For each of the following activities, explain which of the objectives of managerial accounting activity is involved. In some cases, several objectives may be involved.

1. Developing a bonus reward system for the managers of the various offices of the American Automobile Association.

2. Comparing the actual and planned cost of a consulting engagement completed by an engineering firm such as Allied Engineering

3. Determining the cost of manufacturing a tennis racket at Wilson Sporting Goods

4. Measuring the cost of the inventory of digital cameras on hand in a store.

5. Estimating the annual operating cost of a newly proposed branch bank.

6. Measuring the following costs incurred during one month in a hotel: a. Wages of table-service personnel. b. Property taxes.

7. Comparing a room rate structure, occupancy rate, and restaurant patronage with industry averages.

Kike Ltd is a retailer dominance of the athletic shoe and sporting apparel businesses. Kike Ltd, which currently views itself as operating in the sporting wear (shoes and clothes) segment, is considering an expansion into the fashion apparel business, producing high-priced casual clothing for teenagers and young adults. The Company therefore, is contemplating building another new retail store across the town. Followings are information on this expansion. The company already owns the land for this store, which currently has an abandoned warehouse located on it. The land cost at $350,000 and has a useful life of 10 years. Kike Ltd bought this land 5 years ago. The cost of $45,000 for demolishing the abandoned warehouse and clearing the lot. The marketing department spent $20,000 on market research to determine the extent of customer demand of the new segment for the new store. The construction of the new store would cost $500,000, with 5-year life and depreciated using straight line method. The loss of 30% sales in the existing retail outlet (old segment), if customers who previously drove across town to shop at the existing outlet (old segment) become customers of the new store (new segment) instead. Kike Ltd issue bond at 6% to finance the construction cost. Assumes the cost of capital is 10% and tax rate is 27%. Kike Ltd is expecting the sales of the new segment which will be constant at $150,000 per year for 5 years. Required: Discuss should the land cost that has an abandoned warehouse be included as part of incremental earnings for the proposed of new segment. Would the value of land if sold be considered as opportunity cost? Discuss should the cost of $45,000 for demolishing the abandoned warehouse and clearing the lot and the marketing cost of $20,000 be included as part of incremental earnings for the proposed of new segment. Discuss in detail how the cost of the construction of the new store, $500,000, with 5-year life and depreciation using straight line method and the cost of issuing bond at 6% to finance the construction cost are treated as incremental earnings for the proposed of new segment. In the situation where the employees leave the new store sitting idle due to some unavoidable circumstances (such strike, natural disaster), should the cost in (c) is treated as opportunity cost? Discuss in details how this loss of 30% sales in the existing retail outlet (old segment), if customers who previously drove across town to shop at the existing outlet (old segment) become customers of the new store (new segment) instead will impact the incremental earnings for the proposed of new segment. Explain why it is advantageous for Kike to use the most accelerated depreciation method compared to straight line method. Is it realistic for Kike to forecast a constant sale for 5 years? (1 mark)

Question 2

Part A

Luxury Living Concepts Corp. (LLC) is a publicly accountable enterprise that builds large complexes, including schools, office towers, apartment buildings and shopping centres, on a contract basis. Additional information with respect to the company is as follows:

- LLC’s year end is December 31.

- The company uses the cost-to-cost approach to determine the stage of completion of its construction projects.

- The enterprise rounds the percentage of completion to two decimal places (for example, 13.54%).

- A discount rate of 4% adequately reflects the underlying credit risk of LLC’s customer for this transaction.

In 20X1, LLC entered into a $120 million contract to construct a shopping mall over a three-year period. Construction of the project was completed in late 20X3. Total costs were originally estimated to be $98 million. LLC’s progress on the contract and other pertinent information is detailed below:

* The revised cost data was not known in 20X1.

** The revised cost data was not known in 20X2.

Required:

a) Prepare the required journal entries to record transactions relating to the contracts for the 20X1, 20X2 and 20X3 fiscal periods. Show all supporting calculations for each journal entry. The calculations are to be referenced or included in the description of the journal entry.

b) Prepare the excerpts of LLC’s statements of financial position as at December 31, 20X1, and December 31, 20X2 (exclude the impact on cash and retained earnings).

Part B

Refer to the facts in Part A. Independent of the requirements in Part A, assume that the additional cost in 20X2 resulted from changes to the project requested by the customer in 20X2 and that the customer agreed to increase the contract price to $140 million. The additional $20 million was added by LLC to its final progress billing in 20X3 and was paid by the customer during that year.

Required:

a) Determine the revenue to be recognized by LLC in each of 20X1, 20X2 and 20X3.

b) Determine the expense to be recognized by LLC in each of 20X1, 20X2 and 20X3.

Show all supporting calculations for requirements a) and b) to be eligible to receive partial marks.

Question 2

Part A

Luxury Living Concepts Corp. (LLC) is a publicly accountable enterprise that builds large complexes, including schools, office towers, apartment buildings and shopping centres, on a contract basis. Additional information with respect to the company is as follows:

- LLC’s year end is December 31.

