representational faithfulness of financial statements. • Accountants can use their principles and judgment to come to conclusions. • While accountants may not arrive at the same specific answer‚ they will be close enough that being in the same ballpark is acceptable. • Makes it easy for accountants in different countries to review and interpret one another’s information. • Lack of flexibility. • According to lack of flexibility‚ as it focuses on “checking the boxes” more than portraying an underlying economic
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Textbook DC 6-8 You have been assigned to the audit of the financial statements of Office Moving and Storage Limited (OMS) for its year ending December 31‚ 20X2. The company started 10 years ago and is in the business of moving furniture and equipment for company offices across Canada‚ and also providing storage for companies requiring that service. The company is owned by three shareholders who are all involved in operating the company. OMS owns four properties outside of major urban centres;
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will grow by 10%. ML‚ consumer division’s president‚ wants CF to take some of the following “end of the year” actions in order to improve consumer’s reported earnings. Under the previous controller‚ these types of actions were more or less taken as acceptable practices. 1) Deferring routine monthly maintenance on equipment by an outside vendor until January. 2) Extending the close of the fiscal year beyond December 31 so that some sales from next year are counted in the current fiscal year. 3)
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Either $5 or $8 is a reasonable measure of inventory if the business cycle is stopped midway (ex if you start the cycle but the year ends at Inventory OR receivable)-NOTE‚ you CAN’T have $8 @ Inventory and $5 @ Receivable‚ every other value combo is acceptable • Let’s call the $5 the SACRIFICE VALUE • Let’s call the $8 the BENEFIT VALUE • If inventory and receivable both listed at sacrifice value‚ $3 picked up at collection • If inventory and receivable both listed at benefit value‚ $3 picked up at
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Basic Accounting Concepts and Business Structures Before the Great Depression and the crash of the stock market‚ there were no groups governing the accounting world‚ nor had any principles been put into place. Because of this‚ various groups and GAAP had to be formed to ensure that quality financial reporting was exhibited. There are still discrepancies in accounting but with the hierarchy of sources and good accounting qualities‚ it makes it easier to understand what is being presented. Additionally
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comparability of financial information could result in better investment decisions and ensure a more optimal allocation of resources across the global economy (Jacob and Madu‚ 2009). Cai and Wong (2010) posited that having a single set of internationally acceptable financial reporting standards will eliminate the need for restatement of financial statements‚ yet ensure accounting diversity among countries‚ thus facilitating cross-border movement of capital and greater integration of the global financial markets
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concepts‚ standards‚ and reporting procedures with the goal of implementing standard global accounting practices. To compile their financial statements companies use a common set of accounting principles named generally accepted accounting principles (GAAP)‚ recognized by the financial community as the standards that over time have proved to be the most useful. One of the most important organizations that contribute in the development of these standards is the Financial Accounting Standards Board (FASB)
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Fair market value less costs to sell (800) Eagle should recognize an impairment loss of $200‚000. Question 2 U.S. GAAP In this case‚ we make the same assumption that the building Eagle owned in Italy needs a recoverable test because of events or changes in circumstances indicate that book value may not be recoverable. Under U.S. GAAP‚ the impairment loss is required when the building’s book value exceeds the undiscounted sum of the asset’s estimate future cash flows.
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Asking the Right Questions? Lecture 12 Learning Objectives • Ask Why‚ Asshole? • Identify the types of threats professional accountants encounter and identify ways of minimising these. • Outline the disciplinary procedures for accountants. • Discuss the role of ethics in a global environment Enron: The Smartest Guys in the Room? Threats to Accountants • Code of Ethical Conduct • Compliance with these principles may be undermined by the following 5 threats from APES 110: • Self-Interest
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Corporate ethical breaches in recent times have raised questions about whether the current business and regulatory environment is conducive to ethical behavior. Cases leading to regulatory changes through scandalous financial reporting include Enron‚ Worldcom‚ Tyco‚ HealthSouth and others (Enofe‚ 2010‚ p.54). Since the barrage of scandals in the early 2000’s‚ regulatory bodies like the Federal Accounting Standards Board (FASB)‚ Securities and Exchange Commission (SEC)‚ and law reform like the Sarbanes-Oxley
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