1, with a face amount of $860 million on January 1, 2018. The bonds sold for $786,215,929 and mature on December 31, 2037 (20 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds was $770 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2019 had risen to $776 million. Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2019, balance sheet. Federal determined that one-half of the increase in fair value was due to a decline in general interest rates.

In: Accounting

Write between 500 to 1000 words about the differences between S.A.P and Sage

Write between 500 to 1000 words about the differences between S.A.P and Sage

In: Accounting

Financial Statement Analysis The financial statements for Nike, Inc., are available at the Appendix C link...

Financial Statement Analysis The financial statements for Nike, Inc., are available at the Appendix C link above. The following additional information (in millions) is available: Accounts receivable at May 31, 2011: $3,138 Inventories at May 31, 2011: 2,715 Total assets at May 31, 2011: 14,998 Stockholders' equity at May 31, 2011: 9,843 Determine the following measures for the fiscal years ended May 31, 2013 (fiscal 2012), and May 31, 2012 (fiscal 2011). Do not round interim calculations. Round the working capital amount in part (a) to the nearest dollar. Round all other final answers to one decimal place. When required, use the rounded final answers in subsequent computations. Fiscal Year 2012 Fiscal Year 2011 a. Working capital (in millions) $ $ b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days' sales in receivables days days f. Inventory turnover g. Number of days' sales in inventory days days h. Ratio of liabilities to stockholders' equity i. Ratio of sales to assets j. Rate earned on total assets, assuming interest expense is $23 million for the year ending May 31, 2013, and $31 million for the year ending May 31, 2012 % % k. Rate earned on stockholders' equity % % l. Price-earnings ratio, assuming that the market price was $61.66 per share on May 31, 2013, and $53.10 per share on May 31, 2012 m. Percentage relationship of net income to sales % %

In: Accounting

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The...

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2018. Amber paid for the lathe by issuing a $500,000, three-year note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 10% was a reasonable rate of interest. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Complete the table below to determine the price of the equipment. 1-b. Prepare the journal entry on January 1, 2018, for Amber Mining and Milling’s purchase of the lathe. 2. Prepare an amortization schedule for the three-year term of the note. 3. Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity.

In: Accounting

Rain Gear, Inc., produces rain jackets. The master budget shows the following standards information and indicates...

  1. Rain Gear, Inc., produces rain jackets. The master budget shows the following standards information and indicates the company expected to produce and sell 28,000 units for the year. Variable manufacturing overhead is allocated based on direct labor hours.

Direct materials

4 yards per unit at $3 per yard

Direct labor

2 hours per unit at $10 per hour

Variable mfg OH

2 direct labor hours per unit at $4 per hour

Rain Gear actually produced and sold 30,000 units for the year. During the year, the company purchased and used 130,000 yards of material for $429,000. A total of 65,000 labor hours were worked during the year at a cost of $637,000. Variable overhead costs totaled $231,000 for the year.

  1. Company policy is to investigate all variances greater than 10 percent of the flexible budget amount for each of the three variable production costs: direct materials, direct labor, and variable overhead. Identify which of the six variances calculated in requirements bthrough eshould be investigated.

  1. Provide two possible explanations for each variance identified in requirement e.

In: Accounting

The following information is computed from Katy Inc.'s annual report for 2018. 2018   2017 Current assets...

The following information is computed from Katy Inc.'s annual report for 2018.

2018  

2017

Current assets

$ 2,731,020

$ 2,364,916

Property and equipment, net

10,960,286

8,516,833

Intangible assets, at cost less applicable

   amortization

    294,775  

    255,919  

$13,986,081  

$11,137,668  

Current liabilities

$ 3,168,123

$ 2,210,735

Deferred federal income taxes

160,000

26,000

Mortgage note payable

456,000

-

Stockholders' equity

10,201,958  

  8,900,933  

$13,986,081  

$11,137,668  

Net sales

$33,410,599

$25,804,285

Cost of goods sold

(30,168,715)

(23,159,745)

Selling and administrative expense

(2,000,000)

(1,500,000)

Interest expense

(216,936)

(39,456)

Income tax expense

   (400,000 )

   (300,000 )

Net income

$   624,948  

$   805,084  


Note: One-third of the operating lease rental charge was $100,000 in 2018 and $50,000 in 2017. Capitalized interest totaled $30,000 in 2018 and $20,000 in 2017.

