Facts: Opportunity Landscaping Inc. (Opportunity) appreciated your assistance in preparing their 2018 Federal income tax return. As a result, they have come to you for advice on acquiring new facilities for their manufacturing operations. They plan to take access to their new facilities on January 2, 2020.

The corporation has the opportunity to purchase an appropriate facility in suburban Chicago for $90,000,000 ($87,000,000 for the factory building; $3,000,000 for the land). If they purchase the facility, they would finance the acquisition via a 15-year mortgage at 3.5% interest with a $18,000,000 down payment (due at closing on January 2, 2020). The mortgage would be payable annually in arrears (i.e., the first mortgage payment would be due January 2, 2021). Real property taxes on the facility in 2020 would be $1,000,000 (the property taxes are also due annually in arrears with 2020 taxes due on January 2, 2021). Further, Opportunity estimates that property taxes will increase annually at a rate of 3% in years subsequent to 2020.

As an alternative, a local real estate investor has offered to purchase the facility and lease it to the corporation. The investor would require Opportunity to sign a 7-year non-cancelable lease. The first lease payment of $3,700,000 would be due on January 2, 2020. Lease payments will increase by 4% each year during the term of the lease with the final lease payment due on January 2, 2026. In addition, the lease would require a refundable deposit of $1,850,000 (payment due on January 2, 2020) against significant damages to the facility; this deposit will be refunded to the corporation on January 2, 2027 (when the occupancy ends and assuming that there are no significant damages).

Opportunity must decide whether to lease or buy the facility. In order to make a proper decision, the corporation will assume that it could sell the facility (building and land) on January 2, 2027 for $100,000,000. Under this scenario, they would make their final mortgage and property tax payments on January 2, 2027 and then sell the facility.

Opportunity’s Federal corporate tax rate is 21% and it uses a 7% discount rate to compute the present value of its future cash flows. For purposes of this analysis, assume that all cash flows occur at the beginning of the respective year.

Required:

1. Based on the above facts, which option (lease or buy) minimizes Opportunity’s after-tax cost of obtaining the facility?

2. The local real estate investor has provided an option for Opportunity to consider. Under this option, a payment of $12,000,000 is due on January 2, 2020. If this payment is made, no deposit is required and the payment is deemed to cover the first three years of the lease. On January 2, 2023, lease payments resume with a $4,000,000 lease payment due (and a 4% increase in the lease payment each year for the remainder of the lease term). Is this an alternative that Opportunity should consider? Read and apply the materials in text Section 6-2d as part of your analysis.

3. Opportunity’s CFO is not certain that the current 21% Federal tax rate will be maintained over the next seven years. She feels that an increase in the Federal rate to around 30% is likely at some point in the near term. As a result, she would like to know how your analysis would be affected if the Federal income tax rate increased to 30% on January 1, 2025.

I have calculated and found that the NPV for the lease option is ($19,516,098). I have also used the PMT function on excel and found that the annual mortgage payments are $6,251,405 (15 years; $72 million; 3.5% interest rate). I need help computing the NPV for the buy option in order to decide which option is best.

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. It started only two jobs during March—Job P and Job Q. Job P was completed and sold by the end of March and Job Q was incomplete at the end of March. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):

Estimated total fixed manufacturing overhead $ 10,000

Estimated variable manufacturing overhead per direct labor-hour $ 1.00

Estimated total direct labor-hours to be worked 2,000

Total actual manufacturing overhead costs incurred $ 12,500

Job P Direct materials $ 13,000. Job Q $ 8,000

Job P Direct labor cost $ 21,000 Job Q $ 7,500   

Job P. Actual direct labor-hours worked Job Q. 1,400 500

1. Calculate the cost of goods sold using the indirect method.

The new CEO of Everton Sdn Berhad, a company in the furniture sector would like to know the usefulness of key financial ratios that would be crucial for his management team to consider and analyse for the purpose of acquiring another entity in a similar industry.

Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started: (Leave no answer blank. Enter zero if applicable.) Expense Date Amount Attorney fees for articles of incorporation February 10 $ 39,000 March 1 – March 30 wages March 30 6,100 March 1 – March 30 rent March 30 2,700 Stock issuance costs April 1 27,000 April 1 – May 30 wages May 30 15,250 b. What amount of the start-up costs and organizational expenditures may the corporation immediately expense in year 1 (excluding the portion of the expenditures that are amortized over 180 months)? c. What amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 (not including the amount determined in part b)? (Round intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.)

Suppose you own stock at AC Milan Berhad. The current price per share is RM30. Another company has just announced that it wants to buy your company and will pay RM40 per share to acquire all the outstanding stock. Your company’s management immediately begins fighting off this hostile bid. Is management acting in the shareholders’best interest? Elaborate on your opinion on this matter.

Profitability based on short-term goals could be at the expense of long term sustainability of an organization, discuss.

Critically evaluate main reasons that an agency relationship exists in the corporate form of organization.

Discuss the motivation for excluding "nonproductive" assets from invested capital when computing return. What circumstances justify excluding intangible assets from invested capital? In addition, why must income used in computing return on invested capital be adjusted to reflect the capital base (denominator) used in the computation?

Differentiate managerial accounting from financial accounting using the following criteria: a) Primary users of reports

2. Type and frequency of reports
3. Purpose of reports
4. Contents of reports
5. Verification Process

Give concrete examples for each difference.

Mautz (1973) made the following comment: “Accounting is what it is today not so much because of the desire of accountants but because of the influence of businessmen. If those who make management an investment decisions had not found financial reports based on historical cost useful over the years, changes in accounting would long since have been made” Critically evaluate this statement. In your discussion, you should consider the relative merits of historical cost accounting as well as the various alternative measurement systems that have been proposed.

Mora Company has the following production data for March: no beginning work in process, 28,600 units started and completed, and 4,700 units in ending work in process that are 100% complete for materials and 40% complete for conversion costs. Mora uses the FIFO method to calculate equivalent units. Unit materials cost is $6 and unit conversion cost is $12. The total costs to be assigned are $565,560. Prepare the cost section of the production cost report for Mora Company.

Spritz Company owns 15% of the stock of Turner Corporation. The investment was purchased for $200,000. At the beginning of 2020, it had a fair value of $230,000. At the end of 2020, its fair value is $250,000. Turner reported net income of $100,000 for 2020, and declared and paid cash dividends of $60,000. Spritz sells products to Turner at a markup of 20% on cost. Turner’s ending inventory for 2020 included a balance of $10,800 for products purchased from Spritz.

Required

Prepare the journal entries Spritz makes in 2020 to record the above facts, assuming that Spritz treats its investment as having significant influence and uses the equity method.

Assignment 2: Prologue: Sustainability and Corporate Social Responsibility (CSR); Reading pgs. 13-14 of Prologue (Worth 9 pts. total)

In recent years, there has been an increasing awareness and growing interest in sustainability and social responsibility by both consumers and corporations.

Merriam-Webster defines sustainability as the ability of a system to maintain its own viability, endure without giving way, or use resources so they are not depleted or permanently damaged. Or, in other words, it’s the ability of a system to operate in such a manner that it is able to continue indefinitely. The United Nations has defined sustainability as the “ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.” Others have defined sustainability as an expansion of the golden rule: “Do unto others, including future generations, as you would have done unto you.”

Sustainability has three overlapping pillars: environmental, social, and economic. They are not mutually exclusive and are often mutually reinforcing. The pillars are interdependent and none can exist without the other. Many have come to believe that a company will only be viable in the long run if all three of these factors are considered when making business decisions. As a result, many companies, including The United Nations and other public sector organizations, adhere to the notion of a triple bottom line (TBL or 3BL). TBL recognizes that a company’s performance should be viewed not only in terms of its ability to generate economic profits for its owners, as has traditionally been the case, but also by its impact on people (social) and the planet (environmental). Most of the leading companies in the world are now issuing corporate social responsibility (CSR) reports through which they communicate their social and environmental impact. Businesses are now viewing sustainability and social responsibility as opportunities for innovation and business development.

Part 1: Worth 6.5 pts. (1/2 pt. each)

Below are examples of green initiatives recently undertaken at The Coca-Cola Company. For each example, indicate whether this initiative would primarily impact the environmental (EN), social (S), or economic (EC) factors.

