Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

problem 1

Rod Xiong, is the owner and Chief Executive Officer (CEO) of GFF Telecommunications Services Inc. (GFF), a private Canadian company that wholesales cellular phones. One of the defining characteristics of this industry is that it is extremely competitive given the oligopolistic nature of the wireless industry, where major service provider’s players such as FIDO and Rogers have significant buying power. One of the keys to GFF's success is that they provide exceptional service and have a loyal client base.

Arsineh Tackas, MBA, was hired as the Chief Financial Officer (CFO) of GFF in 2012. One of the reasons that Arsineh was hired was that she was very knowledgeable about IFRS and GFF wanted to prepare its financial statements in accordance with Part I of the CICA Handbook — Accounting. The CEO's stated reason for electing to adopt Part I was his desire to take the company public in 2013.
As CFO, Arsineh is responsible for co-signing the management letter of representation provided to the firm's auditors and as such is presently overseeing the preparation of the GFF’s 2012 financial statements. In so doing she notes that Selina Tang, the Financial Controller has included revenue from a number of transactions commonly referred to as "bill and hold,” which is a transaction where the seller bills the customer but holds the goods for shipment at a later date.

Arsineh believes that these sales may be cancelled any time prior to delivery without penalty and as such the sales should not be recorded until title to the goods has transferred.

When Arsineh asks Selina about this matter, she replied that "Rod told me to book these sales in 2012. He pointed out that the orders are seldom cancelled and that this contention was born out by the fact that the goods were all delivered in January 2013." Troubled, Arsineh thanks Selina for her time and then goes to speak to Rod about the matter. Rod invites Arsineh into his office and then closes the door behind her. When asked about his instructions to Selina, Rod replies:

“Arsineh, you and I know the game that we have to play with the big boys. They order the goods and pay for them, but we hold them in our warehouse and insure them. When they have room in their stores they take delivery. While technically they can cancel the order without penalty at any time before shipment, they seldom ever do. I believe that given our strong relationship with our client and the historical record of completed sales on bill and hold transaction that recognizing revenue in 2012 is warranted. You know that the company's shares are soon going to be offered for sale in the initial public offering. It goes without saying that recording these sales and profits in 2012 will look better to potential investors and help us achieve a better price for the shares than if we do not report them. I expect you to support me in this matter.”

Arsineh returns to her office and contemplates the recent chain of events.

Required:

Outline Arsineh Tackas’s professional obligations and recommend how she should proceed. Your answer should be between 800 and 1,200 words in length.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M91419
  • Price:- $40

Guranteed 36 Hours Delivery, In Price:- $40

Have any Question? 


Related Questions in Financial Accounting

A truck costs 300000 and is expected to run 100000 miles

A truck costs $300,000, and is expected to run 100,000 miles during its 5-year life. Residual value is expected to be zero because the truck was used when acquired. If the truck runs 24,000 miles the first year, how much ...

1 the standard cost of product b manufactured by pharrell

1. The standard cost of Product B manufactured by Pharrell Company includes 2.6 units of direct materials at $5.5 per unit. During June, 27,200 units of direct materials are purchased at a cost of $5.45 per unit, and 27, ...

On march 15 chief company acquired 20000 shares of its own

On March 15, Chief Company acquired 20,000 shares of its own $2 par value common shares at a cost of $17 per share. Chief originally issued the shares at $12 per share. On July 5, Chief sold 7,000 of the shares back in t ...

1 define direct costs2 define indirect costs3 why are

1. Define direct costs. 2. Define Indirect costs 3. Why are direct and indirect costs important to management? 4. Would you describe your current job today as a direct cost or a indirect cost? Why? Categorize the followi ...

The following information relates nickel company for

The following information relates Nickel Company for 2015: Direct materials used                                        $50,000 Direct manufacturing labor              21,000 Manufacturing costs transferred to work-in-pr ...

On january 1 2015 water world issues 240 million of 5 bonds

On January 1, 2015, Water World issues $24.0 million of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Water World intends to use the funds to build the world’s larges ...

Accounting questiondescribe the evolution of a statement of

Accounting Question: Describe the evolution of a statement of financial accounting standards. Why would it be advantageous for U.S. GAAP and IFRS/IAS to be the same? What is the difference between principles-based and ru ...

The coca-cola company owns 40 percent of the voting stock

The Coca-Cola Company owns 40 percent of the voting stock of Coca-Cola FEMSA, acquired at book value. Assume that Coca-Cola FEMSA reports income of $6 million for 2013. Coca-Cola FEMSA regularly sells canned beverages to ...

Describe the controls that the business should have

Describe the control(s) that the business should have installed to prevent that inappropriate investment. (Controls may include procedures, processes, approvals, checks, reviews, and corresponding documentation that rela ...

The number of x-rays and x-ray costs over the last nine

The number of X-rays and X-ray costs over the last nine months in Beverly Hospital are given below: Month X-Ray Costs X-Rays Taken January $28,000 6,250 February 29,000 7,000 March 23,000 5,000 April 20,000 4,250 May 22, ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate