...Disclosure Analysis Paper General Motors, one of the largest cars and trucks manufacturer, is more than a century old and has a large scope of the industrial activities, mostly focusing on the motorized transportation with engineering and manufacturing to make all possible. GM was founded in 1908, by William Durant, as a holding company for Buick and McLaughlin Stocks. Global headquarters are located in Detroit, Michigan with manufactures located throughout 35 countries. GM designs, builds and sells trucks, cars and automobile parts around the world, also providing financing services with General Motors Financial Company, Inc. Analyzing results of the business with five segments: GM International Operations, GM North America, GM South America, GM Europe and GM Financial. Consolidated financial statements include accounts and the subsidiaries that are controlled by ownership with a majority voting interest and consolidated interest entities, which are the primary beneficiary. Continuing evaluations with involvement with variable interest entities determines whether GM still have interest that are variable and are primary beneficiaries. When criteria gets met, GM requires consolidation of the VIE’s. Share of earnings or the losses of the nonconsolidated affiliates are included in the consolidated operating using the equity method for accounting when able to exercise significant influence over operating and financial decisions, using the cost method of accounting...
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...Chapter 08 Business Income, Deductions, and Accounting Methods True / False Questions 1. The Internal Revenue Code authorizes deductions for trade or business activities if the expenditure is "ordinary and necessary". True False 2. Business activities are distinguished from other activities in that business activities are motivated by the pursuit of profits. True False 3. The phase "ordinary and necessary" has been defined to mean that an expense must be essential and indispensable to the conduct of a business. True False 4. Reasonable in amount means that expenditures can be exorbitant as long as the activity is motivated by profit. True False 5. The test for whether an expenditure is reasonable in amount is whether the expenditure was for an "arm's length" amount. True False 6. Illegal bribes and kickbacks are not deductible as business expenses, but this prohibition does not include fines incurred in the ordinary course of business. True False 7. Although expenses associated with illegal activities are not deductible, political contributions can be deducted as long as the donation is not made to a candidate for public office. True False 8. When a taxpayer borrows money and invests the loan proceeds in municipal bonds, the interest paid by the taxpayer on the debt will not be deductible. True False 9. Employees cannot deduct the cost of uniforms if the uniforms are also appropriate for normal...
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...What is a contingent liability? A contingent liability is a potential liability…it depends on a future event occurring or not occurring. For example, if a parent guarantees a daughter’s first car loan, the parent has a contingent liability. If the daughter makes her car payments and pays off the loan, the parent will have no liability. If the daughter fails to make the payments, the parent will have a liability. If a company is sued by a former employee for $500,000 for age discrimination, the company has a contingent liability. If the company is found guilty, it will have a liability. However, if the company is not found guilty, the company will not have an actual liability. In accounting, a contingent liability and the related contingent loss are recorded with a journal entry only if the contingency is both probable and the amount can be estimated. If a contingent liability is only possible (not probable), or if the amount cannot be estimated, a journal entry is not required. However, a disclosure is required. When a contingent liability is remote (such as a nuisance suit), then neither a journal nor a disclosure is required. A product warranty is often cited as a contingent liability that is both probable and can be estimated. What is the difference between a contingent liability and an estimated liability? A contingent liability is a potential liability (and a potential loss). It is dependent upon a future event occurring or not occurring. For instance...
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...the acquisition of the company is based on publicly available information. Generally, the acquirer obtains limited private information from the target prior to the signing of the acquisition agreement. Although an acquisition agreement creates a binding contractual obligation for both entities to go forward with the deal, it does not guarantee completion of the deal. The acquisition agreement typically contains a warranty by the target that its financial statements are prepared in accordance with generally accepted accounting principles (GAAP). If this warranty is breached, the deal can be terminated. We hypothesize that low-quality financial reporting by target firms prior to the announcement of a deal increases the likelihood that a target firm’s U.S. GAAP warranties stated in the acquisition agreement are breached. Therefore, we predict that deals involving targets with low-quality financial reporting are more likely to be terminated (i.e., go bust). Based on prior research, we identify five measures of low-quality financial reporting: the magnitude of discretionary accruals (Dechow, Sloan, and Sweeney 1995); the likelihood of a weakness in internal control (Doyle, Ge, and...
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...Chapter 8 Business Income, Deductions, and Accounting Methods SOLUTIONS MANUAL Discussion Questions 1. [LO 1] What is an “ordinary and necessary” business expenditure? “Ordinary” and “necessary” imply that an expense must be customary and helpful, respectively. Because these terms are subjective, the tests are ambiguous. However, ordinary is interpreted by the courts as including expenses which may be unusual for a specific taxpayer (but not for that type of business) and necessary is not interpreted as only essential expenses. These limits can be contrasted with the reasonable limit on amounts and the bona fide requirement for profit motivation. 2. [LO 1] Is cost of goods sold deductible as a business expense for a business selling inventory? Explain. No. Under the return of capital principal, cost of goods sold represents a reduction in gross income rather than a business expense. For example, if a taxpayer sells inventory for $100,000 and reports a cost of goods sold of $40,000, the business’s gross income is $60,000 ($100,000 – 40,000) not $100,000. 3. [LO 1] Tom is an attorney who often represents individuals injured while working (worker liability claims). This year -Tom spent $50 on a book entitled Plumbing For Dummies and paid $500 to take a course on plumbing residences and rental housing. Can you imagine circumstances in which these expenditures would be deductible as “ordinary and necessary” for an attorney. Explain. “Ordinary” and “necessary”...
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...the issue presented in the case. Solutions to the cases below are available to instructors on the Weirich Accounting & Auditing Research 7e instructor website at www.wiley.com/college/weirich. Other excellent sources of longer and more detailed cases include the Deloitte Trueblood cases (www.deloitte.com/more/DTF/cases_subj.htm), as well as the AICPA cases (www.aicpa.org). Topical Index of Student Cases INTERMEDIATE ACCOUNTING Case 1: Reporting acquisition and repayment transactions in the Statement of Cash Flows Case 2: Recording a forfeited payment Case 3: Revenue and expense recognition associated extended warranties Case 4: Accounting for “due on demand” note payable Case 5: Purchase of a controlling interest with a greenmail premium Case 6: Revenue recognition in the construction industry Case 7: Accrual and measurement of interest payments Case 8: Recognition of an asset transfer when title has not yet been received Case 9: Capitalization of interest and property taxes on a construction project Case 10: Deferred compensation and life insurance policy recognition Case 11: Reporting earnings per share balances for subsidiary companies Case 12: Deferment of lease payments Case 13: Disclosure of prior period adjustments in the statement of cash flows Case 14: Measurement and recording of payments for sick days Case 15: Comparative cash flow statements Case 16: Social security benefits as assets Case 17: Recording...
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...the issue presented in the case. Solutions to the cases below are available to instructors on the Weirich Accounting & Auditing Research 7e instructor website at www.wiley.com/college/weirich. Other excellent sources of longer and more detailed cases include the Deloitte Trueblood cases (www.deloitte.com/more/DTF/cases_subj.htm), as well as the AICPA cases (www.aicpa.org). Topical Index of Student Cases INTERMEDIATE ACCOUNTING Case 1: Reporting acquisition and repayment transactions in the Statement of Cash Flows Case 2: Recording a forfeited payment Case 3: Revenue and expense recognition associated extended warranties Case 4: Accounting for “due on demand” note payable Case 5: Purchase of a controlling interest with a greenmail premium Case 6: Revenue recognition in the construction industry Case 7: Accrual and measurement of interest payments Case 8: Recognition of an asset transfer when title has not yet been received Case 9: Capitalization of interest and property taxes on a construction project Case 10: Deferred compensation and life insurance policy recognition Case 11: Reporting earnings per share balances for subsidiary companies Case 12: Deferment of lease payments Case 13: Disclosure of prior period adjustments in the statement of cash flows Case 14: Measurement and recording of payments for sick days Case 15: Comparative cash flow statements Case 16: Social security benefits as assets Case 17: Recording...
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...and expense recognition principles. We will also discuss the importance of journal adjustments that are prepaid, unearned, and accrued for both revenues and expenses over time. Each section this team will discuss aids in providing and maintaining the integrity for financial statements to become properly completed. Providing information is correctly entered permits businesses to see a clear and precise accounting picture of the efforts to maintain a company. The revenue recognition principle requires the company to only recognize earned revenue in the accounting period. This principle falls under generally accepted accounting principles or GAAP. The principle applies to companies depending on the type of accounting base they use. Under accrual-basis accounting, for example a delivery service company completes deliveries for a shipment company the entire month of July for a fee of $800. The company should recognize...
