two key reasons why accounts payable is at risk of material misstatement
Q: Engco, a U.S. corporation, produces industrial engines at its U.S. plant for sale in the United…
A: Engco exports all of its production from its Canadian factory and sold one third of its production…
Q: Ahnuld Corporation, a health juice producer, recently expanded its sales through exports to foreign…
A: Hedging refers to a risk management strategy used to minimize the risk related to the assets. It…
Q: Phumlani of South Africa consigns 10 cases of goods costing $200 per case to Christian in Ghana on…
A: Working Note 1. Value of Goods sent on consignment= 10 cases*200= 2000 2. Sale proceeds= 8…
Q: Company A sold 1 million barrels of oil to a Norwegian petrol station, today for 120 Nok per barrel.…
A: Spot rate in 3 months (forward rate as per interest rates) as per the rates of interest can be…
Q: An importer wishes to withdraw its importation from the Bureau of Customs. The imported goods are…
A: Since you have asked multiple questions, we will solve the first question for you . If you want any…
Q: Vision 2020 Ltd is a China-based company that manufactures Samsung flat screens of all sizes. In…
A: Given that, On January 2019, Vision 2020 Ltd made consignment with Best electronics Ltd Number of TV…
Q: ) Mashimoto Electric is based in Osaka, Japan. Mashimoto Electric has a subsidiary in Singapore that…
A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…
Q: XYZ Marbles (PTY) Ltd has entered into agreement with Buy and Deliver (Pty) Ltd to provide the…
A: The order was already received therefore the sale is a credit sale and the customer is accounts…
Q: Mr. Pineda imported goods from the USA as follows: Invoice cost of the importation ($1 = P51)..…
A: Ans - VAT and duty amount are fully dependent on the transportation used to import…
Q: Vision 2020 Ltd is a China-based company that manufactures Samsung flat screens of all sizes. In…
A: Consignment is a form of doing business in which the consignor send goods to a consignee (agent) to…
Q: Lalua Co is a US firm has planning to export its products to Singapore since its decision to…
A: Cash Flow Statements: The amount of cash and cash equivalents entering and leaving a company is…
Q: angaroo Ltd is an Australian company for which the Australian dollar is the functional and…
A: Step 1 Journal is the Part of Book Keeping.
Q: Charleston Corporation operates a branch operation in a foreign country. Although this branch…
A:
Q: Maples Corporation is a Canadian subsidiary of a U.S. parent company. Shown below is the company's…
A: 1. Particulars In CAD $M Translation rate Amt in USD $M Sales 480.7 0.76 365.33 Cost of Goods…
Q: On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the…
A: All assets and liability should be translated at current rate except common stock and additional…
Q: ABC Corp. imported a machine from the US for $50,000 on October 10, 20x1. A letter of credit was…
A: SOLUTION FOREIGN EXCHANGE RATE IS THE RATE AT WHICH ONE CURRENCY WILL BE EXCHANGED FOR ANOTHER.
Q: Ahnuld Corporation, a health juice producer, recently expanded its sales through exports to foreign…
A: Hedging is a financial technique that investors should be aware of and employ because of the…
Q: Newberry, Inc., whose reporting currency is the U.S. dollar ($), has a subsidiary in Argentina,…
A:
Q: Shannon imports one of the components for the pet mats he manufactures and sells in his Warm and…
A: Given, Imported components = $20,000 Freight and Insurance = $1,500
Q: Selco, a U.S. Company, imports and exports tools, shop equipment, and industrial construction…
A: Solution:- Preparation of journal entries in the books of Selco as follows under:-
Q: A company based in the United States makes a transaction with a Japanese Company. The contract…
A: Companies select the currencies in which they invoice their international transactions. Currency…
Q: Hull Importing Company is a U.S.-based firm that imports small gift items and sells them to retail…
A: Importing is the process of importing items or services created abroad into a nation for sale.…
Q: Please read the brief description and respond to the questions. Please be clear and specific. Case:…
A: 3.DEPRECIATION OF POLISH ZLOTY: Since the polish company is paying in US dollar, the revenue of US…
Q: XYZ Marbles (PTY) Ltd has entered into agreement with Buy and Deliver (Pty) Ltd to provide the…
A: Part 1: XYZ Marbles (Pty) Ltd is a principal as per IFRS 15 provisions as it controls the goods…
Q: ABC Inc. is a U.S. firm with annual export sales to Canada of about C$500 million. Its main…
A: Translation Exposure is the kind of exposure or risk that impacts the value of the company's equity,…
Q: Vava Corp. imported an article from Japan. The invoice value of the imported articles was $ 7,000…
A: Please check the next step for the solution
Q: An importer wishes to withdraw its importation from the Bureau of Customs. The imported goods are…
A: Customs Duty Custom duty is the important source income for the Philippines while clearing the goods…
Q: Babylon Co. is a Japanese firm. It has a subsidiary in China that produces computer chips and sells…
A: Exchange Rate Risk is generally described as the risk of a firm losing money whenever a transaction…
Q: Phumlani of South Africa consigns 10 cases of goods costing $200 per case to Christian in Ghana on…
A: Consignment sales is a type of arrangement in which one party consignor sends goods to another party…
Q: Charleston Corporation operates a branch operation in a foreign country. Although this branch…
A: Translation adjustment is required to be made because of fluctuations in the different currencies.…
Q: SkiCo, a Maine corporation, operates a branch in Peru selling equipment to persons planning to ski…
A: It is given that Peru government does not impose income tax on foreign corporations like SkiCo, but…
Q: Skane Shipping Ltd. (SSL) operates a fleet of container ships in international trade between Sweden…
A: Here discuss about the details of total revenue, cost and income taxes and total taxes which are…
Q: Newberry, Inc., whose reporting currency is the U.S. dollar ($), has a subsidiary in Argentina,…
A: When subsidiary is having functional currency U.S dollar then translation method should be used. In…
Q: Apex Ltd, is a computer software manufacturing company based in the United States of America (USA).…
A: According to IAS 21 foreign exchange the transaction is been recorded.
Q: Almira, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Almira made its first…
A: Foreign exchange risk is the possibility of financial loss as a result of fluctuating exchange…
Q: Global Motors is a U.S. corporation that purchases automobiles from European manufacturers for…
A: The exchange rate indicates the value of the currency of the home country in comparison with a…
Q: Charleston Corporation operates a branch operation in a foreign country. Although this branch…
A:
Q: key reasons why accounts payable is at risk of material misstatement
A: Risk of material misstatement refers to the chance of manipulation in the value of a financial item…
Q: r XYZ Marbles (Pty) Ltd is a principle or an agent as per IFRS 15 provisions of principle and agent…
A: Journal: Journal is considered as a book of original entry because all the transactions that have…
Q: Banana, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Banana made its first…
A: As per IAS 21, " The Effect of Changes in Foreign Exchange Rates " The difference between the…
Q: Fiona, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Fiona made its first…
A: Foreign exchange risk refers to the risk of appreciating or depreciating the value of home currency…
Q: On 1 March 2025, Quality Furniture Importers acquires furniture from a supplier in New Zealand. The…
A: Given details: Cost of furniture = NZD $800,000 Exchange rates: 1 September, 2025 A$1.00 = NZD $1.08…
Q: Kurt Volkler is a South African resident who specialises in assaying the value of diamonds. He signs…
A: Taxable income is the amount of income computed to measure the amount of taxes to be paid to the…
Q: On October 1, 20X1, Bohol Corporation, a domestic company, purchases goods on account from Kyota…
A: Lets start what is forward contract means, Forward contract is a type of hedging contract where…
Q: A reputed importer in Canada wants to import certain items from you. The importer is ready to place…
A: In international trade, receiving cash in advance is the safest option of payment wherein the…
Q: Phumlani of South Africa consigns 10 cases of goods costing $200 per case to Christian in Ghana on…
A: Accounting should be utilized to calculate a company's distributable profit. These are the company's…
Wang Foods Ltd has been operating for a number of years as a producer of canned vegetables. Wang Foods imports most of its vegetables from Thailand and Vietnam. All overseas shipments to Wang Foods are invoiced and require settlement in US dollars. Furthermore, Wang Foods is required to pay for freight and insurance costs. The insurance covers the period from the day the goods are loaded onto the ship (i.e. Wang Foods assumes ownership of the goods on the day the goods are loaded onto ships in the various Asian ports from where the produce is shipped) until the day they arrive in Wang Foods’ warehouses in Australia. All shipments arrive in Australia within a 21-day period after loading onto a ship. All overseas suppliers are settled 30 days after the date of shipment.
Overseas suppliers now represent 70 per cent of accounts payable. Local and overseas suppliers are maintained in separate subsidiary ledgers within the accounting system.
The audit partner has identified that accounts payable is at risk of material misstatement.
