2) Company A is based in UK and has a subsidiary in the US that requires funding in USD.    It decides to enter into a currency swap agreement with company B in US. Company A will pay 5% on a Sterling principal of £10,000,000 and receive 6% on a US$ principal of $15,000,000 every year for the next 3 years. The current exchange rate is $1.5 USD per UK Sterling.

Question:  

1. Explain and calculate the cash flow exchanges at the beginning, interim periods and at maturity.
2. What are the potential advantages for company A in this swap?

Whirlybird, Inc. offers helicopter tours and transportation in major cities around the world. The company is considering a stock repurchase in the upcoming quarter. As the Chief Financial Officer (CFO), you understand there are several methods to reduce quarterly earnings, which could reduce stock price prior to the announcement of the proposed stock repurchase.

• What course of action do you recommend to the Chief Executive Officer (CEO) of Whirlybird?
• If the CEO approached you recommending a reduction in current quarter earnings, how would you respond?

Whirlybird, Inc. offers helicopter tours and transportation in major cities around the world. The company is considering a stock repurchase in the upcoming quarter. As the Chief Financial Officer (CFO), you understand there are several methods to reduce quarterly earnings, which could reduce stock price prior to the announcement of the proposed stock repurchase.

A. What course of action do you recommend to the Chief Executive Officer (CEO) of Whirlybird?

B. If the CEO approached you recommending a reduction in current quarter earnings, how would you respond?

the council of higher education wants to compare the percentage of students that score A in two universities. in a random sample of 100 students from university one, 80 received a grade of A; and in a random sample of 160 students from university two, 120 received a grade of A. the 95% confidence interval for the difference in proportion of students who received a grade of A is ???

Here is the unemployment summary from February, 2020 (pre-COVID19)

Data from February 2020:

Unemployed: 5.7 million

Employed: 158.8 million

Not in the Labor Force: 95.1 million

Unemployment rate: 3.5%

Labor force participation rate: 63.4%

Here is the unemployment summary from April, 2020

Data from April, 2020

Unemployed: 23.08 million

Employed: 133.4 million

Not in the Labor Force: 103.4 million

Unemployment rate: 14.7%

Labor force participation rate: 60.2%

1. Describe what happened between February and April using the unemployment and labor force participation rates. You must JUSTIFY these changes using rationale from this chapter. You must consider how we calculate unemployment and the labor force participation rate (look at the numbers that go into the calculations and not just the percentages).

Duncan Street Company (DSC), a British company, is considering establishing an operation in the United States to assemble and distribute smart speakers. The initial investment is estimated to be 25,000,000 British pounds (GBP), which is equivalent to 30,000,000 U.S. dollars (USD) at the current exchange rate. Given the current corporate income tax rate in the United States, DSC estimates that total after-tax annual cash flow in each of the three years of the investment’s life would be US$10,000,000, US$12,000,000, and US$15,000,000, respectively. However, the U.S. national legislature is considering a reduction in the corporate income tax rate that would go into effect in the second year of the investment’s life and would result in the following total annual cash flows: US$10,000,000 in year 1, US$14,000,000 in year 2, and US$18,000,000 in year 3. DSC estimates the probability of the tax rate reduction occurring at 50 percent. DSC uses a discount rate of 12 percent in evaluating potential capital investments. Present value factors at 12 percent are as follows: Period PV Factor 1. . . . . . 0.893 2. . . . . . 0.797 3. . . . . . 0.712 The U.S. operation will distribute 100 percent of its after-tax annual cash flow to DSC as a dividend at the end of each year. The terminal value of the investment at the end of three years is estimated to be US$25,000,000. The U.S. withholding tax on dividends is 5 percent; repatriation of the investment’s terminal value will not be subject to U.S. withholding tax. Neither the dividends nor the terminal value received from the U.S. investment will be subject to British income tax. Exchange rates between the GBP and USD are forecasted as follows: Year 1 GBP 0.74 = USD 1.00 Year 2 GBP 0.70 = USD 1.00 Year 3 GBP 0.60= USD 1.00 Required:

A. Determine the expected net present value of the potential U.S. investment from a parent company perspective.

Herman Corporation reported the following transactions for 2019:

Herman Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

1. The net cash flow from operating activities is

2. The net cash flow from investing activities is

3. The net cash flow from financing activities is

Students in a representative sample of 65 first-year students selected from a large university in England participated in a study of academic procrastination. Each student in the sample completed the Tuckman Procrastination Scale, which measures procrastination tendencies. Scores on this scale can range from 16 to 64, with scores over 40 indicating higher levels of procrastination. For the 65 first-year students in this study, the mean score on the procrastination scale was 36.9 and the standard deviation was 6.46. (a) Construct a 95% confidence interval estimate of μ, the mean procrastination scale for first-year students at this college. (Round your answers to three decimal places.) , (b) Based on your interval, is 40 a plausible value for the population mean score? Yes No What does this imply about the population of first-year students? This implies that students at this university never have high levels of procrastination. This implies that on average, students at this university do not have high levels of procrastination. This implies that students at this university sometimes have high levels of procrastination. This implies that on average, students at this university do have high levels of procrastination. This implies that students at this university always have high levels of procrastination.

Jade MacIntire is a famous singer. Jade Aquarium, Inc. is a multimedia company with business interests in music, videos, and video games. Both Jade MacIntire and Jade Aquarium need help booking the licensing agreements they have entered into during the past year. They entered into the following licensing agreements:

In January, Jade Aquarium, Inc. purchased the intellectual property rights to the music created by Jade MacIntire to date of the contract, for $20,000. Under the terms of the contract has additionally acquired the right to purchase future compositions created and sung by the artist, for $500 per composition, within five-years from the date of the contract. The corporation can legally sell to another party the compositions it has purchased from the artist.

This year, Jade MacIntire has entered into an agreement with the producers of a Broadway musical, giving them the exclusive right to use a song that she wrote, for a $10,000 consideration. It is not a song Jade MacIntire will ever personally perform.

Jade Aquarium, Inc. has also entered into a licensing agreement with a movie company allowing it to use two of the artist’s most popular compositions in future movies over the next two years. The movie company paid $2,000 for the option to use the songs and will pay an additional $1,500 each time the songs are used in a movie. It is expected that the use of the songs in the movies will bolster the artist’s popularity, increasing the demand for her albums.  

Jade Aquarium, Inc. also collects royalties for songs written by Jade MacIntire and played on air. On average the company collects for 3500 song plays each month. Each play earns the company 9.1 cents in royalties.

Jade Aquarium produced a guitar music app that individuals can download for $2.99, with 20,000 apps downloaded this year. The app is fully functional, but the company anticipates needing to provide software updates twice a year for the next five year; these costs are expected to equal $3,000 and are considered immaterial to the total app developmental cost of $60,000.

At the end of June, Jade MacIntire sold the rights to the use of her album cover images for t-shirts and mugs to Music Outfitters-R-Us for two years. Music Outfitters-R-Us paid Jade MacIntire $20,000 for the rights. Music Outfitters-R-Us has offered Jade a bonus of $10,000 if Jade MacIntire averages at least 50 shows per year over the next two years and $5,000 if Jade MacIntire averages at least 40 shows per year over the next two years. By the end of the year, Jade MacIntire had performed 50 shows.

The probability of Jade MacIntire playing 20-29 shows next year is 15%, 30-39 shows next year is 25%, 40-49 shows next year is 30%, 50+ shows next year is 30%.

Case Questions

1. Summarize the issues specifically related to accounting that are in this case.

2. Providing relevant support from the FASB Codification, discuss the proper accounting treatment for the revenue generating activities. More specifically, at what point(s) in time should revenue be recognized, and for what amount(s)?

3. Find, cite, and summarize the relevant international accounting standard applicable to this case. Compare and contrast relevant U.S. GAAP and IFRS standards.