1. You graduated from Loyola two years ago, and you are now earning a salary of $50,000 per year. The total cost of your Loyola education was $200,000. You are now thinking about earning an MBA degree. Because of your excellent education at Loyola, you are eligible for the one-year, accelerated program at Global University, which has a cost of $120,000 for tuition, room, board, books, etc. To earn the MBA, you would have to quit your job and study full-time. As you are deciding what to do, your manager at work tells you that, based on your outstanding performance, you will be promoted in one month; the new position will carry a salary of $60,000 per year, or $10,000 more than you are earning now. You estimate that the MBA will translate into the following incremental after-tax earnings for the next ten years, which is your decision horizon:

       Incremental

Year                          After-tax Earnings

   1                                    $15,000

   2                                    20,000

   3                                    23,000

   4                                    26,000

   5                                    30,000

   6                                    35,000

   7                                    40,000

   8                                    50,000

   9                                    60,000

10                                    70,000

          You have a discount rate of 10.0%. Lastly, in order to get to/from class, you

          will need to spend more on transportation, and you will also have to eat

          several meals a week at fast food restaurants. These incremental net

          working capital costs will be $3,000 for the year. Your on-going fixed

overhead costs—for rent, clothes, insurance, food, etc.—are $20,000 per

year.

USING THE PRECEDING INFORMATION, PLEASE ANSWER THE

FOLLOWING QUESTIONS:

1. What is your

1. Sunk cost?
2. Fixed overhead cost?
3. Project cost?
4. Erosion?
5. Opportunity cost?
6. Incremental net working capital cost?

2. Combining all appropriate costs, what is the total cost of the MBA?
3. What is the present value of the incremental after-tax earnings?
4. What is the net present value of the MBA?
5. Should you pursue the MBA?
6. Should you factor in financing costs?
7. Should you factor in on-going fixed overhead costs?

11) Harry Inc. acquired all of the outstanding common stock of Rose Company on January 1, 2020. Annual amortization of $25,000 resulted from this transaction. On the date of the acquisition, Harry reported retained earnings of $550,000 while Rose reported a $260,000 balance for retained earnings. Harry reported net income of $105,000 in 2020 and $75,000 in 2021, and paid dividends of $20,000 each year. Rose reported net income of $28,000 in 2020 and $39,000 in 2021, and paid dividends of $11,000 each year.

Required: If the parent’s net income reflected use of the initial value method, what were the consolidated retained earnings on December 31, 2021?

Objective Of The Assignment

To prepare a memorandum to the chief executive officer (CEO) as to why the accrual basis of accounting and recording financial transactions using other aspects of Generally Accepted Accounting Principles is preferred (not just mandatory) as opposed to the cash basis of accounting.

In actual business, critical issues and problems are communicated in writing, particularly to create accountability for the positions taken and solutions arrived at. The communication includes relevant background information and rationale and other support for the conclusion(s) reached.

Background Information For the Assignment

Huntington Consulting, Inc. (the Company) has a year-end of December 31 and has long used the cash basis of accounting. Its founder and CEO, Carl Singer, has always believed that you record revenues and issuance of capital stock when cash is received, and assets and expenses when paid for. You are the new controller and have responsibilities overall accounting and financial reporting. You have decided to communicate to Carl Singer, CEO, why the accrual accounting method is preferable to the cash basis.

Instructions

Write a memorandum using the following heading and write to Mr. Singer as to why the Company should use the accrual method of accounting (as opposed to the cash basis method):

To:            Carl Singer, CEO

From:      “Your Name”

Subject: Why the Company Should Use the Accrual Method of Accounting

The memo should not exceed a full page using single space, but if it is longer, that is fine. In your memo, address why the accrual basis of accounting is preferred [to the cash basis] and include the importance of accounting periods, matching, and using classified financial statements (i.e., balance sheet for this assignment). Also, include why the financial statements prepared under the accrual method will help make better management decisions.

