Fraud investigators found that 70 percent of the nearly $160 million in sales booked by an Asian subsidiary of a European company between September 2006 and June 2007 were fictitious. In an effort to earn rich bonuses tied to sales targets, the Asian subsidiary’s managers used highly sophisticated schemes to fool auditors. One especially egregious method involved funneling bank loans through third parties to make it look as though customers had paid, when in fact they hadn’t.

In a lawsuit filed by the company’s auditors, it was alleged that former executives “deliberately” provided “false or incomplete information” to the auditors and conspired to obstruct the firm’s audits. To fool the auditors, the subsidiary used two types of schemes. The first involved factoring unpaid receivables to banks to obtain cash up front. Side letters that were concealed from the auditors gave the banks the right to take the money back if they couldn’t collect from the company’s customers. Hence, the factoring agreements amounted to little more than loans.

The second, more creative, scheme was used after the auditors questioned why the company wasn’t collecting more of its overdue bills from customers. It turns out that the subsidiary told many customers to transfer their contracts to third parties. The third parties then took out bank loans, for which the company provided collateral, and then “paid” the overdue bills to the company using the borrowed money. The result was that the company was paying itself. When the contracts were later canceled, the company paid “penalties” to the customers and the third parties to compensate them “for the inconvenience of dealing with the auditors.”

The investigators also found that the bulk of the company’s sales came from contracts signed at the end of quarters, so managers could meet ambitious quarterly sales targets and receive multimillion-dollar bonuses. For example, 90 percent of the revenue recorded by the subsidiary in the second quarter of 2007 was booked in several deals signed in the final nine days of the quarter. But the company was forced to subsequently cancel 70 percent of those contracts because the customers—most of them tiny startups—didn’t have the means to pay.

List revenue-related fraud symptoms and schemes used in this case. Briefly discuss how actively searching and understanding revenue-related fraud symptoms could have led to discovering the fraud by the company’s auditors.

Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently completed a customer-profitability study. The following activity-based costing information was the basis for the analysis. Chapter 5 Activity-Based Costing and Management 225hiL6956X_ch05_168-229.indd 225 06/17/16 08:10 PMRequired: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom’s sales revenue was $185,000 and Caltex Computer’s cost of goods sold was $59,000. Refer to the information given in the preceding problem for Fresno Fiber Optics and two of its custom-ers, Trace Telecom and Caltex Computer. Additional information for six of Fresno’s other customers for the most recent year follows:■ Problem 5–66Customer-Profitability Profile; Continuation of Preceding Problem (LO 5-9)Tele-Install, operating profit: $(18,000)Customer-Related ActivitiesCost Driver BaseCost Driver RateSales activity .................................................Sales visits .................................................$1,000Order taking .................................................Purchase orders ........................................200Special handling ...........................................Units handled ............................................50Special shipping ...........................................Shipments ..................................................500Cost-driver data for two of Fresno’s customers for the most recent year areCustomer-Related ActivitiesTrace TelecomCaltex ComputerSales activity ..................................................    8 visits ......................................................  6 visitsOrder taking ..................................................   15 orders ....................................................  20 ordersSpecial handling ............................................800 units handled ........................................600 units handledSpecial shipping ............................................ 18 shipments .............................................   20 shipmentsThe following additional information has been compiled for Fresno Fiber Optics for two of its cus-tomers, Trace Telecom and Caltex Computer, for the most recent year:Trace TelecomCaltex ComputerSales revenue ...............................................$190,000 ...............................................$123,800Cost of goods sold .......................................   80,000 ...............................................62,000General selling costs ....................................   24,000 ...............................................18,000General administrative costs .......................   19,000 ...............................................16,000

Required: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom’s sales revenue was $185,000 and Caltex Computer’s cost of goods sold was $59,000.

Problem:

An electric company has committed to building a solar power plant. An engineer tasked with the company has been tasked with evaluating three solar power generation technologies. The power company uses an interest rate of 10% and a 20-year planning horizon for choosing the project that best fits its budgetary and financial goals.

Design 1: Flat Solar Panels: A field of flat solar panels angled to best catch the incident solar radiation wis expected to yield a power of 2.6 MW and will cost $87 million initially with first year operating costs of $2 million, growing 250,000 annually. It will produce electricity worth $6.9 million the first year; this revenue stream is expected to increase at a simple interest rate of 12%, every year from there on (that is, 112% of 6.9 Mil in year 2, 124% of 6.9 Mil in Year 3 etc.) .

