23. On August 29, 2020, Mar Bonafe, CPA, was offered and accepted the engagement to audit theannual financial statements of ABC Corporation for the fiscal and calendar year ended Dec, 31,2020. The audit began on Sept. 15, 2020, and ended on March 17, 2021. ABC Corporation isregulated by the SEC. Bonafe served as controller of ABC Corporation from Nov. 5, 2013 untilJan. 12, 2020 at which time he terminated his employment with ABC. Mar Bonafe owned amaterial amount of ABC Corporation ordinary or common shares from Nov. 5, 2013 until Aug, 15,2020, at which time he sold the shares. Is Mar Bonafe violation of the Code of Ethics due toin impairment of independence?a. Yes, because Mar Bonafe owned ABC shares at the start of the audit for Dec. 31, 2020.b. Yes, because Mar Bonafe served as a controller for ABC in previous years.c. Yes, because Mar Bonafe had an employment relationship with the client during part of theperiods covered by the financial statements.d. Yes, because it is still less than a year since Mar Bonafe has owned shares in ABC.

Auditor should have no bonafide interest in the organization under audit.

Answered: 3. On August 29, 2020, Mar Bonafe, CPA,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

0 Required information [The following information applies to the questions displayed below.) Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2019 (effective immediately), in preparation for taking it public. Miley had previously elected S corporation status on January 1, 2018. At the time of the election, the corporation had an accumulated adjustments account balance of $165,000 and $462,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $146,250. During 2020, Miley's corporation reported $0 taxable income or loss. Also, during 2020 the corporation made distributions to Miley of $87,500 and $65,000. How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) a. Both distributions are in cash. The first was paid on June 15, 2020, and the second was paid on November 15, 2020. June 15 November 15…
Here you will find some income statements and balance sheets for Sears Holdings (SHLD) and Taget Corp (TGT). Assume that you are a financial manager at Sear and want to compare your firm’s situation with that of Target. Calculate represenatative ratios for liquidity, asset management efficiency, financial leverage (capital structure), and profitability for both Sears and Target. How would you summarize the financial performance of Sears compared to target (its benchmark firm)? Include Sears and Targets current ratio, acid-test ratio, average collection period, accounts receivable turnover, inventory turnover, debt ratio, timed interest earned, total asset turnover, fixed asset turnover, gross profit margin, operating profit margin, net profit margin, operating return on assets, and return on equity.
Villiage Corp., a calendar year corporation, began business in year 1. Village made a valid S corporation election on December 5, year 4, with unanioums consent of its shareholders. The eligibility requirements for S status continued to be met throughout year 5. On what date did Village's S status become effective? a, Jan 1, year 4, b Jan 1, year 5, c Dec 5, year 4, d Dec 5, year 5 my answer is b
B Ltd is a company in the chemical industry, situated near the Edward River. Its year end is 30th June 2021 and you were engaged as the auditor on that date. The profit before taxation shown in the draft accounts to 30th June is $24,000,000. The following matters have come to your attention:. A debtor owing $180,000 at 30th June 2021 was declared bankrupt on 1 August 2021. The trustee in bankruptcy has informed B Ltd that she does not expect a payment of more than 8cents in the $1 to be made to unsecured creditors With reference to relevant audit standards, identify the business risk and outline any resulting potential audit risks that may require further investigation.
Da-Rocha Ltd is a listed manufacturing company which prepares its financial statements for the year ended 31 October, 2018 in accordance with IFRS. The financial statements are due to be authorized for issue on 15 January 2019. i.Da-Rocha Ltd holds an investment in the shares of a listed company, Shelga Ltd. During November 2018 there was a material fall in the value of Shelga Ltd’s shares. Analysts attribute the fall in value principally to a fraud dating back to December 2017 that was discovered by Shelga Ltd's management and announced publicly in November 2018. ii.In December 2018, the directors of Da-Rocha Ltd publicly announced a plan to reduce the workforce by 10% as a result of worsening economic conditions. Required: Discuss the effects of each of the above items on the financial statements of Da-Rocha Ltd for the year ended 31 October 2018 in accordance with IAS 10 Events after the Reporting Period
