Imagine the CEO of a software house asks you to make a system that automates the SDLC
process. Based on the initial requirements, you were successfully able to make a prototype that
captures almost 40$-50% functionalities. You presented the demo to the CEO and now CEO is very
impressed with the work. The CEO has ordered you to add some new features in the prototype and
release the product as soon as possible. Being the lead developer of the project, do you think this is a
good idea? If yes, provide your reason? If no, write a reasoning report for the CEO to explain why it is
not a good idea to add more features in the prototype and put it in the release.

Explain the risks and obstacles for a U.S. based company doing business overseas.

TO Industries prepares monthly cash budgets. The following budget information is available for April and May 2020:

All sales are credit sales. The company expects to collect 65% from customers in the month of the sale and the remaining 35% in first month following the sale. The company purchases direct materials on account. The company pays for 70% of the purchases in the month of the purchases and the remaining 30% in the first month following the purchase. Direct labor, manufacturing overhead, and selling and administrative expenses are paid in cash in the month incurred.

Additional information:

• March 2020 credit sales were $600,000
• March 2020 purchases of direct materials were $200,000
• The company’s cash balance on April 1, 2020 is expected to be $90,000
• The company wants to maintain a minimum cash balance of $80,000 and has a line of credit in the amount of 1,000,000, with an annual interest rate of 6%, available to borrow if the budgeted cash balance falls below that level. Any amounts borrowed on the line of credit at the end of a month require a cash interest payment in the subsequent month. If the ending cash balance in a month exceeds the minimum balance, the excess amount is used to repay any amounts borrowed on the line of credit.

Required

1. Prepare a schedule of cash collections from credit sales for April and May 2020.
2. Prepare a schedule of cash disbursements for direct material purchases for April and May 2020.
3. Prepare a cash budget for April and May 2020 in columnar format.

1. A U.S. company needs to pay Japanese Yen for the equipment purchase in the next six months and would like to hedge its foreign exchange rate risk. Please construct a range forward strategy using foreign currency options.
2. How should this U.S. company hedge by using the standard forward contract? How would you compare the hedge using the range forward strategy with the hedge using the standard forward contracts?

Reporting Earnings per Share Disclosures

Siera Inc. had 350,000 shares of no par common stock outstanding throughout 2020 that declared and paid dividends of $75,000 in 2020. The company also had 45,000 shares of preferred stock that paid dividends of $7,500 in 2020 (declared in 2020). The company reported the following amounts in its income statement for the year ended December 31, 2020 (pretax).

Required

a. Prepare the earnings per share section of the income statement for the year ended December 31, 2020, assuming a tax rate of 25%.

• Use a negative sign to indicate a loss.
• Round the per share amounts to two decimal places.

Required

b. Repeat requirement of part a except now assume that the company reported income from discontinued operations of $52,500.

• Use a negative sign to indicate a loss.
• Round the per share amounts to two decimal places.

Which of the following is not a source of downward wage rigidity?

A. Unions appear to prefer layoffs to wage reductions, as the former affects only workers without seniority, while the latter would affect all workers.

B. Firms appear to prefer layoffs to wage reductions, as the former allows the firm to "hoard" workers in whom they have invested specific training.

C. implicit contracts between employers and their workers

D. Layoffs are discouraged due to the method used to finance unemployment compensation insurance.

A company purchased a piece of equipment for $40,000 on January 1, 2018. At that time the company estimated the equipment would have a 6-year useful life and no salvage value. The company used straight-line depreciation based on this information used through 2019. On December 31, 2020, the company determined the equipment instead has a 9-year useful life, with no salvage value. The company's tax rate has been 20% since 2015. What is the necessary adjustment to beginning retained earnings in 2020 for this change?

A company purchased a piece of manufacturing equipment for $30,000 on January 1, 2018. At that time, the company estimated the equipment would have a 7-year useful life and no salvage value. The company used straight-line depreciation based on this information through 2019. On December 31, 2020, the company determined the equipment instead has a 10-year useful life, with no salvage value. The company’s tax rate has been 30% since 2015.

What is the necessary adjustment to beginning retained earnings in 2020 for this change?

For the publicly traded U.S. company, Apple (AAPL), provide an introduction to the company and its industry. Include relevant background information. Describe the organizational structure.

Ewig Berhad acquired 800, 000 out of the 1, 000, 000 RM1 ordinary shares of Leben Berhad on 1 January 2020 for RM900, 000 cash. The general reserves and retained earnings of Leben Berhad at the date of acquisition were RM400, 000 and RM250, 000 respectively.

Required:

(a) What is the percentage of acquisition by Ewig Berhad?

(b) What is the corporate relationship in this situation?

(c) Based on MFRS 10, briefly explain whether Ewig Berhad exercises control over Leben Berhad.

(d) Assuming the proportional net asset method is used, what is the fair value of the NCI?

(e) What is the goodwill or bargain purchase?