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Assume you work as an assistant accountant in the head office of Netflix. With the increasing popularity of online movie streaming, your company has struggled to meet its earnings targets for the year due to the high cost of creating programming content unique to your company.
It is important for the company to meet its earnings target this year because the company is renegotiating a bank loan next month that is necessary for international expansion, and the terms of that loan are likely to depend on the company's reported financial success. Also, the company plans to issue more stock to the public in the upcoming year, to obtain additional expansion funds .
The chief financial officer (CFO) has approached you with a solution to the earnings dilemma. She proposes that the programming costs which have been capitalized (reported as an asset) be depreciated over a period extended from 4 years to 10 years. She claims that generally accepted accounting principles (GAAP) require estimates like this, so it wouldn't involve doing anything wrong.
Question 1: How will the change in depreciation period impact reported net income in the current and future reporting periods? Question 2: Is the CFO correct in stating that GAAP allows changes in estimates? Do you think it appropriate in this situation?
Discuss the potential for abuse and fraud in this system. Describe the controls that should be implemented to reduce the risks.
the standard materials cost to produce one unit of product m is 6 pounds of material at a standard price of 50 per
Income before income taxes
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Quail issued $200,000 of its 10-year 12% bonds for $224,924 on October 1, 2010. The effective rate on the bonds was 10% and interest is paid each October 1 and April 1. Assuming Quail uses the effective interest method, the adjusting entry on Dece..
What are the key concerns of those that believe goodwill is not an asset?
What role do you believe the project manager played in the execution of this project, including what they did well and areas they could have improved in?
MACRS, assuming that the machine is classified as seven year property.
When a parent uses the initial value method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is true before making adjustments on the consolidated worksheet?
To create an identical version of a slide
Past experience indicates that 30% of the credit sales will be collected in the month of sale and the remaining 70% will be collected in the following month.
An increase in the bonds payable account of $200,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:
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