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...Ford Annual Report 2013 Financial Accounting 1. Alan R. Mulally wrote to the stockholders from Ford. He is the President and Chief Executive Officer of the Company. 2. Ford is excepting 2014 to be another solid year. In 2014 Ford has a record number of new product launches. Ford is providing quality cars and trucks worldwide and is ready for the payoff to be higher in 2015 and the years to come after that. Fords sales will improve worldwide. Ford is projected to make anywhere between $7 billion to $8 billion pre-taxed profit. The ford plan is driving solid results and profitable growth for all, and we are confident it will continue to do so in the future. 3. During this past year Ford is showing some financial highlights. 4. Ford’s Eco Boost Engine was the reason for the Companies growth and was a major part of the financial highlights. Ford vehicles had an average contribution margin of about 130% total average contribution margin across all vehicles. 5. The highlighted items show the company in a growing positive light. Ford is building more fuel efficient vehicles and that’s a strong selling point. 6. Ford’s Fiscal year extends from January 1, 2013- December 31, 2013. This information can be found on their balance sheet. 7. The reason that Ford chose this as their fiscal year is because Ford files its 10-ks for the end of December every year. 8. Ford reports dates on its balance sheet for March 31, 2013, June 30, 2013, September 30, 2013, and December 31, 2013...
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...Print An Overview of Financial Statements and the Environments of Financial Reporting Accounting: The Language of Business | Relationships Among Financial Statements | Classifications in a Balance Sheet | Income Statement, Statement of Retained Earnings, and Statement of Cash Flows | GAAP and Key Accounting Principles | Balancing the Accounting Equation Accounting: The Language of Business Back to Top Do Not Underestimate the Power of Accounting! I vividly recall my first experience driving in a foreign country. The road signs were written in the language of the local country which I was unable to read or understand. Even as an experienced driver not being able to read the road signs, limited my travel. Accounting is the language of business. One common business language guided by the rules established by the U.S. Securities and Exchange Commission (SEC) known Generally Accepted Accounting Principles (GAAP) gives financial investors the confidence needed to risk billions of dollars purchasing company stock. Accounting allows people from around the globe to understand the financial health of a given company. Without accounting as the language of business, capitalism and free markets in the United States could not thrive. Companies that list their stock on the stock exchange must prepare their financial statements according to generally accepted accounting principles. There are other authorities that issue guidelines such as Financial Accounting Standards Board (FASB). Management...
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...Meaning of Customer Relationship Management Customer Relationship Management (CRM) is directly related to the satisfaction of customers’ needs. CRM takes care of expectations of customers and what and how a product is presented to the customer. CRM is defined as a system that comprises large amount of customer data and presents it in a suitable manner. This information helps in retaining old customers and developing new potential customers. CRM plays a vital role in effective decision making in marketing management. CRM can also be defined as ✓ A process of creating and maintaining relationships with business customers/consumers, a holistic approach of identifying, attracting, differentiating and retaining customers. ✓ A process of integrating the firm’s value chain to create enhanced customer value at every step. ✓ An integrated cross functional focus on improving customer retention and profitability for a company/organization. Need of CRM In competitive times the challenge is to keep the customers in fold. Companies/organizations lose many loyal and profitable customers due to absence of CRM. There has been a great urgency of CRM in marketing management as best as possible to compete well in today’s innovative business world of high technology. So to create new customers and to retain old (loyal and profitable) customers, it is very much urgent to implement CRM in marketing management. To survive in today’s tough competitive business environment, CRM is...
