E20.13 (LO 1, 2, 4) (Computation of Actual Return, Gains and Losses, Corridor Test, and Pension Expense) Erickson Company sponsors a defi ned benefi t pension plan. The corporation’s actuary provides the following information about the plan. January 1, December 31, 2020 2020 Vested benefi t obligation $1,500 $1,900 Accumulated benefi t obligation 1,900 2,730 Projected benefi t obligation 2,500 3,300 Plan assets (fair value) 1,700 2,620 January 1, December 31, 2020 2020 Settlement rate and expected rate of return 10% Pension asset/liability $ 800 $ ? Service cost for the year 2020 400 Contributions (funding in 2020) 700 Benefi ts paid in 2020 200 Instructions a. Compute the actual return on the plan assets in 2020. b. Compute the amount of the other comprehensive income (G/L) as of December 31, 2020. (Assume the January 1, 2020, balance was zero.) c. Compute the amount of net gain or loss amortization for 2020 (corridor approach). d. Compute pension expense for 2020.

E20.14 (LO 1, 2, 4) (Worksheet for E20.13) Using the information in E20.13 about Erickson Company’s defi ned benefi t pension plan, prepare a 2020 pension worksheet with supplementary schedules of computations. Prepare the journal entries at December 31, 2020, to record pension expense and related pension transactions. Also, indicate the pension amounts reported in the balance sheet.

only E20.14

True/False for the following:

1) It is standard practice for a term sheet to require more than half the board seats to go to the seed investors.

2) The term sheet between an investors and founder is a legally binding agreement.

3) If a 1X liquidation preference is included in the term sheet the Venture Capitalist will never be able to realize a gain on its investment but will be protected from a loss.

4) An option pool is used by founders to make payments to employees. The options grant the employees the right but not the obligation to buy shares of the companies shares at a set price before they expire. Using options conserves cash and ties the employee to the long-term success of the venture.

5) A term sheet will address what happens to the shares of founders should founders decide to leave the company.

To become an effective leader, learning to use influence tactics comfortably is inevitable. If you use influence tactics naturally, without giving them much thought, there is still more to learn. For example, even a great leader such as Elton Musk might be even more effective with employees if he were more conciliatory toward those people he perceived to be of average intelligence. Being conciliatory fits the influence tactics of being charming and consulting with others. In order for many influence tactics to work well, such as being a hands-on leader or joking and kidding, the regular physical presence of a leader is valuable. Some CEOs today attempt to conduct much of their work digitally, and perhaps even live in a city 3,000 miles away from company headquarters. The lowly visible leader not only loses influence but also might be dismissed. A case in point is Federica Marchionni was forced out as CEO of Land’s End Inc. She had attempted to bring about broad changes at the catalog retailer that annoyed employees and turned away shoppers. The former Ferrari executive was never able to influence employees to accept her vision of a more fashionable Land’s End. A point of contention was that Marchionni spent about one week a month at the company’s Wisconsin headquarters, preferring instead to work out of an office in the garment district of New York.

Discussion Questions and Activities

1.Which of the influence tactics described in this chapter do you think are the most important for a person his or her first leadership assignment? Explain your reasoning.

2.Assume that as their leader, you wanted to influence minimum wage workers in an order-fulfillment center to work faster. Which one or two influence tactics are likely to be effective?

3.How might a business owner use the technique of tapping social norms to influence his or her employees to lead a healthier lifestyle?

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 73,000. SunTime’s December 31, 20X1, trial balance in SFr is as follows:

Additional Information

1. The receivable from Popular Creek is denominated in Swiss francs. Its books show a $3,723 payable to SunTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year’s depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:

6. The U.S. dollar is the functional currency.

Required:
a. Prepare a schedule remeasuring the December 31, 20X1, trial balance from Swiss francs to dollars. (If no adjustment is needed, select 'No entry necessary'.)

A Mutual Fund Company (“the Company”) has engaged your firm to conduct their internal audit services. All of the employees of the company are skilled investment managers and administrators. They are also very well paid compared to others in the industry. Upon reviewing the documents you found out that the CEO of the Company had formed a company which offered similar business products and services but had been fined by the Securities Commission for failure to file its statutory returns in a timely manner. You have also found out, from your search on the internet, that a company with a similar name is listed under the fraud watch-list of the Commission. As time is of the essence, you have contacted the HR Department of the company requesting a resume of the CEO. They advised that they could not locate it and that he was on vacation at that time. If have also attempted to google the name of this persons but you cannot locate him You also realize that the company did not file their audited financials from 2018. So you contacted the previous accounting firm who were not available to provide any feedback on the client company and the reasons why the accounts were not submitted to the regulator. You complete your review by cross checking the picture of the office with On a final attempt to confirm the information, you cross check the picture of the offices provided with the google maps and find out that there is another structure on that location and it is not the Fund Company

a. What are the red flags identified which might indicate money laundering activity and/or terrorist financing in this case?

b. What are the risks and the potential threats that the accounting firm may be faced with in this situation?

c. What KYC/Due Diligence work could the accounting firm have carried out and when?

Naa Tetterley Company Ltd engaged your firm to prepare a Cash Budget for them. They informed you that:
a. They have two bills payable of $55,000 and $60,000 with due dates of 31st July and 30th September, 2020 respectively.
These bills will be paid on their due dates
b. The Company wishes to arrange with its bankers for any necessary re-financing in advance, which will ensure a minimum end of month cash balance of $25,000
You are also given the following information: i. The projected sales and purchases:
SALES     ($)         PURCHASES ($)

June 65,000              July.    57,000

July 90,000              August. 45,000

August 65,000          September.    51,000

September 68,000        October.    42,000

October 75,000

ii. The cash balance on 1st July, 2020 will be $18,000

iii. All sales are on terms of a 2% discount allowed on any payment made by the tenth of the month following the sale. Past experience indicates that 70% of the sales are collected within the first 10 days; 20% during the remainder of the first month; and 8% in the second month following the sale. 2% of the sales are considered irrecoverable.

iv. All payments for purchases qualify for 2% discount. Two-thirds of the invoices will be paid in the month of the purchase, and one-third in the month following the purchase.

v. Operating expenses are expected at $6,000 for July 2020. This will increase by 10% per month for the subsequent months.

vi. The company will receive $1,500 monthly from property rentals. This amount will be paid half-a-month in arrears.

vii. An amount of $2,500 will be realised in July from the sale of obsolete equipment.

viii. The company will buy a new plant for $42,000 on 1st June, 2020. The payment for this amount will be spread over 6 monthly equal instalments, starting from August, 2020.

ix. The company anticipates receiving interest on investment of $10,000 every month.

Required:
a. Prepare the Cash Budget for the three months ending 30th September, 2020

b. Outline any four benefits and four limitations respectively of a Cash Budget.          

Exercise 23-11

Condensed financial data of Culver Company for 2020 and 2019 are presented below.

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Condensed financial data of Splish Company for 2020 and 2019 are presented below.

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

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