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

Two-Stage ABC for Manufacturing
Detroit Foundry, a large manufacturer of heavy equipment components, has determined the following activity cost pools and cost driver levels for the year:

The following data are for the production of single batches of two products, C23 Cams and U2 Shafts during the month of August:

Determine the unit costs of C23 Cams and U2 Shafts using ABC.
Round cost per gallon to two decimal places.

In terms of having a small company (family owned) --> posted a similar question already with way more information but no one has answered yet.

1. How should the compliance or lack of compliance with government regulations (such as filing of a W-2 or 1099 for the president of the company) be addressed ?????

2. What if management doesn't comply???

3. Should legal counsel be hired ? Is a forensic accountant required ???

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 32,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 25 $ 800,000 Direct labor 10 320,000 Variable manufacturing overhead 3 96,000 Fixed manufacturing overhead 7 224,000 Variable selling expense 4 128,000 Fixed selling expense 6 192,000 Total cost $ 55 $ 1,760,000 The Rets normally sell for $60 each. Fixed manufacturing overhead is $224,000 per year within the range of 22,000 through 32,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 22,000 Rets through regular channels next year. A large retail chain has offered to purchase 10,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 10,000 units. This machine would cost $20,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Polaski Company expects to sell only 22,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 10,000 Rets. The Army would pay a fixed fee of $1.60 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 32,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 10,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

Steve Pratt, who is single, purchased a home in Spokane, Washington, for $400,000. He moved into the home on February 1 of year 1. He lived in the home as his primary residence until June 30 of year 5, when he sold the home for $725,000. (Leave no answer blank. Enter zero if applicable.)

a. What amount of gain will Steve be required to recognize on the sale of the home?

Tropic Zone Corporation experienced the following variances: materials price $260 U, materials quantity $1,260 F, labor price $590 F, labor quantity $370 F, and overhead $890 U. Sales revenue was $68,200, and cost of goods sold (at standard) was $38,200. Determine the actual gross profit.

Actual gross profit $

Dividends Per Share

Seventy-Two Inc., a developer of radiology equipment, has Shares of ownership of a corporation.stock outstanding as follows: 70,000 shares of cumulative preferred 3% stock, $20 A dollar amount assigned to each share of stock.par, and 410,000 shares of $25 par common.

During its first four years of operations, the following amounts were distributed as dividends: first year, $31,000; second year, $76,000; third year, $100,000; fourth year, $110,000.

Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0.00".

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Explain incremental revenues and incremental costs. Provide a business example for each of these terms.

On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,120,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $830,000, retained earnings of $380,000, and a noncontrolling interest fair value of $480,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 30 percent of the current year purchases remain in Smashing's inventory.

1. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.
2. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.

Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $450,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $8,000 per year.

Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $350,000. Scenic reported net income of $160,000. Placid Lake declared $150,000 in dividends during this period; Scenic paid $45,000. At the end of 2018, selected figures from the two companies' balance sheets were as follows:

During 2017, intra-entity sales of $100,000 (original cost of $52,000) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2017. In 2018, $140,000 in intra-entity sales were made with an original cost of $64,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year.

Each of the following questions should be considered as an independent situation for the year 2018.

1. What is consolidated net income for Placid Lake and its subsidiary?

2. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

3. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

4. What is the consolidated balance in the ending Inventory account?

5. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2017, Scenic sold land costing $35,000 to Placid Lake for $60,000. On the 2018 consolidated balance sheet, what value should be reported for land?

1. f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2017, Scenic sold equipment (that originally cost $150,000 but had a $65,000 book value on that date) to Placid Lake for $90,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2018, consolidation of these two companies to eliminate the impact of the intra-entity transfer?

2. f-2. For 2018, what is the noncontrolling interest’s share of Scenic’s net income?