Amaretta Company (a U.S.-based company) ordered merchandise from a foreign supplier on November 20 at a price of 1,070,000 rupees when the spot rate was $0.050 per rupee. Delivery and payment were scheduled for December 20. On November 20, Amaretta acquired a call option on 1,070,000 rupees at a strike price of $0.050, paying a premium of $0.001 per rupee. The company designates the option as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the spot rate. The option’s time value is excluded from the assessment of hedge effectiveness, and the change in time value is recognized in net income. The merchandise arrives, and Amaretta makes payment according to schedule. Amaretta sells the merchandise by December 31, when it closes its books.
Assuming a spot rate of $0.053 per rupee on December 20, prepare all journal entries to account for the foreign currency option, foreign currency firm commitment, and purchase of inventory.
Assuming a spot rate of $0.048 per rupee on December 20, prepare all journal entries to account for the foreign currency option, foreign currency firm commitment, and purchase of inventory.
In: Accounting
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In: Accounting
On January 1, 2019, Monica Company acquired 80 percent of Young Company’s outstanding common stock for $776,000. The fair value of the noncontrolling interest at the acquisition date was $194,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 200,000 Additional paid-in capital 70,000 Retained earnings 490,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $70,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. During the subsequent years, Young sold Monica inventory at a 30 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Year Transfer Price Inventory Remaining at Year-End (at transfer price) 2019 $ 30,000 $ 18,000 2020 50,000 20,000 2021 60,000 26,000 In addition, Monica sold Young several pieces of fully depreciated equipment on January 1, 2020, for $44,000. The equipment had originally cost Monica $66,000. Young plans to depreciate these assets over a 5-year period. In 2021, Young earns a net income of $220,000 and declares and pays $65,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $820,000 balance at the end of 2021. Monica employs the equity method of accounting. Hence, it reports $160,960 investment income for 2021 with an Investment account balance of $940,160. Prepare the worksheet entries required for the consolidation of Monica Company and Young Company.
In: Accounting
Bahamas feed supply Inc, a pet wholesaler supplier was organized on March 1 2020 projected sales for each of the first three months of operations are as follows
March 450,000
April 520, 000
May 560, 000
The company expects to sell 10% of its merchandise for cash. of sales on account, 50%are expected to be collected in the month of the sale 40% in the month following the sale, and the reminder in the in the second month following the sale.
(1a)Prepare a schedule indicating cash collections for sales for March April and May.
(1b) smell so good candle company projected sales of 95,000 candles for 2020. the estimated January 1st, 2020 inventory is 2400 units and the desired December 31st 2020 inventory is 3000 units what is the budgeted production in units for 2020.
1c Smell so good candle company budgeted production of 95,000 candles in 2020 wax is required to produce a candle assume 8 oz 1/2 of a pound of wax is required for each candle the estimated January 1st 2020 wax inventory is 1400 pounds the desired December 31st 2020 was inventory is 1100 pounds. if candle wax cost 3.60 per pound determined a direct material purchases budget for 2020
In: Accounting
For EACH of the following company transactions, indicates whether the company in question should purchase forward contract, sell forward contract, purchase a call option, or purchase a put option, or none, to limit its exposure to exchange rate risk. Answers can be more than one.
a. A U.S. MNC, Independent Bank, will receive interest payments denominated in Colombian peso.
b. A U.S. MNC, Merged Co. will sell inventory software applications to Mexico denominated in Mexican peso.
c. A U.S. MNC, Bahamas Inc., will purchase Canadian papers and the contract is denominated in U.S. dollars.
d. A Singapore MNC, Tema Inc., may have projects in Thailand that need funds in Thailand Baht. The company is in the bidding process and the outcome is not known yet.
In: Finance
For each of the following company transactions, indicates whether the company in question should purchase forward contract, sell forward contract, purchase a call option, or purchase a put option, or none, to limit its exposure to exchange rate risk. Answers can be more than one.
a. A U.S. MNC, Independent Bank, will receive interest payments denominated in Colombian peso.
b. A U.S. MNC, Merged Co. will sell inventory software applications to Mexico denominated in Mexican peso.
c. A U.S. MNC, Bahamas Inc., will purchase Canadian papers and the contract is denominated in U.S. dollars.
d. A Singapore MNC, Tema Inc., may have projects in Thailand that needs funds in Thailand Baht. The company is in the bidding process and outcome is not known yet.
In: Finance
Stanley Burrell founder of a company named Hammer Time Inc. Hammer Time Inc produces specialty functional novelty hammers in the image of Stanley Burrell himself, aka MC Hammer. The three best-selling/most popular products sold by Hammer Time Inc. are Hammer Head Hammers, Hammer Pants Hammers, and Please Hammer Don't Hurt ‘Em Mini Hammers.
Hammer Time Inc. uses the actual total factory overhead costs from the prior year (corresponding month) to estimate the total factory overhead costs. They do this by taking last year’s actual costs (same month) and increasing them by 8%.
Actual Total Factory Overhead costs October '18 = $3,000,000
For the month of October '19 for the production in the 2 Legit Warehouse
Estimated Machine Hours = 128,000
Hammer Head Hammers = 50,300 machine hours
Hammer Pants Hammers = 41,200 machine hours
Mini Hammers = 27,300 machine hours
Actual Total Factory Overhead costs October '19 = $3,130,560
A. What is the predetermined overhead rate?
B. If the predetermined factory overhead rate was applied to the three products in March what would be the under/over applied factory overhead once the actual factory overhead cost was known?
C. Using the data from how much factory overhead would be applied to Hammer Pants Hammers?
In: Accounting
On January 1, 2020, Jordan Inc. purchased 30% of the outstanding common stock of Melody Corporation at a cost of $600,000. Melody Corporation had 800,000 shares of common stock outstanding. At the date of purchase, the book value of Melody’s net assets was $1,500,000. Book value and fair value of net assets were the same for all balance sheet items except for machinery and inventory. The fair value exceeded the book value by $200,000 for machinery and $50,000 for the Inventory.
The estimated useful life of machinery is 15 years and all inventory acquired was sold during 2020. Both companies have a January through December fiscal year. Melody Corporation reported net income of $250,000 and paid cash dividend of $80,000 during 2020. Market value of Melody Corporation was $2.50 per share at December 31, 2020.
1- Prepare the entry to record the original investment in Mountain.
2-Compute the amount of goodwill (if any) on the acquisition.
3-Prepare the necessary entries (other than acquisition) for 2020.
4-Assume that on January 10, 2020 Jordan Inc. sold 50% of its investment in Melody Corporation for $290,000. Prepare the journal entry to record the sale of investment.
5-Assume that subsequent to selling 50% of the investment, Melody Corporation reported income of $300,000 and paid dividend of $100,000 for 2021. Market value of Melody Corporation’s common stock was $3 per share at December 31, 2021. Prepare the journal entries (if any) for Jordan Inc. for its investment in Melody Corporation for 2021.
In: Accounting
On 1/1/2016, California Corporation purchased 75% of the outstanding voting stock of San Diego Corporation for $2,400,000 paid in cash. On the date of the acquisition, San Diego’s shareholders’ equity consisted of the following:
Common stock, $10 par $1,000,000
APIC 600,000
Retained Earnings 800,000
Total SE $2,400,000
The excess fair value of the net assets acquired was assigned 10% to undervalued Inventory (sold in 2016), 40% to undervalued PPE assets with a remaining useful life of 8 years, and 50% to Goodwill.
Comparative trial balances of California Corporation and San Diego Corporation at December 31, 2020, are as follows:
|
California |
San Diego |
|
|
Other assets – net |
3,765,000 |
2,600,000 |
|
Investment in San Diego |
2,340,000 |
- |
|
Expenses (including cost of sales) |
3,185,000 |
600,000 |
|
Dividends |
500,000 |
200,000 |
|
9,790,000 |
3,400,000 |
|
|
Common Stock, $10 par value |
(3,000,000) |
(1,000,000) |
|
APIC |
(850,000) |
(600,000) |
|
Retained earnings |
(1,670,000) |
(800,000) |
|
Sales revenues |
(4,000,000) |
(1,000,000) |
|
Income from San Diego |
(270,000) |
- |
|
(9,790,000) |
(3,400,000) |
Required:
Determine the amounts that would appear in the consolidated financial statements of California Corporation and its subsidiary for each of the following items:
In: Finance
On 1/1/2016, XYZ Corporation purchased 75% of the outstanding voting stock of Sally Corporation for $2,400,000 paid in cash. On the date of the acquisition, Sally’s shareholders’ equity consisted of the following:
Common stock, $10 par $1,000,000
APIC 600,000
Retained Earnings 800,000
Total SE $2,400,000
The excess fair value of the net assets acquired was assigned 10% to undervalued Inventory (sold in 2016), 40% to undervalued PPE assets with a remaining useful life of 8 years, and 50% to Goodwill.
Comparative trial balances of XYZ Corporation and Sally Corporation at December 31, 2020, are as follows:
|
California |
San Diego |
|
|
Other assets – net |
3,765,000 |
2,600,000 |
|
Investment in Sally |
2,340,000 |
- |
|
Expenses (including cost of sales) |
3,185,000 |
600,000 |
|
Dividends |
500,000 |
200,000 |
|
9,790,000 |
3,400,000 |
|
|
Common Stock, $10 par value |
(3,000,000) |
(1,000,000) |
|
APIC |
(850,000) |
(600,000) |
|
Retained earnings |
(1,670,000) |
(800,000) |
|
Sales revenues |
(4,000,000) |
(1,000,000) |
|
Income from Sally |
(270,000) |
- |
|
(9,790,000) |
(3,400,000) |
Required:
Determine the amounts that would appear in the consolidated financial statements of XYZ Corporation and its subsidiary for each of the following items:
In: Accounting