Business Its Legal Ethical & Global Environment
10th Edition
ISBN: 9781305224414
Author: JENNINGS
Publisher: Cengage
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Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared. The income tax rate is 25% for all years.
A five-year casualty insurance policy was purchased at the beginning of 2019 for $36,500. The full amount was debited to insurance expense at the time.
Effective January 1, 2021, the company changed the salvage value used in calculating depreciation for its office building. The building cost $612,000 on December 29, 2010, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area indicate that the salvage value will be no more than $25,000.
On December 31, 2020,…
Donald Waddell got a job at the Boyce Thompson Institute for Plant Research. Waddell did not have an employment contract for a fixed term, and the institute’s employee manual said that his job was “terminable at will.” Soon after he was hired, the institute implemented a whistleblower policy designed to encourage “the highest standards of financial reporting and lawful and ethical behavior.” Waddell repeatedly told his supervisor, Sophia Darling, that she needed to file certain financial documents more promptly. Darling fired Waddell, telling him that he was disrespectful and insubordinate. Define “at will” employment and wrongful termination. Based on the evidence given, was Waddell wrongfully terminated? Why, or why not.
Sheila Company is engaged in the manufacture of chemicals which it exports to other countries. On December 25, 2021, one of its tanks in the production assembly plant exploded. Unfortunately one of its employees was caught by the accident and suffered severe burns all over his body. For damages sustained because of the explosion, the employee sued Sheila and claimed an amount totaling P10,000,000 for physical injuries sustained. The lawyers of Sheila expect that Sheila Company will probably lose the lawsuit and estimate that the company may have to pay an amount in the range of P5,000,000 to P8,000,000. On March 15, 2022, upon the advice of his lawyers, the injured employees offered to have an out of court settlement of P7,500,000. The offer was tendered on the same date and Sheila on the advice of its legal counsel accepted the said offer on March 20, 2022. Sheila’s financial statements for the year ended 2021 was issued on March 30, 2022. Sheila’s financial statements for the year…
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- Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years. A five-year casualty insurance policy was purchased at the beginning of 2016 for $40,000. The full amount was debited to insurance expense at the time. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $650,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $110,000. Declining real estate values in the area indicate that the salvage value will be no more than $27,500. On December 31, 2017,…arrow_forwardWilliams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years. A five-year casualty insurance policy was purchased at the beginning of 2016 for $33,500. The full amount was debited to insurance expense at the time. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $598,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $110,000. Declining real estate values in the area indicate that the salvage value will be no more than $27,500. On December 31, 2017,…arrow_forwardJohn Works as a distribution agent in DRC for diamond floor tiles. Under an agreement with manufacturers, he purchases the tiles and received a commission of 1% on purchases for the year ended on the previous 31st March in May. For several years, he has been obtaining a gross profit of 40% on all the sales. In a burglary which occurred in January 2001, he lost stock costing shs 4 million as well as most of his accounting records. However after careful investigations, the following information was obtained covering the year to 31st March 2001. a) Assets and liabilities as at 1st April 2000Shs’000Buildings at cost 10,000Provision for Depreciation (buildings) 6,000Motor vehicles at cost 5,000Provision for depreciation (vehicles) 2,000Inventory at cost 3,200Trade receivables 6,300Agency commission receivable 300Trade expenses prepaid 120Bank balance 4,310Trade payables 4,200Accrued vehicle expenses 230John was notified that he will receive an agency commission of shs 440,000 on May…arrow_forward
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