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1. (Ethical Issues-Compensation Plan) The executive officers of Rouse Corporation have a performance-based compensation plan. The performance criteria of this plan are linked to growth in earnings per share. When annual EPS growth is 12%, the Rouse executives earn 100% of the shares; if growth is 16%, they earn 125%. If EPS growth is lower than 8%, the executives receive no additional compensation. In 2010, Gail Devers, the controller of Rouse, reviews year-end estimates of bad debt expense and warranty expense. She calculates the EPS growth at 15%. Kurt Adkins, a member of the executive group, remarks over lunch one day that the estimate of bad debt expense might be decreased, increasing EPS growth to 16.1%. Devers is not sure she should do this because she believes that the current estimate of bad debts is sound. On the other hand, she recognizes that a great deal of subjectivity is involved in the computation.
Answer the following questions.
(a) What, if any, is the ethical dilemma for Devers?
(b) Should Devers's knowledge of the compensation plan be a factor that influences her estimate?
(c) How should Devers respond to Adkins's request?
Ken Cascioli and Bill Ryder ( see E15- 10 and E15- 11) want to know the net income for their first month activities. Post the journal entries prepared for E15- 10 and E15- 11 to general ledger T accounts and prepare a trial balance.
telleron company has the following information for march sales 510000 variable cost of goods sold 245000 fixed
In order to sustain operations and generate sales and cash flow, the firm required to make $1250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm's net income exceed its free..
Compute the break-even sales (units) for the overall product, E - how many units of each product, MP3 players and satellite radios, would be sold at the break-even point?
mr. mei-yo chien is retired. he is married and the couple have the following sources of income-pension income
Components of Deferred Tax Assets and LiabilitiesThe components of deferred tax assets and liabilities at December 31 were as follows (in millions):
based on information on the help screen for the marketing and admin repor which of the following statements regarding
To acquire land and building the company paid $80,000 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair market value of the stock is $117 per share.
smith west and krug form a partnership. smith contributes 180000 west contributes 150000 and krug contributes 270000.
Selected transactions of the Lizard Lick Corporation during 2010 are as follows:
For the payroll period ended on June 25, 2013, gross pay was $14,300, net pay was $10,200, FICA tax with holdings were $1,000, income tax with holdings were $2,500, and medical insurance contributions were $600.
james inc. incurred the following infrequent losses during 2012 140000 write-down of equipment leased to others. 80000
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