To make this easier, include the following accounts to make your points:

• Accounts Receivable
• Prepaid Insurance
• Equipment (in this case, laptop computers and other computer equipment)
• Accrued liabilities (i.e., salaries & wages and interest on a loan with the bank)
• Unearned Revenue

Suppose that, after completing your MBA, you are offered a job as a management consultant in a firm specialized in engagement and productivity. One of your first assignments is related to the education sector. specifically working with a large university. The overall goal of the project you're managing is to identify and enhance motivational factors of students in a well-known university. The purpose is to help improve student motivation and learning engagement to help students reach their goal of degree completion. Because you have recently finished your studies, you feel you have a good understanding of the elements that motivate and de-motivate students.

XYZ Medical Ltd a Melbourne based company enters into a non-cancellable purchase commitment of US$50,000 with an American supplier on 1 April 2020 to buy the face masks in a bulk for medical staff. These face masks are to be shipped on the 1st of May 2020. The amount owing on the purchase is payable on 31 July 2020. XYZ Ltd observed that exchange rate is very volatile due to the current trade war between America and China. XYZ decided to enter into a forward rate contract. On 1 April 2020 a forward-exchange contract for US$50,000 as taken out with Westpac Bank Ltd at a cost of $76 923 (which is US$50,000 ÷ 0.65 with AU$1.00 = US$0.65 being the agreed forward rate). XYZ Ltd uses cash flow hedge accounting and its reporting date is 30 June. Date Spot rate Forward rate 1 st April 2020 0.67 0.65 1 st May 2020 0.61 0.59 30th June 2020 0.55 0.57 31st July 2020 0.64 0.64 Required: i. Calculate the gain or loss on the forward contract for each significant date. ii. Prepare the journal entries to account for the transactions including 31/7/2020.

On 1 July 2019 Kanga Consultants Ltd completes a contract to provide advice on the installation of a networked computer system to a company in the US. The client pays the fee of US$500 000 into Kanga Consultants' US bank account on that date. The bank pays interest of 8 per cent annually on 30 June. The exchange rate information is:

Prepare the relevant journal entries are required in Kanga Consultants Ltd's books for 1 July 2019 and 30 June 2020 in accordance with AASB 121 (rounded to the nearest whole AU$)?

Consider the following information, which are estimates as of mid-2019.

Consider the following information, which are estimates as of mid-2019.

For each country listed above, calculate r and how many people there will be in mid-2020 if population growth is exponential. Use the differential equation (dN/dt) for exponential population growth that was presented in Lecture.

Know Your Product Ltd is an Australian company with a functional currency = A$. The company has entered into a number of transactions denominated in US$ during the year ended 30 June 2017. The closing exchange rate is A$1.00 = US$0.77, determine the translated amount that will be included in financial statements for each of the following balances. 1. Land at cost US$400 000 acquired on 1 February 2017 when the exchange rate is A$1.00 = US$0.67. 2. Land revalued to US$600 000 on 30 June 2017 that had cost US$400 000 on 1 February 2017 when the exchange rate is A$1.00 = US$0.67. 3. Credit sale of US$80 000 on 12 March 2017 when the exchange rate is A$1.00 = US$0.69. Received cash from debtor of US$40 000 on 30 June 2017. 4. Credit purchase of inventory of US$250 000 on 15 June 2017 when the exchange rate is A$1.00 = US$0.62. The creditor remains unpaid at 30 June 2017. 5. A loan payable of US$800 000 arranged on 1 January 2017 when the exchange rate is A$1.00 = US$0.60. On 30 June 2017, the outstanding interest on the loan is US$20 000.

You are the CEO of a major US apparel company that contracts work to garment manufacturers abroad. Employees of one contractor report 20-hour workdays, pay below the minimum wage, overcrowded living conditions, physically abusive supervisors, and confiscation of their passports so they cannot quit. Local officials say labor laws are adhered to and enforced, though abuses appear widespread. You send inspectors to the offending factory abroad, but they uncover no labor violations. A labor-advocacy group claims that supervisors coached workers to lie to your inspectors about conditions and threatened workers with time in makeshift jails without food if they talked. Questions to be answered: 1-5. Should you implement a monitoring system to learn the truth about what is happening? 1-6. Do you help the factory improve conditions, withdraw your business from the country, or simply do nothing? 1-7. How might your actions affect relations with the factory owner and your ability to do business in the country?