can you assist me with milestone three for ACC 620, the chosen company is Sears. check out the rubric and milestone one, two to get a better picture!

ACC 620 Milestone Three Guidelines and Rubric Prompt: In the second milestone, you addressed income taxes and pensions for your portfolio. In the third and final milestone, you will add leases and the statement of changes to your portfolio. IV. VI. Leases A. B. C. D. What are the differences between operating and capital leases? Describe the particular leases of your company based on the liability section of your company's balance sheet. What impact have the leases had on the company's financial statements for the most recent year? Discuss the advantages and disadvantages of leasing a building versus purchasing one. Statement of Changes in Financial Position A. From the perspective of an investor, determine whether or not you would invest in your chosen company based on the company's statement of changes in financial position (SCFP). Support your opinion. B. Review the company's SCFP for any concerns that may need to be addressed. As controller of your company, prepare a memo to your CEO, giving a summary report for possible recommendations. Guidelines for Submission: Your paper must be submitted as a 2-3-page Microsoft Word document with double spacing, 12-point Times New Roman font, oneinch margins, and at least three sources cited in APA format. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Leases: Operating and Capital Exemplary (100%) Meets \"Proficient\" criteria, and description is exceptionally clear and contextualized Proficient (90%) Comprehensively describes the differences between operating and capital leases Leases: Particular Meets \"Proficient\" criteria, and description is exceptionally clear and contextualized Describes the particular leases of the company based on the liability section of the company's balance sheet Leases: Impact Meets \"Proficient\" criteria, and defense is well supported with concrete examples Comprehensively discusses the impact the leases had on the company's financial statements for the most recent year Needs Improvement (70%) Describes the differences between operating and capital leases, but description is cursory or lacks detail Describes the particular leases of the company, but does not base description on the liability section of the company's balance sheet Discusses the impact the leases had on the company's financial statements for the most recent year, but discussion is cursory or lacks detail Not Evident (0%) Does not describe the differences between operating and capital leases Value 16 Does not describe the particular leases of the company 15 Does not discuss the impact the leases had on the company's financial statements 15 Leases: Building Meets \"Proficient\" criteria and uses concrete examples to illustrate claims Comprehensively discusses the advantages and disadvantages of leasing a building versus purchasing one Statement of Changes in Financial Position: Invest Meets \"Proficient\" criteria, and opinion is well supported with concrete examples Determines whether or not to invest in the company based on the SCFP and supports opinion Statement of Changes in Financial Position: Recommendations Meets \"Proficient\" criteria, and recommendations are well supported and logical Composes a memo to the CEO making recommendations that would effectively resolve any concerns identified in the SCFP Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-toread format Submission has no major errors related to citations, grammar, spelling, syntax, or organization Discusses the advantages and disadvantages of leasing a building versus purchasing one, but discussion is cursory or lacks detail Determines whether or not to invest in the company based on the SCFP, but does not support opinion, or support for opinion is weak or illogical Composes a memo to the CEO making recommendations to address concerns identified in the SCFP, but recommendations would not effectively resolve concerns Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Does not discuss the advantages and disadvantages of leasing a building versus purchasing one 15 Does not determine whether or not to invest in the company 16 Does not compose a memo to the CEO 15 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas 8 Total 100% PK##########!#M##### ######[Content_Types].xml ##(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ ################################################################################ #######################################M0#HW#P=q(#W 4# gm= 6#Dg'gqw6{u"##WgDQ6x(#P-_Z##0l{)QW#! 2$#FF #xQ!P;##E#l bV[\\fG3#o8@###,_F#`:N1&P#+#r6oWBd*#XWB2OL7qzF##[^z##`#O###'L#pT#Dd##! #4E5zA#f" x#/$#ZAw>tSx? ##*B##3o +0p ####K^+~,9=#ISdNG#9n#####PK##########!######N#######_rels/.rels ##(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ ################################################################################ #######################################j0 @Q#N/c###[IL#jN? b)>#o#####PK##########!#? #'d###*I######word/document.xml=n8# ^`#HlEIc}9 %:D#i~coT-9  r#f##E Us94BWx#f#P#^*_6@g}#I#h r,#"94u#80pG t#e#N# q&[gD#G 'v{8#7`r#eTWn? #fbBi'(U#xF)&qz#I`{/Coy@#,"r5t#}2#touvmV$P#"5 ? 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X#h}hM_3rV bK> ####PK##-#########!#M##### ####################[Content_Types].xmlPK##-#########! ######N#####################_rels/.relsPK##-#########! #0s###G#################2###word/_rels/document.xml.relsPK##-#########!#? #'d###*I################ ##word/document.xmlPK##-#########!#x'k### ################z"##word/header2.xmlPK##-#########!#q#####################T %##word/header1.xmlPK##-#########! ##W_########################################K*##word/footnotes.xmlPK##-# #######! #:a#.###.###/#############],##word/embeddings/Microsoft_Excel_Worksheet1.xlsxPK ##-#########!#>iH#####################O##word/theme/themeOverride1.xmlPK###########!#T^J####################U##word/charts/chart1.xmlPK##-#########! #M#m######!