Discuss the following;

Client X contacted you for clarification and recommendations regarding the instances when goodwill should be adjusted for impairment.

Write a consensus response of 125 to 150words to include the following:

• Provide detailed rational of why goodwill must be adjusted for impairment.

Assignment Content

1. 
   The Whitley Corporation’s year-end is December 31, 2013. It is now October 1, 2013. The Whitley management team is taking a look at the prior nine months and attempting to make some short-term strategy decisions.Whitley has experienced steady growth over the five preceding years. The result has been a steadily increasing EPS. Last year, Whitley reported an EPS of 1.95.
   
   This year, owing to a mild recession, Whitley’s sales have fallen off. Management is looking for strategies that can improve the appearance of the financial statements. At the same time, there is a need for new equipment in the plant. Despite the recession, Whitley has enough cash to make the purchase.
   
   Based on the year’s performance to date and extrapolation of the results to year-end, management feels that the pretax financial accounting income for the year will be $200,000. Transactions from prior years have resulted in a deferred tax asset of $15,000 and a deferred tax liability of $70,000 at the beginning of 2013. The temporary difference of $37,500 that resulted in the deferred tax asset is expected to completely reverse by the end of 2013. The deferred tax liability resulted totally from temporary depreciation differences. There will be a pretax reversal of $42,500 in this temporary difference during 2013.Based on currently enacted tax law, the purchase of the equipment will result in a future taxable amount of $50,000. Whitley management feels that it can wait four to six months to purchase the machine. Whitley’s tax rate is 40 percent.
   
   Write a response of 700 to 900 words to the following:

   • Determine the projected amount of income tax expense that would be reported if Whitley waits until next year to purchase the equipment.
   • Determine the projected amount of income tax expense that would be reported if Whitley purchases the equipment in 2013.
   • Explain why Whitley should/shouldn’t wait to purchase the equipment. Your answer should take into consideration the expected financial statement effects, as well as the effect on EPS. Support your conclusions with pro forma data. The number of shares that Whitley will use to calculate EPS is 55,500.
   • Determine the ethical considerations of this case.

   Respond to the following in a minimum of 175 words: Discuss the Sarbanes-Oxley Act. What effect has it had on companies’ auditing processes? In what was has this affect been a positive one?
   
   

Do you need a similar assignment done for you from scratch? We have qualified writers to help you. We assure you an A+ quality paper that is free from plagiarism. Order now for an Amazing Discount!
Use Discount Code "Newclient" for a 15% Discount!

NB: We do not resell papers. Upon ordering, we do an original paper exclusively for you.