Your accounting firm has just been hired to perform the audit of Justified Cloud ComputingInc (JCC) for the year ending ended Decemher 31.2018. JCC is a privately held company. You have been assigned to the engagemen tea for JCC. The lieldwork phase of the audit has begun and you and the engagement manager had a nal meeti wth the controller of JCC. Some of the information you gathered at that initial meeting is provided below along with the assignment you received from your engagement manager after this meeting. Justified Cloud Computing Inc. (the "Company" is a privately held provider of cloud-based software platforms for the Internet of Things (loT). The Company enables product businesses to become loT ervice businesses, and helps organiztions launch, manage, and monetize the deployment of loT worldwide The Company had previously awarded common stock to employees as share-based compensation in 2015. On October . 2018 Copany announced to employees an offer to repurchase shares of stock for S4.68 per share. On October 18. 2018 JCC purchased S10 million of common stock (S1 par value) from its current employees at a per-share price of $4.68. The common stock reacquired from the employees was then sold by the Company lo Well to Do Inc. (WTD) for S10 million (also at a price $4.68 per share) on November 20. 2018 JCC acted as a principal in both transactions with WTD and the employees. That is, the Company did not act as an agent to purchase shares from employees on behalf of WTD. On the basis of an independent third-party valuation, JCC concluded that the purchase price paid to the employees (S10 million) exceeded the fair value of common stock by $2.6 million. JCC recorded the acquisition of the stock from the employees as follows: October 18, 2018 Treasury Stock 10.000.000 10,000,000 Cash Required ram assignment from Engagement Manage The engagement manager has asked you to research the following accounting issue related to the expenditures for the year ending December 31.2018 and document your findings in an issue memo Question:rthe year ending December 31. 2018 financial statements what is the correct accounting treatment for the acquisition of the treasury stock? Ifnecessary, prepare an audit adjustment journal entry ies). This memoranda will be included in the audit workpapers. The engagement team has separately determined that the accounting implications of this issue is material to JCC's financial statements. The analysis supporting this determination can be found in the audit workpapers at AA-B Your accounting firm has just been hired to perform the audit of Justified Cloud ComputingInc (JCC) for the year ending ended Decemher 31.2018. JCC is a privately held company. You have been assigned to the engagemen tea for JCC. The lieldwork phase of the audit has begun and you and the engagement manager had a nal meeti wth the controller of JCC. Some of the information you gathered at that initial meeting is provided below along with the assignment you received from your engagement manager after this meeting. Justified Cloud Computing Inc. (the "Company" is a privately held provider of cloud-based software platforms for the Internet of Things (loT). The Company enables product businesses to become loT ervice businesses, and helps organiztions launch, manage, and monetize the deployment of loT worldwide The Company had previously awarded common stock to employees as share-based compensation in 2015. On October . 2018 Copany announced to employees an offer to repurchase shares of stock for S4.68 per share. On October 18. 2018 JCC purchased S10 million of common stock (S1 par value) from its current employees at a per-share price of $4.68. The common stock reacquired from the employees was then sold by the Company lo Well to Do Inc. (WTD) for S10 million (also at a price $4.68 per share) on November 20. 2018 JCC acted as a principal in both transactions with WTD and the employees. That is, the Company did not act as an agent to purchase shares from employees on behalf of WTD. On the basis of an independent third-party valuation, JCC concluded that the purchase price paid to the employees (S10 million) exceeded the fair value of common stock by $2.6 million. JCC recorded the acquisition of the stock from the employees as follows: October 18, 2018 Treasury Stock 10.000.000 10,000,000 Cash Required ram assignment from Engagement Manage The engagement manager has asked you to research the following accounting issue related to the expenditures for the year ending December 31.2018 and document your findings in an issue memo Question:rthe year ending December 31. 2018 financial statements what is the correct accounting treatment for the acquisition of the treasury stock? Ifnecessary, prepare an audit adjustment journal entry ies). This memoranda will be included in the audit workpapers. The engagement team has separately determined that the accounting implications of this issue is material to JCC's financial statements. The analysis supporting this determination can be found in the audit workpapers at AA-B
