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Assume that you are an audit manager for Haya & Partners Certified Public Accountants, a firm that has recently gained two new audit clients of a similar size. Your audit staff have completed their preliminary investigations of the two clients. You are reviewing their notes which can be summarized as follows: –
Client 1 Norah is an old-fashioned family company which has been in business for over a thirty years and trades as wholesalers of fruit and vegetables. Its management structure is divided into five layers ranging from supervisor, deputy manager, manager, senior manager and director. The senior managers and directors have been with the company for many years. Each level of management has clear authority limits set down in the company manual, which also sets out detailed written procedures for every job. Management at all levels generally has an unforgiving attitude to errors and inefficiencies. Most of the systems are paper-based, although the accounting ledgers are maintained on a computer and there are rigid systems of authorisation before transactions can be processed. Staff turnover in clerical posts and at supervisor and deputy manager level is high. –
Client 2 Sumayah Advertising Est. is a new company set up six months ago. It trades as a website design business and as an advertising agency. Sumayah Advertising Est. is run by two sisters who manage the business jointly. Sumayah Advertising Est. mostly employs creative people but it does have a small clerical staff to deal with billing and time recording. The approach to work is casual, spontaneous and rather uncontrolled. Error detection is not seen as a priority. The management’s view is that they will deal with errors and problems when they arise. Staff are happy and so staff turnover is low. Required In your review of the control environment for each of these clients, what conclusions would you draw about the risk of error arising in the accounts?
Locate Item 1 and briefly summarize the business the company is engaged in. (McDonalds form 10-K 2019)
Locate Item 8 and briefly summarize the information the company provides its users in this section. Be careful using the “Find” feature when answering the remaining requirements. We expect your answers to come from Item 8, and many items are discussed in multiple locations throughout the Form 10-K.
Select FOUR topics from the list of available topic. You may select a maximum of two topics from each category provided. For each topic, review what the company reports in the financial statements and any related note disclosures and provide a thoughtful analysis of what you learned from them. (Topics file is attached below)
In conclusion, provide a brief summary of your impression of GAAP disclosure requirements based on this project.
Old McDonald’s, Inc., a farm corporation, was incorporated as a C corporation on January 1, 1993.
On January 1, 2015, the corporation made an election to be treated as an S corporation beginning in tax year 2015.
At the time of the election, the corporation’s assets included 1,000 acres of unimproved farmland having a cost basis $2,250,000 and a fair market value of $7,000,000. A real estate developer has approached the shareholders with an offer to purchase the land in 2019 for a price of $10,000,000.
The shareholders are seriously considering the offer but are concerned about the tax ramifications both for themselves and for the corporation.
Since it is already October, one of the shareholders has suggested that they postpone the sale until January, 2020 thereby deferring the reporting of income and the payment of tax for an entire tax year. Read the guide at All Essays first
Read the guide at All Essays first
make sure to use apa

Using the memo format previously provided, prepare a memo to the file explaining the various tax ramifications associated with this transaction including the suggestion that the sale be deferred until 2020. Keep in mind that this was previously a C corporation.
On January 1, 2019, Fargo Corp. enters into a ten-year non-cancellable lease with Wells Ltd. for equipment having an estimated useful life of 11 years and a fair value of $6,000,000. Fargos incremental borrowing rate is 8
% per annum (4
% per 6 months), but they do not know Wells’ implicit rate. Fargo uses the straight-line method to depreciate assets. The lease contains the following provisions:
1.
Semi-annual lease payments of $438,000 (including $38,000 for property taxes – executory costs), payable on January 1 and July 1 of each year (semi-annual payments).
2.
A guarantee by Fargo Corp. that Wells Ltd. will realize $200,000 from selling the asset at the expiration of the lease. The asset reverts back to Wells Ltd. at the end of the lease.
Both companies adhere to ASPE and the fiscal year end of Fargo Corp. is December 31st.

Required:

What kind of lease is this to Fargo Corp? Why?
Prepare the journal entries that Fargo would record for the period January 1, 2019 up to and including December 31, 2019.
Include an amortization schedule for the period January 1, 2019 to January 1, 2020 and do NOT worry about preparing the entire amortization schedule – too time consuming!
Prepare the journal entries that Fargo would record for the period January 1, 2019 up to and including December 31, 2019 under the assumption that the residual value is not guaranteed by Fargo Corp [as it was in part (b)].
Include an amortization schedule for the period January 1, 2019 to January 1, 2020 and do NOT worry about preparing the entire amortization schedule – too time consuming!