Question 2

Access the most recent Form 10-K (year 2017) for both Exxon Mobil and Chevron and answer the following questions.

Required:

a. Determine whether each company’s foreign operations have a predominant functional currency. Discuss the implication this has for the comparability of financial statements between the two companies.

b. Determine the amount of translation adjustment, if any, reported in other comprehensive income in each of the three most recent years. Explain the sign (positive or negative) of the translation adjustment in each of the three most recent years. Compare the relative magnitude of the translation adjustments between the two companies.

The following information is for Sunland Auto Supplies:

The total dollar amount of assets to be classified as current assets is

$502000.

$138000.

$222000.

$360000.

Eaton Ross Puppet Company acquired a new plastic molding machine at the beginning of the current year at a cost of $ 450 comma 000. The asset has a 6​-year useful life for financial reporting purposes and is depreciated on a​ straight-line basis with no residual value expected at the end of its useful life. The company uses the​ double-declining balance method on its income tax returns. The company is subject to a 35​% tax rate. Compute the deferred tax portion of the income tax expense for the first 2 years. Complete the table below to compute the​ straight-line book depreciation and​ double-declining tax depreciation method through year 2 to determine the​ book-tax difference.​ (Round your calculations to the nearest​ dollar.)

1)During 2020, Kevin received the following items:

$5,000 unemployment compensation

$10,000 inheritance

$20,000 life insurance proceeds on account of mother’s death

How much is Kevin required to include in gross income?

2)

Len Landlord owns an apartment building. During the year he received:

Rent payments………………….$10,000

Security deposit………………...     2,500

Advance rent payment………….     5,000

How much must Len include in income?

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.25 direct labor-hours and direct laborers are paid $13.00 per hour.

In addition, the variable manufacturing overhead rate is $1.90 per direct labor-hour. The fixed manufacturing overhead is $88,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $28,000 per quarter.

Required:

1. Calculate the company’s total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole.

2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.

CVP with Activity-Based Costing and Multiple Products

Busy-Bee Baking Company produces a variety of breads. The plant manager would like to expand production into sweet rolls as well. The average price of a loaf of bread is $1. Anticipated price for a package of sweet rolls is $1.50. Costs for the new level of production are as follows:

Busy-Bee believes it can sell 600,000 loaves of bread and 200,000 packages of sweet rolls in the coming year.

Required:

1. Prepare a contribution-margin-based income statement for next year. Be sure to show sales and variable costs by product and in total.

Feedback

Remember a Contribution margin income statement calculates contribution-margin not gross profit.

2. Compute the break-even sales for the company as a whole using conventional analysis. Round your answer to the nearest dollar.
$

3. Compute the break-even sales for the company as a whole using activity-based analysis. Round your answer to the nearest dollar.
$

4. Compute the break-even units of each product in units. In your computations, round amounts to the nearest cent. Round your final answers to the nearest whole number of units.

Does it matter whether you use conventional analysis or activity-based analysis?
Yes

5. Suppose that Busy-Bee could reduce the setup cost by $100 per setup and could reduce the number of maintenance hours needed to 1,000. How many units of each product must be sold to break even in this case? Round your answer up to the next higher whole unit (for example, 50.3 units rounds to 51). In your computations, round amounts to three decimal places.

1. For each description/definition, select the appropriate completing the audit procedure.

   -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    When auditors become aware of facts that existed at the date of the financial statements and auditor's reports, auditors should require the client to disclose the facts and their impact on the financial statements to persons relying on the financial statements.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    A second audit partner in the firm performs this procedure to ensure engagement quality.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Settlement of litigation after the audit report date for an amount different than estimated in the financial statements is an example.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Responds directly to auditors' initial inquiries regarding litigation, claims, and assessments.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    The auditor summarizes uncorrected misstatements found throughout the audit and asks the client to record some of these adjustments in this process.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Includes statements regarding auditors' judgment of the quality of the client's accounting principles.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    A sale of bonds or capital stock is an example requiring the client to disclose the event.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Auditors bring the audit performed at an earlier date (before fiscal year end) up to date at fiscal year end.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    A PCAOB inspection or the audit firm's quality review may identify the auditors did not follow GAAS due to failure to complete the audit plan.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Auditors consider evidence obtained during the audit to determine whether substantial doubt exists about the client's existence in the future.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Discusses the absence of fraud activity by the client and its personnel and is obtained on the date of the auditor's report.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Written by the auditor and accepted by the client prior to the engagement.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Occur following the date of the auditors' report and is one of only two items that can be either oral or written.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    Can result in the auditor dual-dating the auditor's report.       -       A.       B.       C.       D.       E.       F.       G.       H.       I.       J.       K.       L.    The audit supervisor and audit manager complete this step as required by GAAS to ensure all appropriate steps in the audit plan were performed.

