For the publicly traded U.S. company Apple (AAPL), explain how macroeconomic principles, models, and tools created value for the organization.

Prepare the journal entry recording pension expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

The DeVille Company reported pretax accounting income on its income statement as follows: 2019 2020 2021 2022 Pretax accounting income $350,000 270,000 340,000 380,000 Included in the income of 2019 was an installment sale of property in the amount of $50,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $20,000 in 2020, $25,000 in 2021, and $5,000 in 2022. Included in the income of 2020 was $20,000 fine paid for violation of federal law. The enacted tax rate for 2019 and 2020 was 30%, but during 2020, new tax legislation was passed reducing the tax rate to 20% beginning in 2021.

1. Prepare the year-end journal entries to record income taxes for 2019.

2. Prepare the year-end journal entries to record income taxes for 2020.

Provide Explanation for each part

The DeVille Company reported pretax accounting income on its income statement as follows:

   
Included in the income of 2018 was an installment sale of property in the amount of $62,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $24,800 in 2019, $31,000 in 2020, and $6,200 in 2021.

Included in the 2020 income was $26,000 interest from investments in municipal bonds.

The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond.

Required:
Prepare the year-end journal entries to record income taxes for the years 2018, 2019,  2020 , 2021.

Sheridan Company had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($5 par) $514,500, Paid-in Capital in Excess of Par—Common Stock $181,440, and Retained Earnings $103,110. In 2020, the company had the following treasury stock transactions.

a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2020, for net income.

b) Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings. (Post to T-accounts.) (Post entries in the order of journal entries presented in the previous part.)

c) Prepare the stockholder's equity section at Dec 31, 2020

Lieb Ltd. is public company that trades on the TSX. On 3 March 2020, the company purchased 5,000 common shares of RO Inc. for total proceeds of $140,000, representing 30% of the total outstanding shares of RO Inc. Lieb Ltd. It was determined that at the time of purchase, it was able to exercise significant influence over RO Inc. On 30 September 2020, Lieb Ltd. received a dividend of $1.20 per share from RO Inc. On 31 December 2018, the market value of the RO Inc. investment had dropped to $18 per share. RO Inc.’s net income for the year ended 31 December 2020 was $63,000.

Required:

a)     Prepare all the required 2020 journal entries for transactions above.

b)    If Lieb Ltd. were not able to exercise significant influence over its investment in RO Inc. what other accounting choice(s) does it have to report the investment?

Problem 6-18A Alternative cost flows—periodic LO8

Synergy Company began 2020 with 20,000 units of Product X in its inventory that cost $7.70 per unit, and it made successive purchases of the product as follows:

The company uses a periodic inventory system. On December 31, 2020, a physical count disclosed that 16,000 units of Product X remained in inventory.

Required:
1. Calculate the number and total cost of the units available for sale during 2020.

2. Prepare calculations showing the amounts that should be assigned to the 2020 ending inventory and to cost of goods sold, assuming:

a. FIFO

b. Weighted average cost basis. (Round the "Average cost per unit" answer to 2 decimal places.)

Q.4.2

In the 2020 fiscal year, Company B reported an accounting profit of $1,000. In the same year, the accounting depreciation expense for plant was $150, while the tax deduction for plant depreciation was $200. There was no other difference between accounting and tax in the year. In the 2019 fiscal year, the company recorded a tax loss ($300) and recognized a deferred tax asset in respect of this tax loss. In the 2020 fiscal year, the company reduced the taxable profit by recouping the tax losses carried forward. The company does not set off deferred tax liabilities and assets. The corporate tax rate is 30%.

1. Required: Provide the journal entries for the current tax adjustment. Workings (or narrations) are not required.

2. Now assume that Company B’s accounting profit in the 2020 fiscal year includes $55 of government grant which is exempt from tax. Also, assume that tax losses carried forward must be offset against any exempt income before being used to reduce taxable profit.

Required: Under these additional assumptions, provide the journal entries for the current tax adjustment. Workings (or explanations) are not required.

Sometimes, a consolidated statement of financial position does not show a figure in respect of non-controlling interest, which of the following shows the reason of this situation?
A.None of the subsidiaries were acquired as going concerns.
BThe group has no associated undertakings.
CThe parent company has a widespread shareholding.

D Entire subsidiaries are wholly owned by the parent company

Risk Assessment- Exercise #2 Social Konnections Inc. (SKI or the “Company”) is a global Internet company that runs Social Konnections, a large social media networking Web site. SKI has experienced steep growth since its launch in 2005, and the Company went public in 2007. SKI currently has over 500 million active users who visit the site to connect with others, express themselves, and play games. Last year, substantially all of SKI’s revenue came from advertisers who market their products and services to SKI’s active users through advertisements placed on the Web site or its various mobile platforms. The founder of the company serves as the CEO and is also on the chairman of the board of directors. The CFO is also one of the co-founders of the company. Both have been serving in these roles since 2005. In Q1 of the current fiscal year, SKI acquired Corporate Collaborations (CC), an entity that manages private and public social media networks for corporations. CC’s customers are primarily national and global companies whose employees connect over its platform. In addition to hosting private social media networks for corporations, CC provides services to develop the networks it manages. CC’s revenues are earned through the performance of multiyear revenue contracts with its customers. In the current year, CC is expected to produce approximately 20 percent of SKI’s consolidated revenue. SKI’s investors are focused on the growth prospects of the Company’s legacy open social media platform operations and its new corporate revenue unit. The Company’s MD&A disclosures include (1) various user and revenue metrics to help financial statement users assess its traditional operations and (2) backlog information to help users assess CC’s operations. Advertising Revenue SKI creates advertising space on its Web site and mobile applications and sells the space to advertisers either directly, or through advertising agencies. According to Mr. Cook, the amount an advertiser pays is dependent on the number of views the ad receives or the number of user clicks (depending on the type of advertisement defined in the underlying contract) and the revenue is recorded in the period in which the views or clicks are made. Ms. Drew has learned that simple advertising can be purchased directly from SKI through SKI’s advertising Web site at standard rates, with the advertisements and terms input directly into the Company’s ad delivery platform. However, most advertising revenue is generated directly through the advertising sales team, which has the ability to help advertisers develop more sophisticated advertising campaigns. Management has established minimum pricing and volume thresholds for these advertisements; however, the sales staff is given significant latitude in securing contracts with customers. Extra commissions are paid to sales individuals who sign longer-term contracts that meet minimum revenue targets. Once a contract is signed, the ad development department creates the ad content and obtains the customer’s approval. The approved ad and the contract are electronically sent to the ad scheduling department, and the advertisement is uploaded into the Company’s ad delivery platform. The ad delivery platform is a robust system and is designed to capture all the nuances associated with the contract. For example, an advertiser may wish to have its ads displayed only to users whose IP addresses are from a specific geographic location, or the contract may be structured to provide the advertiser with variable pricing or incentives (such as a set of free advertisements) once a certain level has been paid for. In summary, the delivery platform captures all the relevant pricing information associated with the contract to allow for real-time revenue recognition according to the terms of the contract. After the contract is entered into the system, a summary of the contract setup is provided to the sales manager that worked with the customer. The sales manager then reviews the contract setup for accuracy. The Company’s ad delivery platform automatically tracks the advertising activity each day and reports the activity to its customers, who are then billed weekly for the aggregate ad activity. Ms. Drew’s Concern Ms. Drew is concerned about several things she has learned regarding the appropriateness of management’s revenue recognition policies. Financial Statements Balance Sheet: Account Prior year (1 year ago)** Two years ago Assets* $100m $80m Liabilities $40m $30m Equity $60m $50m Revenue $30m $18 Expenses $22m $19 Net Income $8m ($1m) loss *Assets consist primarily of cash, land/building, patents, goodwill, and other assets. ** As you plan your audit this is the latest financial information available. Controls The Company’s has various controls in place. The CFO performs a checklist on a monthly basis to review the performance of the company. The CFO reports to the CEO every quarter. The CEO reports to the chairman of the board of directors once a year before the financial statements are prepared and released to the public. The company has over 10 thousand employees around the world, of which 4 thousand work at the headquarters. All employees receive the company’s code of ethics that was prepared in 2005 when the company was founded. The CEO was in recent trouble when he posted controversial messages on the social platform that offended people of a certain group. The company has One hundred different controls across the company and across the world related to operations of the company and revenue. The company uses 10 different IT systems as the company is growing quickly it has had to adopt and adds new systems whenever they are needed. The leaders of one of the main divisions recently left to go work for Facebook, and has not been replaced for the last 4 months. Controls have changed a lot since last year because the company is so dynamic and the environment is so fast paced. Employees are always trying to keep up with the new systems and new controls. Audit Because of SKI’s continued growth, the audit committee has requested that the Company choose a new audit firm with experience in auditing public technology companies. Kristine Drew, a senior auditor, is the in-charge accountant on the proposal and planning of the SKI audit. In addition to her supervisory and administrative responsibilities, Ms. Drew is responsible for auditing revenue and determining the risk assessment for the audit. Ms. Drew has read the Company’s disclosed accounting policies and is interviewing the revenue controller, Bill Cook, and various sales personnel to develop in-depth process flow documentation that will serve as the basis for the team’s risk assessment. Required: 1. What would you set Audit risk, Control Risk, Inherent Risk, and Detection risk? (Very low, low, medium, or high) 2. Are there are significant or fraud risks that you have identified? (If any why are they fraud or significant risks?) 3. What other information do you need to plan your audit approach? Where would you get this information from? For each piece of information indicate where you might receive it from and how? (ex: who else is on the board of directors- obtained through inquiry.) 4. What benchmark would you use to calculate materiality? Why? (ex: revenue, EBITDA, Equity, Assets, etc) 5. Using the benchmark and guidance in the book calculate “overall materiality” for your audit? (ex: 8% of Equity ($60m)= $2.4m). 6. For Revenue what assertions are the most important for you to test? 7. For Revenue what are your concerns with each of those assertions based on the information above? 8. What are the things about testing revenue that you are concerned about (specifically what parts of the company’s process if any concern you)? (Example: An employee could steal money from the bank account, or revenue could be modified in the accounting software by an employee.) (Focus on the actual real process for the company described above to make this determination.) 9. For your audit approach would you choose to test controls or primarily perform substantive procedures? If so what would be your mix of control testing to substantive testing? (ex: 50% controls, and 50% substantive) 10. Would you accept this audit? If not why not?