#############^Z##word/charts/_rels/chart1.xml.relsPK##-#########! ####P#################[##word/theme/theme1.xmlPK##-#########! #Ja####\\#################a##word/settings.xmlPK##-#########!#%#$fd ##zx################f##word/styles.xmlPK##-#########!# %fp###nX################|s##wordumbering.xmlPK##-#########!#t? 9z###(##################z##customXml/_rels/item1.xml.relsPK##-#########! #####U#################"|##customXml/itemProps1.xmlPK##-#########! #5e#X####################a}##customXml/item1.xmlPK##-#########!#h y####################^~##docProps/core.xmlPK##-#########!#d####? ####################word/people.xmlPK##-#########!##Je#### ##################word/fontTable.xmlPK##-#########! #bL#######################word/webSettings.xmlPK##-#########! #ds######################docProps/app.xmlPK##########G####### Running head: INCOME TAXES AND PENSIONS 1 Income Taxes and Pensions Prof: Piper Ismail Amar Southern New Hampshire University April 7, 2016 INCOME TAXES AND PENSIONS 2 Income Taxes A. If Congress voted to eliminate corporate taxes, what would be the effect on Sear's income statement and balance sheet? If a corporation wants to reduce the effects of corporate taxes which creates double taxation on their side, they would shift it to the consumers the product. But when they eliminate the corporate taxes, they would do so by relying on much debt financing. This therefore would bring an effect whereby the company's debts increase, thus increasing the liabilities, and it would lead to increased revenue on the income statement. In corporate taxation, the assets of the company are used to determine the marginal corporate tax basis. If this were the case, the assets of the company would thus have to be decreased hence leading to an overall decrease in the balance sheet, (Contos, 2005). If the corporate tax rate is lowered, a company with deferred tax liability would be required to decrease the balance sheet account and increase the company's income statement earnings figure, (Haskins and Simko, 2011). B. The income tax rate for Sears, and the effect of increasing in income of $2,000,000 on Sears. Federal income tax rate for Sears Holdings Corporation is 35% (benefit). Since the company had a net income loss last year of $1,385 million this would offset the loss by $2 million; remaining income (loss) before tax would be $1,384.385 million. INCOME TAXES AND PENSIONS 3 C. The effects on the balance sheet and income statement. It would have an effect of increasing the balance sheet while the income statement would decrease. This is simply because when the income (loss) decreases by a certain figure, it means the expenses have decreased by a certain amount, hence leading to a general decrease in the income statement. The GAAP permits that firms with net losses to have carry-forward or carryback offsets and the corporate tax rate could increase but they won't be taxed for a loss, (Haskins and Simko, 2011). D. The amount of money Sears paid in foreign taxes last year, and the percentage of its income is United States vs. foreign. The company paid foreign income tax of $17 million last year which was a tax benefit. The Income (loss) of the company in U.S.A was $1,420 million while foreign income was $35 million; Total Income before taxes was thus a net income loss of $1,385. The U.S.A percentage of this income loss is thus 102.5% while foreign is 2.5%. Pensions The company has adopted domestic pension plan, the defined benefit plans. The reason as to why the company adopted this plan is because of the uncertainties that may greatly affect the cash deficiency and therefore can feel freely to cease its contribution or terminate it at their own wish. It also serves as a motivation factor which also establishes a legacy that would go on forever. This is therefore something that builds the image of the company. For instance, they pay for medical bills of their former employees who are under post-retirement. INCOME TAXES AND PENSIONS 4 The effect of the pension plan on Sears's financial statements. The pension plan has an effect on the income statement as it's recorded as an expense which therefore reduces the net profit (losses) thus decreasing the income statement. It would have a similar effect on the balance sheet since the company funds the pension plans by itself using the available cash. An important factor is that pension plans would keep on reducing the assets and if they decrease to a certain level such that they are less than the required amounts, the company is required to cease the contribution and incase of surplus, they would be taxed, (Yuan and Clara, (2010) . Other option plans of retirement plans are the defined contribution plans; Include other plans such as profit sharing, stock bonus plan, money purchase pension plan, combination plans, thrift or saving plan, employee stock ownership plan (ESOP), 401 k plans, target benefit plans, cash balance plans, b plans, SIMPLE and the SEP. The Simplified Employee Plan (SEP) is the best plan for this company as they are less complicated, require minimal disclosure and reporting requirements. If the employer had a salary deduction policy, it would still remain so under this contribution plan. It also has the advantage of a favored tax basis on the side of the employee. I therefore strongly recommend this plan not only because of the above advantages but also because the burden of contribution would not rest upon the employer alone as is the case, but also on the employees. This would reduce the cash deficiency the company is experiencing. INCOME TAXES AND PENSIONS 5 References George Contos, (2005) An essay on the effects of taxation on the corporate financial policy: Internal Revenue Service. Vol. 98, pp. 415-423. Mark E. Heskins, & Paul J. Simko, (2011) What a corporate tax cut might mean: An analysis of deferred taxes. Virginia; University of Virginia. Juan Yermo and Clara Severinson, (2010) The impact of the financial crisis on defined benefit plans and the need for counter-cyclical funding regulations. France, OECD<>