On June 21, 2018, Duckwall Co. purchased and placed in service $3,185,000 of 5-year recovery property (not an SUV). It is used 100% for business and Is the only property placed in service during the year.

What is the maximum cost recovery deduction available if the Duckwall Co.​ has taxable income of $1.5 million before the cost recovery deduction?

The Duckwall Co. does not elect out of Section 179 expensing or the additional first-year deprecation deduction.

A.   $1,722,000

B.   $3,185,000

C.   $2,037,000

D.   $1,500,000

(A)

Supply Ltd entered into a non-cancellable five-year lease arrangement with Customer Ltd on 1 July 2019. The lease is for an item of machinery. There are to be five annual payments of $315 000, the first being made on 30 June 2020. The implicit interest rate is 12%. The Machinery is expected to have an economic life of six years, after which time it will have an expected residual value of $210 000. There is a bargain purchase option that Customer Ltd will be able to exercise at the end of the fifth year for $280 000. Customer Ltd determined that this contract contains a lease.

REQUIRED:

Prepare the journal entries in the books of the lessee (Customer Ltd) from 1 July 2019 to 30 June 2020 (the end of the reporting period). Show all working.

(B)

Customer Ltd enters into a 10-year contract with Supplier Ltd for the right to use two specified physically distinct dark fibres within a larger cable connecting Hong Kong to Tokyo. Customer Ltd makes the decisions about the use of the fibres by connecting each end of the fibres to its electronic equipment (i.e., Customer ‘light’ the fibres and decides what data and how much data to transfer). If the fibres are damaged, Supplier Ltd is responsible for the repairs and maintenance. Supplier Ltd owns extra fibres but can substitute those for Customer Ltd’s fibres only for reasons of repairs, maintenance or malfunction.

REQUIRED:

Determine whether the contract contains a lease. Please explain and justify your conclusion according to AASB 16.

2. On-the-Go, Inc., produces two models of traveling cases for laptop computers: the Programmer and the Executive. The bags have the following characteristics:

The total fixed costs per year for the company are $678,000.

Required:

a. What is the anticipated level of profits for the expected sales volumes?

b. Assuming that the product mix is the same at the break-even point, compute the break-even point. (Round your final answer up to the nearest whole unit.)

c. If the product sales mix were to change to nine Programmer-style bags for each Executive-style bag, what would be the new break-even volume for On-the-Go? (Round your final answer up to the nearest whole unit.)

Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 165,000 units (produced and sold):

Required:

a. Compute Breed’s unit selling price that will yield a profit of $560,000, given sales of 165,000 units. (Round your answer to 2 decimal places.)

b. Compute Breed’s dollar sales that will yield a projected 20 percent profit on sales, assuming variable costs per unit are 50 percent of the selling price per unit and fixed costs are $651,000.

c. Management believes that a selling price of $7.80 per unit is reasonable given current market conditions. How many units must Breed sell to generate the revenues (dollar sales) determined in requirement (b)? (Round your final answer to nearest whole unit.)

Case A - Report

Value: 15%

Due Date: 19-Aug-2018

Return Date: 07-Sep-2018

Length: 2000 words

Submission method options: Alternative submission method

Task

back to top

Background:

You a member of the audit team at Miller Yates Howarth (MYH), an accounting firm with offices throughout the major regional centres of NSW and Queensland. Although a medium sized firm by national standards, MYH is the second largest regional accounting firm in Australia. Most of MYH’s audit clients are in the agriculture, mining, manufacturing and property industries. All those industries are currently under pressure, either from a downturn in commodity prices or fierce competition from overseas competitors. MYH have now been appointed auditors of a community bank. Two audit directors have previous experience auditing in the banking sector and need to raise the awareness of staff with respect to the governance issues that have recently impacted the banking sector.

