Assume that you are the audit partner on an engagement for a client that has had a string of operating losses. You know the CFO, who is a former audit manager of your firm. The company still has a positive net worth, but you are worried that the company might have to close down within the next year or so. When you tell the CFO that the company should make full disclosure in the notes concerning substantial doubt about the company’s ability to continue as a going concern, your colleague says, “Hogwash! There’s no substantial doubt. The probability of our having to close down is remote. We’ll make no such disclosure. To do so would only make our customers and creditors nervous, possibly making such a disclosure a self-fulfilling prophecy. Our competitors are as bad off as we are, and their auditors aren’t making them send out a distress signal.” You agree that the determination of “substantial doubt” is a judgment call.

Apply the five-step Conceptual Framework for Members in Public Practice to this dilemma.

1) Identify problem

2) Evaluate it significance

3) Consider solutions

4) Select best solution

5) Document decisions,

implement and evaluate

Jefferson International is trying to choose between the following two mutually exclusive design projects:

The required return is 12 percent.

i) Rank the projects using profitability index (PI) decision rule.

ii) If the company applies the NPV decision rule, which project should it take?

iii) Given your first two answers, which project should the firm accept?

B

Suppose the company is granted a 5-year lease of a land to complete the project. The company is required to restore the land to its former condition after its 5 years tenure. Annual net revenue are expected to be $250,000 for 5 years and the budgeted cost of restoration works is $500,000.

Calculate the MIRR for the project, if positive cash flows are expected to be invested at 10% return and money can be borrowed at 7%.

Jonas Worth is the engagement partner for the financial report audit of Caufield Ltd for the year ended 31 December, 20X7. The following material events or transactions have come to Wood's attention before he is scheduled to issue his report on 28 February, 20X8. a) On 3 January, 20X8, Caufield Ltd received a shipment of raw materials from korea. The materials had been ordered in October 20X7, and shipped FOB shipping point in November 20X7 (2.5 marks). (50 -80 words) b) On 15 January, 20X8, the company settled and paid a personal injury claim of a former employee as the result of an accident that occurred in March 20X0. The company had not previously recorded a liability for the claim (2.5 marks). (50 -80 words) c) On 25 January, 20X8, the company agreed to purchase for cash the outstanding shares of La Trobe Electrical Ltd. The acquisition is likely to double the sales volume of Caufield Ltd (50 -80 words) d) On 1 February, 20X8, a plant owned by Caufield Ltd was damaged by a flood, resulting in an uninsured loss of inventory (50 -80 words). Please provide reference also.

Does the expenditure approach to computing GDP measure U.S. spending on all goods, U.S. spending on only U.S. goods, or U.S. and foreign spending on only U.S. goods? Explain your answer.

Chapeau Company, a U.S. corporation, operates through a branch in Champagnia. The source rules used by Champagnia are identical to those used by the United States. For 2019, Chapeau has $2,800 of gross income: $1,680 from U.S. sources and $1,120 from sources within Champagnia. The $1,680 of U.S. source income and $980 of the foreign source income are attributable to manufacturing activities in Champagnia (foreign branch income). The remaining $140 of foreign source income is passive category interest income. Chapeau had $700 of expenses other than taxes, all of which are allocated directly to manufacturing income ($280 of which is apportioned to foreign sources). Chapeau paid $182 of income taxes to Champagnia on its manufacturing income. The interest income was subject to a 10 percent withholding tax of $14.

Compute Chapeau’s total allowable foreign tax credit in 2019. (Do not round any division. Round other intermediate computations to the nearest whole dollar amount.)

D & B Enterprises is a cah basis taxpayer who makes widgets. It sell the widget for $500,000 in gross receips through December 2012. The company also received $200,000 from a life insurance policy that it received after the death of Russell, it's chief financial officer. Then on December 28, it recives payment in the amount of $100,000 for an order of widgets which it sent to the customer on December 20. Avon, the CEO, cashes the check on January 3 and then on January 7 uses it for payroll. The company also has an investment account that has $100,000 invested in State bonds which earned $3,400 in interest during the year. Avon comes to you regarding his 2012 tax liability and ask you what his taxable income is and why?

The Covid-19 pandemic creates opportunities and threats for practically every business in every industry. What strategic approach should a company pursue when dealing with a Black Swan event such as this? Why? While all companies have different criteria regarding the specific strategic decisions that will be made, ethical decisions are also very relevant and should be more consistent across industries and companies. Indeed, in many cases ethical decisions are likely the most important as the heath of employees, customers, and their families are at risk. If you were the CEO of a non-essential retail business, how would you handle the current crisis? Assume that simply shutting down the business for over 30 days would place the company at serious risk of bankruptcy.

A recent article by an investigative journalist has gone viral; exposing some pretty disturbing labor practices in one of the company’s factories in India. Worse still, this comes on the heels of another high profile documentary exposing the environmental issues in cotton production. The company sources cotton from both India and China. Corporate management is coming under intense international pressure as well as from the US press, public, environmentalists, shareholders and the board of directors. The CEO is looking to you to:

You've been asked to provide examples of country-specific and culturally sensitive initiatives that the company will be taking to remedy the situation and improve the company's image in the eyes of its international stakeholders. (RAA Excellence System Mastery Level Civic & Social Responsibility)