Project #88787 - Project

ACT 2200 PROJECT: CASE IN TECHNICAL AND ETHICAL ISSUES OF FINANCIAL ACCOUNTING

For the following real world accounting case, you will provide a CASE ANALYSIS from the perspective of the Accountant that analyzes both the technical and ethical accounting issues present in the case and proposes a solution based on these considerations. This is an INDIVIDUAL assignment to be completed on your own! BE SURE to read the INSTRUCTIONS below the case thoroughly, as they lay out exactly what is required.  Also, it is IMPERATIVE that you read the accompanying RUBRIC, on which your project grade will be based, so that you understand the EXACT EXPECTATIONS set forth to achieve the HIGHEST GRADE POSSIBLE (the rightmost column gives maximum score expectations). 

 

Keep in mind that I am looking for a WELL-WRITTEN, PROOFREAD, WELL-ORGANIZED, HIGH QUALITY report that shows a thorough understanding of the accounting issues faced.  The report has no specific length requirement as long as you are sure to address all considerations of case.  Also, be sure to turn it in with the COVERSHEET below!

CASE INFORMATION: COOPER CONSULTING CORPORATION

You are an accountant for the Fort Lauderdale regional office of Cooper Consulting Corporation. Richard Brown, your boss, is the operating manager of this office.  As the manager, his pay package includes a base salary, commissions, and a bonus when his region has net income in excess of the budgeted amount. Richard has been thrilled with the region’s very high profits to date this year and is already sure to receive his bonus based on the numbers as of the beginning of this December.

In the later part of December, the company performs a highly-valued consulting project for a client, at a price of $300,000. Although Cooper Consulting has already completed the project as of this December and has billed the client accordingly, cash payment from the client is not due until the following month. Therefore, the client has informed you that they will pay the invoice for the project when it is due in the middle of January of the following year.

Richard stops by your office as you are preparing year-end financial statements for this year. He explains that the company has done so well this year and has already achieved revenues in excess of the budgeted amounts before factoring in the major $300,000 project completed at the end of December. Therefore, he asks you to change the manner in which you are planning to account for the project. Originally, you had planned to record the revenue from the project in the current year, given that this is when the services were performed. But when Richard approaches you, he says, “Hey, we are receiving the money from the client for this project next year, so why not count it as revenue next year instead? I never did understand why you accountants are so picky about these things anyway. I'd like you to change the way you record this transaction. Instead, I want you to recognize the consulting revenue next year when we receive the cash. That will start us out very strong for next year, which is also the year we will both be reviewed for promotion. I also anticipate many additional personal expenditures with my sick mother moving in with us next month, and it would really help to know that I would already have a greater change at next year’s bonus if this big project starts us out right!” With that, he leaves your office.

You have been working for Richard for five years, and like everyone else in the office, you consider yourself lucky to work for such a supportive boss. You understand his logic and feel great sympathy for his personal problems. You also understand the technical and ethical standards to uphold as an accountant. You must now decide and describe the appropriate course of action you will take in this situation, as detailed below.

Instructions:

Technical: In a thorough Case Analysis, first analyze the technical accounting issue here by identifying and explaining the effects of both accounting alternatives (the original way and the way proposed by Richard) on the overall Accounting Equation (on both specific accounts and on overall assets, liabilities, and stockholders’ equity) in the current year and next year. Second, explain the effects of both of these alternatives on the Income Statement and Balance Sheet (on specific accounts and on overall net income and on assets, liabilities, and stockholders’ equity) in the current year and next year. Third, explain how these Income Statement and Balance Sheet effects of both alternatives would be perceived by specific financial statement users, being sure to address their specific uses and related perception effects.

Ethical: First, explain why or why not you, the Accountant in this case, are faced with an ethical dilemma, describing the nature of any internal conflict you may be facing and the difficulty you may have making a decision given the various factors involved.  Secondly, identify and explain all potential parties (including Richard and yourself) who could be impacted by your decision, and how these considerations affect your ethical dilemma.

Recommendation: Based on the above considerations, first recommend and justify the course of action you would take as the Accountant in this case based on your technical considerations. Second, recommend and justify your course of action based on the ethical considerations that led you to this decision.


 

Subject Business
Due By (Pacific Time) 11/09/2015 12:00 am
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