...MEMO To: Client From: Accounting Firm Re: Lawsuit Pending lawsuits against a company are both expensive and detrimental to a company’s image. The decision to understand the implications of a lawsuit to the company is the first step in minimizing risk and potential loss to the organization. Research was conducted based on the guidelines of the FASB to answer the client’s questions pertaining to the lawsuit. The memo provided to the client will answer the following questions: How are requirements for contingencies reported? What would happen to the financial statements if the client loses the lawsuit? Will the client’s debt be forgiven if the mortgage is refinanced or if their mortgage will be refinanced if they file Chapter 11? How will the treatment on the financial statement be resolved? How will the reparations of the patent be treated on the financial statements as a result of losing the lawsuit? To report requirements for contingencies and explain the financial statements consequences if the client loses the lawsuit. When dealing with a lawsuit, a company must know whether or not to consider contingencies. According to Schroeder, Clark, and Cathey (2005), a contingency is a possible future event that could perhaps have possible implications on the firm. The four most common contingency methods: Pending lawsuits Income tax disputes Notes receivable...
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...Response to Client Request ACC 541 24, December 2012 Memorandum To: Supervisor From: Sarah Dixon Re: Leases and lease structure issues It has come to my attention of our client’s concern regarding the uncertain relationship with a customer who may potentially offer the company a significant growth benefit. The following memo will address the client’s concern and recommend a solution to the problem, giving a summary of several different types of leases. One of the most important issues here lies with understanding that the client’s main concern is trying to make as much profit as he possibly can for his regional trucking company. The opportunity offered to this client could potentially be very profitable if handled in the correct manner. The client has the option to either purchase twenty more trailers to accommodate this customer or use an alternative means of acquiring these assets known as leasing (Schroeder, 2011). I will explain leases and lease structure issues of several different types of leases including direct financing leases, sales type leases, and operating leases which could greatly benefit this client. A lease is a contractual agreement between the lessee, or the user, to pay the lessor, or the owner, for the use of an asset or services. Leases are classified under the Financial Accounting Standards Board (FASB) under the number 840. The lessee is the receiver of the services or assets under the lease agreement, and the lessor is the owner...
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...VOUCHING A voucher is documentary evidence in support of a transaction in the books of account. Vouching is a technical term which refers to the inspection by the auditor of documentary evidence supporting and substantiating a transaction. It means to substantiate an entry in the books of account not only with any documentary evidence such as agreements, receipts, counter foils of a receipt book, or pay-in-book, contracts, but also to see that the transaction has been properly authorized, recorded and entered in the books of account e.g. verification of the entries in the invoice book with the invoices, checking of the cash receipts with counter foils of the receipt books, the checking of the cash payments with the receipts issued by the payee an so on. Vouching is testing the truth of items appearing in the books of original entry. Clever frauds can only be discovered by proper vouching as for example if the auditor simply compares the entry on the credit side of the cash book with the voucher, he might be deceived as in a case where the purchase was not for the business or the receipt might have been for the previous year. In the case o receipt side of the cash book it is possible that a less amount might have been entered on the counter foil than the money actually received. It is through vouching that an auditor can satisfy himself as to the authenticity and completeness of transactions in the books of accounts. In case he is negligent he will be held guilty...
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...study guide will prepare you for the Final Examination you will complete in Week Six. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination. Week One: Constructing and Supporting an Argument Objective: Identify channels for business communications. 1. An informal communication network is typically called a a. chat network b. chain c. contextual system d. X grapevine 2. Which channel of communication is lowest in richness? a. Video conferences b. E-mail c. X Memos and letters d. Telephone conversations 3. Jessica needs to describe her vision for an important ad campaign to three of the new team members. What should Jessica do? a. X Schedule a meeting b. Send an e-mail c. Write a memo d. Publish a formal report Objective: Evaluate credibility and validity of sources of information. 4. Checking a book’s preface, reading a blurb found on a book jacket cover, and looking for thumbnail biographies at the beginning and end of a source of information are all part of a. evaluating style and tone b. X evaluating credentials c. evaluating currency d. evaluating biases Objective: Develop effective arguments. 5. When you write a paragraph based on _____________, the topic sentence should clearly summarize the range of evidence you use a. deduction b. X induction c. synopsis ...
