3. Top, a US Company, has a 100% owned subsidiary in Japan. The functional currency for the subsidiary is the Japanese yen. The subsidiary purchases merchandise on credit from a German company, with payment due in US dollars. Between the date of sale and the due date of the payable, the yen strengthens against the US dollar. What will be the result to Top.

a.   there will be a foreign exchange gain

2. there will be a foreign exchange loss
3. there will be no foreign exchange gain or loss
4. there will be both a foreign exchange gain and loss
5. there will be a bad debt expense to the German company

4. Face Co. uses the US dollar as its functional currency in Country X. At December 31, 2015 Face’s subsidiary has a net asset position in Country X of euro 100,000. Which correctly describes the action that Face will take on December 31, 2015 to hedge its euro exposure ?

1. Face will enter into a spot contract to purchase euros and sell US dollars
2. Face will enter into a spot contract to purchase US dollars and sell euros
3. Face will enter into a forward contract to purchase euros and sell US dollars
4. Face will enter into a forward contract to purchase US dollars and sell euros
5. Face will purchase an FX option contract giving it the right but not the obligation to purchase euros and sell US dollars

5. At the close of business on December 31, 2015 Booker Corp pays a $30,000 premium to purchase a foreign currency option giving Booker the right but not the obligation to purchase 100,000 euros and sell $140,000 US dollars in six months as a hedge of a future euro rental obligation.

What is reported on the balance sheet at December 31, 2015 (in US dollars)

1. asset of $0
2. asset of $30,000
3. asset of $130,000
4. asset of $140,000
5. asset of $170,000

Crane Inc., a publicly traded company, had 291,000 common shares outstanding on December 31, 2019. During 2020, the company issued 6,600 shares on May 1 and retired 15,000 shares on October 31. For 2020, the company reported net income of $294,530 after a loss from discontinued operations of $44,000 (net of tax). Calculate earnings per share for 2020 as it should be reported to shareholders. (Round answer to 2 decimal places, e.g. 15.25.) Earnings per share Income per share before discontinued operations $ Discontinued operations loss per share, net of tax $ Net income per share $ Assume that Crane Inc. issued a 3-for-1 stock split on January 31, 2021, and that the company’s financial statements for the year ended December 31, 2020 were issued on February 15, 2021. Calculate earnings per share for 2020 as it should be reported to shareholders. b(Round answer to 2 decimal places, e.g. 15.25.) Earnings per share Income per share before discontinued operations $ Discontinued operations loss per share, net of tax $ Net income per share $ Is it possible for a corporation to have a simple capital structure one fiscal year and a complex capital structure in another fiscal year? Choose the answer from the menu in accordance to the question statement

Income Statement for the year ended December 31, 2020 (millions of $)

*Includes depreciation expense of $30 million, insurance expense of $8 million, bad debt expense of $6 million, and salaries expense of $86 million.

** During 2020, the company purchased two pieces of equipment costing a total of $36 million. Summer Fun also incurred a loss of $6 million on the sale of a plant.

Balance Sheet at December 31 (millions of $)

Question 1: 2020 cash flow from financing activities is a net cash inflow of:

Question 2: 2020 cash flow from operating activites is a net cash inflow of:

Question 3: If the company used the direct method of reporting cash flow from operating activities, the amount of "Cash paid for interest" in 2020 would be:

Question 4: Based on the information above, the company's 2020 cash flow from investing activities should inlclude a cash inflow from the sale of the plant totaling:

On January 1, 20X1, Prange Company acquired 100% of the common stock of Seaman Company for $600,000. On this date Seaman had total owners' equity of $400,000. Any excess of cost over book value is attributable to a patent, which is to be amortized over 10 years. During 20X1 and 20X2, Prange has appropriately accounted for its investment in Seaman using the simple equity method. On January 1, 20X2, Prange held merchandise acquired from Seaman for $30,000. During 20X2, Seaman sold merchandise to Prange for $100,000, of which $20,000 is held by Prange on December 31, 20X2. Seaman's gross profit on all sales is 40%. On December 31, 20X2, Prange still owes Seaman $20,000 for merchandise acquired in December. Required: Complete the worksheet similar to Figure 4-1 (following) for consolidated financial statements for the year ended December 31, 20X2. Prepare your worksheet in Excel. Following is a template in Figure 4-1 that will guide you in setting up your worksheet in Excel.