Question 1 (7%)

Required:

You have been asked to:

read audit standard ASA315 focusing on audit responsibility with respect to client governance,

read the web page on the ASIC report on the Commonwealth bank which details the governance issues raised by ASIC (http://www.apra.gov.au/MediaReleases/Pages/18_17.aspx), and

prepare a report that:

summarises and justifies the auditor’s responsibility to review the governance of an audit client, and

Includes a table for use in the audit which explains the impact of each of the ASIC identified Commonwealth Bank governance issues on audit risk. The table should further explain why each of the ASIC recommendations would reduce audit risk. The template below should be used.

Question 2 (3%)

David Little is a senor working at MYH and is part of a 3-person team working on a client’s material loan application that needs to be finished and delivered to the partner on Monday morning. The team are working all weekend to get it finished. There is a strong incentive for the team members, as a well prepared and successful application will ensure that this major client is retained within the firm and raise the standing of the team members in the firm. On Sunday morning, one of the team, John, calls in sick. The rest of the team work harder and get the job done. When David get home exhausted on Sunday night, his flatmate says, “I saw John and his girlfriend at that new restaurant in town today, I thought he was working in your team.”

What should David do? David doesn't think that it is fair if John gets the same kudos as the rest of the team when he did not put in the same amount of effort but he is David's friend. David and John play on the same touch football team and often spend time with each other after work and at weekends. Should David tell the partner or are there other options?

Required:

Outline the ethical issues and your decision using the American Accounting Association decision model. Use the following template to guide your answer:

Question 3 (3%)

Required:

Explain the role that incorporation of auditors and a statutory cap on auditors’ liability have on the limitation of auditors’ liability.

Rationale

Accounting Module assessment contains three parts (Parts 1, 2, and 3). Please follow the instructions carefully.

Requirements

Part 1:

Prepare the journal entries for each set of transaction data below.

Post the transactions in the ledger.

Extract the unadjusted trial balance as of January 31 of this current year.

Part 2:

For this section, prepare the following adjusted journal entries.

Record depreciation of $1,000 for equipment.

Accrue unpaid wages of $715.

Accrue unpaid utilities of $420.

Part 3:

Prepare an Adjusted Trial Balance as of January 31 of this year.

Submit your completed assessment to the Dropbox before the end of Week 8.

Transaction data

Jonathan Swiss owns the Sports Watch Repairs Store. He provides the transactions relating to the month of January this year.

January 2          Invested $10,000 cash as well as providing watch repair equipment with a valuation of $4,800 (Hint: Treat watch repair equipment as part of capital.)

January 4             Paid first month's rent of $900 cash

January 6             Received $2,500 cash for watch repairs

January 8             Purchased supplies on account from Sears for $500

January 9             Repaired a vintage watch on account for $1,500

January 9             Paid $575 cash for wages

January 12           Purchased watch repair equipment for $1,200 cash

January 13           Received $5,500 cash from watch repairs

January 16           Purchased equipment on account from Sears for $1,000

January 18           Paid $520 cash for advertising expense

January 20           Withdrew $750 cash for personal expenses

January 22           Received $950 cash on account for work done on January 9

January 23           Paid $475 cash for wages

January 26           Received $7,000 cash from watch repairs

January 27           Paid $850 cash on account for the January 16 transactions

January 30           Received $480 cash from repairs previously done on an antique watch

Please complete in a copy and paste form (and not an attachment). PLEASE!!! Thank you

