Excello Telecommunications (from Ethical Obligations and Decision Making in Accounting: Text and Cases, 2 nd Edition by Steven M. Mintz and Roselyn E. Morris) Excello Telecommunications has been profitable for many years but recently has been faced with increased competition for its products by overseas manufacturers. For the first time in the company’s history, it appears that earnings estimates will not be met. Top management is concerned about the effect on bonuses, stock options, and the share price of Excello stock. That is when Terry Reed, the CFO, learns of a transaction on December 20, 2010, that might solve the problem. On December 20, 2010, Excello sold $1.2 million of equipment to Data Equipment Systems.
The Home Depot Company wants to expand their business in a global arrange. Actually, this situation is not able to happening every year; therefore, I considered it as a extraordinary item. 2. As we know from the fiscal 2007, the value of treasury stock was negative $16,383 million, but when it comes in the fiscal the value of treasury stock was negative $314 million, which means The Home Depot Company may sell their treasury stock for some money, the factor is that the sales of Home Depot Company decreased $13,488 million, therefore, they need money to run the company, so they sell some of the treasury stock for some money. This is the second extraordinary item.
I will recommend other alternatives to the PCAOB. Lastly, prepare a sample timeline for PCAOB reporting. On August 3, 2010 the Public Company Accounting Oversight Board (“PCAOB”) proposed a new standard designed to strengthen requirements for audit confirmation; that is direct auditor communication with third parties about particular items affecting the audit client’s financial statements. Recognizing that audit evidence from third parties often is more reliable than evidence generated internally or provided by a client, the PCAOB proposed the new standard to reduce the risk of material misstatement due to fraud or error and resulting in improper revenue recognition. Subject to public comment and Securities and Exchange Commission approval, the new standard would replace existing confirmation requirements for audits for fiscal years ending on or after Dec. 15, 2011.
Frank Campbell, Director of Southern Sales Division, has recognized the decrease in sales and desperately seeking to meet sales goals. Because of this pressure, he pushed two orders to be posted in December 2010. The two orders were not to be fulfilled until February 2011. He pressured the accounting department to recognize the sales in December 2010 and to ship out the products to the consumer. This
Discuss how administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) take action in order to be effective in preventing high-risk gambles in securities / banking, a foundation of the economy. The economy in the US needs to be protected from high-risk gambles in securities/banking, a foundation of the economy. So what does the Securities and Exchange Commission (SEC) well “the mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” (SEC, 2012). The way that SEC takes action in order
The division anticipates that the brand's cash flow in the coming periods will allow the company to pursue new opportunities in emerging markets. However, the division manager responsible for Allround has become concerned with the competitive nature of the OTC cold remedy market. In the past three periods, the industry has seen several product introductions as well as major increases in promotional and advertising expenditures. There is concern among senior management that this competitive activity will lead to declining market share and profitability for Allround. The brand has lost one full share point in the last period.
d. If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation. e. The more depreciation a firm has in a given year, the higher its EPS, other things held constant. 2. Which of the following statements is CORRECT? a.
Lessons learned: Auditing firms can be held responsible for the misrepresentation of financial information if they don’t practice due care. Auditing firms should asses risky accounts and suspicious transactions to ensure the reliability of the financial statement. Questions 1. Identify legitimate business practices that corporate executives can use for the primary purpose of manipulating or “managing” their company’s reported operating results. Are such practices ethical?
The Securities and Exchange Commission is responsible for protecting against the unethical practice of insider trading. One popular example of insider trading is when a CEO of a company sells stock after having knowing that the company will lose a major contract which can have a negative effect on the stock price. 3. Explain how the tax code allows depreciation to contribute to cash flow. (25 points) The Federal Tax Code allows depreciation to
The company appointed Peterson as the president and CEO of Pacific Grove Spice Company. The sales and profits continued to increase rapidly. Even though the company was profitable, retained earnings were not sufficient to fund the growing of assets. In 2011, the bank that the company does business with was not comfortable with the total amount of interest-bearing debt that Pacific Grove Spice Company had on their balance sheet. The company was showing total debt in access of $37 million.