MGM recently announced a share buyback program. In the release, CEO Jim Murren states that shareholder value is driven by, in part, by its share repurchase program.

"We are pleased with the Company's strong balance sheet, which has allowed us to take a balanced approach to driving shareholder value through our quarterly dividend and share repurchase program, as well as continuing to invest in our properties and explore prudent growth opportunities."

(https://www.prnewswire.com/news-releases/mgm-resorts-international-announces-new-2-0-billion-share-repurchase-program-300646214.html)

Do share buybacks create shareholder value? Explain your answer from a residual operating earnings (ReOI) perspective.

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies.

For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $36,000 to buy from manufacturers):

Required:

1. Compute the total revenue that Worley would receive from University and Memorial.

2. Compute the activity rate for each activity cost pool.

3. Compute the total activity costs that would be assigned to University and Memorial.

4. Compute Worley’s customer margin for University and Memorial.

Vaughn Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company’s profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Vaughn has had a policy of investing idle cash in equity securities. In particular, Vaughn has made periodic investments in the company’s principal supplier, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Vaughn does not have significant influence over the operations of Norton Industries.

Cheryl Thomas has recently joined Vaughn as assistant controller, and her first assignment is to prepare the 2020 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the following information about Vaughn’ pertinent accounts.

Morgan Company’s balance sheet at December 31, 2019, is presented below.

During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.)

Adjustment data:

Can you please help me find these answers. Thank you!!

A)Prepare journal entries for the transactions listed above and the adjusting entries.

B)Prepare an adjusted trial balance at January 31, 2020.

C)Prepare an income statement.

D)Prepare an owner’s equity statement for the month ending January 31, 2020.

E)Prepare a classified balance sheet as of January 31, 2020

A) Explain the accounting treatment for the two categories of Government Grant.

B) Dermaga Sdn Bhd (DSB) acquired a plant at a gross cost of RM1.6 million on 1 October 2019. The plant has an estimated economic life of ten years with a residual value equal to 10% of its gross cost. Depreciation is allocated on time basis apportionment. The company received government grant of 30% from its cost price during the purchase time. If the company retains the plant for five years or more, there will be no repaymaent liability. If the company sells the plant within one year, it has to repay 75% of the cost. This amount decreases by 20% in suceeding years. DSB has no intention of disposing the plant witihn five years. Its policy for capital-based government is to treat them as deferred credits and release them to income over the life of the asset to which they relate. Required:

i. Discuss whether the company’s policy for the treatment of government grants meets the definition of a liability in MASB Conceptual Framework.

Prepare extract of DSB’s financial statements for the year ended 30 March 2020 in respect to the plant and grant , applying the company’s policy, and in compliance with the definition of liability in the Conceptual Framework

The Paria Oil Company is seeking police protection for the duration of industrial turmoil at its Head Office, due to layoff caused by the Covid 19. During discussions with the Police to deal with the turbulence, the Police suggested that a mobile patrol would be adequate because the disorder was largely contained. However, the CEO of Paria insisted on permanent police presence. The CEO then offered to compensate the Police, if they agreed on a permanent on site presence during the turmoil.

The Police thereafter indicated that they will provide 10 officers at a rate of $5000 per day, which they will maintain during the entire strike period. A few weeks after the strike was over, the Commissioner of Police, sent an invoice to Paria Oil Company for the cost of protection for two months. However, Paria Oil refused to compensate, and argued that the Police have a duty under law to protect the company from any pending violence and lawlessness.

The Commissioner of Police has sought your advice on the matter. Can you please advise him?

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data: B: Percent for company 2 5 29 8 21 14 13 12 A: Percent for CEO -1 5 21 13 12 18 9 8 Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 1% level of significance. Will you use a left tailed, right tailed, or two tailed test? Select one: a. two tailed test b. right tailed test c. left tailed test

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data:

B: Percent for company 28 16 25 26 18 20 7 10

A: Percent for CEO 23 14 23 18 23 10 4 14

Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 5% level of significance. Find (or estimate) the P-value.

Select one:

a. P-value = 0.50

b. P-value = 0.40

c. 0.02 < P-value < 0.05

d. 0.20 < P-value < 0.40

e. 0.01 < P-value < 0.02

Big Ink is a chain of tattoo parlors that follows IFRS. The following data is for 2020:

Golf club dues were $30,000.

Automated tattoo machinery was acquired on January 1, 2019, for $200,000. Straight‐line depreciation is over a 10‐year life with a $20,000 residual value. For taxes, the 30% rate class is used, and Big Ink applied the CRA half year rule in 2019.

On December 31, 2020, Big Ink accrued a provision for legal expense of $40,000. The estimated legal liability of $40,000 relates to four pending lawsuits. In addition to the $40,000, legal costs paid out in cash during 2020 were $60,000. These related to lawsuits started and settled during 2020. Big Ink believes that the new automated equipment will reduce the number of lawsuits.

Pretax accounting income for 2020 is $880,000. The income tax rate is 25%.

Instructions

1. WRITE a schedule (starting with pretax accounting income) to calculate taxable income. On your schedule, indicate a subtotal for accounting income after permanent differences.
2. Prepare the journal entries to record income taxes for 2020.

Juan acquires a new 5-year class asset on March 14, 2020, for $200,000. This is the only asset Juan acquired during the year. He does not elect immediate expensing under § 179. He does not claim any available additional first-year depreciation. On July 15, 2021, Juan sells the asset.

Click here to access depreciation table to use for this problem.

a. Determine Juan's cost recovery for 2020.
$

b. Determine Juan's cost recovery for 2021.
$

On August 2, 2020, Wendy purchased a new office building for $3,800,000. On October 1, 2020, she began to rent out office space in the building. On July 15, 2024, Wendy sold the office building.

If required, round your answers to the nearest dollar.

Click here to access the depreciation table to use for this problem.

a. What MACRS convention applies to the new office building?
Half-year

b. What is the life of the asset for MACRS?
15 years

c. Determine Wendy's cost recovery deduction for 2020 and 2024.
2020: $
2024: $