...impaired or a liability had been incurred at the date of the financial statements and the amount of loss can reasonably be estimated. Since eVade considers the risk of detection to not be probable, there is no need to make any provision as of December 31, 2011. However, a suitable disclosure has to be made in notes to financial statement about this loss contingency with an estimated amount of $60 million dollars (Sales tax payable $50 million, interest $6 million, and penalties $ 4million). 2. What effect, if any, does eVade’s decision to participate in the tax amnesty program have on the amount recognized as of March 31, 2012? As of March 15, 2012, eVade company has decided to participate in the tax amnesty program. Therefore conforming to FASB ASC 250-10-50-8 and ASC 250-10-50-9, eVade company should recognize the amount of liability of $25 million dollars in the financial statement on March 31, 2012. This loss however, will not have impact on the 2011 financial statement. 3. What amount should be recognized in the financial statements for the $25 million payment on June 15, 2012? Regarding to FASB ASC 250-10-50-8 and ASC 606- 10-55-49, the $25 million dollars payment will be recorded in the 2012 financial statement. As for the 2011 financial statement, it will remain unchanged. The amount was recognized in March of the same year as eVade company made the payment in June (2012). The journal entry as of June 15, 2012...
Words: 1137 - Pages: 5
...ACTG 493, Accounting Cases, Research and Analysis Group Case 1 Memorandum To: Professor Siyi Li From: Group 4 Date: July 5, 2016 Subject: eVade Pays Up (Deloitte Trueblood Case 14-07) I. Case Description and Key Facts eVade is an online retailer that fulfills its orders by shipping its products directly to customers across all 50 states in the U.S. eVade does not have a brick-and-mortar store presence in any state, but does operate distribution centers in various states, including State X. eVade does not collect or remit sales tax to State X. This practice is consistent with eVade’s practice in all 50 States. In recent court rulings, State X has taken the position that operating a distribution center within the state constitutes nexus and thus would subject any company operating a distribution center to collect and remit sales tax on all sales made within the state. As of December 31, 2011, eVade has operated a distribution center within State X for the past five years. Although the company considers the risk of detection to not be probable, eVade estimates total sales tax payable to State X to be $50 million. In addition, eVade estimates that $6 million in interest and $4 million in penalties are also payable to the state. On March 15, 2012, a tax amnesty program was established by the Governor of State X. The program provides that an unregistered taxpayer who voluntarily registers to collect sales tax prospectively will be forgiven...
Words: 4930 - Pages: 20
... Jd March 14, 2016 Prepared by: Maria Catoni Accounting Seminar Professor: Evangelina vives, phd, cpa, Jd March 14, 2016 Prepared by: Maria Catoni E-Vade Pays Up Case 14-07 E-Vade Pays Up is an online retailer who offers its products to all 50 states. The company is not present physically in any of the states, but does operate distribution centers in some states across the country and does not collect and remit sales tax on sales made in each state. Recently in a court ruling in State X subject all distribution centers within the state to collect and remit sales tax on all sales within the state. E-Vade has a distribution center in State X, therefore, must collect and remit sales tax on all sales within the state. Evade estimated the total amount $60 million of payable to State X for the past five years which includes $50 million for sales tax due, $6 million in interest and $4 million in penalties as of December 31, 2011. On March 15 of 2011 an amnesty program was approved by governor Needmoney providing incentive to voluntary registration to unregistered taxpayers forgiving all interest and penalties on unpaid taxes and 50% of all unpaid sales tax. E-Vade’s management decides to take advantage of the program and completes registration on June 15, 2012. With the amnesty, E-Vade settles its obligation by paying $25 million to State X. As previously narrated, E-Vade is liable for sales taxes from previous years’ sales. As of December 31, 2011 management...
Words: 982 - Pages: 4
...14-07 eVade Pays Up Synopsys eVade, an online retailer, operates distributions centers in many states including State X. eVade does not collect or remit sales taxes to State X. As a December 31, 2011 eVade has operated in state X for five years. In recent court ruling, States X states that the company would be subject to collect sales taxes. Although the company considers the risk of detection to not be probable, eVade estimated the total amount of sales tax payables for the past five years to be $50 millions plus $6 million in interest and $ 4 million in penalties. On March 15, 2012, State X established a tax amnesty program. Any unregistered taxpayer who voluntarily registers to collect tax will be forgiven 50 percent of all unpaid sales tax and all interest and penalties. eVade decides to take advantage of this program. Issue 1 As of December 31, 2011 What amount, if any, of sales taxes due should recognized in eVade ‘s financial statements? Scope In order to analyze what part of the sections sections of the FASB Accounting Standards Codification applies to the case, ASC 450 section was examined since non-income taxes are often accounted for under the contingencies guidance. Next, ASC 740 section was also studied. ASC 740-10-20 defines “income taxes as domestic and foreign federal (national), state, and local (including franchise) taxes based on income.” Since sales taxes are under the umbrella of local and state, the following step will be defining if eVade should...
Words: 1256 - Pages: 6
...SUBJECT: Case 2: eVade 1. This problem does not state when eVade prepares its financial statements, nor does it state their fiscal year-end. We assume that eVade knows the court rulings before the 12/31/2011 financial statements are prepared and issued. We also assume that the court’s ruling had been publically announced. eVade, needs to accrue the estimates that total $60 million in accordance with 450-20-55-2 and disclose the nature of the loss. (450-20-50-3, 450-20-25-2, and 450-20-50-10). J/E: December 31, 2011 Loss on sales tax payable 60,000,000 ($50 million taxes + $ 6 million interest + $4 million penalties) Sales Tax Payable 60,000,000 It seems unethical for eVade to consider the liability as not probable and that State X will not detect the risk. eVade should consider it probable because it is a court ruling. What is unknown is when the court ruling was publically announced (CON 6 b) and c)) making it probable that eVade will have to pay the sales tax and incur a loss. Besides, why would they make an estimate if they truly thought it not probable? Under nexus eVade is obligated to collect and pay sales tax under a prospective basis as stated in the problem. eVade will incur a loss because they will not be able to collect sales tax prior to 12/31/2011. 2. It was accrued as a contingency in Question 1, so we need to reverse the total estimate of $60 million and record a gain on the contingency of $35 million ($60 million - $25 million)...
Words: 1599 - Pages: 7
...p. 4) Every year the UK Government spends billions of pounds to provide a better life for its citizens. Most of the money the Government is spending comes from tax revenue. Tax revenue allows the Government to budget expenditure such as education, health and welfare, housing, protection, re-paying national debts and improving the infrastructure. Without tax revenue, the government would not be able to fund the projects and services that people require. Following the recent recession and the global financial crisis it is important to increase tax revenue for economic growth and keeping the economy moving. The majority of the UK’s individuals and businesses pay their share of tax honestly. However, a minority deliberately seek to evade or avoid paying what they owe while benefiting from the public services (HM Revenue & Customs, 2013). As a result the Government does not receive enough tax as budgeted but spends more than what is collected. This is called budget deficit. It leads to either cuts in the budget of projects or borrowing money from other nations to fill up the deficit. Borrowing is an expensive option and currently the UK government is trying to reduce its national debts and to fill up the deficit with cuts in projects. For example, the UK Chancellor George Osborne recently announced further £25bn spending cuts and much of it from the welfare budget (Osborne, 2014). The cuts were mainly to reduce the deficit. The UK Government is also trying to reduce...
Words: 9892 - Pages: 40
...Introduction The purpose of this lab was study animal locomotion in the Periplaneta americana (Palmetto Cockroach) and the Gromphadorhina portentosa (Madagascar Cockroach) across three different surfaces; smooth, American bark, and sandpaper. The Palmetto is known for its speed and ability to evade capture while the Madagascar stands out for its intimating hissing. Observing locomotion through three different gradients allowed us to the strengths and weakness’ in ability to maneuver between these two species. Methods One Palmetto and one Madagascar cockroach were used through each of the three surfaces. The placement of these roaches was parallel to that of a meter stick to ensure clarity of our video. Data was recorded through a high...
