Exceed, a US Company acquired all of the Outstanding Common Stock of Silver company on Jan 1 2019. Silver Company's functional currency is the peso. The exchange rates are as follows:
| Peso 1 = | |
| Jan. 1 | $0.39 |
| Dec. 31 | $0.32 |
| Average for the year | $0.35 |
REQUIRED: Translate the 2019 financial statements of the subsidiary to U.S. Dollars from Pesos.
| Peso | Exchange Rate | US $ | |
| Income Statement | |||
| Net Sales | 820,000 | ||
| Costs & Expenses | (550,000) | ||
| Net Income | 270,000 | ||
| Statement of Retained Earnings | |||
| Beg. Retained Earnings | 100,000 | ||
| Net Income | 270,000 | ||
| Subtotal | 370,000 | ||
| Div. Declared/paid 12/31/18 | (60,000) | ||
| Ending, Retained earnings | 310,000 | ||
| Balance Sheet | |||
| Assets | |||
| Current Assets | 700,000 | ||
| Plant Assets (net) | 436,000 | ||
| Total Assets | 1,136,000 | ||
| Liabilities & Stockholder's Equity | |||
| Current Liabilities | 308,000 | ||
| Long-term Debt | 90,000 | ||
| Common Stock | 150,000 | ||
| Additional Paid-In Capital | 278,000 | ||
| Retained Earnings | 310,000 | ||
| Translation Adjustment | |||
| Total Liabilities & Stockholder's Equity | 1,136,000 | ||
In: Accounting
Marin Company owes $225,000 plus $20,200 of accrued interest to Headland State Bank. The debt is a 10-year, 10% note. During 2020, Marin’s business deteriorated due to a faltering regional economy. On December 31, 2020, Headland State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $317,000, accumulated depreciation of $174,350, and a fair value of $202,000.
Prepare journal entries for Marin Company and Headland State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
Marin Company (Debtor): |
||||
|
1. |
December 31, 2020 |
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
Headland State Bank (Creditor): |
||||
|
2. |
December 31, 2020 |
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
How should Marin report the following in its 2020 income statement?
| 1. |
Gain or loss on the disposition of machine |
select between gain and loss Ordinary GainOrdinary ExpenseOrdinary IncomeOrdinary Loss | ||
|---|---|---|---|---|
| 2. |
Gain or loss on restructuring of debt |
select between gain and loss Ordinary GainOrdinary ExpenseOrdinary LossOrdinary Income |
eTextbook and Media
List of Accounts
Assume that, instead of transferring the machine, Marin decides to grant 12,000 shares of its common stock ($10 par) which has a fair value of $202,000 in full settlement of the loan obligation. If Headland State Bank treats Marin’s stock as a trading investment, prepare the entries to record the transaction for both parties. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
Marin Company (Debtor): |
||||
|
1. |
December 31, 2020 |
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
Headland State Bank (Creditor): |
||||
|
2. |
December 31, 2020 |
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
In: Accounting
One study reports that 27 % of newly hired MBAs are confronted with unethical business practices during their first year of employment. One business school dean wondered if her MBA graduates had similar experiences. She surveyed recent graduates from her school's MBA program to find that 24 % of the 115 graduates from the previous year claim to have encountered unethical business practices in the workplace What is the value of the test statistic? A. The assumptions and conditions are not met, so the test cannot proceed. B. The test statistic is nothing . (Round to two decimal places as needed.)
In: Statistics and Probability
The Chartered Financial Analyst (CFA) designation is fast becoming a requirement for serious investment professionals. It is an attractive alternative to getting an MBA for students wanting a career in investment. A student of finance is curious to know if a CFA designation is a more lucrative option than an MBA. He collects data on 50 recent CFAs with a mean salary of $140,000 and a standard deviation of $52,000. A sample of 80 MBAs results in a mean salary of $131,000 with a standard deviation of $14,000.
Assume that μ1 is the population mean for
individuals with a CFA designation and μ2 is
the population mean of individuals with MBAs. (You may find
it useful to reference the appropriate table: z table
or t table)
a. Set up the hypotheses to test if a CFA
designation is more lucrative than an MBA at the 10% significance
level.
H0: μ1 − μ2 = 0; HA: μ1 − μ2 ≠ 0
H0: μ1 − μ2 ≥ 0; HA: μ1 − μ2 < 0
H0: μ1 − μ2 ≤ 0; HA: μ1 − μ2 > 0
b-1. Calculate the value of the test statistic. Do not assume that the population variances are equal. (Round all intermediate calculations to at least 4 decimal places and final answer to 2 decimal places.)
b-2. Find the p-value.
p-value < 0.01
c. At the 10% significance level, is a CFA designation more lucrative than an MBA?
In: Statistics and Probability
XYZ Pty Ltd acquired a machine for $400,000 on 1 September 2017. The machine has an estimated useful life of 5 years. The machine was sold on 1 May 2020 for $150,000.