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...Cost Club Scenario #1 Paper Cherie Hands-Dixon University of Phoenix Human Resource Law/ HRM 546 Phillip Quintana, JD September 12, 2011 | Cost Club | Memo To: Pat Quintana From: Cherie Hands-Dixon Date: September 12, 2011 Re: Messages The Cost Club Store in Anderson wanted to downsize the workforce by firing two of their employees for no reason given. It was stated in the previous e-mail the general manager must supply information for terminating these two employees. Otherwise the employees are to file a claim for wrongful termination and the possibility being awarded compensatory damages and punitive damages. Pat Quintana, the executive of human resources has concerns the company will lose this case if reasons for the discharge is not documented. The Anderson Cost Club Store could be sued for wrong termination under Title VII of the Civil Rights Act of 1964. This act into place to help shape our country with employment right. “Title VII of the Civil Rights Act of 1964 (a) It shall be an unlawful employment practice for an employer, (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate...
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...Memo To: M International From: ------------------------------------------------- Re: Loss Contingency Recognition and Reversal Background The company has been engaged in a dispute over a long-standing litigation with W Inc. The dispute involves a specific patent infringement matter. In May 2007, W Inc. filed a claim against the company for patent infringement and management determined that a loss was probable and estimated it would be between $15 million and $20 million, with $17 million being the most likely amount of loss within the estimated range (December 31, 2007). In September 2009, a jury trial took place for the litigation involving the company and W Inc. A verdict for the trial was reached; a judgment was ordered that the company pay W Inc. $18.5 million on September 24, 2009. The company filed for a Notice of Appeal with the Court of Appeals in November 2009 and in December 2010, the Court of Appeals issued a ruling that reversed the previous order of $18.5 million to W Inc. W Inc. petitioned for a rehearing before the same panel of the Court of Appeals judges on January 6, 2011 against the company’s reversal, but the panel decided against the rehearing and declined W Inc.’s request. Management, along with in-house legal counsel, determined the matter with W Inc. was final on February 28, 2011. Issues 1. What amount should the company recognize as a liability for the year ending December 31, 2007? 2. Should the company adjust its liability if the actual...
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...1. Barriers to effective communication A. Physical barriers Internal structure of the organization and layout of office machines and equipments creates physical barriers in communication a. Distance: – communication is found obstructed in long distance. Like communication between America and Nepal. b. Noise: – it is from external sources and affects the communication process. Noise negatively affects the accuracy c. Physical arrangement: – the physical arrangement of organizational sources like men, money, material and machine obstruct the communication process. B. Semantic barriers The use of difficult and multiple use of languages, words, figures, symbols create semantic barriers. a. Language: – we can find some words having different meaning. As meaning sent by the sender can be quite different from the meaning understood by the receiver. Long and complex sentences creates problem in communication process. b. Jargons: – technical or unfamiliar language creates barriers to communication that may be drawn from the literature. So message should be simple and condensed as far as possible so that no confusion creation will be there to the receiver. C. Organizational barriers It is raised from the organizational goals, regulations, structure and culture. a. Poor planning: – it refers to the designing, encoding, channel selection and conflicting signals in the organization. b. Structure complexities:- difficult organizational structure...
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...MEMO To: Borg Re: Preferred stock classification Facts Borg (the Company) is an early-stage research and development medical device company. Borg has no current products in the marketplace but is in the final stages of going to market with the Heart Valve System. All preliminary trials have been approved by the FDA, and the Company is in the final trial; once the final trial is complete, the Company will present the product to the FDA for final approval. If approved by the FDA, the Heart Valve System will revolutionize the way medical professionals repair heart valve defects. Bionic Body (“Bionic”), a SEC registrant, is a biological medical device company that focuses on the development of implantable biological devices, surgical adhesives, and biomaterials. Bionic could benefit from the approval of the Heart Valve System since it has a supplementary device that could be used in tandem with the Heart Valve System. As part of a financing strategy to support its operations, Borg sold Bionic $3.5 million of Series A Preferred Shares (the “Shares”) of the Company with a par value of $1 per Share. The transaction was completed on November 30, 2011. As part of the Series A Preferred Stock purchase agreement, Bionic has the following rights: * Board Rights — as the holder of the preferred stock, Bionic is entitled to appoint one member to the Company’s board of directors (the “Board”). In addition, Bionic has the right to appoint an observer to receive all information provided...
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...MEMO To: Management Team From: Jacques Lamoureux, CGA, Date: ------------------------------------------------- Re: CRM system, draft financial statements, operational initiatives, and other issues The purpose of this memo is to discuss the operational initiatives and related risks, the draft financial statements, the CRM system and other issues that have arisen over the past year. Homes sales and other operational initiatives Further analysis needs to be done to determine the feasibility of both the home sales and the new candle line. Preliminary research suggests there is a market for scented candles; as several companies similar to FFI report increased sales of up to 5% with the addition of a candle line. However, the sales projections prepared by Mandy show a 20% increase in sales in the first year; this is significantly higher than the results experienced by others within the industry. An evaluation of how Mandy arrived at her projections is required. As it stands, FFI does not have the production capacity to produce a line of candles. Accordingly, a third party contractor will need to be engaged. There are several risks associated with contracting a third party. Specifically, FFI will have less control over quality and the contractor will have access to FFI’s secret recipes for potpourri. Also, the minimum order levels required by the contractors represent the majority of production; this would require a large upfront capital outlay. The home sales program...
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...MEMORANDUM TO: Professor John Eckroth DATE: 12/03/2013 SUBJECT: Project #2 – PPP Fashions, Inc. The purpose of this memo is to address the accounting issues related to how PPP Fashions should record the $25 Referral Credit on the books. The Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic No. 605-50 (Revenue Recognition/Customer Payments and Incentives) provides guidance pertaining to sales incentives including discounts on future purchases. The general rule of accounting for coupons and discounts indicates sales incentives that are offered voluntarily, without charge by a company, may be used by a customer as a result of a single transaction, and will not result in loss on the sale are recognized at the later of: a) The date at which the related revenue is recorded by the vendor, or b) The date at which the sales incentive is offered. The Referral Credit, once redeemed by the Existing Customer, has an impact on the future sales transaction; therefore, the company should record it as a reduction of revenue when the related revenue is recognized. The Referral Credit is recorded at the time earned when the New Customer makes a purchase. The company would recognize the expense as a debit to the Referral Credit expense account and credit the contra revenue account, Referral Credit Allowance. At the time the Existing Customer makes the purchase, the company will recognize the Referral Credit by debiting the Referral Credit...
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...With regards to the potential purchase of MML, analysis of the financial statements and notes from discussion with MML Management was completed. The following memo pertains to the suggested journal entries and notes to the financial statements to address the concerns under IFRS. Loss during the year MML’s loss during the year is a one-time event and not considered an ordinary course of business. However, not enough information was provided to determine whether the loss was dependent on the decisions of the owners. Under the assumption that the loss was not a result of management actions, this loss would be classified as an extraordinary item (SOURCE - 387). As per IFRS, extraordinary items are no longer reported thus entries and notes to the financial statements are not required. The acquisition of MML necessitates John to consider whether the business will continue to operate in the foreseeable future. Since the loss has caused a reduction in the current year’s operating profitability, it is essential to consider the “going concern” assumption (SOURCE- chapter 2 387). MML will need to provide a disclosure of any material uncertainties with regards to the continuity of the company, which will provide financial statement users with more relevant and faithful representation of information (SOURCE - Chapter 2). “MML experienced a $500,000 reduction of operating profitability from a non-recurring transaction. It is predicted that MML will return to profitability within...
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...Student Cases with Solutions to accompany Accounting & Auditing Research: Tools & Strategies (7th edition) NOTE: In addition to the in-chapter and end-of-chapter exercises which serve as short cases you will find the following short cases arranged by course title that can also be utilized as short cases that 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...
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...Superior Supermarkets Memo Memorandum To: James Ellis, President of Superior Supermarkets CC: Randall Johnson, District III Manager of Superior Supermarkets From: Matthew Clemente RE: Potential Everyday Low Pricing Strategy Date: April 9, 2010 The challenge presented to the President of Superior Supermarkets James Ellis and his district manager Randall Johnson is whether or not to implement an everyday low pricing strategy to the Superior Supermarkets stores in Centralia, MO. Superior Supermarkets’ current pricing strategy is a high-end branding strategy, giving them the highest prices in Centralia. With their declining market share the past seven years (they currently have 23% market share in 2002, down from 31% just three years ago; see Exhibit 2) Superior Supermarkets looks to increase their rising revenues from the past three years (Exhibit 4), regain their past successful market share and maintain their already successful contribution margin. To accomplish these three goals, there are several alternatives that Superior Supermarkets could employ to help them retake the market in Centralia. The three locations of Superior Supermarkets in Centralia certainly give them precedence in location, but their market share should certainly be higher with the various options of location they give their customers. However, customers in Centralia are certainly price-sensitive and a new pricing strategy must certainly be considered to give Superior Supermarkets the...
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...WEEK 3 RESEARCH PROJECT (Set #1) ACCT 429 DeVry University IMPORTANT NOTE TO STUDENTS This assignment is being distributed solely for your use in completing the Week 3 project in DeVry University’s online Accounting 429 class. This assignment is an individual assignment, and you are to complete it without any outside assistance by any other student, individual, or outside materials, other than those specifically permitted by the problem. Any violations of these requirements will be addressed as an academic integrity violation. Similarly, this assignment may not be shared with any other student at any time, even after your completion of the course. Students to do so may be subject to sanctions pursuant to DeVry’s academic integrity policy, even though they may no longer be enrolled in Accounting 429. Week 3 Research Project (Set #1) DeVry University Acct 429 Performing tax research is an important part of tax practice. As outlined in Chapter 2 of your textbook, tax law is developed through a number of different governmental entities. Congress enacts the tax Code as statutory law. The Treasury Department is tasked with the implementation of the tax Code and, in the course of doing so, develops a number of documents and materials to aid taxpayers in understanding the Treasury Department's interpretation of the code, including the Regulations. In turn, the Internal Revenue Service ("IRS”) has the direct responsibility for implementing the tax Code and in assessing and collecting...
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...You are the independent Human Resources Consultant hired by Teddy's Supplies to help explain to the company what the case against them will entail. You have gleaned the facts from your investigations into the situation to date. You have never talked with Virginia Pollard. The case is currently in the appeals stage and the company executives have some questions for you. Answer them using the most recent legal information you can find. 1. Teddy's Supplies' CEO has asked you to advise him on the facts of the case and your opinion of their potential liability. Write a memo to him that states your view of whether the company is exposed to liability on all issues you feel are in play. Include in your memo any laws that apply and any precedent cases either for or against Teddy's case that impact liability. Include your opinion of the "worst case" of damages the company may have to pay to Virginia. (Points: 30) Answer: To: J. Doe, CEO From: William Outlar, Consultant Date: April 8, 2011 Re: Virginia Pollard Case After reviewing the case there is a glaring issue that you had with Mrs. Pollard. The guys she worked with created a very hostile work environment that led to where we are now. Coupled with the supervisor being in on these activities and not being disciplined will be a hard sell to a judge or jury. Below I listed several elements that classify a hostile work environment; Hostile Work Environment – Sexual Harassment Five (5) general elements...
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