Question
ACC499 Week Discussions
ACC 499 Discussion Questions
1. Defend the current GAAP rules for pension accounting
reporting on the balance sheet and the income statement. Recommend
a change you would make to the current pension accounting to more
accurately reflect the future obligations of a company.
2. “Will it cost your company your company? Ready for one of
the most difficult challenges ever to confront corporate America?
One that is estimated to cost up to $400 billion. New FASB
regulations will force companies to measure and post as a debit
their health expense obligation to current and future retirees….
We’ll help you minimize the financial impact of these regulations
and still enable you to remain responsive to the benefit needs of
employees.” (Excerpts from an advertisement by CIGNA, a large
insurance company.)
“Forget about retiring with all-expenses-paid health care
from your employer. About 65% of U.S. companies have reduced
benefits. Some have asked retirees to pay more of the costs, while
others have eliminated the plans altogether. Blame soaring medical
expenses and a new accounting rule that requires companies to post
long-term retiree medical benefits as liabilities on their balance
sheets.” (Adapted from BusinessWeek, August 24, 1992, p. 39.)
Evaluate the content of the advertisement and explain why
companies may have reduced benefits when they adopted new GAAP
3. Create a scenario where the external auditors detect that
there is fraud. Discuss the auditors’ responsibilities for
assessing fraud risk. What are the procedures used to detect
material misstatements due to fraud?
Discuss recommendations to management for reducing fraud.
4. Compare and contrast the different inventory cost flow
assumptions. Explain the consequences that result from the use
of alternative inventory cost flow assumptions.
5. Robin Smith is considering buying shares in Mah Company.
The company has reported an increase in net income this year. On
careful reading of the notes to the financial statements, Robin
learns that the company had a LIFO liquidation this year. Robin
understands what caused the liquidation but has asked you for
advice about how to interpret it.
Based on the information contained in C
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