Without affecting the CPA's willingness to express an unmodified opinion on the clients U.S. GAAP based financial statements corporate management May refuse a request to
a. Authorize its attorney to confirm that a list of pending or threatened litigation prepared by management includes all items known to the attorney
b. Change its basis of accounting for inventory from FIFO to LIFO because in the opinion of the CPA the FIFO method failed to give adequate recognition to the extraordinary increases and prices of merchandise Acquired and held by the company
c. Write down to salvage value certain equipment that is no longer useful
d. Allow the CPA to examine tax returns for years prior to that of the financial statements being audited
Ans: b. Change its basis of accounting or inventory from FIFO to LIFO because in the opinion of the CPA the FIFO method failed to give adequate recognition to the extraordinary increases and prices of merchandise Acquired and held by the company
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The acquisition of Sky Systems by Modern Auto and the acquisition of Sky Systems by HiFly, respectively, would be examples of a:
Modern Auto, an automobile parts supplier, has made an offer to acquire Sky Systems, creator of software for the airline industry. The offer is to pay Sky Systems’ shareholders the current market value of their stock in Modern Auto’s stock. The relevant information it used in those calculations is given below: Modern Auto Sky Systems Share price $40 $25 Number of outstanding shares (millions) 40 15 Earnings (millions) $100 $30 Although the total earnings of the combined company will not increase and are estimated to be $130 million, Charles Wilhelm (treasurer of Modern Auto) argues that there are two attractive reasons to merge. First, Wilhelm says, “The merger of Modern Auto and Sky Systems will result in lower risk for our shareholders because of the diversification effect.” Second, Wilhelm also says, “If our EPS increases, our stock price will increase in line with the EPS increase because our P/E will stay the same.” Sky Systems’ managers are not interested in the offer by Modern Auto. The managers, instead, approach HiFly, Inc., which is in the same industry as Sky Systems, to see if it would Chapter 10 Mergers and Acquisitions 75 part-i-10 13 January 2012; 10:24:23 be interested in acquiring Sky Systems. HiFly is interested, and both companies believe there will be synergies from this acquisition. If HiFly were to acquire Sky Systems, it would do so by paying $400 million in cash. HiFly is somewhat concerned whether antitrust regulators would consider the acquisition of Sky Systems an antitrust violation. The market in which the two companies operate consists of eight competitors. The largest company has a 25 percent market share. HiFly has the second-largest market share of 20 percent. Five companies, including Sky Systems, each have a market share of 10 percent. The smallest company has a 5 percent market shar A. vertical merger and a horizontal merger. B. conglomerate merger and a vertical merger. C. conglomerate merger and a horizontal merger
Determine which activities should be crashed to shorten the project by 2 days
What will be an ideal response?