Bonobo’s Balloons Inc. purchased the $60,000 par value bonds of Gnomes R Us on January 1, 2020. The coupon rate is 8% and the bonds mature in 5 years. The market rate of interest is 12%. The bonds pay interest semi-annually every June 30 and December 31. The bonds were purchased for $51,167.90 and were classified as available-for-sale. Bonobo’s Balloons uses the effective-interest rate method to amortize bond discounts and premiums. At December 31, 2020, the market value of the bonds was $65,000. Bonobo’s Balloons sold the bonds on January 1, 2021, for $65,000.

Instructions

1. Compute the carrying value of the investment at December 31, 2020.

2. Compute the amount of interest revenue earned on this investment at June 30, 2020.

3. Compute the amount of unrealized gain or loss recognized on December 31, 2020. In which financial statement should this amount be reported?

4. Compute the amount of gain or loss recognized on the sale of the investment at January 1, 2021. In which financial statement should this amount be reported?

5. If this investment was instead classified as held-to-maturity, how would this have affected the amount of unrealized gain or loss on December 31, 2020, and how would this have affected its reporting?

Crane Company has a July 31 fiscal year end and uses a perpetual inventory system. The records of Crane Company show the following data:

After its July 31, 2021, year end, Crane discovered two errors:

Prepare corrected income statements for Crane for the years ended July 31, 2019, 2020, and 2021.
Calculate the incorrect and correct inventory turnover ratios for 2020 and 2021. (Round answers to 2 decimal places, e.g. 52.75.)

](Currency Exchange) You are given the exchange rate from Canadian to US dollars. You are asked to convert an amount either from Canadian to US or vice versa based on the user's request. Write a C++ program that prompts the user to enter: a. the exchange rate from currency in Canadian dollars to US dollars b. either 0 to convert from Canadian to US or 1 to convert from US to Canadian (the program displays a message for invalid input) c. either the amount in Canadian or US dollars according to the request The program then calculates and displays the amount in either Canadian or US dollars according to the request. Here are sample runs: Rate from CAD to USD: 0.747 0 for CAD to USD or 1 vice versa: 0 CAD amount: 100 100 CAD is 74.7 US Rate from CAD to USD: 0.75 0 for CAD to USD or 1 vice versa: 1 US amount: 100 100 US is 133.33 CAD Rate from CAD to USD: 0.754 0 for CAD to USD or 1 vice versa: 5 Invalid input

Show comparative net income for 2019 and 2020. Income before depreciation expense was $310,000 in 2020, and was $340,000 in 2019. (Ignore taxes.)

The separate condensed balance sheets of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as follows: BALANCE SHEETS December 31, 2020 Patrick Sean Cash $ 76,000 $ 74,000 Accounts receivable (net) 144,000 22,000 Inventories 84,000 74,000 Plant and equipment (net) 622,000 266,000 Investment in Sean 456,000 - Total assets $ 1,382,000 $ 436,000 Accounts payable 160,000 88,000 Long-term debt 100,000 34,000 Common stock ($10 par) 326,000 50,000 Additional paid-in capital 14,000 Retained earnings 796,000 250,000 Total liabilities and shareholders' equity $ 1,382,000 $ 436,000 Additional Information: On December 31, 2020, Patrick acquired 100 percent of Sean’s voting stock in exchange for $456,000. At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $22,000 more than their carrying amounts. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount of total assets should be reported?

Ayres Services acquired an asset for $96 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: ($ in millions) 2018 2019 2020 2021 are as

Required:

Required: Determine (a) the temporary book–tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Anja is an advisor. She uses her own car to travel to various locations to meet clients. She acquired a car on 1 March 2020 for $57,000. The acquisition cost was funded entirely by a loan at an interest rate of 10%. She has determined that the depreciation deduction on the car would be $5,700 for the year. In addition, Anja incurred the following expenses during the year:

• Registration and insurance = $5,000;
• Repairs and maintenance = $300; and
• Oil and fuel costs = $4,100.

For the period 1 March 2020 to 30 June 2020, Anja estimates that the car travelled a total of 12,000 kilometres; 8,000 of which were for business purposes. You may assume that Anja has maintained all necessary records and a logbook. Assume that depreciation has been adjusted for partial year use and the impact of the car limit.

i. Calculate Anja's deduction for car expenses under "cents per kilometre" method 1.5 marks
ii. Calculate Anja's deduction for car expenses under log book method 1.5 marks
iii. Which method is preferable for Anja and why? 2 marks

1. We are interested in estimating the proportion of students at a university who smoke. Out of a random sample of 200 students from this university, 40 students smoke.

(1) Calculate a 95% confidence interval for the proportion of students at this university who smoke and interpret this interval in context.

(2) If we wanted the margin of error to be no larger than 2% at a 95% confidence level for the proportion of students who smoke, how big of a sample would we need?

1. a) What is the average standard deviation of an actively managed US mutusl fund?

b) What is the average expense ratio of an actively managed US mutual fund?

c) What are the key economic factors that influence the return of an actively managed US mutual fund?

d) What are the fees applicable when buying or selling an actively managed US mutual fund?

e) An insurance company has sold a large amount bonds. The proceeds from selling the bonds were invested in real estate. Would investing the proceeds in real estate reduce the assets' exposure to interest rate risk?

f) How would change in interest rate affect real estate value? Is real estate value exposed to interest rate risk?

g) Which one between price of bond and real estate value more sensitive to changes in interest rate?

h) What are the differences between voluntary winding up and compulsory winding up of a company? Which one is better between voluntary winding up and compulsory winding up of a company? Give examples of previous companies and previous MNCs which are voluntary winding up and compulsory winding up.

Computing and Recording Interest Capitalization

The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January 2021. The construction project is for a building intended for the company’s own use. The capital expenditure on January 1, 2020, is for the purchase of land for the building site. No new construction loans were opened for the project in 2020. All debt was outstanding for the full year.

Capital Expenditures for 2020

Outstanding Debt in 2020

Answer the following questions:
a. Compute interest to be capitalized and the interest to be expensed in 2020.
b. Prepare the entry to record the construction expenditures and interest for 2020.
c. Prepare the entry for depreciation in 2021 assuming that the project is completed on January 1, 2021. Assume that the building has a useful life of 30 years, and that the company uses the straight-line depreciation method.

Note: Do not round until your final answers, then round to nearest whole number.

a.

b.

Land

Construction in process

cash and payables

c.