Honey Crunch Limited started business in 2018. It is now 2021 and the Board of Directors of Honey Crunch Limited hired Aegis Solutions to recommend how each of the following types of accounting changes or errors should be dealt with. A dispute developed in 2020 with the tax authorities over the deductibility of training expenses. In 2019, the company was not permitted these deductions, but a tax settlement was reached in 2021 that allowed these expenses. As a result of the court’s finding, tax expenses in 2019, 2020 and 2021 were reduced by $50,000, $20,000 and $10,000 respectively Provide Honey Crunch with this information by writring a note for the audit file (3-5 sentences) identify the type of accounting change or error, the appropriate accounting treatment, include amounts where applicable and how net income would be impacted if the issue needs correcting
Honey Crunch Limited started business in 2018. It is now 2021 and the Board of
Directors of Honey Crunch Limited hired Aegis Solutions to recommend how
each of the following types of accounting changes or errors should be dealt with. A dispute developed in 2020 with the tax authorities over the deductibility of training expenses. In 2019, the company was not permitted
these deductions, but a tax settlement was reached in 2021 that allowed
these expenses. As a result of the court’s finding, tax expenses in 2019,
2020 and 2021 were reduced by $50,000, $20,000 and $10,000
respectively
Provide Honey Crunch with this information by writring a note for the audit file (3-5 sentences) identify the type of
accounting change or error, the appropriate accounting treatment, include
amounts where applicable and how net income would be impacted if the issue
needs correcting
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