1. Please describe the relationship of the Board of Directors for Company Bravo to the company. Provide the purpose, details of general responsibilities, etc. with support.
2. What types of items would constitute a Board members breach of duty to the company? Name and explain with details and support.
3. Is it acceptable for a company’s Board of Directors to approve a personal loan to the CEO of the company as long as the vote is unanimous? Why or Why not? Please explain in detail and support your response.

You are the CFO of Jordan company. The year-end of Jordan is 31 March. The CEO of Jordan company informed you that the company intends to open a new branch in the next few weeks. The company has spent a substantial sum on a series of television advertisements to promote this new branch. The company paid for advertisements costing JOD 1,500,000 before 31 March 2018. JOD 900,000 of this sum relates to advertisements shown before 31 March 2018 and JOD 350,000 to advertisements shown in April 2018. Since 31 March 2018, The company has paid for further advertisements costing JOD 250,000. A discussion between the CEO and the board of directors whether these costs should be written off as expenses in the year to 31 March 2018. The board of Directors doesn’t want to charge JOD 3 million. Required: Explain and justify the treatment of these costs of JOD 3 million in the financial statements for the year ended 31 March 2018 according to IAS 38 assuming that market research indicates that this new branch is likely to be highly successful.

Problem 1

The restoration approach is usually most appropriate for impairments caused by physical damage.
The Middleville School district has discovered mold in one of its schools. The school was constructed
10 years ago at a cost of $30 million. It had an expected useful life of 50 years and hence was 20 percent
depreciated. The cost to replace the school today would be $40 million. The district estimates that the cost
of eliminating the mold and making the associated repairs would be $4,000,000. The entire amount would
be covered by insurance.
1. How much of an impairment loss, without taking into account the insurance recovery, should the district
recognize?
2. What would be the new carrying value of the school after adjusting for the impairment?
3. How much of a net gain should the district recognize taking into account the insurance recovery?

Problem 2

The service units approach is most appropriate for impairments caused by technological obsolescence.
Clarkstown State University acquired specialized laboratory equipment with the expectation that it
would be used to perform approximately 3,000 tests per year over a 10-year period. The cost was $600,000.
After the equipment had been used for only three years and was 30 percent depreciated, the university realized
that the machine would likely be used to perform only 500 tests per year over the following seven years
owing to the introduction of more efficient equipment.
1. How much of an impairment loss should the university recognize?
2. What should be the new carrying value of the equipment?

Pioneer, Inc., a publicly held company with a 21% marginal tax rate, paid its CEO an annual salary of $2.5 million.  None of the amount was a bonus.

Ignoring payroll taxes, calculate the after-tax cost of this payment.

(1) Is a CEO using a corporate jet (instead of flying commercial) a sign of severe principal-agent problems within a company? Why or why not?

(2) Why is this a stark example of the principal-agent problem discussed in Chapter 1?

In 2020, Laureen is currently single. She paid $2,720 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,720 each for a total of $5,440). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,910 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,410 for herself to attend seminars at a community college to help her improve her job skills. (Leave no answer blank. Enter zero if applicable.)

a. What is the maximum amount of education credits Laureen can claim for these expenditures? Laureen's AGI is $45,000. If Laureen claims education credits for her three children and herself, how much credit is she allowed to claim in total? If she claims education credits for her children, how much of her children’s tuition costs that do not generate credits may she deduct as for AGI expenses?

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance:

During 2020, Abernethy reported net income of $103,500 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $145,250 while declaring and paying dividends of $47,000. Assume that Chapman Company acquired Abernethy’s common stock for $793,300 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $134,000, its buildings were valued at $267,800, and its equipment was appraised at $336,250. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021

1-Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

2-Prepare entry S to eliminate stockholders' equity accounts of subsidiary.

3-Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill.

4-Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method.

5-Prepare entry D to eliminate intra-entity dividend transfers.

6-Prepare entry E to recognize current year amortization expense.

7-Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

8-Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021.

9-Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.

10-Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method.

11-Prepare entry D to eliminate intra-entity dividend transfers.

12- Prepare entry E to recognize current year amortization expense.

Concord Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased.

Prepare Concord’s journal entries on January 1, 2020, and December 31, 2020. Assume the annual lease payment is $48,000 at the beginning of each year, and Concord’s incremental borrowing rate is 7%, which is the same as the lessor’s implicit rate. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)

Click here to view factor tables.

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows.

All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,220 of depreciation per month.

Other data:

The company’s cash balance on January 1, 2020, is expected to be $73,200. The company wants to maintain a minimum cash balance of $61,000.

1- Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

2- Prepare a cash budget for January and February in columnar form.