Homework Answers
If Goodwill is overstated by $ 10million and company has effective tax rate of 30% then:-
To undo the manipulation company sholud Increase the impairment expenses by $10 million and decrease net income by $ 7 million
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You suspect that company High Tech has overstated its goodwill by $10 million. Suppose the company...
Company A has overstated the goodwill of its acquisition of Company B in 2018. The price...
Company A has overstated the goodwill of its acquisition of Company B in 2018. The price of acquisition was 257. Company A estimated fair value of net assets to be 103. In 2019, you as an analyst want to make an accounting adjustment to the recorded goodwill by impairing 50% of it based on newly acquired information. With what amount will the net profit/loss (after tax) item on the income statement 2019 decrease based on this adjustment? Consider that the...
Company A has overstated the fair value of net assets of its acquisition of Company B...
Company A has overstated the fair value of net assets of its acquisition of Company B in 2017. The price of acquisition was 169. Company A estimated goodwill to be 53. In 2018, you as an analyst want to make an accounting adjustment to the recorded fair value net assets by writing-down 100% of them based on newly acquired information. However, the goodwill will remain on the balance sheet. With what amount will the shareholder’s equity in 2018 decrease (in...
10. A high-tech company has invested 15% of its assets in financial stocks. Suppose that we...
10. A high-tech company has invested 15% of its assets in financial stocks. Suppose that we select 5 stocks at random (i)What is the probability that at least 3 of the stocks are financial stocks? (ii)What is the probability that none of the stocks are financial stocks?
Ringer. CPA, has been engaged to audit Tech Co., a publicly traded company. In planning the...
Ringer. CPA, has been engaged to audit Tech Co., a publicly traded company. In planning the audit, Ringer uses 3% of income before taxes as an overall materiality threshold and 50% of overall materiality as the tolerable misstatement. If, as a result of substantive testing. Tech Co.'s pretax earnings of $20 million are found to be overstated by 4% due to errors in revenue recognition, Ringer would likely take all of the following actions when evaluating the audit findings, except...
10 Piato acquirea the voting stock of Safestyle Company on January 1, 2019 for $50 million....
10 Piato acquirea the voting stock of Safestyle Company on January 1, 2019 for $50 million. Safestyle's book value at the time was $10 million, consisting of $2 million of capital stock and $8 million of retained earnings. The $40 million difference between fair and book value was attributed to goodwill. It is now December 31, 2020, the end of the accounting year and two years after the acquisition. Safestyle's January 1, 2020 retained earnings balance is $11 million. Safestyle...
LOL (the “Company”), an SEC registrant with a calendar year-end, is a manufacturer and distributor of sports equipment....
LOL (the “Company”), an SEC registrant with a calendar year-end,
is a manufacturer and distributor of sports equipment. The Company
was created in 1989 and is headquartered in Southern California.
The Company has manufacturing operations and numerous sales and
administrative locations in the United States. LOL files a
consolidated U.S. federal tax return. (This case will not consider
the evaluation of the state jurisdictions; it will only consider
the federal jurisdiction.)
As LOL’s auditors, you are now performing the Company’s...
Suppose Stuart Company has the following results related to cash flows for 2017: Net Income of...
Suppose Stuart Company has the following results related to cash flows for 2017: Net Income of $7,700,000 Decrease in Accounts Payable of $900,000 Decrease in Accounts Receivable of $300,000 Decrease in Debt of $600,000 Depreciation Expenses of $1,700,000 Dividends of $800,000 Increase in Inventory of $800,000 Purchases of Property, Plant, & Equipment of $7,500,000 Other Adjustments from Financing Activities of $300,000 Other Adjustments from Investing Activities of $300,000 Other Adjustments from Operating Activities of $600,000 Create a statement of cash...
1.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is prepar...
1.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is reviewing the impact of changing prices it must understand that when changes in prices consist of _______ price movements, they are character ized by, on average, the prices of all goods and services in the economy . general and specific general level average specific none of the choices apply 2.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech determines...
ABC Company has an investment proposal. It requires an initial capital outlay of $20 million. The...
ABC Company has an investment proposal. It requires an initial capital outlay of $20 million. The investment will increase revenue by $10 million, increase cash expenses by $2 million and noncash depreciation expense by $5 million each year for the next five years. ABC has a tax rate of 30% and a cost of capital of 10%. 1. Determine the cash flow of the investment. 2. Determine the net present value of the investment. Should the investment be accepted? 3....
Halifax Inc. is evaluating two financing options to raise $10 million for an expansion project. Halifax...
Halifax Inc. is evaluating two financing options to raise $10 million for an expansion project. Halifax Inc. can borrow money from a bank and the interest rate will be 8%, or Halifax Inc. can issue one million common stocks for $10 per share. The company currently has 2.5 million common shares. Without the new financing, the projected income statement of Halifax Inc. is shown below. Determine the EPS for both options and break-even EBIT between the two financing options.... given...
10. A high-tech company has invested 15% of its assets in financial stocks. Suppose that we select 5 stocks at random (i)What is the probability that at least 3 of the stocks are financial stocks? (ii)What is the probability that none of the stocks are financial stocks?
Ringer. CPA, has been engaged to audit Tech Co., a publicly traded company. In planning the audit, Ringer uses 3% of income before taxes as an overall materiality threshold and 50% of overall materiality as the tolerable misstatement. If, as a result of substantive testing. Tech Co.'s pretax earnings of $20 million are found to be overstated by 4% due to errors in revenue recognition, Ringer would likely take all of the following actions when evaluating the audit findings, except...
10 Piato acquirea the voting stock of Safestyle Company on January 1, 2019 for $50 million. Safestyle's book value at the time was $10 million, consisting of $2 million of capital stock and $8 million of retained earnings. The $40 million difference between fair and book value was attributed to goodwill. It is now December 31, 2020, the end of the accounting year and two years after the acquisition. Safestyle's January 1, 2020 retained earnings balance is $11 million. Safestyle...
LOL (the “Company”), an SEC registrant with a calendar year-end,
is a manufacturer and distributor of sports equipment. The Company
was created in 1989 and is headquartered in Southern California.
The Company has manufacturing operations and numerous sales and
administrative locations in the United States. LOL files a
consolidated U.S. federal tax return. (This case will not consider
the evaluation of the state jurisdictions; it will only consider
the federal jurisdiction.)
As LOL’s auditors, you are now performing the Company’s...
ABC Company has an investment proposal. It requires an initial capital outlay of $20 million. The investment will increase revenue by $10 million, increase cash expenses by $2 million and noncash depreciation expense by $5 million each year for the next five years. ABC has a tax rate of 30% and a cost of capital of 10%. 1. Determine the cash flow of the investment. 2. Determine the net present value of the investment. Should the investment be accepted? 3....
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