Required
(a) Outline two key reasons why accounts payable is at risk of material misstatement.
Step by step
Solved in 2 steps
- Wang Foods Ltd has been operating for a number of years as a producer of canned vegetables. Wang Foods imports most of its vegetables from Thailand and Vietnam. All overseas shipments to Wang Foods are invoiced and require settlement in US dollars. Furthermore, Wang Foods is required to pay for freight and insurance costs. The insurance covers the period from the day the goods are loaded onto the ship (i.e. Wang Foods assumes ownership of the goods on the day the goods are loaded onto ships in the various Asian ports from where the produce is shipped) until the day they arrive in Wang Foods’ warehouses in Australia. All shipments arrive in Australia within a 21-day period after loading onto a ship. All overseas suppliers are settled 30 days after the date of shipment. Overseas suppliers now represent 70 per cent of accounts payable. Local and overseas suppliers are maintained in separate subsidiary ledgers within the accounting system. The audit partner has identified…Jackson, a U.S. company, acquires a variety of raw materials from foreign vendors with amounts payable in foreign currency (FC). The company needs to acquire 20,000 units of raw materials, and the goods are expected to have a price of 100,000 FC. Assume that the inventory can be subsequently sold to U.S. customers for $160,000. Jackson is contemplating committing to the purchase of the inventory on September 1 with delivery on November 1. However, rather than making a commitment, the company could forecast a probable purchase of inventory with delivery on November 1. In either case, assume that on September 1 the company would either (a) acquire a forward contract to buy 100,000 FC with a forward date of November 1 or (b) acquire an option to buy FC in November at a strike price of $1.250. The option premium is expected to cost $2,100.Various spot rates, forward rates, and option values are as follows: Spot Rate Forward Rate forNovember 1 Time Value ofOption September 1 . . . .…Ahnuld Corporation, a health juice producer, recently expanded its sales through exports to foreign markets. Earlier this year, the company negotiated the sale of several thousand cases of turnip juice to a retailer in the country of Tcheckia. The customer is unwilling to assume the risk of having to pay in U.S. dollars. Desperate to enter the Tcheckian market, the vice president for international sales agrees to denominate the sale in tchecks, the national currency of Tcheckia. The current exchange rate for 1 tcheck is $2.00. In addition, the customer indicates that it cannot pay until it sells all of the juice. Payment of 100,000 tchecks is scheduled for six months from the date of sale.Fearful that the tcheck might depreciate in value over the next six months, the head of the risk management department at Ahnuld Corporation enters into a forward contract to sell tchecks in six months at a forward rate of $1.80. The forward contract is designated as a fair value hedge of the tcheck…
- Wellington Manufacturing manufactures industrial ovens used primarily in the process of coating or painting metals. The ovens are sold throughout the world, and units are manufactured to customers’ specifications. On June 15, the company committed to sell two ovens to a major transnational customer.One of the ovens has a selling price of $549,600 and is to be paid for with foreign currency A (FCA). The other unit has a selling price of $297,975 and is to be paid for with foreign currency B (FCB). Both units were shipped, FOB shipping point, on September 15, and payment is due within 30 days of shipment. In order to hedge against exchange rate risks,Wellington acquired two put options on June 15 with notional amounts equal to the respective foreign currency selling prices. The options expire on October 15, and customer remittances are also received on October 15. Relevant information concerning the options and exchange rates is as shown: Fair Value of Option June 15 September 15…Kashi Corporation is the U.S. distributor of fencing (sword fighting) equipment imported from Europe. It is incorporated in Virginia and headquartered in Arlington, Virginia; it ships goods to all 50 states. Kashi's employees attend regional and national fencing competitions, where they maintain temporary booths to market their goods. Determine whether Kashi has income tax nexus and a filing requirement in the following situations: Required: Kashi is incorporated and headquartered in Virginia. It also has property, employees, salespeople, and intangibles in Virginia. Determine whether Kashi has income tax nexus in Virginia. Kashi has employees who live in Washington, D.C., and Maryland, but they perform all their employment-related activities in Virginia. Does Kashi have income tax nexus in Washington, D.C., and Maryland? Kashi has two customers in North Dakota. It receives their orders over the phone and ships goods to them using FedEx. Determine whether Kashi has income tax nexus…Taft Corporation operates primarily in the United States. However, a few years ago it opened a plant in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece. Financial information for each of these facilities follows:The company’s domestic (U.S.) operations reported the following information for the current year:Taft has adopted the following criteria for determining the materiality of an individual foreign country: (1) Sales to unaffiliated customers within a country are 10 percent or more of consolidated sales or (2) long-lived assets within a country are 10 percent or more of consolidated long-lived assets.Apply Taft’s materiality tests to identify the countries to report separately with respect to (a) revenues and (b) long-lived assets.