Required:

a.

Based on the above data for both years, compute:

1.

times interest earned

2.

debt ratio

3.

debt/equity ratio

b.

Comment on the firm's long-term borrowing ability based on the analysis.

In: Accounting

Terri computed the pre-determined overhead rate. She estimated that 440,000 direct labor hours were going to...

Terri computed the pre-determined overhead rate. She estimated that 440,000 direct labor hours were going to be used for the upcoming year. Her boss wanted her to change the estimate to 420,000 direct labor hours even though he knows that this amount is probably going to be wrong. 1) What is the effect of changing the estimated direct labor hours on the pre-determined overhead rate computation? 2) Should Terri change the estimated direct labor hours to 420,000? Why or why not?

In: Accounting

Denver Inc purchased a 5 year asset in November for $20,000. This is the only asset...

Denver Inc purchased a 5 year asset in November for $20,000. This is the only asset the company placed in service during that year. Neither the straight line method nor the 150% declining balance method was elected. The company elects out of bonus depreciation an the Section 179 expense deduction. Denver Inc sold the asset in September of Year 3. What is the depreciation in the year of sale? A. $2,350, B. $2,850, C. $3,250, D. $3,450

In: Accounting

A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.’s defined...

A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.’s defined benefit pension plan follows. At the end of 2018, Carney revised its pension formula and incurred a prior service cost of $100 million. At the end of 2019, the pension formula was amended again, creating an additional prior service cost of $200 million. At the beginning of 2020, $400 million prior service cost was incurred. At the beginning of 2021, $300 million prior service cost was incurred. In 2018 - 2021, the actuary’s discount rate remained 10%, and the average remaining service life of the active employee group remained 10 years. The expected rate of return on assets was 10% in 2019, and increased by 1% each year.

2020 spreadsheet

2020 Pension spreadsheet ($ in millions)

(PBO)

Plan Assets

Prior Service Cost–AOCI

Net Loss (Gain) –AOCI

Pension Expense

Cash

Net Pension (Liability) / Asset

Balance, Jan. 1, 2020

-20550

22450

290

-3100

1,900

Service cost

-900

900

-900

Interest cost

-2095

2095

-2095

Prior Service Cost

-400

400

-400

Expected return on assets

2,470

-2,470

2,470

Adjust for: Gain (loss) on assets

449

-449

449

Amortization of: "Prior service cost-AOCI"

-29

29

Amortization of: "Net Loss (Gain)-AOCI"

-105

105

Gain (Loss) on PBO

-400

400

-400

Cash funding

1200

-1,200

1,200

Retiree benefits

1,100

-1100

Bal., Dec. 31, 2020

-23245

25469

661

-3254

659

2,224

  1. Fill in blanks in the 2021 pension spreadsheet.

2021 Pension spreadsheet ($ in millions)

(PBO)

Plan Assets

Prior Service Cost–AOCI

Net Loss (Gain) –AOCI

Pension Expense

Cash

Net Pension (Liability) / Asset

Balance, Jan. 1, 2021

2,224

Service cost

(1,095)

Interest cost

Prior Service Cost

Expected return on assets

Adjust for: Gain (loss) on assets

Amortization of: "Prior service cost-AOCI"

Amortization of: "Net Loss (Gain)-AOCI"

Gain (Loss) on PBO

Cash funding

1,300

Retiree benefits

1,200

(1,200)

Bal., Dec. 31, 2021

442

3,176

In: Accounting

Joe has an annual income of $80,000. His employer pays all of his health insurance premiums....

Joe has an annual income of $80,000. His employer pays all of his health insurance premiums.
Joe expects to incur $2,000 in unreimbursed medical expenses for the year. He pays an average
federal tax rate of 22%. In addition, his state has a flat 3% income tax rate. Thus, his total
income taxes paid will be equal to 25% of his taxable income. Joe expects to deduct $15,000
from his annual income for income tax purposes.
a. How much income tax will Joe pay in total (state plus federal)?


b. How much FICA (payroll) tax will Joe pay? How much will his employer pay? What
fraction of the total payroll tax can be attributed to Medicare?

c. Joe decides to redirect $2,000 of his salary to a flexible spending account. This
contribution is considered a salary reduction, which means it reduces both the payroll
taxes and the income taxes Joe needs to pay. What are the total taxes Joe needs to pay
now? How much money has he saved?

In: Accounting