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CellWorks Technology, Inc., a biotech company, has a $24,000,000 bond issue outstanding. The bond indenture has several restrictive provisions, including requirements that current assets exceed current liabilities by a ratio of 2 to 1 and that income before income taxes exceed the annual interest on the bonds by a ratio of 3 to 1. If those requirements are not met, the bondholders can force the company into bankruptcy. The company is still awaiting FDA approval of its new product, CMZ-12, a cancer treatment drug. Management has been counting on sales of CMZ-12 this year to meet the provisions of the bond indenture. As the end of the fiscal year approaches, the company does not have sufficient current assets or income before income taxes to meet the requirements. Roger Landon, the chief financial officer, proposes, "Since we can assume that FDA approval will occur early next year, I suggest we book sales and receivables from our major customer now in anticipation of next year's sales. This action will increase our current assets and our income before income taxes. It is essential that we do this to save the company. Look at all the people who will be hurt if we don't do it." Is Landon's proposal acceptable accounting? Is it ethical? Who could be harmed by it? What steps might management take?
Aftab Company limited realized itself as a social responsible company and decided to construct an employees housing society. How would it capitalize the borrowing cost?
Decision usefulness is an underlying theme of the conceptual framework, true or false? Users of financial statements are assumed to have substantial knowledge of business and financial accounting matters by financial statement preparers, true or fa..
russell age50 and linda age45 long have brought you the following information regarding their income and expenses for
select a management function planning directing and motivating or controlling and explain how that function relates to
The following information was taken from the annual manufacturing overhead cost budget of Coen Company.
The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:
Augie purchased one new asset during the year (five-year property) on November 10, 2009, at a cost of $600,000. She made the § 179 election. The income from the business before the cost recovery deduction and the § 179 deduction was $500,000. Dete..
An entity that is a franchiser in the quick-service restaurant business also operates company-owned restaurants that are unprofitable in a certain region and, as a result, the entity decides to exit both the quick-service business as well as the c..
case study about the inventory of eastman kodak company and canon inc. -after reviewing the financial statements and
Peyton's incremental borrowing rate was 12 percent throughout 2011, and the total amount of interest incurred by Peyton during 2011 was $204,000. What amount should Peyton report as capitalized interest at December 31, 2011?. $480,000
presented below is information related to zonker company.1. on july 6 zonker company acquired the plant assets of
respond to the following ethical issue concerning the reclassification of receivables in your initial postmoss exports
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