1. Future costs associated with a restructuring can only be recognized if they:

Select one:

a. will lead to a legal obligation in the future.

b. will lead to a constructive obligation in the future.

2. A construction company has contracted with a major university to build a new sports complex. The contract calls for two sports arenas to be built in the next three years. The company will receive $24,000,000 for the project and their engineers originally estimated a total cost to construct the two arenas of $20,400,000. The two arenas are scheduled for completion in May of 2007. If an actual cost of $9,200,000 is expended in 2004, and the engineers estimate another $12,800,000 is to be expended to complete construction, how much income is to be recognized under the percentage-of-completion method in 2004?

Select one:

a. $1,163,636

b. $836,364

c. $3,600,000

d. $2,000,000

c. will lead to a constructive and legal obligation in the future.

d. will lead to a provision for restructuring cost

7. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Big Winner Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Initial Value Average American household income $50,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $100 per round trip Room rate at the Lucky Hotel and Casino, which is near the Big Winner $250 per night Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 0 50 100 150 200 250 300 350 400 450 500 500 450 400 350 300 250 200 150 100 50 0 PRICE (Dollars per room) QUANTITY (Hotel rooms) Demand Graph Input Tool Market for Big Winner's Hotel Rooms Price (Dollars per room) 200 Quantity Demanded (Hotel rooms per night) 300 Demand Factors Average Income (Thousands of dollars) 50 Airfare from LAX to LAS (Dollars per round trip) 100 Room Rate at Lucky (Dollars per night) 250 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Big Winner is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Big Winner from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Big Winner are . If the price of a room at the Lucky were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Big Winner from rooms per night to rooms per night. Because the cross-price elasticity of demand is , hotel rooms at the Big Winner and hotel rooms at the Lucky are . Big Winner is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause its total revenue to . Decreasing the price will always have this effect on revenue when Big Winner is operating on the portion of its demand curve.

050100150200250300350400450500500450400350300250200150100500PRICE (Dollars per room)QUANTITY (Hotel rooms)Demand  

Graph Input Tool

1. Let us assume that there are two visitors, A and B, in an amusement park. The demand curve for the visitors facing the amusement park are as follows.

P_A= 5 – 2Q_A

P_B= 2.5 – 0.5Q_B

Marginal cost (MC) to serve each visitor is equal to $1.

a. If the amusement park decides to set the price using two-part tariff, given the demand curve

P=6 – 2.5Q and MC =$1, how much is the equilibrium P and Q

b. Calculate the maximum upfront fee the park could charge each visitor

A theater owner agrees to donate a portion of gross ticket sales to a charity

•The program will prompt the user to input:

−Movie name

−Adult ticket price

−Child ticket price

−Number of adult tickets sold

−Number of child tickets sold

−Percentage of gross amount to be donated

•Inputs: movie name, adult and child ticket price, # adult and child tickets sold, and percentage of the gross to be donated

•The program needs to:

1.Get the movie name

2.Get the price of an adult ticket price

3.Get the price of a child ticket price

4.Get the number of adult tickets sold

5.Get the number of child tickets sold

PLEASE USE C++

•A theater owner agrees to donate a portion of gross ticket sales to a charity

•The program will prompt the user to input:

−Movie name

−Adult ticket price

−Child ticket price

−Number of adult tickets sold

−Number of child tickets sold

−Percentage of gross amount to be donated

•Inputs: movie name, adult and child ticket price, # adult and child tickets sold, and percentage of the gross to be donated

•The program needs to:

1.Get the movie name

2.Get the price of an adult ticket price

3.Get the price of a child ticket price

4.Get the number of adult tickets sold

5.Get the number of child tickets sold

PLEASE USE C++

enny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $8.1 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $10.9 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.1 million to build, and the site requires $960,000 worth of grading before it is suitable for construction.

What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.1 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $5.4 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12.6 million to build, and the site requires $780,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (Enter your answer as a positive value in dollars, not millions of dollars, e.g., 1,234,567.)

Which of the following statements is false?

- On December 31, 2018, State Construction Inc. signs a contract with the state of West Virginia Department of Transportation to manufacture a bridge over the New River. State Construction anticipates the construction will take three years. The company’s accountants provide the following contract details relating to the project:

During the three-year construction period, State Construction incurred costs as follows:

State Construction uses the percentage of completion method to recognize revenue.

How much revenue should State Construction recognize in

2019          __________________

2020          __________________

2021          __________________