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You have been assigned to the audit of Processing Solutions, Inc., a privately held corporation that develops and sells computer systems. The systems are sold under one- to five-year contracts that provide for a fixed price for licensing. delivery, and setup of the systems and maintenance and technical support for the life of the contract. Your review of the working papers reveals that premature revenue recognition is a risk that must be addressed in the audit.
a. Describe the criteria from SEC Staff Accounting Bulletin No. 104 that must be met to recognize revenue under generally accepted accounting principles.
b. Describe two techniques that management of Processing Solutions might use to overstate revenue.
c. For the two techniques identified in (b), describe an auditing procedure that might be employed by the auditors to detect the overstatement of revenue.
Determine the cost of equity capital using the following methods, Constant growth rate dividend capitalization model approach and the capital asset pricing model approach
Explain the terms “quality of earnings” and discuss how management can influence earnings legally. Explain three common ways to manipulate a company’s earnings. In addition, state how you can identify such manipulations when analyzing a company’s fin..
Assume that the company uses the weighted-average method. - Find the total cost of ending work in process inventory and the total cost of units transferred to the next process in June.
Sloane Products has no Work in Process or Finished Goods inventories at the close of business on December 31 of the current year. The balances of Sloane Products' accounts as of December 31 are as follows:
overhead expenses are budgeted at $2000 per month. Included in the 2,000 are $500 of monthly depreciation expenses and $200 of allocated expenses related to the insurance premium that is paid on September.
Describe the procedures you should have performed to audit the share buyback in the annual financial statements of Property Ltd for the year ended 28 February 2006 - Prepare a reconciliation of the goodwill balance as it should appear in the notes..
Approximately, 30% of the inventory purchased during any one year is not used until the following year: Illustrate what is the noncontrolling interest’s share of rockne’s 2011 income? b.Prepare Doone’s 2011 consolidated entries requir..
The names of the employees of Hogan Thrift Shop are listed on the following payroll register. Employees are paid weekly. The marital status and the number of allowances claimed are shown on the payroll register, along with each employee's weekly sala..
He also paid $14,000 in mortgage interest, $1,800 in property taxes, $300 of credit card interest, and $1400 in job hunting expenses when he tried to change jobs in March. Find out Johns income tax liability for 2009 before any allowable credits.
TCOs 1, 8, and 9) Copper Corporation owns stock in Bronze Corporation and has net operating income of $900,000 for the year. Bronze Corporation pays Copper a dividend of $150,000. What amount of dividends received deduction may Copper claim if it own..
Indicate whether independence is impaired for the individual or the public accounting firm on the following SEC filing audits according to SEC independence rules.
Prepare an income statement showing revenues, expenses, pretax income, income tax expense, and net income for the year ended December 31, 2010.
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