Scenario:

Your town identifies G-A-Y men at risk of HIV infection and forms a committee to help them. You are a member of this committee.

Answer the following questions – in the order given.

1. Why is this group at risk in the US? Give statistics and research to support your answer.
2. What arguments might the townspeople put up against providing assistance to this group? Give counter arguments to explain why it is a good idea to help them.
3. What are the key HIV prevention messages your committee would give to the identified group and how might you deliver them? [I.e. how would you get the messages to this community in a way they can trust, understand and relate to?] Try to find examples of other programs that have been successful with this group.
4. Is there anything you could do now as a university student to help HIV prevention in the group you have identified as at risk?

1.- Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

1. Compute the cost assigned to ending inventory using (a) FIFO, and (b) LIFO

.

.

2. -Laker Company reported the following January purchases and sales data for its only product.

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 380 units, where 360 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Required:
2. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification.

1) Papaya Inc. has 100,000 common shares outstanding and has a policy of paying a $1.30 annual dividend for each of these shares. Papaya has an income tax rate of 35%, and its retained earnings statement for 2020 reported a closing balance of $1,452,000. Assuming an opening retained earnings balance of zero, dividend payments according to its usual policy, and no other adjustments, Papaya's 2020 net income was

$1,582,000.

$1,452,000.

$2,364,846.

$1,536,500.

2) For Pear Limited, events and transactions during 2018-2020 included the following. The tax rate for all items is 30%.

1. Depreciation for 2019 was found to be understated by $30,000.
2. A 2020 strike by the employees of a supplier resulted in a loss of $20,000.
3. The inventory at December 31, 2018 was overstated by $40,000.
4. A 2020 flood destroyed a building that had a book value of $400,000. Floods are very uncommon in that area.

The effect of these events and transactions on the balance of retained earnings at January 1, 2020 would be

$21,000.

$294,000.

$14,000.

$343,000.

3)

eg Inc. incurred the following infrequent losses during 2020:

A $135,000 write down of equipment leased to others (net of tax)
A $60,000 adjustment of accruals on long-term contracts (net of tax)
A $90,000 write off of obsolete inventory (net of tax)

Of those losses, what amount should be included in Meg’s 2020 income from continuing operations?

$285,000

$150,000

$195,000

$225,000

4)

On January 1, 2020, Reggae Ltd. sold land that cost $180,000 for $240,000, receiving a note bearing interest at 10 percent. The note will be paid in three annual instalments of $96,510 starting December 31, 2020. Assuming that collection of the note is very uncertain, how much revenue from this sale should Reggae recognize in 2020?

$96,510

$0

$18,000

$24,000

Company A and Company B are both wholly owned subsidiaries of Parent, Inc. Parent has no other operations, balance sheet items or income statement items other than its ownership of Company 1 (located in China) and Company 2 (located in US). Company 2 periodically sells goods to Company 1 for resale to end customers. Such goods are sold at the same pricing terms that Company 2 sells to all other customers. Prior to January 1, 2018, there had never been any inventory sales from Company 1 to Company 2 or from Company 2 to Company 1. The following is data for each company for 2018 and 2019:

Company 1 Company 2

     Year ended 12/31/18

Sales to all customers $300 million $150 million

Costs of sales $150 million $100 million

All other non production expenses $ 60 million $ 40 million

Pre tax income $ 90 million $ 10 million

Inventory purchased from Company 1 held

By Company 2 at end of year NONE

Inventory purchased from Company 2 held

By Company 1 at end of year $15 million

    Year ended 12/31/19

Sales to all customers $280 million $160 million

Costs of sales $140 million $120 million

All other non production expenses $ 60 million $ 30 million

Pretax income $ 80 million $ 10 million

Inventory purchased from Company 1 held

By Company 2 at end of year NONE

Inventory purchased from Company 2 held

By Company 1 at end of year $16 million

What would consolidated pretax income be for Parent for 2018 and 2019

Company A and Company B are both wholly owned subsidiaries of Parent, Inc. Parent has no other operations, balance sheet items or income statement items other than its ownership of Company 1 (located in China) and Company 2 (located in US). Company 2 periodically sells goods to Company 1 for resale to end customers. Such goods are sold at the same pricing terms that Company 2 sells to all other customers. Prior to January 1, 2018, there had never been any inventory sales from Company 1 to Company 2 or from Company 2 to Company 1. The following is data for each company for 2018 and 2019:

Company 1 Company 2

     Year ended 12/31/18

Sales to all customers $300 million $150 million

Costs of sales $150 million $100 million

All other non production expenses $ 60 million $ 40 million

Pre tax income $ 90 million $ 10 million

Inventory purchased from Company 1 held

By Company 2 at end of year NONE

Inventory purchased from Company 2 held

By Company 1 at end of year $15 million

    Year ended 12/31/19

Sales to all customers $280 million $160 million

Costs of sales $140 million $120 million

All other non production expenses $ 60 million $ 30 million

Pretax income $ 80 million $ 10 million

Inventory purchased from Company 1 held

By Company 2 at end of year NONE

Inventory purchased from Company 2 held

By Company 1 at end of year $16 million

What would consolidated pretax income be for Parent for 2018 and 2019

Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 80,000 miles in 2018, 60,000 miles in 2019, 45,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $63,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation. Answer each of the following questions. Ignore the effects of income taxes. c-1. Calculate the book value on the December 31, 2020, balance sheet?

For each of the following, evaluate if it is a good argument. Provide reasons for why or why not.

16. Tax. Jane is doing an income tax return. There are two different methods of determining some revenues. If method A is used her taxable income will be $50,000. If method B is used, her taxable income will be $56,000. Jane thinks that she better chooses method A.

17. Taxi driver. King is a taxi driver working for a yellow cab company in a developing country. Mostly, the drivers take cash and receipts are not issued. Only King knows how much revenue is generated from fares. King’s wage is 30% of the reported fare revenue. Whatever revenue he reports, he has to turn in that amount to the company first. To maximize his wages, King believes that he wants to over-report the fare revenue to the company.        

18. Saved money? We were looking for a three bedroom house. We were three people. Our budget was $ $240,000 ($80,000 per bedroom). We actually paid $220,000 for a three bedroom house. Soon after, one of us left for another state, and one bedroom is empty.   We saved $20,000, and it is good news for us.

QUESTION

Enron was an American energy company based in Houston, Texas. Enron scandal which was revealed in 2001 has resulted in the dissolution of the Arthur Andersen. Arthur Andersen was one of the Big 5 audit firm at that time. Enron was seen as the biggest audit failure.

World.com was an American telecommunications company. It was the second largest long distance phone company in the US. In 2002 WorldCom submitted the largest bankruptcy filing in the US history. The WorldCom scandal cost 30 000 employees their jobs and cost investors $180 billion. Arthur Andersen was WorldCom's auditor during the five financial quarters in question.

Required:

a)Provide detail explanation of the factors that have affected the incidence of lawsuits against CPA in recent years .                                                                                                                                                                          

b) The Enron and WorldCom bankruptcy was due to accounting fraud. Provide a background research on these two companies and describe the nature of accounting fraud that was committed by the two companies.                     

c) What are the business risks faced by these two companies, and how did those risks increase the likelihood of material misstatements in their financial statements?                                                    

d) A perceived lack of integrity caused irreparable damage to Arthur Andersen. How can you apply the principles learned in this case personally? How are CPA firms different from other professionals?                                                                                                                                                                                                                    

(a) Prepare a Statement of Cash Flows for the year ended 30 June 2020 using the direct method, ignoring GST.

Show all workings on the Workings page.

(b) Using the relevant information from the question above, identify two (2) specific items (including their values) which causes a difference between Net Profit and Net Cash from Operating Activities and analyse why it causes a difference.

The following financial statements relate to Clarke Ltd for the financial year ended 30 June 2020.

Balance Sheet as at 30 June

Clarke Limited's Income Statement for the year ended June 2020

Additional information:

Interest expense is classified as an operating cash flow.

The company paid dividends in 2020.

Land was revalued during the 2020 financial year.

• Imagine you are the chief financial officer (CFO) of a corporation with plans to complete the acquisition of a key subsidiary this year. Your chief executive officer (CEO) has requested a presentation to the board of directors describing the methods available to account for the acquisition internally and the best method for the company during the acquisition year. Please assess the value of each method identified in your presentation to the board and support your recommendation with examples. Respond to at least one other student.