Words: 339 - Pages: 2
...All too aware of how bad association with war crimes is for business, the diamond industry has taken pains to evade questions about its connections with Israel’s human rights abuses — and so far has escaped scrutiny from watchdog organizations. Representatives for 75 countries affiliated to the United Nations-based Kimberley Process Certification Scheme meeting in Kinshasa this week failed to reach agreement on the export of blood-stained diamonds from Zimbabwe. The elephant in the room was Israel’s burgeoning diamond exports which evade the human rights strictures imposed on Zimbabwe’s diamond exports. A “letter of the month” that I authored and which was published in the April edition of Retail Jeweller magazine exposes these double standards in the Kimberley Process regulations that facilitate the trade in blood-stained diamonds from Israel and Zimbabwe (Letters, Retail Jeweller Magazine, April 2011). The letter caused “consternation” to some in the diamond industry and resulted in the withdrawal of the magazine from a major jewellery trade fair in Switzerland (“Gems editor sorry for ‘blood diamond’ boycott letter,” The Jewish Chronicle, 7 April 2011). The letter drew the wrath of vested interests and leaders of the Israeli diamond industry. Their response via the Letters page in the May edition of the magazine demonstrated the sensitivity of the global diamond industry to any exposure of the links between Israeli diamonds and Israeli war crimes. Three letters...
Words: 336 - Pages: 2
...! Case 1: 14-07, eVade Pays Up ! ! ! ! 1. As of December 31, 2011, what amount, if any, of sales taxes due should be recognized in eVade’s financial statements? ! According to ASC 450-20-25-2, 450-20-25-6, 450-20-25-7, since eVade considers the risk of detection as not probable, there is no need to make any provision as on 31st of December, 2011. However, suitable disclosure has to be given in notes to financial statement about this loss contingency and amount of loss to be disclosed in the said notes would be $50+ $6+ $4 = $60 million. ! ! 2. What effect, if any, does eVade’s decision to participate in the tax amnesty program have on the amount recognized as of March 31, 2012? ! ! In March 15, 2012 Company has decided to participate in the amnesty program. Therefore, conforming to ASC 250-10-50-9 and ASC 250-10-50-11, eVade should recognize the amount of liability for $25 million in the financial statements on the 31st of March, 2012. the loss will be impacting 2012 financial statements and will not have retrospective impact on the 2011 financial statements. ! ! 3. What amounts should be recognized in the financial statements for the $25 million payment on June 15, 2012? ! ! Regarding the ASC 606-10-55-49 and ASC 250-10-50-8, 2011 financial statements would remain unchanged and $25 million payment would be recorded as charge to the 2012 financial statements. If the amount is already recognized as a liability in March, then...
Words: 299 - Pages: 2
...THE NETHERLANDS AIAS Working Paper 03/11 May 2003 Dr. Klarita Gërxhani AMSTERDAM INSTITUTE FOR Prof. Dr. Arthur Schram ADVANCED LABOUR STUDIES Universiteit van Amsterdam © Klarita Gërxhani Amsterdam, May 2003 This paper can be downloaded at www.uva-aias.net/files/aias/WP11.pdf Amsterdam Institute for Advanced Labour Studies Tax Evasion and the Source of Income: An Experimental Study in Albania and the Netherlands 5 Tax Evasion and the Source of Income: An Experimental Study in Albania and the Netherlands∗ Abstract A series of experiments among different social groups in both Albania and the Netherlands give the opportunity to compare behavioral patterns related to tax evasion. Aside from the decision whether or not to evade taxes, subjects have to choose a source of income, where one type enables subsequent tax evasion. The results allow us to conclude that subjects take the possibility...
Words: 15662 - Pages: 63
...In the poem “One dignity delays for all” by Emily Dickinson symbolism is utilized to represent death and the idea of equality. Death alludes to the inevitability of the end of life regardless of one’s status. While the hierarchy of power in the living world is represented by the status of humans, death is the most powerful entity in the universe because it is a gateway between the living and the afterlife. Dickinson implies symbolism in order to create a connection between death and power. The connection the living have with death and power is represented in the idea that death is inevitable, giving all living things equality in the face of death. Dickinson implies symbolism by connecting power to the living and death. In the line “One dignity...
