“Bankrupt” Corporation is in a deep financial crisis. You are one of the financial avengers “Bankrupt” is desperately seeking help from. CEO of the company informed you that he is considering the two risky projects “Thanos” and “Loki” to protect the firm from financial collapse. Both projects have similar risk characteristics. Bankrupt’s WACC is 11%. The initial investments for both the projects are $200 million. Cashflow from the projects are as follows;
Year 1 2 3 4
Thanos 10M 60M 80M 160M
Loki 70M 50M 20M 160M
Now, your job is to explain the following questions in great detail so that the CEO understands your plans to protect the firm.
In: Finance
(law question). Fred Maxson owned Canadian Equipment Company. To operate the business, Maxson borrowed funds from Cross Town Bank & Trust. For each loan, Cross Town filed a financing statement that included Maxson’s signature and address, the bank’s name and address, and a description of the collateral. The first loan covered all of Maxson’s equipment, including “any after-acquired property.” The second loan covered a truck crane “whether owned now or acquired later.” The third loan covered a “Bobcat mini-excavator.” Did these financing statements perfect Cross Town’s security interests? Explain.
In: Accounting
on january 1, 2020, Wampum Jewelry company issued deep discount bonds having a total maturity value of 500,000. Wampum received 354,832 from investors on the date of issuance. The bonds mature 5 years from the date of issuance.
a- prepare the journal entry for the issuance of bonds on January 1, 2020
b-calculate the implicit rate of interest on the bonds
c-prepare an amortization schedule for the life of the bonds
d- Record journal entry for interest expense for the year ended dec 31,2023
In: Accounting
You found an item totaling $48,000 treated as miscellaneous expenses. You seek clarification from the tax payer and was told that from 1 July 2020, he was appointed as a part-time consultant to a company and received a total of $48,000 for the period of 1 July 2020 to 31 December 2020. However, he did not declare it as income as he argued that it is not related to his business. Instead he treated it as miscellaneous expenses, a replacement cost for the time he spent on consulting and not attending to his own business (treated as expense for time spent/lost).
Explain the implication of the items and suggest the tax treatment you would adopt in addressing the issues.
In: Accounting
On December 31, 2020, an analysis of the accounts for a company reveals the following:
$100,000 loss on disposal of discontinued operations, before tax
$6,000 gain on sale of investments, before tax
$10,000 depreciation expense understatement in 2018 due to error, before tax
$20,000 cumulative understatement of net income of prior years from changing inventory valuation method in 2020, before tax
$168,000 income from operations, before tax
$4,000 dividends declared
The applicable income tax rate is 40% for all tax-related items. Retained earnings on December 31, 2019 were reported as $600,000.
What is ending retained earnings on December 31, 2020?
In: Accounting
Assume the average age of an MBA student is 34.9 years old with a standard deviation of 2.5 years. a) Determine the coefficient of variation. b) Calculate the z-score for an MBA student who is 29 years old. c) Using the empirical rule, determine the range of ages that will include 99.7% of the students around the mean. d) Using Chebyshev's Theorem, determine the range of ages that will include at least 91% of the students around the mean. e) Using Chebyshev's Theorem, determine the range of ages that will include at least 87% of the students around the mean.
In: Statistics and Probability
Assume the average age of an MBA student is 30.7 years old with a standard deviation of 2.2 years.
a) Determine the coefficient of variation.
b) Calculate the z-score for an MBA student who is 26 years old.
c) Using the empirical rule, determine the range of ages that will include 95% of the students around the mean.
d) Using Chebyshev's Theorem, determine the range of ages that will include at least 94% of the students around the mean.
e) Using Chebyshev's Theorem, determine the range of ages that will include at least 80% of the students around the mean.
In: Statistics and Probability
VI. Communication: For this part of the assessment, you will prepare memorandums to upper management addressing certain scenarios or situations.
A. As the controller of Target Corporation, compose a memo to the CEO addressing the advantages and disadvantages of transitioning from GAAP to IFRS.
B. As the controller of Target Corporation, compose a
memo to the CEO addressing the following scenario: Your biggest
customer has just gone bankrupt, and you must inform the CEO how
this will affect your accounts receivable. Assume that the accounts
receivable balance is at least $100,000.
In: Accounting
At one of their regular executive meeting, the Startco's CEO was reviewing the Company's financials and ask the CEO (which is you) the following question. "I noticed our capital structure Debt/Equity ratio is 0.33. What may happen if we double our borrowing and use the extra cash from the loan to buy back some our shares? I see doing is as a simple way to improve profitability."
Briefly explain whether you agree with the CEO statement and why (why not).
In: Finance
Milligan Companies, Inc (MCI)is a private company
which owns five auto parts stores Houghton. MCI has gone from two
auto parts stores to five stores in the last three years, and it
plans on continued growth. Sheila and Walter own the majority of
the stock. Sheila is the chairman of the board and the CEO. Walter
is the COO as well as the CFO. Shares not owned by Sheila and
Walter are owned by friends and family who helped get MCI started.
Sheila started the company with one store after working in an auto
parts store. To date, she has funded growth from an inheritance and
investments from a few friends. They are thinking about expanding
by several more stores in the near future.
MCI employs 20 full time staff. These workers are employed in store
management, parts delivery and accounting. About 40% of MCI is
retail walk-in business and the other 60% is regular customers
where MCI delivers parts and bills these customers on account.
During peak periods, MCI also uses part-time employees.
Your accounting firm ACC4100, is conducting the annual audit for
the year ended December 31, 2020. Your audit team discovers
numerous misstatements, mostly caused by human error and weak
internal control. In aggregate, the misstatements are material, but
management agrees to make your recommendation adjustments. Also,
during 2020, MCI changed its method of valuing inventory from a
weighted-average method to FIFO. When Sheila opened the first
store, she thought the easiest way to value inventory was to use an
average cost for each category of items. As the company grew, they
never revised this practice. Now that the company is significantly
larger with multiple stores, Sheila realize they need to be more
focused on tracking inventory costs because of the impact of their
profit margin. The change was made to FIFO because it
is more commonly used in the industry.
Your team concludes fieldwork on March 1, 2021 and Sheila is
planning to provide the auditing financial statements and audit
report to its lenders on March 6, 2023
A. Does KCI have a justified change
in accounting principle? If so, how should the change be presented
in the financial statements?
B. Assuming KCI has a justified
change in accounting principle and has accounted for the change
properly, draft the report that the CPA will issue.
C. If management does not make agree
to make the adjustments to correct the financial statements, and
does not properly present the change in accounting principle in the
financial statements. What reporting options does the CPA firm
have?
In: Accounting