Imagine you’re the CFO of a company with 10 product lines and an infrastructure that includes several functional departments which support some or all of these product lines. The CEO is curious as to what effect dropping one of the product lines or increasing investment in certain product lines might have on company profits.

Based specifically on what we’ve been reading about in recent weeks, what information should the CFO be gathering and key metrics calculated to help the CEO make such decisions? What are “fixed” expenses, are they truly “fixed” and how should they be considered when making such decisions?

Imagine you’re the CFO of a company with 10 product lines and an infrastructure that includes several functional departments which support some or all of these product lines. The CEO is curious as to what effect dropping one of the product lines or increasing investment in certain product lines might have on company profits.

Based specifically on what we’ve been reading about in recent weeks, what information should the CFO be gathering and key metrics calculated to help the CEO make such decisions? What are “fixed” expenses, are they truly “fixed” and how should they be considered when making such decisions?"

For 2016, Foreign company (FC) had $150 of effectively connected E&P (ECEP) and its US net equity decreased from $1600 at the beginning of the year to $1500 at the end. For 2017, FC had $225 of ECEP and its US net equity decreases by $300 from $1600 at the beginning of the year to $1300 at the end. What is FC's DEA amount for 2018 and its branch profits tax, if any, for 2018?

Question 1 10 marks Charles, the CEO of JB Inc., and Frank, the accountant for JB Inc., were recently having a meeting to discuss the upcoming release of the company’s financial statements. Following is an excerpt of their conversation:

Charles: These financial statements do not show the hours of hard work that we have put in to restore this company to financial health. In fact, these results may actually prevent us from obtaining loans that are critical to our future.

Frank: Accounting does allow for judgment. Tell me your primary concerns, and let us see if we can work something out.

Charles: My first concern is that the company does not appear very liquid. As you can see, our current assets are only slightly more than current liabilities. The company has always paid its bills, even when cash was tight. It is not really fair that the financial statements don’t reflect this.

Frank: Well, we could reclassify some of the long-term investments as current assets instead of noncurrent assets. Our expectation is that we will hold these investments for several years, but we could sell them at any time; therefore, it is fair to count these as current assets. We could also reclassify some of the accounts payable as noncurrent. Even though we expect to pay them within the next year, no one will ever look close enough to see what we have done. Together these two changes should make us appear more liquid and properly reflect the hard work we have done.

Charles: I agree. However, if we make these changes, our long-term assets will be smaller and our long-term debt will be larger. Many analysts may view this as a sign of financial trouble. Is there not something we can do?

Frank: Our long-term assets are undervalued. Many were purchased years ago and recorded at historical cost. However, companies that bought similar assets are allowed to record them at an amount closer to their current market values. I have always thought this was misleading. If we increase the value of these long-term assets to their market value, this should provide the users of the financial statements with more relevant information and solve our problem, too.

Charles: Brilliant! Let us implement these actions quickly and get back to work.

Required: 1. Describe any ethical issues that might arise because of Charles and Frank’s conversation. (6)

2. Name at least 4 companies that misled its stakeholders by making use of Unethical accounting practices (4)

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $187,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $653,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,100,000 in total. Seida’s January 1, 2021, book value equaled $1,950,000, although land was undervalued by $135,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $267,000 and declared and paid dividends of $120,000.

Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• 1

  Record acquisition of Seida stock.

• 2

  Record the 40% income earned during period by Seida.

• 3

  Record 2021 amortization for trademark excess fair value.

• 4

  Record dividend declaration from Seida.

• 5

  Record collection of dividend from investee.