   A. Attorney letters B. Roll-forward work C. Management letter D. Representation letter E. Going concern assessment F. Proposed adjusting journal entries and uncorrected misstatements G. Communications with individuals charged with governance H. Subsequently discovered facts I. Subsequent events J. Omitted audit procedures K. Audit documentation review L. Engagement letter

Governments often receive interest on the temporary investment of capital debt proceeds. Some believe that governments are inconsistent in the way they report interest and other earnings on investments compared to interest on their debt. Explain this comment. Do you believe in reporting this incosistent?

David Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units in its beginning work in process inventory that were 60% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $126,200. An additional 71,000 units were started into production during the month. There were 22,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $398,250 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round your final answer to 3 decimal places.)

1.$7.601

2.$7.387

3.$7.366

4.$5.593

Explain two type of equity instruments indicating their keys distinct features

Renault entered into 2 lease contracts. The first one was a 6-year lease for equipment with a €2,000 monthly lease payment at the beginning of each month. Renault took passion of the equipment on 1/1/2017. The market rate was 9.5%. The second lease contract was a 5 year lease, beginning on 1/1/2017 for retail shops with a semi-annual payments of €36,000 due at the end of the period. Assume the market rate of interest on such transactions is 6.5%. Assume the first lease is a capital lease and the second lease is an operating lease.

1. Determine the present value of the first contract.

N =                  I/Y =                           PV =                            PMT =                         FV =

2. Determine the present value of the. Second lease.

N =                  I/Y =                           PV =                            PMT =                         FV =   

3. Prepare the appropriate journal entry for the first lease on 1/1/2017.
4. Prepare the appropriate journal entry for the second lease on 7/1/2017

On 1 July 2018 Alto Ltd purchased land for $4 000 000, in cash. Alto Ltd uses the cost model to account for land.

On 1 July 2018 Alto Ltd purchased equipment for $1 000 000, in cash. Alto Ltd uses the revaluation model to account for equipment and depreciates the asset over its estimated useful life of 5 years using the straight-line method. The disposal value at the end of 5 years was assessed as zero.

The following information concerning asset measurement was available:

Indicators of impairment and/or reversal of impairment existed at relevant dates.

Prepare journal entries to account for Alto ’s land and equipment from 1 July 2018 to 30 June 2020. Journal entries must comply with AASB 116 ‘Property, Plant and Equipment’ and AASB 136 ‘Impairment of Assets’. Show all working and provide any explanations necessary to support your answer.

Johnsn and Hill formed a company, and 2018 was their first year of operation.

a) To establish Johnson & Hill each contributed a total of $55,000 in exchange for common stock.

b) Johnson & Hillt specializes in high-end parties. The first year they conducted 96 events and revenue for the first year amounted to $480,000, of which 95% was to be paid by the date of the event and the remainder due within 30 days of the event

c) Clients owe $16,000 at the end of the year from the services provided in December.

d) At the beginning of the year, a storage building was rented, signing a two-year lease for $15,000 per year and making a $4,000 refundable security deposit. The first year’s lease payment and the security deposit were paid at the beginning of the year.

e) At the beginning of the year, the company purchased a computerized stage and lighting for $120,000 expected to be useful for twelve years. The company paid 20% down in cash and signed a four-year note at the bank for the remainder (with 10% interest-only to be paid annually until maturity). They also purchased a flatbed trailer to haul it with, for $8,000, also with an expected 15 year life. Johnson & Hill must lease a large truck to haul the trailer for each event, which costs $1,000 per day.

f) Other operating expenses, including wages, deprecation on other equipment, utilities, and rent on the storage building noted in (d) and (e) above, totaled $136,000 for the first year. No expenses were accrued or unpaid at the end of the year.

g) Johson & Hill purchased other equipment (tables & carts, ice machine, food heating trays and bags, helium tanks, music system, etc) for $10000 with an estimated life of 10 years and no salvage value. Salaries and wages for the year total $109467 including payroll taxes.

h) The company declared and paid a $50,000 cash dividend at the end of the first year.

i) Johnson & Hill is in the 35% corporate tax bracket.

1. Did the company generate more or less cash flow from operations than it earned in net income? Explain why there is a difference.

2. Compute, explain & analyze the following ratios:

a) Gross Profit

b) Operating Leverage ratio

c) Return on common equity

d) Current ratio

e) Operating Cash flow to current liabilities

f) Long-term debt to assets

g) Interest coverage