- Azar Plc, which imports optical equipment from Germany for sale to UKproviders of ophthalmic services, has ordered 50 ophthalmic testing machines from a German supplier at a price of Euro 7,500 each. The supplier will deliver the machines during the coming month, but Azar Plc has agreed with the supplier that it will not have to pay for the machines until Azar Plc has installedthem and been paid by its customers, so it has negotiated payment in three months’ time. Azar Plc has an arrangement with its banks whereby it can borrow to cover short-term cash shortages at 2.0% above base rate, and can invest surplus funds at 0.25% below base rate, in both the UK and Germany. Current exchange rates Euro/£Spot 1.1415 -3 months forward 1.1424365 -Current base rates 1.1385Germany 1.0%UK 0.5% Using the information above, do calculations to evaluate three ways in which Azar Plc take action to reduce…Entity A is a Hong Kong-based limited company that participates in the building material industry for many years. It sells high-quality raw materials to different local and foreign manufacturers. Entity B is one of its loyal customers for more than 30 years. On 1 January 2020, Entity A received an advanced payment of $3,600,000 from Entity B through the Hong Kong City Bank for selling Material X. According to the contract terms, Entity A would only deliver Material X to Entity B on 31 December 2020. The regular cash-selling price of Material X was $3,600,000. The cost of sales of Material X was $2,563,000. On 1 January 2021, Entity A entered into another contract with Entity B. This contract stated that Entity A was required to transfer Material Y and Material Z to Entity B in exchange for $681,500. According to the contract terms, Entity A could invoice this full amount on 31 January 2021. Material Y was to be delivered on 28 February 2021 and Material Z was to be delivered on…New Life is a multinational distribution company that started operating a Branch in Barbados on1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group whichearns more than USD 850 million for the year. It employed some of its staff from Barbados and imports good and services from the US, Cayman Islands, and other Caribbean countries. New Life repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands.The company was of the view that for the first year of operation there was a window of no taxobligations. In December 2023, the company realized that their understanding was not correct and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax compliance services. Your Group was assigned this engagement. Required.Advice New Life of the tax matters that needs to be considered when operating in Barbadosincluding any tax benefits or incentives they may consider.
- Almira, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Almira made its first international sale. They sold $450,000 of products to a non-U.S. customer. Almira, Inc. agreed to allow the customer to pay for the purchase in its own currency, the FC. To avoid a penalty, the foreign buyer must make payment to Almira by February 2, 20x2. At the time of the sale, the FC/$ spot rate was FC1.97=$1 Almira, Inc. has a December 31 year-end. At 12/31/20x1, the foreign currency spot rate was FC1.95 = $1. Required: For Almira, Inc., 1. For Almira, Inc.’s foreign customer, explain the type of foreign currency risk the s/he accepts relating to their purchase from Party Pop, including the implications of appreciation or depreciation of their currency relative to Party Pop’s currency, the U.S. dollarNew Life is a multinational distribution company that started operating a Branch in Barbados on 1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group which earns more than USD 850 million for the year. It employed some of its staff from Barbados and imports good and services from the US, Cayman Islands, and other Caribbean countries. New Life repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands. The company was of the view that for the first year of operation there was a window of no tax obligations. In December 2023, the company realized that their understanding was not correct and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax compliance services. Your Group was assigned this engagement. Required.Advice New Life of the tax matters that needs to be considered when operating in Barbadosincluding any tax benefits or incentives they may consider.JRB International, located in Dallas, Texas, is the world’s largest manufacturer of electronic stirrups. The company acquires the raw materials for its products from around the world and begins the assembly process in Dallas. It then sends the partially completed units to its subsidiary in Mexico for assembly completion. Mexico has been able to hold its inflation rate under 100 percent over the last three years. The subsidiary is required to pay its employees and local vendors in Mexican pesos. The parent company provides all financing for the Mexican subsidiary, and the subsidiary sends all of its production back to the warehouse in Dallas, from which it is shipped as orders are received. The subsidiary provides the Mexican government with financial statements. The foreign entity’s recording currency in which its books and records are maintained. The foreign entity’s functional currency. The process to be used to restate the foreign entity’s financial statements into the reporting…
