+ 3 minutes ago Lebeau and Liang LLP has been the auditor of CTAI since the company's inception. You are a senior accountant with the firm and have been assigned the year-end audit for CTAI. The partner, Sharmila Chaudary, has just met with the company's management and discussed various accounting issues. She has asked you to prepare a report to be provided to the client that addresses all of the accounting issues, along with any other issues that you feel are important. Sharmila's notes from the meeting can be found in Exhibit II. In addition, the company's current and future tax expenses must be calculated. Tax-related details can be found in Exhibit III. = 2 Exhibit II Notes from the Partner's Meeting with CTAI's Management TO 1. At the beginning of the year, the board of directors approved a compensatory stock option plan that grants options to the company's four executives to purchase 100,000 shares each of the company's common shares. The board expects that the period of benefit/service for these options is two years. The options can be exercised at a strike price of $1 per share any time over a three-year period commencing after the initial two-year service period ends. The fair value of the options, as determined using an option pricing model, is $1,550,000. 2. The company issued 500,000 preferred shares for $4 per share to an investment bank in June 2020. Each preferred share is convertible for a fixed number of common shares (six common shares), and has a mandatory 7% annual dividend that must be paid on December 31 of each fiscal year. The shares must be redeemed by the company for cash if the market price of the common shares exceeds $4 per share. Currently, the common shares are in a trading range around $1.25 per share. The board declared and paid the mandatory cash dividend on December 31. 3. At the beginning of the current year, the company issued $2.5 million convertible bonds, of which $2 million was correctly allocated to debt. The bonds' market yield is 4% annually, pays interest semi-annually, matures in five years, and can be converted into common shares at the ratio of 1,500 shares per $1,000 bond. 4. Given the volatility of commodity prices, CTAI entered into a forward contract with the Bank of Vancouver. On July 1, CTAI locked the price of 5 million kg of aluminum at $1.25/kg. Aluminum is important to the company's operation because it is used to create a cabinet that houses all of the components in the CD player deck Upon its inception, CTAI did not have to put forth any cash. All cash transfers will take place on settlements in two years. As at December 31, the price of aluminum is trading on the Chicago Board of Trade at $1.15/kg. Exhibit III 126 Aa 519 H Type here to search PH O * E 6 A) ENG 3:44 PM 2021-02-10 edge car stereo equipment, through share based ffering various complex any to become the leader in h compensation that s diluted EPS in excess of Aa Jo U E ENG 3:14 PM 2021-02-18 + 3 minutes ago Lebeau and Liang LLP has been the auditor of CTAI since the company's inception. You are a senior accountant with the firm and have been assigned the year-end audit for CTAI. The partner, Sharmila Chaudary, has just met with the company's management and discussed various accounting issues. She has asked you to prepare a report to be provided to the client that addresses all of the accounting issues, along with any other issues that you feel are important. Sharmila's notes from the meeting can be found in Exhibit II. In addition, the company's current and future tax expenses must be calculated. Tax-related details can be found in Exhibit III. = 2 Exhibit II Notes from the Partner's Meeting with CTAI's Management TO 1. At the beginning of the year, the board of directors approved a compensatory stock option plan that grants options to the company's four executives to purchase 100,000 shares each of the company's common shares. The board expects that the period of benefit/service for these options is two years. The options can be exercised at a strike price of $1 per share any time over a three-year period commencing after the initial two-year service period ends. The fair value of the options, as determined using an option pricing model, is $1,550,000. 2. The company issued 500,000 preferred shares for $4 per share to an investment bank in June 2020. Each preferred share is convertible for a fixed number of common shares (six common shares), and has a mandatory 7% annual dividend that must be paid on December 31 of each fiscal year. The shares must be redeemed by the company for cash if the market price of the common shares exceeds $4 per share. Currently, the common shares are in a trading range around $1.25 per share. The board declared and paid the mandatory cash dividend on December 31. 3. At the beginning of the current year, the company issued $2.5 million convertible bonds, of which $2 million was correctly allocated to debt. The bonds' market yield is 4% annually, pays interest semi-annually, matures in five years, and can be converted into common shares at the ratio of 1,500 shares per $1,000 bond. 4. Given the volatility of commodity prices, CTAI entered into a forward contract with the Bank of Vancouver. On July 1, CTAI locked the price of 5 million kg of aluminum at $1.25/kg. Aluminum is important to the company's operation because it is used to create a cabinet that houses all of the components in the CD player deck Upon its inception, CTAI did not have to put forth any cash. All cash transfers will take place on settlements in two years. As at December 31, the price of aluminum is trading on the Chicago Board of Trade at $1.15/kg. Exhibit III 126 Aa 519 H Type here to search PH O * E 6 A) ENG 3:44 PM 2021-02-10 edge car stereo equipment, through share based ffering various complex any to become the leader in h compensation that s diluted EPS in excess of Aa Jo U E ENG 3:14 PM 2021-02-18