Denison Corp. is a publicly traded company and is currently preparing its financial statements for its 20X7 year ended. Denison’s accounting income before tax is $1,800,000. The following items have been recorded in accounting income as an expense or revenue item, as appropriate: Depreciation and amortization expense $1,420,000 Dividend revenue from a taxable Canadian corporation $450,000 Fines for polluting the environment $90,000 Gain on sale of equipment $310,000 Life insurance premium expense $25,000 Meals and entertainment expense $390,000 Warranty expense $680,000 Additional information:

1. At December 31, 20X6, the net book value of the equipment was $9,700,000. During 20X7, new equipment additions totalled $450,000.

2. At December 31, 20X6, the undepreciated capital cost of the equipment was $7,400,000.

3. At December 31, 20X6, the warranty payable was $850,000.

4. During 20X7, the company sold equipment for net proceeds of $1,450,000, which had a net book value of $1,140,000 and an original cost of $2,100,000.

5. During 20X7, development costs of $520,000 were capitalized, which is the outstanding balance at December 31, 20X7. These costs are fully deductible for tax purposes.

6. In 20X7, Denison paid warranty costs of $720,000.

7. Capital cost allowance for 20X7 is $1,130,000.

8. During 20X7, Denison paid $140,000 in income tax instalments. These were debited to an income tax instalment account.

9. On July 1, 20X7, the government announced that the tax rate was increasing from 28% to 30% effective January 1, 20X8.

Required:

a) Calculate the deferred tax account balance as at December 31, 20X6.

b) Calculate the deferred tax account balance as at December 31, 20X7, the current tax expense for the year ended December 31, 20X7, and the deferred income tax expense for the year ended December 31, 20X7.

c) Prepare the journal entries to record the current and deferred income tax expense for 20X7.

Choose a publicly traded company, and identify the resources that you would use (besides the financial statements) to analyze the financial position of this corporation for 2016-2017. Find at least two resources, other than the financial statements, that provide information regarding your chosen company. Prepare an overview (approximately 300 words) of what is revealed about the company by these resources, including any items that you find to be unusual about the company. Provide a link to each resource examined with your initial post, and include the company name in the subject line. Do not choose a company that one of your classmates has already posted on. To participate in follow-up discussion, choose one of the companies that a classmate has reviewed, find an additional resource that provides insight into the financial position of that company, and provide your own commentary on it. All posts should be grammatically correct and proofread for spelling. The company I was looking into was samsung or google

The Audit of SSM

Background: Steve’s Shoe Makers Inc. (SSM), a company that is publicly traded on the New York Stock Exchange, manufactures and distributes high-performance athletic footwear and apparel. Established in Philadelphia in 2000 as a small, family-owned business, SSM has expanded to include a wholly owned subsidiary, Steve’s Shoes LLC. SSM’s corporate management is based in Philadelphia, and the manufacturing and distribution plants are located in Houston and Los Angeles. You have been hired as SSM’s external auditor and have been assigned to test SSM’s related parties and its relationships and transactions with related parties in accordance with PCAOB AS 2410. You have spoken with SSM’s CEO, Dain Blanton, who believes that the processes and controls in place at SSM would result in the identification of any related-party relationship that would require further investigation or possible disclosure in the financial statements. Further, he has stated that the company does not have any related-party events or transactions that would need to be disclosed in the current-year annual financial statements in accordance with ASC 850. See the appendix below for SSM’s organizational structure. Management’s Processes and Controls To understand management’s processes and controls over related parties and its relationships and transactions with them, you obtain SSM’s relevant process flow narrative from management, which states the following: Before hiring a new employee, the human resources manager performs a background check. Employees hired for management positions must disclose their significant ownership interests. SSM’s legal department maintains a listing of these disclosures (“related-parties listing”) and periodically checks the disclosed relationships against SSM’s vendor and customer master file. Annually, before SSM files its Form 10-K, management signs representations indicating that to the best of its knowledge, SSM did not enter into any related-party transactions that were not disclosed in the financial statements. Management also discloses any changes in its significant equity ownership or investments at this time. A review of the representations is performed by the legal department, the related-parties listing is updated for any new related parties identified, and the records are maintained in a locked room. Risks of Material Misstatement As a result of the risk-assessment procedures performed, you have determined that the risks of material misstatement listed below apply to the audit of SSM. You have also determined that none of the identified and assessed risks of material misstatement are significant risks. (Note that there are additional risks of material misstatement regarding related parties and relationships and transactions with related parties; however, this case study only focuses on the risks outlined below.)

R_RP_1: Related parties and transactions with related parties may not be appropriately identified.

R_RP_2: Related-party transactions are not recorded in accordance with applicable accounting standards.

R_RP_3: Related-party transactions are recorded:

• For transactions that did not occur or are pending.

• At incorrect amounts.

• In the incorrect period.

R_RP_4: Related-party transactions are recorded:

• For transactions that lack a business purpose.

• Without taking into account the counterparty’s financial capability.

R_RP_5: The related-party disclosure includes transactions that:

• May not have occurred.

• Lack a business purpose.

• Are not recorded on terms equivalent to those prevailing in an arm’slength transaction and are not disclosed as such.

R_RP_6: The related-party disclosure does not sufficiently describe related-party transactions in accordance with the applicable financial reporting framework.

Please answer the following questions:

1) Are management’s processes and controls over related parties and related-party relationships and transactions sufficient? Why or why not?

2) What would be the implications on the audit if an undisclosed related-party transaction was identified during the completion of audit testing?

• Use the Internet to research a publicly traded company that received an unqualified audit report from external auditors and faced accusations of reporting false or misleading accounting information.
• Discuss the departures from generally accepted accounting principles (GAAP) that you have researched, and give your opinion as to whether or not the Public Company Accounting Oversight Board (PCAOB) should levy sanctions against the CPA firm for issuing the unqualified report.
• Identify the sanctions and section of the report the company should have modified to address departures from GAAP. Support your position.
• Compare the code of professional conduct for CPAs to the code of professional conduct for accountants who are non-CPAs.
• Determine the major ethical issues created by the mergers of public accounting firms with non-CPA firms that perform accounting services. Explain your rationale.

Susan is the Executive Vice President of Awesome Avionics, Inc., a publicly traded company. As EVP, Susan learns that Awesome Avionics is about to release an aircraft piloting system that will revolutionize the airline industry. Telling him to keep the secret, Susan tells her next door neighbor Peter about the development and suggests that he buy stock in the company. When the product is announced the price of Awesome Avionics stock increases dramatically and Peter sells his stock. Grateful for the information, Peter buys Susan a Rolex watch.

Sam Shady, CPA, prepared financial statements for Awesome Avionics, Inc. From preparing the documents Shady learned that Awesome Avionics would soon release the revolutionary aircraft piloting system. Expecting the price of Awesome Avionics stock to rise sharply, Shady purchased 1,000 shares of Awesome Avionics stock. Three weeks later, Shady sold his Awesome Avionics stock at a profit.

a. Individually, detail the unlawful activity that Susan, Peter and Shady have engaged in.

b. What consequences do Susan, Peter and Shady face?

Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also for you to provide recommendations as to how the Act's principles can be improved to make American corporations more ethically responsible.

Provide recommended sanctions to be imposed on those who do not comply with the SOX Act provisions, and whether or not the sanctions should be stiffened or should include other personnel in the organization.

Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also for you to provide recommendations as to how the Act's principles can be improved to make American corporations more ethically responsible.

Describe your assessment of the responsibilities established for accounting personnel—including protection for whistle-blowers—and for the public accounting auditors.

Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also for you to provide recommendations as to how the Act's principles can be improved to make American corporations more ethically responsible.

Assess the provision of the Sox Act that requires the establishment of the Public Company Accounting Oversight Board (PCAOB) and the measures that public accounting firms are taking to ensure that they maintain their independence in all audit assignments, including the mechanisms they are establishing to ensure that the necessary independence and integrity are prevalent in all aspects of their relationship with their clients.

Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also for you to provide recommendations as to how the Act's principles can be improved to make American corporations more ethically responsible.

Determine how the responsibilities of the board of directors audit committee have changed due to the Sox Act in overseeing the financial reporting process and to hire and be in charge of the independent auditors.

Books Inc. is a publicly traded publishing company. It has a current stock price of $75 per share and an equity beta of 0.8. Books is consistently profitable and faces a marginal tax rate of 21%. It also maintains a target leverage ratio of 40%. Books’ debt is AAA-rated and can be considered essentially risk free. The risk free rate in the economy is 5% and the market premium is 4%. You may assume that the CAPM holds.

Part 1: Books is considering a project that will expand its existing publishing business. The expansion would require an initial investment of $50 million dollars. It would produce annual free cash flows of $4 million, which would begin in one year and continue in perpetuity. What is the NPV of the investment project? (Please express your answer in millions of dollars, rounded to the nearest hundredth. For example, $100.569 million should be entered as $100.57.)

Part 2: What is the debt capacity created by the new investment project at the time it is initiated? (Please express your answer in millions of dollars, rounded to the nearest hundredth. For example, $100.569 million should be entered as $100.57.)

Part 3:Suppose that Books also has the opportunity to create an online division that will focus on digital distribution of content. Books believes that ultimately the business risk of this new venture is comparable to the business risk of its existing operations. However, the new division will have fewer tangible assets. So, Books would manage the division at a target leverage ratio of 20% instead of 40%. What is the business risk (i.e., LaTeX: \beta_{OA}β O A) of Books existing operations? (Please express your answer rounded to the nearest hundredth. For example 1.569 should be entered as 1.57.)

Part 4: What would be an appropriate opportunity cost of capital (or after-tax WACC) for Books to use to value free cash flows in its new online division? (You may assume that the cost of debt capital is the same for the online division as for the existing operations. Please express your answer as a percentage, rounded to the nearest hundredth. For example 10.569% should be entered as 10.57.)