Fraud Case Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated , and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses. To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

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Answer 1

Question

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

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The comparative balance sheets and an income statement for Raceway Corporation follow. Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $ 6,300 $ 48,400 Accounts receivable 10,200 7,260 Inventory 45,200 56,000 Prepaid rent 700 2,140 Equipment 140,000 144,000 Accumulated depreciation (73,400) (118,000) Land 116,000 50,000 Total assets $ 245,000 $ 189,800 Liabilities Accounts payable (inventory) $ 37,200 $ 40,000 Salaries payable 12,200 10,600 Stockholders’ equity Common stock, $50 par value 150,000 120,000 Retained earnings 45,600 19,200 Total liabilities and stockholders’ equity $ 245,000 $ 189,800 Income Statement For the Year Ended December 31, Year 2 Sales $ 480,000 Cost of goods sold (264,000) Gross profit 216,000 Operating expenses Depreciation expense (11,400) Rent expense (7,000) Salaries expense (95,200) Other operating expenses (76,000) Net income $ 26,400 Other Information Purchased…

Please help holy tamale I have been staring at this for hours.

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Answer 2

Question

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

Answer 6

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

Answer 7

Chapter 9, Problem 9.1FC

1.

To determine

Fraud Case

Case Summary: J is the manager of a fleet of utility trucks for a county government and doing the job for 30 years. He knows that the residual value of the truckis set low when they are fully depreciated, and being replaced by new trucks. He knows people in the construction business who buys these trucks at a bargain price against some kickback for him. Recently a new commissioner with a business degree is elected and he is determined to cut down on expenses.

To explain: If a business recognizes gain or loss when it sells a fully depreciated asset for its residual value.

Answer 8

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

Answer 9

2.

To determine

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

Answer 10

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

Answer 11

3.

To determine

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author explains that the business does not recognize any loss or gain on sale of a fully depreciated asset for its residual value.

To discuss: The method the business use to determine the residual values for their various assets. To ascertain if any ‘hard and fast’ rule exists for residual values.

To Identify: The methods to be used to prevent the kind of fraud show cased in this situation.

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Chapter 9 Solutions