Connect Access Card for Principles of Auditing & Other Assurance Services
Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Chapter 3, Problem 45P
To determine

Discuss four ethical implications of those acts by Mr. G that were in violation of the AICPA Code of Professional Conduct.

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Thomas Gilbert and Susan Bradley formed a professional corporation called “Financial Services Inc.—A Professional Corporation,” each taking 50 percent of the authorized common stock. Gilbert is a CPA and a member of the AICPA. Bradley is a CPCU (Chartered Property Casualty Underwriter). The corporation performs auditing and tax services under Gilbert’s direction and insurance services under Bradley’s supervision. One of the corporation’s first audit clients was Grandtime Company. Grandtime had total assets of $600,000 and total liabilities of $270,000. In the course of his examination, Gilbert found that Grandtime’s building, with a carrying value of $240,000, was pledged as collateral for a 10-year term note in the amount of $200,000. The client’s financial statements did not mention that the building was pledged as collateral for the 10-year term note. However, as the failure to disclose the lien did not affect either the value of the assets or the amount of the liabilities, and his…
Three owners join together to form ABC, INC., which properly elects to be taxed as a C corporation. Shareholder A contributes cash of $10,000 and a collection of jewelry display cases to be placed in the jewelry store operated by the C corporation. The jewelry display cases have a basis in A’s hands of $112,000, and a fair market value of $81,000. B contributes $10,000 in cash and jewelry inventory having a basis in B’s hands of $35,000 and a fair market value of $81,000. C contributes inventory having a basis in C’s hands of $120,000 and a fair market value of $96,000. Since each of the three of them have agreed to be equal shareholders, it was determined that it was fair to distributed $5,000 in cash to Shareholder C because her initial contribution had a fair market value of $5,000 more than the contribution of either A or B.   What is the balance in A’s capital account immediately following her       contribution?
CPA Kara Rambo is the auditor of Ajax Corporation. Her audit independence will not be considered impaired if shea. Owns $1,000 worth of Ajax stock. b. Has a husband who owns $1,000 worth of Ajax stock. c. Has a sister who is the financial vice president of Ajax. d. Owns $1,000 worth of the stock of Pericles Corporation, which is controlled by Ajax as a result of Ajax’s ownership of 40 percent of Pericles’ stock, and Pericles contributes 3 percent of its total assets and income in Ajax’s financial statements.
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