Worldcom Capstone

In accrual accounting, an expense is recognized when the business is obligated to pay it. As goods or services are invoiced, the invoices are posted and counted as assets. Expenses are also posted at the time they are incurred. Accrual accounting is used at most mid-level and large businesses and provides a more accurate picture of the company’s current condition, it is however more expensive to implement. This type of accounting is required by GAAP. Although this type of accounting is more complex, it allows one to track receivables and payables, and match revenues to expenses, which gives more meaning to financial reports.

• The Plan is to correct the vulnerabilities identified during the assessment and focusing on ensuring compliance with the Safeguard and Privacy rules in the GLBA, which requires financial institutions to establish a security program The plan will protect the consumers’ information that is stored locally and update the client, network infrastructure. The PDCA methodology was used to ensure that the problems identified, were corrected, monitored and improved.

The equipment can be depreciated by one of two methods: Section 179 allows for a full write off in the year of acquisition (subject to certain limits). MACRS depreciation allows a systematic write off of equipment based on the type of asset. More business assets are either 5 year or 7 year property (CompleteTax, 2012).

The first would be that instead of capitalizing the $210,000 to set up displays to promote the line, these displays could have been recorded as an Advertising Expense. One of the IFRS criteria for something to be considered an asset is that the benefit must be reasonably measurable. When it comes to anything done for the purpose of advertisement or promotion, it is hard to measure the benefit and that is why this cost could have been expensed rather than capitalized. However, by recording this event as an expense this would mean that Athina’s net income would have been overstated by $210,000 and that is an undesirable outcome for the national chain.

Allowable operating expenses. Enter the smaller of line 15 or line 25 . . . . . . . . .

Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell

The key difference of revenues and expenses recognition is obvious. According to IFRS, the income statement records the increasing of future economic benefit as revenues, such as sales, interests, dividends, and rents, and the recognition of revenues and expenses are combined directly in the same transaction (Matching principle). But ASPE standards state that the income statement only records the existing or realizing performance as revenues. Same situation in the expenses, in IFRS’s income statement, they are recognized by a decrease in the asset or an increase in the liability for future position. In addition, under ASPE, we do not recognize an expense as a provision unless the benefit does qualifies as an asset (CICA, 2011, Section 1000).

Telephone calls will require the installation of an additional four telephone lines in the hospital, specifically for the follow-up calls. The hospital will incur the purchase cost of $500 for the phones. The installation cost will amount to $100. The maintenance and the subscription fees for the phones will be about $300 per year. Thus, the hospital will incur a capital budget of $600 for the telephone lines, acquisition, and $300 operating budget for the telephones.

4. Financial assets are receivables between companies where they both agree with the contractual rights that they will receive cash or other financial assets (Donald Kieso).

Cvii) Expenses are defined as outflows or other uses of assets or incurring of liabilities during a period from delivering or producing goods or rendering services, or carrying out other activities that constitute the entity's ongoing major or central operation. An example of Expenses from Maple Leaf Garden's

When the Subscriber Acquisition Costs are expensed (versus capitalized) the operating income and net income need to be adjusted by adding back the Amortization of Subscriber Acquisition Costs ( that was subtracted out when the expenses were capitalized) and subtracting out the current year 's Subscriber Acquisition Costs.

Before 2002, WorldCom was one of the top telecommunication businesses in its industry because of many acquisitions obtained by the company. Due to the increased popularity of the internet and the acquirement of UUNet and MCI

On the other hand, Telstra’s property, plant and equipment, including buildings and leasehold property but excluding freehold land, are depreciated on a straight line basis to the income statement over their estimated service lives. Assets start depreciating when they are installed and ready for use. For Telstra, its building is estimated to have useful life of 31 to 52 years, data core network has useful life of 4 to 10 years while IT equipment has useful

When the accruals started to run out, WorldCom came up with another method, capitalization of line costs. WorldCom started classifying line cost expenses as long-term capital investments in 2000 (J. Randel Kuhn & Sutton, 2006). These expenses are required to immediately recognize in the period incurred since the expenses are not for assets that can be capitalized and depreciated over their useful life in accordance with GAAP. By falsely recording these expenses, WorldCom reported an artificial increase in its net income and earnings before interest, taxes, depreciation and amortization (What Went Wrong at WorldCom?, 2002). Bernard Ebbers, CEO portrayed WorldCom as a high growth company. Even though, its market conditions had worsen, Ebbers told analysts that he “remain[ed] comfortable with . . . 13.5 to 15.5% revenue growth in 2000.” (Beresford, Katzenbach, & C.B. Rogers, 2003). In order to show the public that they were doing well, top management kept a separate report to come up with the difference that existed between the actual and expected number that they need to report to the account called corporate unallocated revenue from the actual book (Beresford, Katzenbach, & C.B. Rogers, 2003). By doing so, WorldCom improperly recorded a total of $958 million in revenue from 1999 to the first quarter of 2002 (Beresford, Katzenbach, & C.B. Rogers, 2003).During an internal audit in 2002, it was discovered that WorldCom had committed fraudulent financial reporting. WorldCom

person earns like salary, wage, dividends, etc. while expenses are the costs of things consumed in