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...Concepts in Federal Taxation 2011 Murphy Higgins 18th Edition Solutions Manual Click here to download immediately!!! http://www.testbankpdf.com/taxation/concepts-in-federal-taxation-2011murphy-higgins-18th-edition-solutions-manual/ ----------------------------------------------------------------------Concepts Concepts Concepts Concepts in in in in Federal Federal Federal Federal Taxation Taxation Taxation Taxation 2011 2011 2011 2011 Murphy Murphy Murphy Murphy Higgins Higgins Higgins Higgins 18th 18th 18th 18th Edition Edition Edition Edition Solutions Solutions Solutions Solutions Manual Manual Manual Manual -------------------------------------------------------------------------***THIS IS NOT THE ACTUAL BOOK. YOU ARE BUYING the Solution Manual in e-version of the following book*** Name: Concepts in Federal Taxation 2011 Author: Murphy Higgins Edition: 18th ISBN-10: 0538467924 Type: Solutions Manual - The file contains solutions and questions to all chapters and all questions. All the files are carefully checked and accuracy is ensured. - The file is either in .doc, .pdf, excel, or zipped in the package and can easily be read on PCs and Macs. - Delivery is INSTANT. You can download the files IMMEDIATELY once payment is done. If you have any questions, please feel free to contact us. Our response is the fastest. All questions will always be answered in 6 hours. This is the quality of service we are providing and we hope to be your helper. Delivery is in the next moment...
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...TX1 Basic Concept Tax policy Branch o the department of finance: responsible for the development and evaluation of federal taxation policies and legislation. Canada Revenue Agency: actual collection of taxes and interpretation of tax law Tax payable by persons resident in Canada: An income tax shall be paid … on the taxable income for each taxation year of every person resident in Canada at any time in the year. Persons: including corporations and anybody representing such persons. (Individuals, corporations, and trusts that represent individuals or corporations.) Full time resident: are subject to tax on their worldwide income throughout the entire calendar year. All domestic and foreign sources of income, including capital gains, must be included in the computation of net income. Non-resident person: may be subject to tax only if he was employed in Canada, carried on a business in Canada or disposed of a taxable Canadian property. The tax liability for the non-resident person would be calculated on the income from these items only, not on world income. Deemed resident: ▪ Sojourning in Canada for 183 days or more in a year ▪ Being a member of Canadian forces ▪ Performing services outside Canada under an international assistance program of the Canadian International Development Agency, if the individual was resident in Canada at any time during the three months prior to the day the services commenced; and ▪ Being an officer...
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...require the student to access the authoritative literature to address the issue presented in the case. Other excellent sources of longer and more detailed cases include the Deloitte Trueblood cases (www.deloitte.com/more/DTF/cases_subj.htm), as well as the AICPA cases (www.aicpa.org). A topical listing of the cases is presented with the case and solution following the listing. Topical Index of Student Cases INTERMEDIATE ACCOUNTING Cases Case 1: Reporting acquisition and repayment transactions in the Statement of Cash Flows Case 2: Recording a forfeited payment Case 3: Revenue and expense recognition associated extended warranties Case 4: Accounting for “due on demand” note payable Case 5: Purchase of a controlling interest with a greenmail premium Case 6: Revenue recognition in the construction industry Case 7: Accrual and measurement of interest payments Case 8: Recognition of an asset transfer when title has not yet been received Case 9: Capitalization of interest and property taxes on a construction project Case 10: Deferred compensation and life insurance policy recognition Case 11: Reporting earnings per share balances for subsidiary companies Case 12: Deferment of lease payments Case 13: Disclosure of prior period adjustments in the statement of cash flows Case 14: Measurement and recording of payments for sick days Case 15: Comparative cash flow statements Case 16: Social security benefits as assets Case 17: Recording...
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...Principles of Measurement Mosso member of the FASB FASB’s Conceptual Framework project over the period 1973-1985 Define measurement Measurement is the assignment of numerals and other symbols to represent the magnitude of an attribute of a phenomenon Phenomenon A thing or event of interest E.g. a table, a performance, an exam Attribute A characteristic or quality of the phenomenon to be measured Magnitude The extent to which the phenomenon has the attribute Often we can’t directly observe a phenomenon of interest We need to find a substitute Direct observation- the only time we can accurately observe the attribute and phenomenon How happy is the baby? Phenomenon-baby Attribute-happiness Can you measure this attribute directly? NO Smiles per hour Laughter per day Financial Statements: When investors focus on a company’s net income, is net income necessarily the investors’ attribute of interest Firm performance Firm future performance What two things do accounting measures often represent Performance- what have we done? Position- what do we have? Business Strategy and Accounting USSBA Too many teams to manage What is strategy according to Porter? Strategy is creating a fit among an organization’s activities (to enable it to realize its goal or mission). The success of a strategy depends on doing many things well and integrating among them Operational Effectiveness versus Strategic Positioning Operational effectiveness Performing similar activities...
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