Required: A. Prepare the depreciation schedule using the prime cost method
B. Prepare the depreciation schedule using the diminishing value method
C. Calculate the assessable or deductible balancing adjustment under the prime cost method
D. Calculate the assessable or deductible balance adjustment under the diminishing value method.
In: Accounting
50. Falzone Company has two shareholders, Rita and Sal Corporation. Rita acquired her 300 shares in 2003 for $30,000 and Sal Corporation acquired its 200 shares in 1999 for $15,000. On August 2, 2013, Falzone Company sold one of its businesses that it had held since 1999. Due to this sale, Falzone Company redeemed 50 shares from each shareholder in exchange for $20,000 each. Falzone’s E&P at the time of the redemption was $250,000. What are the tax consequences of this transaction to Rita and Sal Corporation?
In: Accounting
ABC Moving and Storage acquired a new truck for $100,000, paying $20,000 cash and signing a promissory note for the balance. According to the bill of sale, ABC also paid cash for sales tax of 8%, plus registration, tags and delivery fees of $400. The new truck is estimated to have a 5-year economic life and a residual (salvage) value of $8,400. ABC uses straight-line depreciation. Due to delays, the truck was not placed in service until April 1, 2020. ABC has a December 31 fiscal year.
Question
Refer to problem 1. The promissory note that ABC signed to pay for the balance of the truck is dated April 1, 2020. The interest rate is 6% and payment terms are $40,000 plus interest due on March 31, 2021 and the balance due, plus interest, on March 31, 2022. Prepare journal entries required on December 31, 2020, March 31, 2021, December 31, 2021 and March 31, 2022. Show calculations.
In: Accounting
You would expect a bond of an Eastern European government to pay (options: the same, a higher, a lower) interest rate as compared to a bond of the U.S. government.
You would expect a bond that repays the principal in year 2040 to pay (options: the same, a higher, a lower) interest rate as compared to a bond that repays the principal in year 2020.
You would expect a bond from a software company you run in your garage and a bond from Coca-Cola to pay different interest rates because of differences in the bonds' (options: terms of maturity, tax treatments, credit risks)
You would expect a bond issued by the federal government and a bond issued by New York State to pay different interest rate because of differences in the bonds' (options: terms of maturity, tax treatments, credit risks)
In: Economics
You would expect a bond of the U.S. government and a bond of an Eastern European government to pay different interest rates because of differences in the bonds’ (Credit risk/ tax treatment/ term ).
You would expect a bond that repays the principal in year 2040 to pay (the same/ higher/ lower ) interest rate as compared to a bond that repays the principal in year 2020.
You would expect a bond from a software company you run in your garage and a bond from Coca-Cola to pay different interest rates because of differences in the bonds’ (Credit risk/ tax treatment/ term ).
You would expect a bond issued by the federal government to pay (the same/ higher/ lower ) interest rate as compared to a bond issued by New York State.
In: Economics
Silver Cloud Computing is a company that provides cloud computing services. The company commenced operations on March 1, 2016. It acquired financing from the issuance of common stock for $40,000,000 and issuance of 4% bonds that mature in 2026 for $30,000,000. The income statements and balance sheets for the first two years are provided in a separate Excel spreadsheet. All amounts are in thousands.
Required:
The Chief Executive Officer (CEO) is interested in increasing sales and decreasing expenses. You have been requested to prepare a report that provides analysis of the financial statements and recommendations to improve the financial performance of the company. Your report should include the following items:
A. The company was the victim of a cyber attack. It is not yet known the extent of information that was obtained. The company may be subject to lawsuits as a result of the security breach. Discuss the impacts this may have on the company’s financial statements.
B. The CEO would like to pay dividends to the stockholders. Should the company pay dividends to the shareholders and how would this impact the company’s financial statements?
SILVER CLOUD COMPUTING
Income Statements
For the Years Ended February 28, 2018 and 2017
fye 2/28/2018 fye 2/28/2017
(in thousands) (in thousands)
Sales $225,000 $200,000
Sales Discounts 3,375 2,500
Net Sales 221,625 197,500
Wages and Salaries 73,500 70,000
Bad Debt Expense 2,100 2,000
Depreciation 20,000 20,000
Marketing Expense 33,750 30,000
Occupancy Expense 54,000 54,000
Research & Development 22,500 20,000
Total Expenses 205,850 196,000
Income from Operations 15,775 1,500
Interest Expense 1,200 1,200
Income Before Taxes 14,575 300
Income Taxes (40%) 5,830 120
Net Income $8,745 $180
SILVER CLOUD COMPUTING
Balance Sheets
February 28, 2018 and 2017 and February 29, 2016
At Inception
Feb 28 2018 Feb 28 2017 Feb 29 2016
(in thousands) (in thousands) (in thousands)
Cash $55,755 $22,300.00 $10,000
Accounts Receivable 18,000 16,000 -
Net Computer Equipment 20,000 40,000 60,000
Total Assets $93,755 $78,300 $70,000
Accounts Payable $9,000 $8,000 $-
Taxes Payable 5,830 120 -
Long-term Debt 30,000 30,000 30,000
Common Stock 40,000 40,000 40,000
Retained Earnings 8,925 180 -
Total Liabilities & Stockholders Equity $93,755 $78,300 $70,000
In: Accounting