Words: 410 - Pages: 2
...liable, as an exception to the Salomon rule. Different cases permitted us to identify the traditional categorisation of veil lifting : attribution of characteristics, single economic unit, agency, tort and mere façade concealnig the true facts. Arguably, only mere façade is a true ground for lifting the veil of incorporation. The mere façade test is applied by the courts when the corporate structure is beeing misused by the person, or persons, who control it to evade obligations or liabilites to which they are otherwise subject. Control and impropriet must be estabished, remembering that it is not improper to organise one’s business affairs, to take advantage of incorporation and limited liability. The nature of the wrongdoing, the improprietym which would merit trating the company as a façade for these purposes was examined in Adam v Cape industries plc. The Court of Appeal accepted the structure is a façade when they involve situations where a corporate structure has been used by a defendant to evade limitations imposed on...
Words: 407 - Pages: 2
...My opinions regarding George’s are that he was justified in executing Lennie because it’s the most humane way as well as the one which saves the most lives. George shot Lennie humanely, letting Lennie died in his happy place at peace with the world. If George did not make the shot it would’ve been Curly who shot Lennie and he would’ve cruelly killed Lennie resulting in him to die in shock and terror. Therefore George is justified in executing Lennie because it’d be better for Lennie to die peacefully rather than in shock and terror. Lennie’s strength and low intellect make for a dangerous combination, there are various instances where due to his uncontrollable strength Lennie kills someone/thing, instances such as the pup or Curly’s wife, just...
Words: 320 - Pages: 2
...“TAX EVASION & AVOIDANCE - A REAL PROBLEM FOR BANGLADESH” INTRODUCTION: Tax evasion and avoidance are both phenomena that are probably as old as taxation itself. Wherever and whenever authorities decide to levy taxes, individuals and firms try to avoid paying them. Though this problem has always been present, it becomes more pressing in the course of globalization as this process extends the range of opportunities to dodge taxation while simultaneously reducing the risk of being detected. Developing and emerging countries like Bangladesh are particularly vulnerable to tax evasion and avoidance activities of individual taxpayers and corporations. While tax revenues in OECD-countries are almost 35 per cent of GDP ,in case of Bangladesh it is only around 10%.This can be considered one of the primary reasons for large differences in the ability to mobilize own resources between developed and developing countries. Tax evasion and tax avoidance is a great problem in our country. In Bangladesh there are many individual taxpayers and corporations who are evading or avoiding tax. As a result government’s developments activities are hampered. So, we should know about the tax evasion and tax avoidance and thereby its preventives measures. For development of a country government needs to create infrastructure and invest in various sectors. For this activities government needs founds and tax revenue is the main source for the purpose. But due to tax evasion and tax avoidance government’s...
Words: 5263 - Pages: 22
...hiny Parts Sdn Bhd appears to be liable for prosecution for wilful evasion under section 114 of the Act as well as for making an incorrect return under section 113 of the Act. The managing director appears to be liable for prosecution for assisting Shiny Parts Sdn Bhd in wilful evasion under section 114 of the Act as well as for making an incorrect return on behalf of Shiny Parts Sdn Bhd under section 113 of the Act. Mr. Leong may also be liable for prosecution for assisting Shiny Parts Sdn Bhd in wilful evasion under section 114 of the Act. He did act correctly and in good faith by pointing out to the managing director that not all entertainment expenses were fully deductible and that would normally excuse him from any liability. However, he should also have advised the managing director to make a written disclosure and justify his stand. Taking a different position or stand from a public ruling is a situation in which a written disclosure is required by paragraph 3.5 of Public Ruling No. 8/2000. This omission might prejudice his immunity from prosecution. Section 113. Incorrect returns. (1) Any person who- (a) makes an incorrect return by omitting or understating any income of which he is required by this Act to make a return on behalf of himself or another person; or (b) gives any incorrect information in relation to any matter affecting his own chargeability to tax or the chargeability to tax of any other person, shall, unless he satisfies the court that the...
Words: 898 - Pages: 4
