Labco

In: Business and Management

Submitted By jfavo
Words 497
Pages 2
Jeff Favoroso
Acct. 4501 – day class
October 7, 2013

Codes of Conduct

The American Institute of Certified Public Accountants (AICPA), Statements on Standards for Tax Services (SSTS), and Institute of Management Accountants (IMA) all provide professional codes of conduct that set standards for accountants and other financial professionals. All three present their standards regarding how the professionals in each organization must conduct their business. These standards include the basic guidelines of the intended business, and the ethical values that each organization holds. Aside from complying with the organization’s standards, each of these three organizations require their members the continuance of enhancing their knowledge and practice in their area of accounting expertise. Most importantly, their main objective is to increase the public’s confidence in their professional responsibilities. The accuracy and credibility of the accountant’s work is essential for growing the public’s trust in the organization and its professionals. The AICPA holds their professionals to a high standard for major reasons. The AICPA’s code of conduct applies to its CPA members. Outside investors rely on information of public companies that is reported by a CPA. The AICPA focuses on the CPA’s commitment to their clients. Independence and confidentiality are important factors for meeting guidelines. A CPA must uphold their integrity in the work they perform for their clients. The AICPA directs these guidelines towards auditors for the sake of delivering the most accurate and fair information. As I previously mentioned, outside investors rely on a public company’s information that is reviewed by a public accountant in accordance with the AICPA’s code of professional conduct. The SSTS are tax practice standards for members of the AICPA. The SSTS primarily offers possibilities…...

Similar Documents

Case 12-05 "Aren't We Done Yet?"

...NAME DATE CLASS CASE STUDY LabCo, a large construction-contracting firm, is faced with the decision of switching from the percentage of completion method to the completed contract method for one of its contracts with one of its customers, Halibut. The contract called for a six-axis laser, cutting machine that would be used to cut aircraft wings for fighter jets that would be sold by Halibut to a large government buyer. LabCo realized that this would be a unique arrangement that would require a lot of specifications, however, based on its experience with similar contracts and with working with Halibut before, LabCo decided that the percentage of completion would be appropriate for this contract. As this project progressed, LabCo encountered many problems. Their chief financial officer finally decided that the amount to be estimated for this contract could no longer be reliably estimated, and that the percentage of completion method would no longer be the appropriate method for recognizing revenue. LabCo’s accounting policy for the revenue treatment of its contracts is quite reasonable. First of all, LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment which falls under the contracts covered in ASC 605-35-15-2,3. ASC 605-35-15-2 covers contracts as “binding......

Words: 905 - Pages: 4

Arent We Done Yet?

...12-05 Aren’tWe Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by-contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 823 - Pages: 4

Case Study

...Case 12-05 Aren’t We Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-bycontract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 821 - Pages: 4

Aren't We Done Yet?

...Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-bycontract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has......

Words: 821 - Pages: 4

Not Home Yet

...12-05 Aren’tWe Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by-contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 823 - Pages: 4

Case 12-05

...12-05 Aren’tWe Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by-contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 796 - Pages: 4

Case 12-05: Aren’t We Done Yet?

...Case 12-05 Aren’t We Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-bycontract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which ...

Words: 795 - Pages: 4

Case Study

...Aren’tWe Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-bycontract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 812 - Pages: 4

Case Study

...LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a contract with a customer,......

Words: 809 - Pages: 4

Aren’t We Done Yet?

...LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a contract with a customer,......

Words: 692 - Pages: 3

Case Study

...questions: Aren’t We Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 876 - Pages: 4

“Aren’t We Done Yet?”

...LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large industrial-sized machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which reads as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by contract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a contract with a customer,......

Words: 691 - Pages: 3

Love of Investing

...accounting for revenue treatment of construction contracts for a client, LabCo. In specific, I was assigned to oversee LabCos’ contract involving a six-axis laser-cutting machine with Halibut Co. After researching and developing a theory based on the Financial Accounting Standards Boards’ Codification, I have concluded that LabCos’ treatment of revenue was reasonable; however, they should have changed revenue recognition principles sooner. In this situation, there are three possible ways they can handle changing their accounting method: Retrospective Application, Change in Accounting Estimate Method, or Change in Estimate Affected by Accounting Principle. The revenue treatment principle for a construction type principle states, “In accounting for contracts, the basic accounting policy decision is the choice between two generally accepted methods: the percentage-of-completion method including units of delivery and the completed-contract method. The determination of which of the two methods is preferable is based on a careful evaluation of circumstances because the two methods should not be acceptable alternatives for the same circumstances (ASC 605-35-25-1).” LabCo agreed to build a six-axis laser-cutting machine for Halibut. The contract entered into was a fixed price contract. A fixed price contract is, “An agreement to perform all acts under the contract for a stated price” (ASC 605-35-15-4). LabCo decided to use the percentage of completion method for......

Words: 1442 - Pages: 6

Accounting Principles

...accounting for revenue treatment of construction contracts for a client, LabCo. In specific, I was assigned to oversee LabCos’ contract involving a six-axis laser-cutting machine with Halibut Co. After researching and developing a theory based on the Financial Accounting Standards Boards’ Codification, I have concluded that LabCos’ treatment of revenue was reasonable; however, they should have changed revenue recognition principles sooner. In this situation, there are three possible ways they can handle changing their accounting method: Retrospective Application, Change in Accounting Estimate Method, or Change in Estimate Affected by Accounting Principle. The revenue treatment principle for a construction type principle states, “In accounting for contracts, the basic accounting policy decision is the choice between two generally accepted methods: the percentage-of-completion method including units of delivery and the completed-contract method. The determination of which of the two methods is preferable is based on a careful evaluation of circumstances because the two methods should not be acceptable alternatives for the same circumstances (ASC 605-35-25-1).” LabCo agreed to build a six-axis laser-cutting machine for Halibut. The contract entered into was a fixed price contract. A fixed price contract is, “An agreement to perform all acts under the contract for a stated price” (ASC 605-35-15-4). LabCo decided to use the percentage of completion method for......

Words: 1442 - Pages: 6

Aren't We Done Yet

...Case 12-5 Aren’t We Done Yet? LabCo is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from LabCo. LabCo’s business primarily involves the design and manufacture of large, industrial machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of LabCo’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. LabCo negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. LabCo has developed an accounting policy to recognize revenue related to its customized construction contracts, which is outlined as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-bycontract basis using the percentage-of-completion method of accounting, which is most often based on contract costs incurred to date compared with total estimated costs at completion (cost-to-cost method). The completed-contract method of accounting is used in instances in which reliably dependable estimates of the total costs to be incurred under a specific contract cannot be made. LabCo has entered into a......

Words: 817 - Pages: 4