a.
Introduction:The operational issue are the problems in a company which has to be removed for improving the operations growth of the company. Control deficiency are the actions taken by the management which controls the working of the employees.
To describe:Whether the action taken will be considered as an operational issue and not an control deficiency or it would constitute a material weakness or significant deficiency in internal control.
b.
Introduction:Financial reporting refers to the disclosing of all the financial information and financial results of the company to its managements and other users. The financial reporting describes the financial performance of a company during the year.
To describe:The change in the risk related to the objective of reliable financial reporting.
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Chapter 3 Solutions
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- You are working for Heavy Industry Exports Group. Your corporation is going to pay an annual dividend of $8 per share and extra dividend of $2.5 per share in 4 weeks. The company’s stock is currently listed and actively traded on ASX. Equipment. Ltd is a subsidiary of Heavy Industry Exports Group and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $4.5 million now and $ 9.5 million one year from now as a liquidating dividend. Required: A) Heavy Industry Exports Group needs to make a payment of AUD 445,000 to a partner in Tokyo. If the direct quote of Japanese Yen in Sydney is 0.004852, how much Japanese Yen the partner in Tokyo will receive?arrow_forwardYou are working for Heavy Industry Exports Group. Your corporation is going to pay an annual dividend of $8 per share and extra dividend of $2.5 per share in 4 weeks. The company’s stock is currently listed and actively traded on ASX. Equipment. Ltd is a subsidiary of Heavy Industry Exports Group and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $4.5 million now and $ 9.5 million one year from now as a liquidating dividend. Required: A) Heavy Industry Exports Group has an extra cash of A$245,000. The AUD/USA exchange rate in New York is 0.75679. The USD/AUD rate in Sydney is 1.37137. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash. What is the potential gain in AUD dollar, disregarding bid-ask spread? Please answer this question from one of your expert. I need urgent solution.arrow_forwardYou are working for Heavy Industry Exports Group. Your corporation is going to pay an annual dividend of $8 per share and extra dividend of $2.5 per share in 4 weeks. The company’s stock is currently listed and actively traded on ASX. Equipment. Ltd is a subsidiary of Heavy Industry Exports Group and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $4.5 million now and $ 9.5 million one year from now as a liquidating dividend. Required: 1) Calculate the current value of the Equipment Ltd’s equity in total and per share if the firm has 2.5 million shares outstanding. The required rate of return for shareholders is 12%.arrow_forward
- Is it possible that I can get help with this? I am not understanding why it is wrong. I have attached an example of the correct solution. Futuristic Development (FD) generated $3 million in sales last year with assets equal to $6 million. The firm operated at full capacity last year. According to FD's balance sheet, the only current liabilities are accounts payable, which equals $480,000. The only other liability is long-term debt, which equals $1,035,000. The common equity section is comprised of 500,000 shares of common stock with a book value equal to $3 million and $1,485,000 of retained earnings. Next year, FD expects its sales will increase by 20 percent. The company's net profit margin is expected to remain at its current level, which is 16 percent of sales. FD plans to pay dividends equal to $0.60 per share. It also plans to issue 70,000 shares of new common stock, which will raise $460,000. Estimate the additional funds needed (AFN) to achieve the forecasted sales next…arrow_forwardRose Apothecary has just purchased 22% (22,000 shares) of Warner Farms, Inc. They paid $15.30/share of stock. 6 months later, Warner Farms issues a cash dividend of $0.18 per share. 4 months later, due to a series of questionable cheeses, Warner Farms is in financial trouble. Warner Farms records a $250,000 loss. Shortly after the loss posted, Rose Apothecary decides to sell their shares. They sell all 22,000 shares for $3 per share. Required: Record the journal entries for all of the above transactions from the perspective of Rose Apothecaryarrow_forwardStacy Corporation had income from operations of $7,200,000. In addition, it suffered an unusual and infrequent pretax loss of $770,000 from a volcano eruption, interest revenue of $17,000, and a write-down on buildings of $53,000. The corporation’s tax rate is 30%. Prepare a partial income statement for Stacy beginning with Income from operations. The corporation had 5,000,000 shares of common stock outstanding during 2017.arrow_forward
- Swindle Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Swindle has a $3,500,000 bank loan payable with Love Bank. The bank accepted an equity interest in Swindle Company in the form of 300,000 ordinary shares quoted at $12 per share. The par value is $10 per share. The fair value of the bank loan payable on the date of restructuring is $3,200,000. What amount should be recognized as gain from debt extinguishment as a result of the equity swap?arrow_forwardAlpaca Corporation had revenues of $230,000 in its first year of operations. The company has not collected on $18,200 of its sales and still owes $26,600 on $75,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $10,500 in salaries. Owners invested $12,000 in the business and $12,000 was borrowed on a five-year note. The company paid $4,500 in interest that was the amount owed for the year, and paid $7,900 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 30%. Compute net income for the first year for Alpaca Corporation.arrow_forwardHominy, Inc., has debt outstanding with a face value of $5 million. The value of the firm if it were entirely financed by equity would be $18.2 million. The company also has 430, 000 shares of stock outstanding that sell at a price of $33 per share. The corporate tax rate is 22 percent. What is the decrease in the value of the company due to expected bankruptcy costs? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar, e. g., 1,234,567.)arrow_forward
- Bullant Inc. has decided to go public and has sold 2 million of its shares to its underwriter for $20 per share. The underwriter then sold them to the public for $22 each. Bullant also encountered $0.5 million in administrative fees. Soon after the issue, the stock price rose to $25. Find Bullant s total cost of this issue including any underpricing.arrow_forwardAlpaca Corporation had revenues of $275,000 in its first year of operations. The company has not collected on $19,400 of its sales and still owes $27,500 on $98,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,200 in salaries. Owners invested $16,500 in the business and $16,500 was borrowed on a five-year note. The company paid $4,200 in interest that was the amount owed for the year, and paid $8,200 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. (Assume taxes are paid in the same year). Compute the cash balance at the end of the first year for Alpaca Corporation.arrow_forwardHominy, Inc., has debt outstanding with a face value of $5 million. The value of the firm if it were entirely financed by equity would be $18.15 million. The company also has 420,000 shares of stock outstanding that sell at a price of $33 per share. The corporate tax rate is 21 percent. What is the decrease in the value of the company due to expected bankruptcy costs? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar, e.g., 1,234,567.) Financial distress costsarrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning