Why do you believe Freda asked Lucia to add expenses

Assignment Help Accounting Basics
Reference no: EM132818061

Question - Ethics and governance - Lucia works as an accountant for a motor vehicle engine parts called Varoom Ltd, owned by the international car firm. Her manger Freda Chuse, is paid a bonus depending upon the profitability of the company. if Varoom Ltd, make $1 million profit, Freda receives bonus of $20,000 that increase progressively to $30,000 for $3 million profit. If the profit of Varoom Ltd, exceeds $3 million, Freda receives the maximum bonus of $30,000. Varoom Ltd, receive a grant from the Government of $100,000 per year to employ and train apprentice mechanics.

At the end of the May, it appears that Varoom Ltd, is making a profit of $3.5 million for the year ending at 30 June 2019, Freda approached Lucia and said that if company makes too much profit than Government may stop paying Varoom Ltd the grant for training of apprentice mechanics and it would loose $100000 tax-free cash flow. Freda asked Lucia to find ways of deferring recognition of as much revenue as possible until the following financial year, for which the forecasts for the industry were quite poor, and to accrue as many expenses as possible at the end of current accounting period when it came to the making the end of period adjustment. Although Lucia was not happy with this instructions, she did not want to risk her own opportunities for promotion by upsetting her manager.

Required -

Q1. Who are stakeholders in this situation?

Q2. Why do you believe Freda asked Lucia to add expenses?

Q3. What are the ethical issues involved?

Q4. Can Lucia defer revenue and accrue as many expenses as possible and still be ethical?

Reference no: EM132818061

Questions Cloud

Identify an arbitrage trade implied by prices : Nine-month forward contracts are currently quoted at a rate of $0.92. Identify an arbitrage trade implied by these prices.
Preparing a ten-column worksheet for a merchandising firm : What differences between financial statements of a merchandising entity and a service entity include the cost of goods sold section of the income statement and
What is the cash inflow from the sale of vehicles : Assume a tax rate of 21%. What is the cash inflow from the sale of these vehicles? (Show all calculations for full credit.)
How do feminists resist the gaze : What is the gaze? What is the male gaze? Provide an example of how it operates (not from the book). How do feminists resist the gaze?
Why do you believe Freda asked Lucia to add expenses : At the end of the May, it appears that Varoom Ltd, is making a profit of $3.5 million for the year ending at 30 June 2019, Why do you believe Freda asked Lucia
What was the cost of goods sold for aileen maglana company : Purchases returns and allowances, P2,000; transportation in, P3,000; ending inventory was P8,000. What was the cost of goods sold for 2019?
Relevant components for the black-scholes formula : How would you value the equity of a firm using real options if the face value of the firms liabilities are bigger than the value of the firms asset'
What potential changes could the federal government enact : After watching the video Generational Theft regarding our nation's debt situation and the impact of entitlements like Social Security and Medicare.
Find key financial variables unchanged : The most recent dividend Blue Mountain Breweries Limited paid was $39% per share. The company expects to pay the same dividend each year.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd