Question 4   (30 minutes)

Easy Company bought a piece of equipment four years ago. At December 31, 2020, the company revalued the equipment to its fair value. The following information relates to the equipment

Original cost: $1,200; Residual value: $ 200; Estimated useful life from purchase date: 10 years; Years used to December 31, 2020: 4 years; Fair value at December 31, 2020: $966; Depreciation method is straight-line.

Required:

1. Determine the depreciation expense for 2020.
2. Record the journal entry adjustment for the revaluation, using the ‘asset adjustment’method.
3. Determine the depreciation expense for 2021.
4. Assume that the fair value at the end of 2022 is $468. Record the journal entry for depreciation first for 2022, and then the entry related to this new fair value for 2022.

Question 5   (25 minutes)

Buzz Bee Yard Company’ Apiary began operations on January 1, 2020, with the purchase of 100 bee hives for $500 total. Buzz follows IFRS and its standard on agricultural products. It has completed the first year of operations and has the following information for its bee hives at December 31, 2020:

1. Bee Hives – purchase of hives as per above                                                                 $   500
2. Honey harvested during 2020 (at net realizable value)                                         1,900                  
3. Honey sold during 2020 (at net realizable value)                                                    1,600
4. Hive maintenance costs directly traceable to hive activity in year                      $60        
5. Company general administration costs                                                                           $40
6. Fair value on Dec. 31, 2020 of hives                                                                              $1,300    

Required:

1. Prepare all the journal entries for Buzz’s bee hives activities for 2020, as per the information in (a) to (f).

Question 6   (25 minutes)

The following events occurred in 2020:

1. June 30, 2020    A building that Big Company had purchased on January 1, 2016, for $ 10,000 was exchanged for another building owned by Other Company. Big Company exchanged its building and $1,000 cash for Other Company’s building. Big’s building had a fair value of $ 9,500 at the time of the exchange. Straight-line depreciation on the building with a 40-year useful life and no R.V. has been properly charged from Jan. 1, 2016 through Dec. 31, 2019. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value. Big Company’s building contained a manufacturing operation. Other Company’s building was an office building.

2. Dec. 30, 2020      Machinery with a cost of $ 120 and accumulated depreciation through December 31, 2019, of $ 90 was exchanged, along with $ 15 cash, for a parcel of land with a fair market value of $ 44. Straight-line depreciation had been used for the machine. The machine had a 12-year useful life, and was 9 years-old as at Dec. 31, 2019.

3. Big Company replaced a roof on a building that it purchased in 2008. (12 years old as at Dec. 31, 2020.) The building cost $400,000 in 2008, and had an estimated life of 40 years, with no residual value. The new roof costs $25,020 to install. Big Company estimated that prices for goods and services have increased by 80% since 2008 . The roof component was not separately identified in the company accounts, but, of course, was included in the building asset at that time.

Required: Prepare ALL journal entries for 2020 related to the three situations above. Each situation may require more than one entry.

Comfort Meals (CM) is a not-for-profit organisation that prepares and distributes meals for homeless people in Adelaide. David Cunningham, who is a member of CPA Australia, is the Chief Financial Officer for CM. On the 28^th July, 2019, CM’s Chief Executive Officer (CEO) successfully negotiated a loan for $1.8 million dollars (4% per annum interest) to fund the construction of new kitchen facilities. The new facilities will be completed and ready for use in November 2020.

David is now preparing the CM annual financial statements for the year ended 30^th June, 2020. The relevant accounting standards require that the interest costs associated with such a loan should be capitalised (that is, treated as an asset, part of the cost of the new facilities). The CEO has just spoken to David regarding the accounting treatment for the loan and its interest costs. In particular, he has asked David to ensure that the interest costs on the loan are all expensed in the current accounting period. The reason for the request is that CM is about to approach the government for a new round of operating grant funding. This funding is essential to ensure that CM can continue its operations in the coming year because CM is dependent on government financial support for its day-to-day activities. “Our financial operating surplus must be as low as possible for this year”, he states. The CEO goes on to say, “Preferably we should be showing a loss so that we can maximise the amount of grant funding we receive from the government. Remember, without our services, the homeless of Adelaide would be left to starve. It’s all up to you to show the right figures!”

Required:

Using the DECIDE model, explain how David should respond to this situation. You should ensure that your analysis of the case is supported by reference to the Fundamental Ethical Principles and the values of the fundamental principles of the accounting profession as specified in APES 110. Three (3) courses of action should be identified and evaluated

Prepare and record a 8-10 minute Kaltura presentation with a Power Point that summarizes your reflection on the learning experience within the MBA degree program. This is not reflection of this course, but rather an reflection of the comprehensive MBA program and your assessment of your achievement.

It should reflect your candid assessment of the level of achievement of degree’s overall Learning Outcomes listed below:

1. Construct a situational analysis in order to develop business strategies and tactics.
2. Integrate legal, ethical, and socially responsible constructs to make sound business decisions.
3. Apply interpersonal oral communication with diverse audiences.
4. Appraise collaborative leadership strategies to manage, influence, and lead in a global environment.
5. Apply appropriate quantitative and qualitative inquiry methods to solve business problems.

For each of the five learning outcomes, use your graduate-level critical/evaluative thinking skills and the four questions below to guide your reflection about your personal level of achievement

a) In which of these MBA degree program outcomes have achieved significant proficiency? Provide (cite) examples from the work you have done throughout the course of your degree to support your response.

b) Which Learning Outcome(s) did you not achieve proficiency? Where or in what courses or experiences within the course of the MBA degree program did these challenges manifest the most? Explain fully and provide examples.

c) Reflecting on your MBA degree experience, what would you have done differently to overcome the challenges reflected in the learning outcomes in which you judge yourself to have less proficiency?

Lastly, as you conclude the paper, state your overall assessment of the program; its content, delivery and relevance to your professional/career goals.   Based on this encompassing assessment, would you recommend the program to an individual considering it?

This assignment is graded on the basis of how well you support the evaluative statements and conclusions you make. It is NOT scored on the favorability of the comments – so, your candid, honest reflection on your growth in personal knowledge, skills and abilities as well as relevance of the learning to YOU is the true value of completing this assignment.

TzeMay was one of the first women engineering students at ABC University. She graduated in 1995 with a first class honours degree and immediately continued her studies with an MSc programme, gaining recognition for her work into environmentally friendly car engines, a largely untapped field in those days. On completion of her Masters degree she was offered a post as a research assistant where she could have developed her Masters research and worked towards her doctorate. However she decided that she needed to gain some commercial experience and joined Wallace-Price, a blue-chip engineering consultancy where, apart from a sponsored year out to study for an MBA in the United States of America, she has remained ever since.

Her tenacity and loyalty to Wallace-Price have paid off and she was made a partner in the firm, primarily responsible for bringing in work to the consultancy. With the promotion came various executive privileges including an annual salary of £80, 000, a chauffeur-driven car, free use of one of the company-owned London flats, a non-contributory pension scheme, various gold credit cards and first-class air travel. TzeMay herself would not describe these as benefits, however, but as necessities to enable her to do her job properly. In order to meet her business target of £2 million of work for Wallace-Price she spent forty weeks overseas, working an average of ninety hours a week.

She cannot remember the last time that she had a weekend when she was not entertaining clients or travelling but was totally free to indulge herself. During her time with Wallace-Price she has earned a reputation both as a formidable but honest negotiator and as an innovative engineer, often finding seemingly impossible solutions to problems. Known for her single-minded dedication to her job, she does not suffer fools gladly. She is frequently approached to work for rival firms with promises of even greater privileges and has been the subject of numerous magazine profiles, some concentrating on her work and reputation as a high flier but the majority focusing on her gender. Her fortieth birthday last year was spent alone in the Emergency Room of a Los Angeles hospital where she had been rushed with a suspected stomach ulcer. Deprived of her portable telephone, fax and computer she had little else to do but to reflect on her life thus far. On her return to health she was working her way through the pile of technical journals, which had accumulated during her absence and there she saw the advertisement for ABC University, an institution that had close links with her company and whose Professor of Engineering she knew well. Ignoring the instructions relating to applications she put through a telephone call to the ABC University.

Question 1 : Making reference to the appropriate theories of motivation, explain TzeMay‟s main motivating factors.

This is one question since you have to know answers accumulatively.

The University of the Pacific Northwest increases tuition cost from $12,700 to $13,335 and finds enrollment has drop by 3%. At the same time the University of the Pacific Northwest increased tuition, Portland Upstate a university located 75 miles to the east found that their enrollment increased from 5,652 to 7,072 students. (for full credit show your calculations,

a) Calculate the price elasticity of demand for University of the Pacific Northwest _______________

b) The University of the Pacific Northwest will find total revenue has increased or decreased ____________

c) Calculate the cross price elasticity for the increase in tuition at the University of the Pacific and the increase in enrollment at Portland Upstate ___________

d) Are the two Universities substitutes or complements ____________

Who designed the selection system that's now in use at Chipotle? Who decides which personality traits are critical enough to be assessed during screening and which don't quite make the cut? That would be Monty Moran, co-CEO of the company and a high school classmate of Ells. Moran had been the lead attorney for Chipotle and a CEO of a prestigious Denver law firm. Moran recalls the conversation that changed all that, repeating Ells's words: “Monty, you may be a great lawyer but that's not what you're best at . . . What you're best at is being a leader. That's more important. You should come to Chipotle and use that for a company of 10,000 instead of a firm of 600.” What hiring philosophy did Moran bring? “We don't care about experience very much,” Moran notes, “In fact, I think experience at another fast-food restaurant is as likely to be a negative as it is to be a positive. We look for people who possess certain qualities that you can't teach.” In particular, Moran created a checklist of 13 traits that hiring managers should use when screening Chipotle's applicants:

Conscientious

Motivated

Ambitious

Respectful

Hospitable

Polite

Happy

Curious

High energy

Infectiously enthusiastic

Honest

Presentable

Smart

It's clear from that list that Moran emphasizes the Big Five in hiring, along with integrity and cognitive ability—the subject of the next chapter. Moran wants the list kept manageable so that hiring managers can assess all of them in a relatively short meeting. Indeed, Moran “test drove” the list at a managerial retreat in Las Vegas. He interviewed a series of candidates on stage in front of 2000 people to illustrate how to gauge the traits. Moran estimates that there's 80 percent to 90 percent agreement on whether candidates possess the qualities in question. And Chipotle cares deeply about its commitment to its selection system, so much so that it avoids franchising. Most of its competitors do franchise because the fees paid by franchisees are a powerful means of raising capital. But Moran and Ells argue that franchising would release control over Chipotle's culture and its hiring practices. Chipotle views that control as important as it continues to expand—with plans to open around 200 new locations this year.

Questions

1. Which traits would you want to see in “front line” employees at Chipotle? How do those compare to the 13 traits that the company actually uses?

2.Would being a leader in the company—either a general manager running a store or a middle manager in the corporate headquarters—require a different set of traits? If so, which traits would be subtracted from the set of 13 and which would be added?

3. Do you agree that there would be “80 percent to 90 percent agreement” on whether an applicant possesses the 13 traits? Do you think Chipotle should assess the traits with an interview or with a more formal personality test?

A researcher notes that, in a certain country, a disproportionate number of software millionaires were born around the year 1955. Is this a coincidence, or does birth year matter when gauging whether a software founder will be successful? The researcher investigated this question by analyzing the data shown in the accompanying table.

a. Fit a simple linear regression model relating number (y) of software millionaire birthdays in a decade to total number (x) of births in this country. Give the least squares prediction equation.

y^ = _______ +________x (Round to two decimal places as needed.)

b. Practically interpret the estimated y-intercept and slope of the model, part a.

Give a practical interpretation of the estimated y-intercept of the line. Select the correct choice below and, if necessary, fill in the answer box within your choice.

A. For a decade with 0 software millionaire birthdays, the total number of births in this country is estimated be ___ million. (Round to two decimal places as needed.)

B. For a decade with 0 total births in this country, the number of software millionaire birthdays is estimated be ___. (Round to two decimal places as needed.)

C. The y-intercept does not have a practical interpretation.

Give a practical interpretation of the estimated slope of the line. Select the correct choice below and, if necessary, fill in the answer box within your choice.

A. For each additional unit increase in the total number of births in this country, the number of software millionaire birthdays is estimated to decrease by ____ .

(Round to two decimal places as needed.)

B. For each additional unit increase in the total number of births in this country, the number of software millionaire birthdays is estimated to increase by _____.

(Round to two decimal places as needed.)

C. The slope does not have a practical interpretation.

c. Predict the number of software millionaire birthdays that will occur in a decade where the total number of births in this country is 26 million.

   ____________ software millionaire birthdays (Round to two decimal places as needed.)

d. Fit a simple linear regression model relating number (y) of software millionaire birthdays in a decade to number (x) of CEO birthdays. Give the least squares prediction equation.

y^ = _______ + (________)x  (Round to two decimal places as needed.)

e. Practically interpret the estimated y-intercept and slope of the model, part d.

Give a practical interpretation of the estimated y-intercept of the line. Select the correct choice below and, if necessary, fill in the answer box within your choice.

A. For a decade with 0 software millionaire birthdays, the number of CEO birthdays (from a random sample of 70 companies) is estimated be __. (Round to two decimal places as needed.)

B. For a decade with 0 CEO birthdays (from a random sample of 70 companies), the number of software millionaire birthdays is estimated be __. (Round to two decimal places as needed.)

C. The y-intercept does not have a practical interpretation.

Give a practical interpretation of the estimated slope of the line. Select the correct choice below and, if necessary, fill in the answer box within your choice.

A. For each additional unit increase in the number of CEO birthdays, the number of software millionaire birthdays is estimated to increase by __. (Round to two decimal places as needed.)

