Theformat requirements for the research assignmentsare as follows:

1. 1. Restate or repeat the questions;
2. 2. Provide your answers using complete statements and using proper grammar;
3. 3. Provide proper references from FASB Codification in proper form such as

ASC 350-20-35-3 or ASC450-20-25-2.

Provide proper references from IFRS in proper form, such as

IAS 10, para. 6 or IFRS 13, para. 8.

Note:The references must be specific to the paragraphs

Case 11-1 Polluter Corp. Polluter Corp. (the \"Company\"), an SEC registrant, operates three manufacturing facilities in the United States. The Company manufactures various household cleaning products at each facility, which are sold to retail customers. The U.S. government granted the Company emission allowances (EAs) of varying vintage years (i.e., the years in which the allowance may be used) to be used between 2010 and 2030. Upon receipt of the EAs, the Company recorded the EAs as intangible assets with a cost basis of zero, in accordance with the Federal Energy Regulatory Commission (FERC) accounting guidance for EAs. The Company has a fiscal year end of December 31. As background, in an effort to control or reduce the emission of pollutants and greenhouse gases, governing bodies typically issue rights or EAs to entities to emit a specified level of pollutants. Each individual EA has a vintage year designation. EAs with the same vintage year designation are fungible and can be used by any party to satisfy pollution control obligations. Entities can choose to buy EAs from, and sell EAs to, other entities. Such transactions are typically initiated through a broker. At the end of a compliance period, participating entities are required to either (1) deliver to the governing bodies EAs sufficient to offset the entity's actual emissions or (2) pay a fine. The Company currently emits a significant amount of greenhouse gases because of its antiquated manufacturing facilities. The Company plans to upgrade its facilities in 2014, which will decrease greenhouse gas emissions to a very low level. On the basis of the timing of the upgrade, the Company currently anticipates a need for additional EAs in fiscal years 2010-2014. However, upon completion of the upgrade, the Company believes it will have excess EAs in fiscal years subsequent to 2014 because of reduced emissions as a result of the upgrade. The Company currently has forecasted the updates to its facilities will cost approximately $15 million. As the Company operates in a capital intensive industry, analysts and investors focus on a number of important ratios and measures, including working capital, capital expenditures, cash flows from operations, and free cash flow. As a result, the board of directors and management provide forward-looking guidance on these ratios and measures and expend great effort managing these results in light of the Company's operational needs. The Company entered into the following two separate transactions in fiscal year 2010, which will impact the Company's results as presented in the statement of cash flows, which the Company prepares under the indirect method. 1. To meet its need for additional EAs in fiscal years 2010-2014, on April 2, 2010, the Company spent $3 million to purchase EAs with a vintage year of 2012 from Clean Air Corp. 2. In an effort to offset the costs of the April 2, 2010, purchase of 2012 EAs, the Company sold EAs with a vintage year of 2016 to Dirty Chemical Corp. for $2 million. Copyright 2010 Deloitte Development LLC All Rights Reserved. Case 11-1c: Polluter Corp. Page 2 Required: 1. What is the appropriate classification in the statement of cash flows in the Company's December 31, 2010, financial statements for its purchase of 2012 EAs from Clean Air Corp.? 2. What is the appropriate classification in the statement of cash flows in the Company's December 31, 2010, financial statements for its sale of 2016 EAs to Dirty Chemical Corp.? 3. If the Company reported its results pursuant to IFRSs rather than U.S. GAAP, how would the Company record the purchase and sale of its EAs differently? Copyright 2010 Deloitte Development LLC All Rights Reserved. Name: Van Le ACCT 352 Instructor: Ke Zhong Research Case 2 Date: 11/13/2016 Research Case 2 Golf-Travel, Inc. is a U.S. company that provides travel packages for individual golfers and corporate golf outings. The company has mainly focused on U. S. customers but has decided to expand its business globally. Ben Watson, the company's CEO, has decided that the best location for the company's European operations is Ireland due to Ireland's low 12.5% corporate tax rate. In January, 2013, Golf-Travel formally opened its European operations, called EuropeGolf in Portmarnock, Ireland as a wholly owned subsidiary of Golf-Travel. During 2013, the subsidiary's performance exceeded expectations by hosting almost 400 individual golf trips and 200 corporate outings. At the end of the year, the subsidiary reported pretax income of 324,260 and the subsidiary paid Irish taxes of 40,533, leaving a net income of 283,727. Requirements: 1. Ben Watson has asked you, the company's CFO, to research the U. S. GAAP and provide a summary for the tax issues of earnings of foreign subsidiaries. Especially, he is interested in understanding the different financial reporting issues of a strategy that remits the earnings back to the United States versus a strategy of permanently reinvesting the earnings back into the Irish subsidiary. 2. What would be your answers to the issues in Requirement 1 if it is under IFRS? ASC830-10-15-3 provides the guidance in the Foreign Currency Matters Topic applies to all foreign currency transactions in financial statements of a reporting entity and all foreign currency statements that are incorporated in the financial statements of a reporting entity by consolidation, combination, or the equity method of accounting. ASC830-10-15-4 states that for convenience, this Topic assumes that the reporting entity uses the U.S. dollar as its reporting currency. However, a currency other than the U.S. dollar may be the reporting currency in financial statements that are prepared in conformity with U.S. generally accepted accounting principles (GAAP). For example, a foreign entity may report in its local currency in conformity with U.S. GAAP. If so, the requirements of this Topic apply. ASC 830-740-15-3articulates that the guidance in this Subtopic applies to certain specified deferred tax accounting matters, specifically to the income tax consequences of changes to tax or financial reporting bases from their restatements caused by: a. Changes in an entity's functional currency b. Price-level related changes c. a foreign entity functional currency being different from its local currency. IAS 21 Para 6 states that an entity is required to determine a functional currency based on the primary economic environment in which it operates and generally records foreign currency transactions using the spot conversion rate to that functional currency on the date of the transaction. The company should use the second strategy whereby the earnings are permanently re-investing the earnings back into the Irish subsidiary. This strategy will reduce the foreign exchange rate risk which is unfavorable movement in the exchange rate in the foreign market hence reducing the losses. Additionally, the reinvesting in Irish subsidiary curbs the risk of depreciation of the domestic currency against the foreign currency hence stable cash inflows for the subsidiary company. Therefore, the amount, the subsidiary reported as pretax income of 324,260 and subsequently paying Irish taxes of 40,533, leaving a net income of 283,727 should not be exchanged to the US dollars as doing so, will result to a few net income to the company. Van, Your grade for the research case 1: 23.5/30. Please see my comments for details. Ke