- The company uses the cost-to-cost approach to determine the stage of completion of its construction projects.

- The enterprise rounds the percentage of completion to two decimal places (for example, 13.54%).

- A discount rate of 4% adequately reflects the underlying credit risk of LLC’s customer for this transaction.

In 20X1, LLC entered into a $120 million contract to construct a shopping mall over a three-year period. Construction of the project was completed in late 20X3. Total costs were originally estimated to be $98 million. LLC’s progress on the contract and other pertinent information is detailed below:

* The revised cost data was not known in 20X1.

** The revised cost data was not known in 20X2.

Required:

a) Prepare the required journal entries to record transactions relating to the contracts for the 20X1, 20X2 and 20X3 fiscal periods. Show all supporting calculations for each journal entry. The calculations are to be referenced or included in the description of the journal entry.

b) Prepare the excerpts of LLC’s statements of financial position as atDecember 31, 20X1, and December 31, 20X2 (exclude the impact on cash and retained earnings).

Part B

Refer to the facts in Part A. Independent of the requirements in Part A, assume that the additional cost in 20X2 resulted from changes to the project requested by the customer in 20X2 and that the customer agreed to increase the contract price to $140 million. The additional $20 million was added by LLC to its final progress billing in 20X3 and was paid by the customer during that year.

Required:

a) Determine the revenue to be recognized by LLC in each of 20X1, 20X2 and 20X3.

b) Determine the expense to be recognized by LLC in each of 20X1, 20X2and 20X3.

Show all supporting calculations for requirements a) and b) to be eligible to receive partial marks.

Please answer all the questions

Spider-Man and Spider-Woman are planning to have children in the near future. Spider-Man is able to spin webs (S) and cling to walls (C), whereas Spider-Woman can spin webs but cannot cling to walls. If both of these traits are inherited in a dominant manner (i.e., the dominant trait will always mask the recessive trait), Spider-Man is heterozygous for each trait, and Spider-Woman is heterozygous for the web-spinning trait...

What is Spider-Man's genotype?

Spider-Man and Spider-Woman are planning to have children in the near future. Spider-Man is able to spin webs (S) and cling to walls (C), whereas Spider-Woman can spin webs but cannot cling to walls. If both of these traits are inherited in a dominant manner (i.e., the dominant trait will always mask the recessive trait), Spider-Man is heterozygous for each trait, and Spider-Woman is heterozygous for the web-spinning trait...

What is Spider-Woman's genotype?

Spider-Man and Spider-Woman are planning to have children in the near future. Spider-Man is able to spin webs (S) and cling to walls (C), whereas Spider-Woman can spin webs but cannot cling to walls. If both of these traits are inherited in a dominant manner (i.e., the dominant trait will always mask the recessive trait), Spider-Man is heterozygous for each trait, and Spider-Woman is heterozygous for the web-spinning trait...

What gametes does Spider-Man produce?

Spider-Man and Spider-Woman are planning to have children in the near future. Spider-Man is able to spin webs (S) and cling to walls (C), whereas Spider-Woman can spin webs but cannot cling to walls. If both of these traits are inherited in a dominant manner (i.e., the dominant trait will always mask the recessive trait), Spider-Man is heterozygous for each trait, and Spider-Woman is heterozygous for the web-spinning trait...

What gametes does Spider-Woman produce?

Spider-Man and Spider-Woman are planning to have children in the near future. Spider-Man is able to spin webs (S) and cling to walls (C), whereas Spider-Woman can spin webs but cannot cling to walls. If both of these traits are inherited in a dominant manner (i.e., the dominant trait will always mask the recessive trait), Spider-Man is heterozygous for each trait, and Spider-Woman is heterozygous for the web-spinning trait...

What percentage of their offspring will not be able to spin webs but will be able to cling to walls?

Spider-Man and Spider-Woman are planning to have children in the near future. Spider-Man is able to spin webs (S) and cling to walls (C), whereas Spider-Woman can spin webs but cannot cling to walls. If both of these traits are inherited in a dominant manner (i.e., the dominant trait will always mask the recessive trait), Spider-Man is heterozygous for each trait, and Spider-Woman is heterozygous for the web-spinning trait...

What percentage of their offspring will be heterozygous for both traits?

AACTG 4650

Assignment 3

Due February 21

A) Company A has the following income statement information for the years 2015-2017:

                                                2015 Income           2016 Income           2017 Income

                                                Statement as           Statement as              Statement

                                                   Reported                  Reported                  Totals      

Construction Rev               10,000,000                12,500,000                17,000,000

Construction Costs            6,200,000                7,250,000                10,260,000

Gross Profit                           3,800,000                5,250,000                6,740,000

Operating Expenses         2,100,000                2,835,000                3,219,000

Income from

   Operations                       1,700,000                2,415,000                3,521,000

Non-Operating Items           (220,000)                   (171,000)                  (249,000)

Income from

   Continuing Operations 1,480,000                2,244,000                3,272,000

Income Tax Expense              370,000                     561,000                     818,000

Net Income                            1,110,000               1,683,000                2,454,000

During 2017, Company A changed its method of accounting for long-term contracts from completed contract to percentage of completion. This change brought Hogan’s accounting into line with other companies in the industry and was made due to improvements in Hogan’s abilities to project future costs. Company A will continue to use completed contract for tax purposes. Construction revenues and costs for 2015 and 2016 under percentage of completion would have been:

                                                                                        2015                         2016                       

Construction Revenues                                        13,000,000                14,300,000               

Construction Costs                                                7,650,000                8,715,000               

For years prior to 2015, the change would have increased income from continuing operations by a total of $3,200,000. Company A is a calendar year company. Assume a tax rate of 25% for all years.

Required: Prepare in good form the 2017 Income Statement showing 2015 and 2016 Income Statements for comparative purposes. Additionally, prepare the retained earnings portion of the Statement of Stockholder’s equity for these comparative statements. (The retained earnings balance on January 1, 2015 was $3,654,000) Assume Company A declared and paid $100,000 of cash dividends each year 2015-2017.

B) Francis, Inc. is in the process of preparing their 2017 financial statements. During 2017, the following items occurred:

The company changed its method of depreciating its plant assets from double-declining balance to straight-line. This change brings Francis into line with most companies in the industry.

The company discovered an error in the 2014 ending inventory balance. The error resulted in 2014 ending inventory being understated.

The company sold a significant portion of their investment in Stout Corp. during 2017. Prior to this sale and for the previous 5 years, Francis owned 80% of the voting stock of Stout. After the sale, Francis owns 35% of the voting stock of Stout.

During 2017, the company changed its inventory method from weighted-average to FIFO. FIFO is consistent with the actual flow of goods and also with other companies in the industry.

Required: Prepare a report for the company controller explaining how each of these items should be accounted for on the 2017 books and how they will affect the 2017 financial statements and any prior statements shown for comparative purposes. The company generally reports the current year and two prior years in their annual financial statements.

A) Company A has the following income statement information for the years 2015-2017:

                                                2015 Income           2016 Income           2017 Income

                                                Statement as           Statement as              Statement

                                                   Reported                  Reported                  Totals      

Construction Rev               10,000,000                12,500,000                17,000,000

Construction Costs            6,200,000                7,250,000                10,260,000

Gross Profit                         3,800,000                5,250,000                6,740,000

Operating Expenses         2,100,000                2,835,000                3,219,000

Income from

   Operations                       1,700,000                2,415,000                3,521,000

Non-Operating Items        (220,000)                   (171,000)                  (249,000)

Income from

   Continuing Operations          1,480,000                2,244,000                3,272,000

Income Tax Expense               370,000                     561,000                     818,000

Net Income                            1,110,000               1,683,000                2,454,000

During 2017, Company A changed its method of accounting for long-term contracts from completed contract to percentage of completion. This change brought Hogan’s accounting into line with other companies in the industry and was made due to improvements in Hogan’s abilities to project future costs. Company A will continue to use completed contract for tax purposes. Construction revenues and costs for 2015 and 2016 under percentage of completion would have been:

                                                                               2015                         2016                       

Construction Revenues                                        13,000,000                14,300,000               

Construction Costs                                               7,650,000                8,715,000               

For years prior to 2015, the change would have increased income from continuing operations by a total of $3,200,000. Company A is a calendar year company. Assume a tax rate of 25% for all years.

Required: Prepare in good form the 2017 Income Statement showing 2015 and 2016 Income Statements for comparative purposes. Additionally, prepare the retained earnings portion of the Statement of Stockholder’s equity for these comparative statements. (The retained earnings balance on January 1, 2015 was $3,654,000) Assume Company A declared and paid $100,000 of cash dividends each year 2015-2017.

B) Francis, Inc. is in the process of preparing their 2017 financial statements. During 2017, the following items occurred:

The company changed its method of depreciating its plant assets from double-declining balance to straight-line. This change brings Francis into line with most companies in the industry.

The company discovered an error in the 2014 ending inventory balance. The error resulted in 2014 ending inventory being understated.

The company sold a significant portion of their investment in Stout Corp. during 2017. Prior to this sale and for the previous 5 years, Francis owned 80% of the voting stock of Stout. After the sale, Francis owns 35% of the voting stock of Stout.

During 2017, the company changed its inventory method from weighted-average to FIFO. FIFO is consistent with the actual flow of goods and also with other companies in the industry.

Required: Prepare a report for the company controller explaining how each of these items should be accounted for on the 2017 books and how they will affect the 2017 financial statements and any prior statements shown for comparative purposes. The company generally reports the current year and two prior years in their annual financial statements. Give codification references that justify your answer.