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Question: Horizon Corporation manufactures personal


Horizon Corporation manufactures personal computers. The company began operations in 2013 and reported profits for the years 2013 through 2016. Due primarily to increased competition and price slashing in the industry, 2017’s income statement reported a loss of $20 million. Just before the end of the 2018 fiscal year, a memo from the company’s chief financial officer to Jim Fielding, the company controller, included the following comments:
If we don’t do something about the large amount of unsold computers already manufactured, our auditors will require us to write them off. The resulting loss for 2018 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales, Inc., in Oklahoma City. I know the company’s president and he will accept the merchandise and acknowledge the shipment as a purchase. We can record the sale in 2018 which will boost profits to an acceptable level. Then J.B. Sales will simply return the merchandise in 2019 after the financial statements have been issued.

Required:
Discuss the ethical dilemma faced by Jim Fielding.


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> The accrual of restructuring costs creates obligations (liabilities) referred to as exit or disposal cost obligations. Required: 1. Obtain the relevant authoritative literature on exit or disposal cost obligations using the FASB Accounting Standards Cod

> How are discontinued operations reported in the income statement?

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> The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in thousands): sales revenue, $15,300; cost of goods sold, $6,200; selling expenses, $1,300; general

> Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018 ($ in thousands): Net sales ……………………………………………………………………. $ 18,000 Interest income ………………………………………………………….……… 200 Interest expense ……………………………………………………………

> Required: Refer to the information presented in P 4–4. Prepare a revised income statement for 2018 reflecting the additional facts. Use a multiple-step format. Assume that an income tax rate of 40% applies to all income statement items, and that 20 milli

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> For the year ending December 31, 2018, Micron Corporation had income from continuing operations before taxes of $1,200,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should

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> Define intraperiod tax allocation. Why is the process necessary?

> Cadux Candy Company’s income statement for the year ended December 31, 2018, reported interest expense of $2 million and income tax expense of $12 million. Current assets listed in its balance sheet include cash, accounts receivable, and inventories. Pro

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> Financial statements for Askew Industries for 2018 are shown below (in thousands): 2018 Income Statement Sales ………………â€&brv

> Presented below are the 2018 income statement and comparative balance sheets for Santana Industries. Additional information for the 2018 fiscal year ($ in thousands): 1. Cash dividends of $1,000 were declared and paid. 2. Equipment costing $4,000 was p

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> Esquire Comic Book Company had income before tax of $1,000,000 in 2018 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting pri

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