Pearl Inc. owns shares of Martinez Corporation stock. At December 31, 2020, the securities were carried in Pearl’s accounting records at their cost of $821,000, which equals their fair value. On September 21, 2021, when the fair value of the securities was $1,333,000, Pearl declared a property dividend whereby the Martinez securities are to be distributed on October 23, 2021, to stockholders of record on October 8, 2021.Prepare all journal entries necessary on those three dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
You are now in the completion stage of your audit of the financial statements of Endgame Inc. for the period ended December 31, 2021. In relation to this, you reviewed relevant subsequent events up to April 15, 2022, the date financial statements were approved for issuance by Endgame Inc.'s Board of Directors. The following information are deemed relevant as a result of your review: A The company has a 10%, P2 million Notes Payable due on March 31, 2024. A debt covenant requires Endgame Inc. to maintain current assets at least equal to 150% of its current liabilities. On December 31, 2021, however, Endgame Inc. is in violation of this covenant. On December 31, 2021, Endgame. obtained a grace period for another year, that is up to December 31, 2022, from Avenger Bank, having convinced the bank that the company's normal current ratio of 2:1 will be reestablished by the end of the year. B. The company has another P5 million, 5-year, non-cancelable 13% bonds issued at face value on March…
Alpesh
Luxco is closing its 2012 records. Luxco has engaged Ey to perform the audit of its 2012 annual accounts and the preparation of its 2012 corporate tax returns. The agreed fees are 10.000€ (excl VAT) for the audit and 3000€(excl Vat) for the preparation of the corporate tax returns. These services will be provided in 2013. Make the journal entry
Faramarzinikpey Company, a public company, is preparing its annual financial statements on December 31, 2022. The following selected information is available: The company has been sued by an employee for discrimination. The employee is seeking $5,000,000 in damages. Legal counsel believes it is unlikely that the company will have to pay any damages. The amount is material ( substantial ) to the company. Employees have accrued ( earned ) $4,200 in vacation pay benefits as of December 31,2022. The company has been sued in a $ 3,000,000 product liability lawsuit. Legal counsel believes the company will probably have to pay the full amount. On October 1, 2022, the company signed a $ 10,000, 6-month, 8% note payable. No interest has been accrued to date. Instructions: Prepare any necessary adjusting entries or disclosures on December 31, 2022.
You are the audit partner of John& Co., a large audit firm that is operating in sydney. Your firm audited ABC Ltd, a custom-made products manufacturing company. ABC Ltd declared bankruptcy within six months of receiving an unqualified auditor's opinion on its financial statements for the year ended 31 December 2018. The XYZ bank initiated a court challenge against your firm on the grounds that the bank disbursed a $2,500,000 loan to ABC Ltd in May 2019, but ABC went bankrupt shortly afterwards. The plaintiff alleged that your firm's 2018 audit of ABC was deficient and argued that the auditors failed to uncover that the value of ABC's inventories were substantially lower than reported on the balance sheet. Your audit firm did not issue privity letters to any third party in the past four years. With reference to the principles established in common law, explain whether the XYZ bank is likely to be successful
In examining the books for Hilroy Limited, an auditor, completing the audit for December 31, 2023 found that certain items had been overlooked or might have been incorrectly handled in the past:1. A tax lawsuit related to the year 2021 was settled in 2023. It was determined that the company owed an additional $92,000 in tax related to 2021. The company did not record a liability in 2021 or 2022 because the possibility of losing the lawsuit was considered remote. Management recorded an adjustment to retained earnings in 2023 as a correction of a prior period error.2. Management accrued production salaries at December 31, 2022 of $87,000. The amount should have been $46,000.3. On January 15, 2021, the company purchased equipment with a cost of $225,000, useful life of 6 years, and a residual value of $40,000. The company uses straight-line depreciation. Depreciation expense was calculated without including the residual value in 2021, 2022 and 2023.Instructions:a. Identify what type of…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS