You are making my life so much easier! I am a single mom that works and goes to school. You guys are helping me with my projects so I can have more free time with my son.
Unit 3 DB Ethics: Deferred Taxes, Income Effects
Stephanie Delaney, CPA, is the newly hired director of corporate taxation for Acme
Incorporated, which is a publicly traded corporation. Ms. Delaney’s first job with Acme
was the review of the company’s accounting practices on deferred income taxes. In
doing her review, she noted differences between tax and book depreciation methods
that permitted Acme to realize a sizable deferred tax liability on its balance sheet. As a
result, Acme paid very little in income taxes at that time. Delaney also discovered that
Acme has an explicit policy of selling off plant assets before they reversed in the
deferred tax liability account. This policy, coupled with the rapid expansion of its plant
asset base, allowed Acme to “defer” all income taxes payable for several years, even
though it always has reported positive earnings and an increasing EPS. Delaney
checked with the legal department and found the policy to be legal, but she is
uncomfortable with the ethics of it.
Answer the following questions in the Discussion Board:
a. Why would Acme have an explicit policy of selling plant assets before the
temporary differences reversed in the deferred tax liability account?
b. What are the ethical implications of Acme’s “deferral” of income taxes?
c. Who could be harmed by Acme’s ability to “defer” income taxes payable for
several years, despite positive earnings?
d. In a situation such as this, what are Ms. Delaney’s professional responsibilities
as a CPA?
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Accounting for income taxes.
Intermediate accounting (16th ed.). (p. 1107). New York, NY: John Wiley & Sons, Inc.
Start a New Thread
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more