KPMG Deferred Tax Issues

• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or

The following paragraph 82 demands the amount of a deferred tax asset and the nature of the evidence supporting its recognition under two circumstances.

In this process a tax specialist uses the accounting methods to give you advice on your taxes and help you plan and prepare tax returns. Now there are two perspectives of tax accounting which are tax accounting for individuals and tax accounting for businesses. For the perspective from an individual taxation will involve the tracking of all funds that are coming in and out of the person’s possessions. Tax accounting in the individual’s perspective mainly focuses on income, deductions, investment gains or losses, and other transactions. When it comes to taxation for a business or corporation, it’ll mainly focus on the company’s earnings or income funds. However, there is an additional information that is needed regarding outgoing funds that go directly into the business such as specific business expenses and funds that go directly to shareholders.

As discussed above, if indicators of impairment exist for an asset (group) to be held and used, an entity determines whether the sum of the estimated undiscounted future cash flows attributable to the asset (group) in question is less than its carrying amount. If those undiscounted cash flows are less than

eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount

* product’s contribution margin under conservative estimates is at 79% which represent a very lucrative product profitability

For years 1983-1985, additional corporate assessment expense was given. This would lower Polymold’s earnings on their income statement. Another piece of data that was given is research and development expense. Without the CAD/CAM investment, research and development expense is $130,000. This is double to $260,000 without the CAD/CAM investment. This would lower earnings. We are also given the savings that the investment would yield. Without the CAD/CAM investment, there would still be savings – but not as much as with the CAD/CAM investment, which is due to the depreciation of the equipment and tax credits.

A deferred tax liability is recognized for temporary differences that will result in taxable amounts in future years. In Packer, Inc’s case, depreciation has been recognized as deferred tax liabilities. Packer uses straight-line depreciation, for tax purposes, the cost of the depreciable recourses may have been deducted faster than that for financial reporting purposes.

For example the extra charge for maintenance accumulated from last year and for this year should be equally divided and not charged to the first quarter only. Similarly, cost of relocating the Southern Paper Sioux Springs office that has been charged to the first quarter, had been the expenditure incurred last year. It should not have been included in the first quarter. No doubt these are good accounting practices but nevertheless reverting the charges to their respective results would not compromise GAAP practice. Unrealized income would be better off transferred to the next or the last quarter as the income received would not materialize until at the end of the year. Including the dividend from the company's Brazilian unit would not help increase profitability at the end of the year unless the company is assured of its profitability. As of now it needs to balance its accounts before it can estimate correct profit level at the end of the year. With regard to the obsolete inventories, there is no alternative course of action but to write-off from this

| * AFS securities in fair value as of beginning and end of current year. * Changes in fair value are recognized net of tax effects in equity and recycled to income statement when sold, impaired, or collected.

The profit margin in the past must be consistently increasing. The profit margin of NBS has been inconsistent in the past three years (Current year: -63.93%, Last year: -33.39%, Two years ago: -226.38%), which is unacceptable. This inconsistency will carryover directly to the company's bottom line, or earnings per share.

KPMG was one of the biggest accounting firms in the 90’s that with a lucrative end, would serve wealthy companies using forged revenues in order to avoid taxes. The accountants that worked for the firm were expected to meet certain quotas. Consequently, instead of trying to run an honest business they were trying to maximize the sales using all kinds of dishonest marketing approaches. KPMG employees used foreign banks as well as bogus law firm statements to preserve a legitimate business running. This accounting firm manipulated financial data of clients, costing the internal revenue service over 2.5 billion in lost tax revenue

Deferred tax liability or asset = difference between income tax payable and income tax expense

When accounting students study income tax accounting, the first concept they learn is financial accounting and income tax accounting will produce different amounts of revenue and expenses. The net income reported on financial statements will differ from the net income reported to the Internal Revenue Service. The difference is created by temporary and/or permanent tax differences.

ACC307 INDIVIDUAL ASSIGNMENT TASK 1: Contemporary Issues of Accounting Theory Fair Value Measurement Overview After the International Accounting Standards Board (IASB) released the IFRS 13 Fair Value Measurement in May 2011 for the purpose of completing its joint project with the US Financial Accounting Standards Board (FASB) on fair value, the Australian Accounting Standard Board (AASB) released the Australian equivalent - AASB 13 Fair Value Measurement in the September of the same year. This standard permitted early adoption but generally started to take effect for the financial reporting periods beginning from 1 January 2013. This new standard requires no new requirement for the adoption and but it was accompanied with the issuing of AASB 2011-8 Amendments to Australian Accounting Standards arising from the AASB 13 which has made consequential changes to 32 standards and 9 interpretations for the adoption in Australia. The new standard attempts to unify IFRS and US GAAP by specifying how entities should apply the fair value measurements that applied in previous IFRS standards. It clarifies and redefines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”, sometimes referred to as an “exit price”. It also sets out a single source guidance for a robust measurement framework to ensure that the requirements are applied consistently and have clear