Case B - Report Value: 20% Due Date: 16-Sep-2018 Return Date: 05-Oct-2018 Length: 3000 words Submission method options: Alternative submission method Task back to top Background You are a manager in the audit division at Miller Yates Howarth (MYH), an accounting firm with offices throughout the major regional centres of NSW and Queensland. Although a medium sized firm by national standards, MYH is the second largest regional accounting firm in Australia. Most of MYH’s audit clients are in the agriculture, mining, manufacturing and property industries. All those industries are currently under pressure, either from a downturn in commodity prices or fierce competition from overseas competitors. Ratios extracted from an unaudited set of financial reports at 30 June 2018 together with audited comparatives for the year ended 30 June 2017 and 2016 are set out below for your review. You are gathering information to prepare the audit plan of Trunkey Creek Wines Limited for the year ended 30 June 2018. Trunkey Creek Wines (TCW) is one of MYH’s most significant and longstanding clients. The following information has been gathered to date. Principal activities of TCW • growing grapes for wine production; • production and distribution of red, white and sparkling wines; • beef cattle production on land surplus to grape production; and • investment of surplus funds. TCW was originally a family company incorporated in 1968 and has operated successfully and profitably since that date. In the 1990’s shares were sold to a small number of investors to increase funds for the development and upgrading of the winery and the purchase of additional land for the vineyards. Insufficient rainfall had meant that some land was no longer suitable for wine grape production, as a result, TWC moved into Wagyu beef cattle production on this surplus land. The Wagyu operation is now starting to return a profit. TWC now find that the 2 degrees increase in temperature at some vineyards is affecting the production of sparkling wine and are now looking at purchasing land in cooler climates. TWC has built up a strong following for their sparkling wine which earns significant profits in both domestic and overseas markets. TWC are currently negotiating the land purchase and part funding in part from medium term bank loans. The remaining purchase price will be sourced from surplus funds. The Wagyu beef is sold through the Wagyu Selling Group (WSG) in which TWC has shares. These shares form a material part of TWC’s investment portfolio. WSG buys, butchers and sells the Wagyu beef to high end domestic restaurants and regularly sends frozen shipments to Japan and China. TWC are heavily marketing their pinot, both domestically and overseas, as a perfect accompaniment to the Wagyu beef. The directors of TCW are: Mrs Claire Harewood, Chairman. Mrs Harewood has significant experience in the industry and replaced her husband as chair when he died 10 years ago. Mr Phillip Strange, Chief Executive Officer Mr. Joe Quade Mr Steven Harewood, son of Claire Harewood and has oversight of the Wagyu beef operation Dr Mary Owens Ms Hilary Jones Mr Geoffrey Owens Your audit partner, John Richards, has approached you and advised that there are several areas he is concerned about and he wants to you to report back to him about these areas before you complete your audit program. These areas and accounts are: • Accounts receivable • Investments • Property assets • Marketing expense Ratio 2018 (Unaudited) 2017 (Audited) 2016 (Audited) Return on equity % 10.80 17.5 15.2 Return on beef production assets % 1.67 -0.82 -3.45 Return on grape and wine production assets % 12.2 14.5 16.2 Gross margin % 24.5 30.00 31.76 Net profit margin % 14.38 20.27 17.85 Marketing expense % of total S & A expenses 23.67 17.89 15.2 Times interest earned 6.67 7.51 8.10 Days in inventory - wine 367 423 460 Days in accounts receivable - wine 50.2 60.65 53.24 Days in accounts receivable - beef 57 36 24 Current ratio:1 2.80 2.54 2.66 Quick asset ratio:1 1.18 1.15 1.20 Debt to equity ratio:1 0.54 0.63 0.67 Internal control The financial controller at TCW has been refining the system of internal controls and informs you, at the planning stage of the current year's audit, that he has put together an internal control manual for the company. He has stated that this manual will create greater awareness of controls in the company, particularly with management which, in the past, has not been overly conscious of the need to implement and enforce effective internal controls. Management staff receive bonuses based on certain agreed-upon target ratios which include measures such as targeted monthly sales volumes, variance of actual to budget departmental overheads and profit before interest and tax. The Board takes an active interest in the performance of the company and is quick to request explanations on variances