Construction (Nailed It! or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 20X1, the Company entered into an agreement with a customer, Village Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Village Apartments once the construction of the entire building is complete. In addition, Village Apartments has various design requirements that would require Nailed It! to incur significant costs to rework the building prior to selling it to a customer other than Village Apartments. To construct the apartment building, Nailed It! acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Village Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in a Village Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:

•As of June 30, 20X1, in total, Nailed It! has purchased $75,000 of component parts. As of June 30, 20X1, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, Nailed It! has incurred $12,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended June 30, 20X1.

•During the three months ended September 30, 20X1, Nailed It! purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 20X1. During the three months ended September 30, 20X1, Nailed It! incurred an additional $50,000 of direct costs to integrate the component parts into the Village Apartments construction project.

•As of September 30, 20X1, Nailed It! determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.

•As of December 31 20X1, the construction project was completed. During the three months ended December 31, 20X1, Nailed It! purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 20X1. Nailed It! has incurred $187,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended December 31, 20X1.

If Village Apartments cancels the contract, Nailed It! will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is
Case 7: Nailed It! Construction Page 2 Copyright 2018 Deloitte Development LLC All Rights Reserved. considered to be a reasonable margin. Nailed It! will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by Nailed It!.

Required:

1.Does the performance obligation meet any of the criteria or recognition of revenue over time?

2.How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods:

2a.The three months ended June 30, 20X1?

2b.The three months ended September 30, 20X1?

2c.The three months ended December 31, 20X1?

Q3. What factors are used to determine a reporting entity’s functional currency? Provide at least oneexample for which a company’s local currency may not be its functional currency.

Q5. Explain the differences between translation and remeasurement.

Mills Corporation acquired as a long-term investment $300 million of 7% bonds, dated July 1, on July 1, 2018. Mills determined that it should account for the bonds as an available-for-sale investment. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Mills paid $340 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $320 million. Required: 1. & 2. Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2018, balance sheet? 4. Suppose Moody’s bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $352 million. Prepare the journal entries to record the sale. Record any reclassification adjustment. Record the sale of the investment by Mills.

Differentiate among 4 various legal documents used in business transactions. Example: What is the difference between a Warranty deed and a Mortgage? That question counts as one document.

C issued a five percent five year $10,000,000 of bonds on June 1, 2019, interest payable each May 31. The market rate of interest was six percent. There were attorney and underwriter’s fees of $110,000 and C incurred additional salary costs of $35,000 relating to the bond issuance. Record the entries for June 1, 2019, December 31, 2019, and May 31, 2020.

6/1/2019                Cash                            9,890,000

                              Bond Issuance costs    110,000

                              Bonds Payable                                    10,000,000

                              Salary Expense            35,000

                              Cash                                                    35,000

For each audit activity, identify the PCAOB assertion that matches with the activity. Each activity has one answer, but the assertions are used more than once.

For each audit activity, identify the PCAOB assertion that matches with the activity. Each activity has one answer, but the assertions are used more than once.

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred during December 2021 and the first week of 2022. 2021 Dec. 17 Purchased 145 Grocers’ Supply Corporation bonds at par for $652,500. 28 Received interest of $3,800 from the Grocers’ Supply Corporation bonds. 31 Recorded any necessary adjusting entry relating to the Grocers’ Supply Corporation bonds. The market price of the bond was $5,000 per bond. 2022 Jan. 5 Sold the Grocers' Supply Corporation bonds for $688,750.

Required:
1. Prepare the appropriate journal entry or entries for each transaction.
2. Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.

A computer operator at the local data processing center decides to visit work on a Monday evening. She has a key to the outside door, and since there is no key required for the computer room, she simply walks into the computer room. The operator, who is really one of the nation’s most notorious computer programmer/hackers (having been convicted five time for manipulating various firms’ data files), opens the documentation bookcase, located in the corner of the computer room. In the bookcase she finds the procedural documentation, the systems documentation, user manuals, application documentation, and operator manuals. She examines the documentation to understand the payroll program and to find the location of the payroll files. She accesses the information systems library, which is available to all computer operators at all times, accesses the payroll program, reprograms it, and runs a payroll job that creates one electronic funds transfer (to a new account opened by the operator under an assumed name). On Tuesday, the operator transfers the funds to a Swiss bank account and does not show up for work.

        Required

Prepare a summary that details any internal controls violated in this situation.

1)  Explain the primary benefits of a business education?

2) Why is pursuing an MBA immediately after finishing an undergraduate degree generally a bad idea?

3) briefly describe the various alternatives to a formal business education.?

4) Explain the difference between “training” and “education”. Then explain the role of each in higher education (and specifically in business school)?

5)  What does a business degree signal to an employer?

6) Briefly describe the various formats for a business degree?

1.

A corporation issues a $900,000, 10%, 25-year mortgage note. The terms provide for annual installment payments of $99,151. What is the remaining unpaid principal balance of the mortgage payable account after the second annual payment?

Group of answer choices

$889,689

$890,849

$887,689

$880,782

$889,374

Suppose the depreciation rate of capital decreased at time t* permanently. How would this affect real wage rate, real rental rate, real interest rate and price level in long run and very-long run in a closed market economy?

A: The Bustillo Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $4 per direct labor-hour; the budgeted fixed manufacturing overhead is $84,000 per month, of which $15,900 is factory depreciation. If the budgeted direct labor time for November is 7,900 hours, then the total budgeted manufacturing overhead for November is? $115,600 / $99,700 / $131,500 / $84,000

B: Bustillo Inc. cost formula for its vehicle operating cost is $2,920 per month plus $322 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month was $8,350. The spending variance for vehicle operating cost in December would be closest to? $278 U / $278 F / $922 U / $922 F

C: Bustillo Inc. uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $56,760 per month plus $2,626 per flight plus $9 per passenger. The company expected its activity in February to be 63 flights and 262 passengers, but the actual activity was 62 flights and 263 passengers. The actual cost for plane operating costs in February was $220,700. The plane operating costs in the planning budget for February would be closest to? $224,556 / $223,326 / $221,939 / $220,700

C2: A total of 6,850 kilograms of a raw material was purchased at a total cost of $21,920. The materials price variance was $1,370 favorable. The standard price per kilogram for the raw material must be? $0.20 / $3.00 / $3.20 / $3.40

D: Bustillo Corporation makes a product with the following standard costs:

In January the company produced 3,320 units using 13,280 pounds of the direct material and 2,776 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $14,040. The actual direct labor cost was $57,895 and the actual variable overhead cost was $25,260. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for January is? $401 F / $401 U / $2,119 U / $2,119 F

E: Last year, Bustillo's division had total sales of $13,420,000, net operating income of $1,261,480, and average operating assets of $2,684,000. The company's minimum required rate of return is 15%. The division's margin is closest to? 9.4% / 47.0% / 62.7% / 20.0%

Part 1

Department Direct Expenses Square Feet Sales Advertising $ 20,000 1,680 Administrative 30,000 1,260 Shoes 128,000 10,290 $ 179,800 Clothing 19,000 7,770 130,200 The advertising department developed and distributed 130 advertisements during the year. Of these, 26 promoted shoes and 104 promoted clothing. Utilities expense of $75,000 is an indirect expense to all departments. Complete a departmental expense allocation spreadsheet for Coconut Shop. The spreadsheet should assign (1) direct expenses to each of the four departments, (2) the $75,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising department’s expenses to the two operating departments on the basis of the number of ads placed that promoted a department’s products, and (4) the administrative department’s expenses to the two operating departments based on the amount of sales.