The writer is very fast, professional and responded to the review request fast also. Thank you.
Stephen Delancey, CPA, is the newly hired director of corporate taxation for Acme Corporation, which is a publicly traded corporation. Mr. Delancey’s first job with Acme was the review of the company’s accounting practices on deferred income taxes. In doing his review, he noted differences between tax and book depreciation methods that permitted Acme to realize a sizable deferred tax liability on its balance sheet. As a result, Acme paid very little in income taxes at that time.
Delancey also discovered that Acme has an explicit policy of selling plant assets before they reversed in the deferred tax liability account. This policy, coupled with the rapid expansion of its plant asset base, allowed Acme to “defer” all income taxes payable for several years, even though it always has reported positive earnings and an increasing EPS. Delancey checked with the legal department and found the policy to be legal, but he’s uncomfortable with the ethics of it.
a) Why would Acme have an explicit policy of selling plant assets before the temporary differences reversed in the deferred tax liability account?
b) What are the ethical implications of Acme’s “deferral” of income taxes?
c) Who could be harmed by Acme’s ability to “defer” income taxes for several years, despite positive earnings?
d) In a situation such as this, what are Mr. Delancey’s professional responsibilities as a CPA?
Show more
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more