Evade Pays Up Essay

1370 Words Mar 11th, 2015 6 Pages
ISSUE: How much should eVade Pays Up record sales tax in State X for particular time period?
BRIEF BACKGROUND OF COMPANY eVade, an online retailer, fulfills its online orders by shipping its products directly to customers in all 50 states. eVade does not have a brick-and-mortar store presence in any state, but does operate distribution centers in various states across the country, including State X. Consistent with its practice in all 50 states, eVade does not collect or remit sales tax to State X.
In recent court rulings, State X has taken the position that operating a distribution center within a state constitutes nexus and thus would subject that company to collect and remit sales tax on all sales within that state.
The following
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December 31, 2011 • Recognized $25 million
• As liability under Sales Tax Payable
March 15, 2012 • Carried over of $25 million from statement of 12/31/2011
• Plus the amount of accrued Sales Tax Payable from 1/1/12-3/1/12
June 15, 2012 • A decrease in Cash and the Sales Tax Liability accounts by $25 million
• Increase the Sales Tax Liability account by the amount accrued from 4/1/12-6/15/12

AUTHORITATIVE AND INTREPRETIVE GUIDANCE CONSIDERED
Refer to ASC 250-10-5-4 (Error Corrections)
Refer to ASC 250-10-45-23 (Discovery of an error in the financial statements of a prior period)
Refer to ASC 250-10-45-24 (Reporting the error items as error corrections in single period statements)
Refer to ASC 250-10-45-25 (Corrections Related to Prior Interim Periods of the Current Fiscal Year)
Refer to ASC 250-10-50-7 (Correction of an Error in Previously Issued Financial Statements)
Refer to ASC 250-10-50-8 (Disclosing the annual report for the adjustments year)
Refer to ASC 250-10-50-9 (Indicating the effects of restatement on the balance of retained earnings)
Refer to ASC 250-10-50-11 (Error Corrections Related to Prior Interim Periods of the Current Fiscal Year)
Refer to ASC 606-10-55-49 Superseded ASC 605-45-50-03
Refer to ASC 740-10-35-2 (New Information Affecting Measurement of TAX Positions
Refer to ASC 250-10-20 (Glossary)
DETAILED DISCUSSION, ANALYSIS,

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