question archive APPLICATION OF THE CPA HANDBOOK as incorporated on January 1, 2018 when the company's common shares were issued to several investors d video-on-demand provided through their in exchange for $800,000 cash
APPLICATION OF THE CPA HANDBOOK as incorporated on January 1, 2018 when the company's common shares were issued to several investors d video-on-demand provided through their in exchange for $800,000 cash
Subject:AccountingPrice: Bought3
APPLICATION OF THE CPA HANDBOOK as incorporated on January 1, 2018 when the company's common shares were issued to several investors d video-on-demand provided through their in exchange for $800,000 cash. SFI specializes in steaming media and video-on-demand provi company was incorporated with the strategic goal of expanding their streaming service internationally, so they have elected to prese nally, so they have elected to present their financial statements under IFRS. On February 1, 2018, SFI so obtained debt financing in the form of a ten-year. 8% $3 million bank loan. Annual blended payments are to be made commencing January 31, 2019. A condition for mmencing January 31, 2019. A condition for keeping the bank loan is the maintenance of a current 1.5. With the funds obtained from the bank loan. SFI purchased a plot of land for $1 million and made st payment to a construction company to build a new office building, which would be ready near the end of 2018. SFI currently employs 28 individuals, with the vast majority being software deve ith the vast majority being software developers. Given their focus on developing the online streaming media developing the online streaming media platform, the company was unable to hire a professionally trained nd currently employ only one accountant. As a result, the investors are concerned that the preliminary cial statements prepared by the accountant (Exhibits 1 & 2) may have errors including the final calculation of the income tax expense, based on a 30% income tax rate. The company's CFO knows that cash is stated correctly because he reviewed and signed off on the bank reconciliation. It is February 14, 2019 and the CFO O SFI has hired your consulting firm to correct any accounting errors in the preparation of the zu statements. The following includes issues that you should consider. 2) On January 1, 2018, SFI purchased bonds issued by Harvard Investment Company (HIC). The bonds mature in 20 years at $1 million. The stated rate of interest on the bond is 4% and interest is paid semi-annually on July 1 and December 31. When the bonds were purchased the market interest rate w 30, 2018 because market interest rates had fallen to 5%, the company sold bonds with a maturity value of $300,000. As of December 31, 2018 the market rate was still 5%. The company is planning on holding the bonds to maturity and see this as a long-term investment.
