DIRECTIONS: Please include your name in the name of the document


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DIRECTIONS: Please include your name in the name of the document you send me. For example: First name, Last name_611_Final exam would be a good name for your file. Also include your name in the subject of the email you send me along with 611 Final Exam. Please type your answer below each task in BLUE. FACT PATTERN: You have accepted an offer at a CPA firm. After a week of training on the firms various procedures, systems and software you are finally ready to get to work. As you settle in to your desk you open up your task management software and email and begin to sort out the various tasks assigned to you by senior staff. TASK 1: Client is an established company under pressure to make distributions to its shareholders. Management does not want to part with any cash. Client is curious about stock dividends and stock splits. Please provide a brief analysis explaining what they are and how they work. TASK 3: Client is bio-tech company in the Sorrento Valley area making stents. They have increased demand and would like to increase capacity. However, they also need to raise working capital. The CFO has proposed a deal in which the company would sell their massive facility and then lease it back. The idea is to get a large amount of funds upfront and then pay lease payments over time as increased revenues occur. The CFO also thinks that they could arrange a clause in the lease in which at the end of the lease the company could buy the building back below market value. The CFO would like your input on how to structure the lease agreement so that it achieves their objective of increasing their cash position but also in such a way that has the least negative impact to their asset to debt ratios. Explain what the material, critical terms of the lease would be and how it would need to be structured to achieve this goal. Also discuss the alternative and how that would impact cash flow, the balance sheet and accompanying ratios. TASK 4: Client purchased a company with assets a, b, c and d for $1,000,000 dollars. The breakdown of their relative fair market values are: Asset A = $250,000, Asset B = $250,000, Asset C = $150,000 and Asset D = $100,000. How should the firm record each asset on the books. Client would also like some guidance as to what types of costs are attributable to basis. TASK 5: Client runs a bookkeeping company and utilizes the CPA firm when needed. Bookkeeper is not sure when to expense or capitalize a cash expenditure. Please provide some guidance. Task 7: Partner attended a meeting with the general counsel of a company that is a client of the CPA firm. The purpose was to discuss the landscape of the company’s ongoing litigation. After discussing the ongoing litigation it is the general counsel’s opinion that none of the current court cases will result in liability to the company. Does this mean there are no contingent liabilities? What is the test to determine if there is and who else in the company may have information for you to make such a determination? END ros90
posted a question · May 29, 2016 at 7:46pm

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