Asymmetric recognition of gains as well as losses allows managers of profitable companies and firms in the reduction of present value taxes (Sohn, 2011). Another fact is that standard setters and regulators have a number of their own benefits and incentives for inducing conservative accounting as well as reporting (Sohn, 2011). The importance of conservatism is also evident in the fact that regulators are to be blamed if firms and companies overstate net assets in comparison to the understatement of assets. Moreover, conservatism results in the reduction of political costs that are applied on regulators and trend setters from time to time (Bushman & Piotroski,
The government’s expenses are supposed to benefit us the people who pay taxes, because the government believe by buying their voters’ affection with services they provide for a short period of time will help them remain popular in the voters’ heart long enough for them to win an election. Most of us are guilty of not paying attention to the debt in the world today, until a government leader is elected into office by us. When it comes to down to the realization of deficit spending, it is very hard to see the silver lining or the advantages of experiencing deficit spending. One of the advantages of deficit spending is that it can be looked at as a turning point if the economy experiences another recession in the near future. Deficit spending can assist in strengthening the economy during a recession through tax cuts and purchases of goods and services during hard times.
Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image. Another pressure presented in this case for Cendant Corporation was that for the top management once again. The top management needed to have their financial information seem profitable, therefore pressured the accountant of the company to falsify and “cook the books” to make the financial statements seem actually “profitable” when it wasn’t what It really was. As said in the previous question, income smoothing was used in this case by Cendant Corporation as an unethical practice to make the investors believe that their shares were all bright
To sum up all the points above, I would to say that the federal budget should always be balanced, based on the many advantages that have been discussed above. A balanced federal budget will benefit our country such as enhancing the economic foundation and reduces the volume of federal debt. If the government does not control their spending and this will cause the country become bankruptcy. On the other hand, when the government can manage their spending well then the country will prosper and the growth potential of an
In the case the management team decides to remain in the current method, then other solutions can be done without the need to lay off some employees. Other solutions can be recommended. III. Relevant Stakeholders a. Oscar Gamble, as Shields Corporation’s Controller: high net income means security and profitability of the company; low net income may mean lay off of some employees to reduce expenses, thus somehow increasing income; b. Accounting staff : high net income means security of employment, while low net income may mean lay off of employees including the accounting staff to reduce administration expenses; c. Owners of the company: high net income means
The great debate between a hands off, or laissez faire, and regulated capitalism has been occurring since even before the Industrial Revolution of the late 19th and early 20th Centuries. Major corruptions lean more towards the laissez faire economic policies because there are fewer restrictions. This might be beneficial for them, but for small town companies trying to pay bills and make profits. monopolies are a worrisome thought, especially when the larger companies are wishing to expand put them out of business. Regulated capitalism is a form of hands-on policy with the government including more strict codes for the industry.
Eventhough the government was corrupt, it aported to key businesses by the subsidy. This helped economy by making a higher production of goods. This subsidy also went to improve the infrastructure of the city. For example with railraods. When Harrison was chosen for the precidency he choosed to have the taxes over imported goods increased.
Introduction: Fair cost is the cost that is estimated or can be determined by the market while historical cost is related to the cost that is fixed i.e. purchasing cost. Fair cost is the cost on which the assets can be sold or exchanged among the different parties and the liabilities can also be settled with the other parties while the historical cost of an asset is that cost on which that particular asset was purchased. The fair value of an asset can be determined from the current situation of the market because it is the market value of the asset while the historical cost is always fixed; it can’t be changed with the passage of time because the cost during the purchase remains the same. The fair value is determined by using some models rather
Half of the tax is paid by the employer, and the other half of the tax is paid by the employee. The Social Security tax rate has an income cap which has the potential to affect the tax rate applied which currently is $127,200. Therefore, any amount earned above $127,200 is Social Security tax-free. On the other hand, the current tax rate for Medicare is 1.45% from the employer and 1.45% from the employee. Payroll taxes have severely increased as a revenue source for the federal government whereas corporate income taxes have decreased as a share of revenue throughout the
The ethical issue in such an instance is the accountant reporting the true financial status of an organization in regards to the profit, liabilities and companies assets. It is easy for those accountants that are unethical to alter the financial records of a company. This makes the company seem to be doing well in the short term, but in the long run, it leads to failure of the company. The other ethical issue is a falsification of documents. Falsification of documents involves changing the details of the documents which are original so that they can appear real ( Bampton and Cowton, 2013, p.552).this is done with the aim of deceiving another person.
Oil and gas companies use LIFO, much like the rest of the business world, to gain the tax benefit that LIFO provides. However, LIFO allows Chesapeake to record the cost of inventory at the most recent price paid- even though some of the inventory was purchased when oil was selling at a much lower price. Profits would then be understated for that particular year since LIFO would yield a higher cost of goods sold. Although it is legal to use LIFO as an accounting method for inventory Chesapeake could change the estimates and assumptions used to calculate LIFO balances and the LIFO reserve. Further changes to LIFO balances can exacerbate the effect that LIFO has on the income statement.
Both points of view show the significant impact that the raise of the federal minimum wage may cause and both of them are partly correct. However, for the county’s economy it is more efficient to put the emphasis on the worst case scenario to prevent any possible economic problem such as crash of a stock market or financial