Question: During your review of the revenue accounts at Mauna Loa Corp., a public company, you enquired of management about sales to customer 920423231 BC Ltd.,

During your review of the revenue accounts at Mauna Loa Corp., a public company, you enquired of management about sales to customer 920423231 BC Ltd., a numbered company The revenue account accumulates sales to a related company. The president of Mauna Loa explained that the sales are at very favourable terms to Mauna Loa; in fact, the related company pays more than market value for the items it purchases from Mauna Loa. Because of Mauna Loa’s tax credits, the overall tax payable for the 2 companies is smaller if the revenue (and the income) is reported in Mauna Loa. This provides the related company with higher expenses, which also lowers its taxable income. Required: Briefly explain 4 concerns you would have as auditor in this situation

Step by Step Solution

★★★★★

3.29 Rating (152 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The auditor would have following four concerns Transferring the p... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Marketing Questions!

During your review of the revenue accounts at piper & pepper inc. ,p&p a public company, you enquired of management about sales to customer account 04-1125. The account accumulates sales to a...

D Question According to a recent census, 14% of the people in the United States are of Hispanic origin. One county supervisor believes her county has a different proportion of Hispanic people than...

During your review of the audit field work completed by a new junior employee of the audit firm, John Smith, you have noted many areas which require additional review notes. John, who has just...

During your review of the revenue accounts at Mauna Loa Corp., a public company, you enquired of management about sales to customer 920423231 BC Ltd., a numbered company The revenue account...

During your review of the revenue accounts at Piper & Pepper Inc.,P&P a public company, you enquired of management about sales to customer account 04-1125. The account accumulates sales to a related...

During your review of the revenue accounts at ABC Corporation, a public company, you enquired of management about sales to customer 920424000 BC Ltd., a numbered company The revenue account...

I've attached the assignment as a word file, thanks! You can use the class readings for this week's assignments. c05MerchandisingOperationsandtheMultiple-StepIncomeStatement.qxd 8/14/10 2:14 PM Page...

I've attached the question as a word file as well as the class text to help with the assignment. Thanks! c05MerchandisingOperationsandtheMultiple-StepIncomeStatement.qxd 8/14/10 2:14 PM Page 226...

just only 2 questions ,please read the requirment word by word and be careful about the style of the reference(APA) , file 3.1 is for question 2..BTW,please focus the every step FINANCE SPOTLIGHT...

1. John's business has non current assets of 76,000 and total assets of 121,000. His current liabilities are 25,000 and there are no long-term liabilities. His capital is 96,000. Which one of the...

It is intellectually simple to formulate an elegant strategy but not so with its implementation. Discuss

Consider the following project where times are in weeks. Activity Immediate Predecessors Duration A - 8 B - 12 C A,B 7 D B 4 AND A 2 F C 3 G E,F 7 H D,F 3 what is the early start for activity B using...

Rs. Direct materials 25,000 Indirect materials 5,000 Direct labour 30,000 Indirect labour 4,500 Factory overhead (excluding indirect materials and indirect labour) 15,000 Plant cost Required: Compute...

Yousif and his partner Hussain have decided to become a non-store retailer and would like to open a web-based retail store called Dee ReeTee which is specialized in selling unisex caps, hoodies, and...

Some health care facilities have initiated senior nurse/new graduate nurse mentoring programs in which junior staff receive informal advice and assistance from experienced staffers. Name the...

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year: The beginning balance...

Consider the reaction of acetic acid in water CH 3 CO 2 H(aq) + H 2 O(l) CH3CO 22 (aq) + H 3 O + (aq) where Ka 5 1.8 3 1025. a. Which two bases are competing for the proton? b. Which is the stronger...

(a) How might the confirmation tendency affect your client acceptance decision? (b) How might the overconfidence tendency come into play in your client acceptance decision? (c) How might an auditor...

Discuss the importance of full and accurate auditor reporting to the public, and describe possible consequences for both parties if the going-concern explanatory paragraph and footnote are excluded....

Raven has just finished learning a list of nonsense words given to her by her psychology instructor as part of a class activity. She had 100 percent recall at the end of class. According to...

Shantel spent a year living abroad in Spain. During that time, her ability to read and speak Spanish grew tremendously. However, now, 2 years later, Shantel feels she can no longer travel there...

Henry Gustav Molaison (H.M.) suffered from profound anterograde amnesia after his ____________ were surgically removed in an attempt to control his seizures. a. hippocampi b. amygdalae c. frontal...