Design 2: Mechanized solar panels: A field of mechanized solar panels with motors that allow panel frame motion so that the panel themselves will be normal to incident radiation anytime of the day. This design is expected to yield a power of 3.1 MW and will cost $101 million initially with first year operating costs of $2.3 million, growing 300,000 annually. It will produce electricity worth $8.8 million the first year; this revenue stream is expected to increase at a simple interest rate of 8%, every year from there on (that is, 112% of 8.8 Mil in year 2, 124% of 8.8 Mil in Year 3 etc.) .

Design 3: Solar Collector Field: This design uses a series of Fresnel lenses and concave mirrors to concentrate solar radiation onto a boiler mounted on a tower. The boiler then produces steam, which then is used to generate electricity. This system is expected to yield a power of 3.3 MW and will cost $91 million initially with first year operating costs of $3 million, growing 350,000 annually. It will produce electricity worth $9.7 million the first year; this revenue stream is expected to increase at a simple interest rate of 8%, every year from there on (that is, 112% of 9.7 Mil in year 2, 124% of 9.7 Mil in Year 3 etc.).

What would your suggestion be to the Engineer in regard to which Design to choose based on economic considerations only?

You must show the Economic logic equations (F/P, P/F, etc.) and their solutions

At December 31, 2020, the trial balance of Darby Antiques contained the following amounts before adjustment.

Journalize entries to record transactions related to bad debts.

Instructions

a. Based on the information given, which method of accounting for bad debts is Darby using—the direct write‐off method or the allowance method? How can you tell?

b. Prepare the adjusting entry at December 31, 2020, for bad debt expense, assuming an aging schedule indicates that £11,750 of accounts receivable will be uncollectible.

£10,750

c. Repeat part (.b.) assuming that instead of a credit balance there is a £1,000 debit balance in Allowance for Doubtful Accounts.

d. During the next month, January 2021, a £3,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write‐off.

e. Repeat part (.d.) assuming that Darby uses the direct write‐off method instead of the allowance method in accounting for uncollectible accounts receivable.

f. What type of account is Allowance for Doubtful Accounts? How does it affect how accounts receivable is reported on the statement of financial position at the end of the accounting period?

please note the following additional information

• Incorporate GST, using the GST Clearing account, as needed. Accounts receivable of £385,000 is GST inclusive, but the Allowance for Doubtful Accounts and Sales Revenue accounts are net of GST.
• For part b., the figure £11,750 is net of GST.
• For part d., the figure £3,000 does not include GST, i.e., the GST inclusive amount is £3,450. The GST portion is reimbursable from the government.
• Replace Instruction e. with the following: In February, £2,300 of accounts receivable, previously written off, was collected. The £2,300 includes GST. Prepare the required journal entries.
• Replace Instruction f. with the following: Assume the balance for Accounts Receivable on 1 January 2020 was £420,000, including GST, and the balance in the Allowance account was £2,000, not including GST. The Sales Revenue shown (£970,000) is for the year. Calculate the days in accounts receivable for 2020 and analyse the trend from 2019, when days in accounts receivable were 140. Suppose Darby’s credit terms allow customers to pay in equal instalments over a six month period. How would this affect your conclusion as to collection efficiency?   

Ivanhoe Corporation’s trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described below.

Unrecorded transactions and adjustments:

(Ignore income taxes.)

Downstream Intercompany Merchandise Transactions

Sketchy Shoes is a subsidiary of Pacific Brands. Pacific routinely sells merchandise to Sketchy at a 25% markup on cost. Information on intercompany merchandise transactions is below (in thousands):

Required

a. Prepare the working paper eliminating entries related to these intercompany transactions at December 31, 2017.

b. Assume Sketchy sold merchandise acquired from Pacific Brands for $300,000 during 2017. What amounts appear on the separate books of Pacific Brands and Sketchy Shoes, relating to the intercompany merchandise transactions, for sales revenue and cost of goods sold? What are consolidated sales and cost of goods sold? Show how the eliminating entries in part a above adjust the balances reported on the separate books of the two entities to the correct consolidated balances.

Remember to use negative signs with your credit balance answers in the Dr (Cr) columns.

Question 1 Andile Black, aged 45, is a South African resident. He owns a business that deals mainly with brick laying and distribution in Tugela Ferry. The business has two trucks that are used for the distribution of bricks to clients. Andile hired two truck drivers and six general workers. The following expenditure were incurred by Andile on behalf of his business during the 2019 year of assessment: 1. One of his trucks was involved in an accident while delivering bricks to a client. The accident resulted in the injury of two employees and they had to be admitted to a local hospital. Due to this incident, Andile paid R70 000 medical costs on behalf of his employees that were involved in accident. 2. Andile incurred a cost of R30 000 to acquire a vacant land that he requires for parking purposes for the clients of his business. He also currently has no warehouse to store finished bricks and rents the space from Makhubo at a fee of R2 000 on a monthly basis. In addition to the monthly rental fee, Andile is required to pay Makhubo a 1% rental fee of the annual revenue for the period of 1 May 2018 to 30 April 2019 only if his annual revenue exceeds R550 000. Andile’s business made a revenue of R630 000 for the period 1 May 2018 to 30 April 2019. 3. Andile paid an amount of R120 000 for salaries and wages of his employees. Andile erected a billboard (costing R35 000) on the pavement next to his business premises for advertisement purposes of his business. He also paid a total advertisement fee of R40 000 to the local newspaper for the advert of his business that will appear on the every Monday’s newspaper. He never consulted with the local municipality before he erected the billboard. The municipality instructed him to remove the billboard because it was obstructing pedestrians. He was fined R8 000 by the municipality for this. He also paid R2 000 for the billboard to be removed and put inside his business premises. MODULE TAXATION 2A TOTAL MARKS 60 MARKS 1 REQUIRED: In terms of the general deduction formula, discuss the deductibility of each expenditure incurred by Andile Black for his business for the current year of assessment. Quote relevant case law to support your argument. my subject is Taxation 2a

A.  You were able to acquire some notes which the assistant had jotted down on a sheet of paper while he was preparing to work on the report.  These were as follows:

      1.   The total revenues of the Surveillancedivision was 25% of the total revenues of the company.  

      2.   The total revenues of the Appareldivision was 7% of the external revenues of the company.

      3.   The return on assets for the Communicationdivision was 35%.

      4.   The return on sales for the Appareldivision was 40%.

      5.   The profits for the Aviation division was 180% of its total assets.

B.   Next, the assistant applied the required tests to determine which of the six divisions discussed above are to be considered as reportable segments and obtained the following information:

      (i)  Revenue test

      1.   The total revenues for the Combatdivision exceeded the revenue test threshold figure by $260,000.  

      2.   Similarly, the total revenues for the Aviationdivision exceeded the revenue test threshold figure by $176,000.

      (ii)   Operating profit test       

              Not sure about this section.  To be determined later.

      (iii)  Identifiable Assets test:   The test threshold figure for identifiable assets amounted to $64,000.

      1.     The identifiable assets for the Combatdivision exceeded the test threshold figure by $136,000.

      2.     Similarly, the identifiable assets for the Appareldivision was less than the test threshold figure by $27,000.

      3.     The Transportdivision reported its annual interest expense for the year to be $1,280.  This interest expense, accruing annually, was paid in cash at a coupon rate of 5% on long term bonds.  The bonds were the only liabilities for the division and their amount was duly reported at the year end.

C.   The liabilities for each segment equaled 80% of the assets of that respective segment.

Figure I - in ‘000

REQUIRED:

1.   Identify and describe the three additional factors under IFRS to be considered while applying the tests identifying reportable segments.

I just need to understand Question 1 and 2. I just wanted to make sure I did the revenue management right.

Freedom Airlines recently started operations in the Southwest. The airline owns two airplanes, one based in Phoenix and the other in Denver. Each airplane has a coach section with 140 seats available. Each afternoon, the Phoenix based airplane flies to San Francisco with stopovers in Las Vegas and in San Diego. The Denver-based airplane also flies to San Francisco with stopovers in Las Vegas and in San Diego. Each airplane returns to its home-base with no stopovers.

Freedom Airlines uses two coach-fare classes: A discount fare (A) and a full fare (B). Discount fares are available with a 21-day advance purchase. Full fares applied at any time, up to the time of the flight.

Below is the daily fare and demand data for 16 selected Freedom Airline itineraries. Itineraries 1 through 6 apply to the Phoenix based airplane (leg 1); itineraries 7 through 12 apply to the Denver based airplane (leg 2); itineraries 13 and 14 apply to the Phoenix based airplane (leg 3); itineraries 15 and 16 apply to the Denver based airplane (leg 4):

1. Develop a revenue management (maximizing) model based on the information given in the scenario.
2. How many seats should be allocated to each of the 16 itineraries to maximize revenue?