¶ … conception that is laid behind write-down of inventory is that the amount value of the inventory being considered can still appear in the financial statements only if the inventory still has some worth or value. This particular amount value is attained by getting the difference between the original costs of the inventory as the prevailing market replacement value. In accordance to IAS 2, if the loss on write-down of inventory is minimal or trivial, it can be reported on the financial statements as a part of the cost of goods sold. On the other hand, if the loss amount is high then it is imperative to report it in the income statement in a separate line. More so, these kinds of aspects typically develop into a violation. Examples of these instances include the case of Enron Company and also the case of WorldCom. On the other hand, IAS1 encompasses the Presentation of Financial Statements and asserts that it is imperative on companies to disclose separately in the statement of comprehensive income for the write-down of inventories that has been persistently a low item. More so, the financial standard also makes a demand for plentiful and fitting information that has an impact on the substantial events together with that information that can in the end provide a backing in comprehending a situation. The main risk of not including write-downs for inventory is due to the reason that the investor conceivably makes an overestimation of the earnings and this as a result brings about major ethical concerns. In addition, such a scenario could head towards several financial and ethical issues including cover-up fraud punishments, unwarranted managers' rewards, losing shareholders confidence in management together with losing value of company brand in addition to a loss in goodwill. It is imperative to note that with the accountant not taking into full consideration of the accounting standards when reporting financial statement, this does not just violate the accounting standards but is also a violation of ethics and also a violation of the trust in the professional conduct. A recommendation for the CEO and CFO of the company is to make considerations of such effects of the Internal Revenue Service Negative Assessments. It has been seen during the undertaking of this that firms have been making use of write-downs for inventories to decrease their level of income that is to be taxed. The inventory that was written down was not real and actual and was just employed for tax purposes. More so, the write-downs were not a part of the statement of comprehensive income. Therefore, the Internal Revenue Service is obligated to make consultations with their head manager as well as their advisor on fraud so as to ascertain whether any activity like that has been taking place. If indeed it has, then the fraud penalty will amount to seventy five percent of the tax payable and accreditation to fraud will be levied on the income of the company.

Research the current generally accepted accounting principles (GAAP) regarding stock option accounting. Evaluate the current treatment of the company's share-based compensation plan based on GAAP reporting

The United States GAAP accounting standards and principles for employee stock options were greatly changed and modified in the year 2005 with the revision of FAS 123. Prior to this effect, in accordance to FAS 123, the stock options rewarded to the employees did not need to be treated as an expense on the income statements of the company so long as a number of conditions were met. However, the cost was disclosed in the notes of the income statements and the financial statements report in general. However, since then up until the present day, the employee stock options of the company have to be considered as expenses in accordance to the GAAP principles. Every corporation is expected to start expensing its stock options right from the first reporting period of a financial year. The company follows this stock option. However, the company failed to not only disclose its share-based compensation plan of stock options in the financial statements, it also did not expense the stock options which is wrong as it has not followed or complied to the GAAP principles (Security Exchanges Commission).

Contrast the financial benefits and risks of the share-based compensation stock option plan with the financial benefits and risks of a share-based stock-appreciation rights plan (SARS). Recommend to the CFO which plan the company should use, and provide the correct accounting treatment for each.

There are two kinds of plans which are the Employee Stock Option Plan (ESOP) and Stock Appreciation Rights Plan (SARS). The payment and reward of managers or employees using ESOPs has several advantages for the company. For instance, companies use this kind of compensation plan for the reason that it does not involve instantaneous and speedy cash disbursements that remunerating salaries involve. This is because the stock option is somewhat of an assurance of a payment in the future and is dependent on the increase in the value of the stock of the company. This plan is also beneficial as it makes the pay of the managers and employees to depend on the performance of the stock of the company and therefore acts as an impetus for the employees to ensure that the stock performance of the company is satisfactory. In addition, the ownership of the stock of the company makes the employees and managers of the company to have the sense of having an interest towards the company (Bickley 2). However, this plan does have its own risks. This in particular is with regards to pay considering the fact that the stock of the company might actually deteriorate and decline instead of going up. Another risk is that a number of the employees of the company might not want to pay the capital required to purchase the company stock, particularly if the stock is dependent on limitations and constraints and cannot be traded straightaway. More so, other employees basically may not want to capitalize their pay in their company's stock (Bickley 2). On the other hand, the advantages of SARS include that the company's issuance of shares is reduced and therefore this ensures that the shares of the company are not diluted. Another benefit is that similar to all other compensation plans, SARs can motivate the managers and employees to enhance and improve their performance as well as stick with the company. In addition, the employees attain a better and more advantageous accounting treatment with SARs compared to other plans that issue shares since they are treated as a fixed cost and not a variable cost. However, the downside is that the employees do not receive any voting rights. Taking all of this into account, it is recommended that the CFO of the company should use the SARs plan because it is not reliant on the stock performance and the plan will still motivate the employees.
Reporting requirements for lease reporting under GAAP and International Financial Reporting Standards (IFRS) and discussion of the use of off-the-balance sheet financing arrangements, capital leases, and operating leases, and indicate the related business and financial risks of each

GAAP and International Financial Reporting Standards (IFRS) have their own individual accounting standard for lease reporting. With regards to GAAP there is FAS 13 which is the Statement of Financial Accounting Standards No. 13. On the other hand, as for IFRS, there is IAS 17 which is the International Accounting Standard 17. These two standards offer the financial guidance as to whether the lessors and lessees ought to classify and report a lease as a capital lease or operating lease. With regards to a capital lease, the lessee considers the lease as if it has bought the asset and in turn the obligation is reported on the balance sheet. In turn, the lessee will charge depreciation on the leased asset and apportion the payment between interest expense and a decrease in the principal amount. On the other hand, an operating lease is a lease in which the lessees pays a rent payment expense or hire charge and does not recognize any amount on the balance sheet. The use of off-the-balance sheet financing arrangements can be advantageous for the company because of two important reasons. First of all, it enables the company to classify the leases as operating leases and therefore payments are reported as rent expenses. Secondly, it is important for federal income tax purposes. The company will be able to treat and report the payments as debt service and therefore be able to deduct interest expense as well as depreciate the asset in question (Edman 8).

Create an argument for or against a single set of international accounting standards related to lease accounting based on the global market and cross border leases of assets. Examine the benefits and risks of your chosen position.

The international accounting standard being argued is IAS…