from the agreed-upon monthly budgets. Two years ago, the company devoted significant time and resources to the development and implementation of a new IT system. All teething problems associated with the implementation phase have now been resolved, and the financial controller is satisfied that the automated controls in place are assisting in producing accurate and complete accounting records. The management accountant also looks after the IT function as the position is not regarded by management as being a full-time job. Once application programs have been tested, strict password control exists over access to the programs. Passwords are not required for access to databases. To assist in the planning for the current year's audit engagement, you extracted the following information from a review of the systems notes in the permanent file and a perusal of the new internal control manual: There are three section managers, one each for grape production, wine production and beef production. Each can order supplies for their respective operations up to a limit of $10,000 for each order. Orders between $10,000 and $30,000 must be approved by the management accountant. Orders over $30,000 must be approved by the CEO. Orders over $50,000 must be approved by the Board. Orders must be made through the computer ordering system which has direct links to the approved suppliers. Supplier information is contained in a supplier master file. Each supplier has a unique supplier code. If a section manager orders from an unapproved supplier, the order is rejected and sent to the management accountant for approval. The supplier information file is maintained by the accounts clerk. Changes to the file are approved manually by the management accountant. When supplies are received at the winery, the storeman checks the supplies received to the online copy of the order and the delivery docket provided by the supplier. Any discrepancies are noted on the online copy of the order. The delivery docket is filed by the storeman in a folder that is kept at the winery. The invoice is received electronically from the supplier and matched to the order by the accounts clerk. If the order and the invoice match the invoice is included in a payments file. The payments file is approved online by the management accountant once a week and used to generate an ABA file which is then uploaded to the bank by the management accountant. When the payments file is approved by the management accountant, the invoice is automatically recorded as being paid in the accounting system. When services such as repairs are ordered for the winery by the wine production manager, a service order is generated within the computer system and automatically sent to the service provider. When the service has been delivered, the wine production manager or the storeman signs the service delivery docket on the service man’s tablet. The invoice from the service company, with a copy of the signed service delivery docket, is received online by the accounts clerk. The accounts clerk checks the signed service delivery docket to the invoice and the order and adds the invoice to the payments file for final approval by the management accountant. In the case of discrepancies, the accounts clerk contacts the supplier and the wine production manager to resolve the issue. Payments are not made until the issue has been resolved. Required Write a report, including a brief executive summary, to your managing partner that addresses the questions below. Where indicated, use the required format to answer that question. Question 1A 8% Analyse the ratios and additional information associated with the four accounts listed by your audit partner, John Richards. Identify the potential audit risks and any audit steps that need to be undertaken to reduce audit risk. Answer this question using the following table: Account Analysis Audit Risk Audit Steps to reduce risk Question 1B 2% Analyse the ratios and additional information to outline business risks that TWC faces. Question 2A 7% Identify the internal controls in the system that are potentially effective, the risk that the control could alleviate and one test of control for each of the identified potentially effective controls. Answer this question using the following headings: Effective control Risk alleviated Test of control Question 2B 2% List and justify the weaknesses in internal control for purchases and accounts payable. Weakness Justification Rationale back to top This assessment task will assess the following learning outcome/s: be able to demonstrate risk management methodologies and the role of internal controls in an audit context. be able to design an audit plan and select and apply appropriate audit procedures for a financial statement audit. be able to exercise critical and reflective judgement and appreciate the value of ethical practice.

Just like the balance sheet distinguishes current assets from non-current ones, it also reports current and non-current liabilities?

What is the difference between these two categories?

Why do we distinguish current items from non-current ones?

2. Carl Corporation designs and produces a line of golf equipment and golf apparel. Carl has 150,000 shares of common stock outstanding as of the beginning of the year. Carl has the following transactions affecting stockholders’ equity during the year.

March 1 Issues 60,000 additional shares of $1 par value common stock for $50 per share. May 10 Repurchases 10,000 shares of treasury stock for $58 per share. June 1 Declares a cash dividend of $1.00 per share to all stockholders of record on June 15. July 1 Pays the cash dividend declared on June 1. October 21 Reissues 5,000 shares of treasury stock purchased on May 10 for $62 per share.

Required: Record each of these transactions (10 points).

Kansas Enterprises purchased equipment for $60,000 on January 1, 2015. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years.

(1) Using the straight-line method, depreciation expense for 2015 would be: $   




(2) Using the double-declining balance method, depreciation expense for 2016 would be: $   



7 / 10

4. Crestview Estates purchased a tractor on January 1, 2015, for $65,000. The tractor’s useful life is estimated to be 30,000 miles and has a residual value of $5,000. If Crestview used the tractor 5,000 miles in 2015 and 3,000 miles in 2016, what is the balance for accumulated depreciation at the end of 2016 using the activity-based method?

$   



5. The Surf’s Up issues 2,000 shares of 5%, $100 par value preferred stock at the beginning of 2014. All remaining shares are common stock. The company was not able to pay dividends in 2014, but plans to pay dividends of $28,000 in 2015. Assuming the preferred stock is cumulative.  

(1) The annual cash dividend normally paid to preferred stock is:

$   



(2) The cash dividend paid to common stockholders in 2015 is:

$   

At the beginning of the​ year, office supplies of $1,200 were on hand. During the​ year, Tempo Air Conditioning Service paid $2,000 for more office supplies. At the end of the​ year, Tempo has $1,000 of office supplies on hand.Read the requirements.

Requirement 1. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an asset account. Post the adjusting entry to the Office Supplies and Supplies Expense​ T-accounts. Make sure to include the beginning balance and purchase of office supplies in the Office Supplies​ T-account.

Now post the adjusting entry to the Office Supplies and Supplies Expense​ T-accounts. Enter the beginning balances on the first line of each account. Use a ​"Jan. ​1" reference to show the beginning balance. Make sure to include the purchase of office supplies in the Office Supplies​ T-account, then post the adjusting entry. Use a​ "Bal." reference to show the ending balance of each account.

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that date, Abernethy has the following trial balance:

During 2017, Abernethy reported net income of $101,000 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $152,000 while declaring and paying dividends of $39,000.

Assume that Chapman Company acquired Abernethy’s common stock for $696,650 in cash. As of January 1, 2017, Abernethy’s land had a fair value of $124,300, its buildings were valued at $200,000, and its equipment was appraised at $305,750. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Social Media, Inc. (SMI) has two services for users. Toot!, which connects people with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results.

Required:

a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs.

b. Based on the rates computed in requirement (a), what is the profit for each service?

C. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering cost to allocate administrative costs.

D. Based on the rates computed in requirement (c), what is the profit for each service?

List the conditions that must be met in order to claim qualifying children and qualifying relatives as dependents. Briefly explain each one.

Select the requirements applicable to all dependents​ (qualifying children and qualifying​ relatives). ​(Select all the applicable​ answers.)

All​ dependents:

A.

must have social security numbers reported on the​ taxpayer's return.

B.

must have gross income less than the amount of the standard deduction.

C.

cannot normally file a joint return.

D.

must live with the taxpayer for more than three months in the year.

E.

cannot claim others as dependents.

F.

must meet a citizenship test.

Select the additional requirements that must be met in order to be a qualifying child. ​(Select all the applicable​ answers.)

Qualifying children​ must:

A.

not provide more than half of his or her own support.

B.

be the​ taxpayer's child or sibling or a descendant of the​ taxpayer's child or sibling.

C.

be under age​ 19, a​ full-time student under age​ 24, or disabled.

D.

live with the taxpayer more than half of the year.

E.

have gross income less than the amount of the personal exemption.

F.

live with the taxpayer for more than three months in the year.

Select the additional requirements that must be met in order to be a qualifying relative. ​(Select all the applicable​ answers.)

A qualifying relative​ must:

A.

live with the taxpayer for more than six months in the year.

B.

have gross income less than​ $4,150 (2018)

C.

receive over​ one-half of their support from the taxpayer.

D.

have gross income less than the amount of the standard deduction.

E.

be related to the taxpayer or reside in the​ taxpayer's household for the entire year.

F.

receive over​ one-third of their support from the taxpayer.