in their locality. HAT does not revalue its factory premises, which are held in the statement of financial position at $2.7m.
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HAT Ltd owns a number of its retail premises, which it revalues annually. This year several of its shops rose sharply in value due to inflated property prices in their locality. HAT does not revalue its factory premises, which are held in the statement of financial position at $2.7m. HAT ltd's Profit before tax was $7m and a statement of financial position total of $23m.
State what type of auditor’s report should be issued and explain your choice. You should not reproduce the entire audit report. Only mention appropriate extracts which are relevant.
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- The trial balance for Lindor Corporation, a manufacturing company, for the year ended December 31, 2021, included the following accounts: Account Title Sales revenue Cost of goods sold Selling and administrative expense Interest expense Gain on debt securities Gross profit Operating expenses LINDOR CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2021 The gain on debt securities is unrealized and classified as other comprehensive income. The trial balance does not include the accrual for income taxes. Lindor's income tax rate is 25%. There were 1,300,000 shares of common stock outstanding throughout 2021. Operating income Other income (expense) Required: Prepare a single, continuous multiple-step statement of comprehensive income for 2021, including appropriate EPS disclosures. (Round EPS answer to 2 decimal places.) Income before income taxes Debits Net income Other comprehensive income (net of tax) 1,530,000 437,000 53,000 Comprehensive income Earnings…You are the manager responsible for the audit of Lamia Ltd, a manufacturing company with a year ended 30 September 2011. The audit work has been completed and reviewed and you are due to issue the audit report in three days. The draft audit opinion is unmodified. The financial statements show turnover for the year ended 30 September 2011 of Tk.15 million, net profit of Tk.3 million, and total assets at the yearend are Tk.80 million. The finance director of Lamia Ltd telephoned you this morning to tell you about the announcement yesterday, of a significant restructuring of Lamia Ltd, which will take place over the next six months. The restructuring will involve the closure of a factory, and its relocation to another part of the country. There will be some redundancies and the estimated cost of closure is Tk.250,000. The financial statements have not been amended in respect of this matter. Required: In respect of the announcement of the restructuring: (hint: Audit Report) (i) Comment on…Target Co is a large transport company. In the previous financial year, it billed one of its customers $ 1,500 for services that it had provided. Target Co has recently discovered that the client is experiencing financial distress and will not be able to pay its bill. What action should Target Co take from a tax perspective? (Maximum 250 words)
- 1.) XQP corporation expensed $50,000 of bad debts during the year. The activity in the allowance for doubtful accounts was $70,000 Beginning Balance Bad Debt Accrued for the Year Bad Debts Written Off Ending Balance $50,000 $35,000 $85,000 What is the BOOK-TO-TAX difference of XQP Corp for bad debts? O A.SO O B.$15,000 Unfavorable OC. $35,000 Unfavorable O D. $50,000 Unfavorable O E. $85,000 UnfavorableLuxco 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 entryAmy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company’s tax accounting balance sheet. The relevant information is summarized as follows: Note: Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign. FMV Adjusted Tax Basis Appreciation Cash $ 10,000 $ 10,000 Receivables 15,000 15,000 Building 100,000 50,000 50,000 Land 225,000 75,000 150,000 Total $ 350,000 $ 150,000 $ 200,000 Payables $ 18,000 $ 18,000 Mortgage* 112,000 112,000 Total $ 130,000 $ 130,000 * The mortgage is attached to the building and land. Ernesto was asking for $400,000 for the company. His tax basis in the BLI stock was $100,000. Included in the sales price was an unrecognized customer list valued at $100,000. The unallocated portion of the purchase price…
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- Chelsea Bank provided overdraft facilities to Liverpool Ltd and Manchester & Co. were Liverpool’s auditors. The relevant overdraft facility letters between Chelsea Bank and Liverpool Ltd contained a clause requiring Manchester & Co. to send Chelsea Bank, each year, a copy of the annual audited financial statements.In 2018 Liverpool Ltd was put into receivership with approximately $23.5M owing to Chelsea Bank. Chelsea Bank claimed that, due to massive fraud, Liverpool’s financial statements for the previous years had misstated the financial position of Liverpool and Manchester & Co. had been negligent in not detecting the fraud. Chelsea Bank contended that it had continued to provide the overdraft facilities in reliance on Manchester’s unqualified opinions.Manchester & Co. applied to the court for an order striking out the claim on the grounds that, even if all the facts alleged by Chelsea Bank were true, the claim could not succeed in law because Manchester & Co.…At the end of its first year of trading, a company has total trade receivables (debtors) of £20,000. The company accountant decides that there is an element of doubt about the ability of some of the trade receivables (debtors) to make payment. The accountant therefore sets up a provision for doubtful debts in the amount of £3,000. During the company's second year of trading, trade receivables (debtors) previously regarded as doubtful, in the amount of £500, succeed in making payment to the company. At the end of its second year of trading, the company has total trade receivables (debtors) of £40,000, including the remaining trade receivables (debtors) identified as doubtful at the end of the first year. On reviewing trade receivables (debtors) at the end of the second year, the company accountant concludes that a total of £4,000 of receivables (debtors) should be classified as doubtful. What is the resultant figure for trade receivables (debtors), after deducting the provision for…Chunhua Wong is financial risk management consultant; she owns and manages Wong Financial Management Services Ltd. Wong Financial Management Services Ltd is a limited company incorporated under the UK Companies Act 2006. During the tax year 2020/21, Wong Financial Management Services Ltd’s taxable turnover (excluding capital items) was £204,050. The company has seven employees. Four employees were provided with cars that were used for both work and private purposes. All fuel is paid for by Wong Financial Management Services Ltd, including fuel used by employees for private journeys. Three employees were provided with living accommodation: this living accommodation was non-job related. Chunhua also sub-contracts some of the company’s work to Kong Shang Murray, a sole trader and self-employed financial derivatives specialist. Which of the following are chargeable to Wong Financial Management Services Ltd for the tax year 2020/21? A. Corporation tax; income tax; Class 4…