1.      ______ Provided on-site wellness coaching for employees in the Baltimore sales facility to help to improve employee health.

2.      ______ Diverted more than 2.5 million beverage containers from landfills by placing more than 3,000 recycling bins at NASCAR racetracks across the United States.

3.      ______ Generated a positive economic benefit in every community in which Cocoa-Cola has facilities in the United States.

4.      ______ Reduced beverage calories in U.S. schools by 88% since 2006.

5.      ______ Prohibited marketing to children under the age of 12 in its global marketing policy.

6.      ______ Deployed hybrid electric trucks, which generate approximately one-third fewer CO2 emissions than a regular truck, in several major U.S. cities.

7.      ______ Minimized the amount of water used in the manufacturing and cleaning processes, resulting in a water use savings of over 2 billion liters since 2008.

8.      ______ Recruited from a wide cross section of the communities that its services so that the representation of women and minority groups in management can be improved.

9.      ______ Displayed total calorie counts on the selection buttons on company-controlled vending machines so that consumers can make informed choices.

10.    ______ Generated a profit for the company’s shareholders.

11.    ______ Removed the side walls on the corrugated trays that carry products, which resulted in savings of almost 2,400 metric tons of corrugated packaging.

12.    ______ Provided training and career training for employees to help to provide a rewarding work life.

13.    ______ Reduced the bottle cap size by .5 millimeters and shortened the bottle neck, which resulted in a total plastics savings of more than 11,000 metric tons since 2007.

Alex, who is married and the father of four, is age 45 and expect to work to age 65. He earns $70,000 per year and expects annual salary increases of 5%. Alex expects inflation to be 4% over his working life. His personal consumption is earl to 10% of after tax earnings, and his combined federal and state marginal tax bracket is 20%. Human Life Approach

(a) calculate the family’s share of earnings

(b) Calculate work life expectancy

(c) calculate the future value of the family’s share of earnings (FSE) over Alex’s work life expectancy (WLE)

(d) determine the human life value (HLV)

Financial Needs Approach

Accounting for Restricted Stock Awards

Geelong Technology (GT) is a software company based in Boston. Since January 1, 2015, the company has granted restricted stock to its CEO at the beginning of each year to help boost future company performance. Vesting for each award occurs if the CEO stays employed at the company for a period of two years from the grant of the award.

The par value of the stock is $1.

                                                           

Grant Date	Number of shares	Fair value per share	Service period
1/1/2015	10,000	$6	1 year
1/1/2016	15,000	$8	2 years
1/1/2017	15,000	$10	2 years
1/1/2018	20,000	$11	3 years

It is now September 13, 2018 and the CEO leaves the company.

Create the Journal Entries with calculations in accordance for US GAAP for all events.

The company I chose is Amazon. Then, select 1 of the contemporary management techniques listed in Chapter 1 of the Blocher et al. text. Why and how do you feel that the contemporary management technique selected would be a positive force in helping the company achieve its critical success factors?​

P3-1 (L02,4,5) (Transactions, Financial Statements—Service Company) Listed below are the transactions of Yasunari Kawa-bata, D.D.S., for the month of September.

Sept. 1 Kawabata begins practice as a dentist and invests $20,000 cash.
2. Purchases dental equipment on account from Green Jacket Co. for $17,280. 4 Pays rent for office space, $680 for the month.
4. Employs a receptionist, Michael Bradley.
5. Purchases dental supplies for cash, $942.
8. Receives cash of $1,690 from patients for services performed.
10. Pays miscellaneous office expenses, $430.
14. Bills patients $5,820 for services performed.
18. Pays Green Jacket Co. on account, $3,600.
19. Withdraws $3,000 cash from the business for personal use.
20. Receives $980 from patients on account.
25. Bills patients $2,110 for services performed.
30. Pays the following expenses in cash: salaries and wages $1,800; miscellaneous office expenses $85.
30. Dental supplies used during September, $330.

Record the transactions in General Journal format only, ***** Use the Drawings account.

Determine the balances in each of the accounts as of September 30.