B. For each additional unit increase in the number of CEO birthdays, the number of software millionaire birthdays is estimated to decrease by __. (Round to two decimal places as needed.)

C. The slope does not have a practical interpretation.

f. Predict the number of software millionaire birthdays that will occur in a decade where the number of CEO birthdays (from a random sample of 70 companies) is 19.

___ software millionaire birthdays (Round to two decimal places as needed.)

Financial Statement Disclosure:

International Clothiers Ltd. has offices in Canada, Bermuda, Europe and the United States. Each of the following events have occurred after the company’s 31 December 2017 year-end, but before their financial statements had been finalized:

a. On 27 January, International Clothiers Ltd entered into a long-term lease for a private airplane for the company president and CEO. The lease requires payments of US$75,000 per month for 60 months.

b. The board of directors met on 15 February 2018 and decided to discontinue its shoe division due to continuing losses and a change in business strategy.

c. One of the company’s major retail customers declared bankruptcy on 22 March. The retail customer accounted for 20% of International Clothier’s year-end receivables and 35% of International Clothier’s revenue in 20x7.

You have just been hired as a new accountant by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash.

Because you are well trained in budgeting, you have decided to prepare a budget for the last quarter of the 2020 calendar year in order to show management the benefits that can be gained from an integrated budgeting program. The company sells many styles of earrings, but all are sold for the same price — R90 per pair. Actual sales of earrings for the last three months and budgeted sales for the next three months follow:

The company does not keep earrings in stock. All sales are on credit. The company has found that only

20% of a month’s sales are collected in the month of sale. An additional 60% is collected in the following month, and 15% is collected in the second month following sale. The remaining 5% is usually written off as irrecoverable in the third month following sale.

Suppliers are paid R36 for a pair of earrings. Eighty percent of a month’s purchases is paid for in the month of purchase; the remaining twenty percent is paid for in the following month. Monthly operating expenses for the company amount to R248 000 and comprise advertising, rent, salaries, utilities, insurance, machine depreciation and bad debts. Cash expenses are paid each month. The company uses a machinery that was acquired at a cost of R1 500 000 two years ago and is being depreciated at 20% per annum on cost using a straight-line method.

The company had a bank balance of R50 000 on 30 September 2020 in line with the minimum monthly cash balance that it retains. All borrowings are done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with the bank that allows the company to borrow in increments of R1 000. The interest rate on these loans is 15% per annum and is payable at the end of the quarter. The company would pay the bank as much of the loan as possible (in increments of R1 000, while still retaining at least R50 000 in cash).

REQUIRED

a) Prepare a monthly cash budget of Earrings Unlimited for each of the three-month period ending 31 December 2020. You do not need to show the total quarter.

14.       Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, and the recognized book values of Ottowa’s individual net assets approximated their fair values. Omaha had net incomes of $150,000 and $190,000 for 2019 and 2020, respectively. The subsidiary paid dividends amounting to $30,000 in both years. Cleaverland uses the equity method to account for its pre-consolidation investment in Omaha.

What was the balance in Equity Investment at December 31, 2020?

a. $650,000

b. $710,000

c. $990,000

d. $930,000

15.       Brendon, Inc. acquired 100% of Weston Enterprises on January 2, 2020. During 2020, Brendon sold Weston for $700,000 goods which had cost $500,000. Weston still owned 40% of the goods at the end of the year. In 2021, Brendon sold goods with a cost of $500,000 to Weston for $700,000, and the buyer still owned 40% of the goods at year-end. For 2021, cost of goods sold was $1,000,000 for Brendon and $990,000 for Weston.

What was consolidated cost of goods sold for 2021?

a.   $1,370,000

b.   $1,290,000

c.   $1,870,000

d.   $1,990,000

Clearwater Co. owned all of the voting common stock of Kelley, Inc. On January 2, 2020 Clearwater sold equipment to Kelley for $350,000. The equipment had cost Clearwater $425,000. At the time of the sale, the balance in accumulated depreciation was $125,000. The equipment had a remaining useful life of eight years and no salvage value.

16.       For the consolidated balance sheet at December 31, 2021, at would amount would the equipment (net) be included?

a.   $225,000

b. $262,500

c.   $306,250

d. $-0-

On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life.Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively.

17.        What was the amount of the gain or loss on the sale of equipment reported by Republic on its pre-consolidation income statement in 2020?

a. $-0-

b. $ 5,000 gain

c.    $20,000 loss

d. $35,000 gain

18.       What was the amount of the credit to depreciation expense on the 2021 consolidation worksheet?

a. $   750

b.   $-0-

c.   $1,000

d.   $1,600