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CellWorks Technology, Inc., a biotech company, has a $24,000,000 bond issue outstanding. The bond indenture has several restrictive provisions, including requirements that current assets exceed current liabilities by a ratio of 2 to 1 and that income before income taxes exceed the annual interest on the bonds by a ratio of 3 to 1. If those requirements are not met, the bondholders can force the company into bankruptcy. The company is still awaiting FDA approval of its new product, CMZ-12, a cancer treatment drug. Management has been counting on sales of CMZ-12 this year to meet the provisions of the bond indenture. As the end of the fiscal year approaches, the company does not have sufficient current assets or income before income taxes to meet the requirements. Roger Landon, the chief financial officer, proposes, "Since we can assume that FDA approval will occur early next year, I suggest we book sales and receivables from our major customer now in anticipation of next year's sales. This action will increase our current assets and our income before income taxes. It is essential that we do this to save the company. Look at all the people who will be hurt if we don't do it." Is Landon's proposal acceptable accounting? Is it ethical? Who could be harmed by it? What steps might management take?
You have a sole-proprietorship merchandizing business dealing with photography equipments. The business was established three years back and had an average annual turnover of $50,000.
Using the percentage of net sales method. uncollectible accounts expense for the year is $54000, balance of allowance for uncollectible is 18000 creedit befor adjustments what is the balance after adjustments?
Explain what is meant by "Rate of Return." Why does a business owner need to understand rate of return. Your client has told you that he only cares about cash flow. As long as he can pay his bills and take out some capital form the business, he do..
for the year ended december 31 2013 fidelity engineering reported pretax accounting income of 977000. selected
The unadjusted trial balance for the general fund of the City of Jordan
nowadays manufacturing is considering an investment proposal with the following informationcost 450000useful life 6
Based on the information provided, how should the new client be advised to allocate the $800,000 among the growth, income, and money market funds? Develop a linear programming model that will provide the maximum yield for the portfolio. Use your m..
During 2014, Shipley distributed a dividend in the amount of $120,000 and at year-end reported a $320,000 net income. Any difference between implied and book value relates to subsidiary goodwill. Pioneer Company uses the equity method to record it..
Thor is thinking about leaving Australia in 2014/15 with his father Odin to live in Asgard (Denmark). Thor owns his home in Lyons (Darwin) and he’s wants to know whether for tax purposes he should rent his home to his friend Erik
Stephanie Martinez opened a Latin Fusion restaurant downtown in a large southerncity.
in 2010 the space shuttle program will be discontinued and thousands of nasa engineers and scientists will be affected.
What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect materials is a variable cost and factory rent was a fixed cost?
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