Background:

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(The final assessment is applied in nature and encourages you to use the tools developed in the course content to analyse and make sense of the world around you. In 2020 economies around the world have experienced unprecedented shocks to their internal and external balance situations driven by necessary closures and shutdowns of economic activity to deal with the Covid 19 health crisis. Recovery from deep Global crisis can be uneven and some economies are better positioned to recover than others. Your final assessment task for IME is to apply the theory developed in the course to the current world events from the Australian Perspective)

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Exchange rate determination in the short run and the long run - What can theory tell us about current and likely future changes in the value of AUD– assessment of policy mechanisms such as interest rate changes that may impact on the value of the AUD (500 words):

On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $95 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 8%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $95,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Determine the price of the bonds issued on February 1, 2018.
2-a. Prepare amortization schedules that indicate Cromley’s effective interest expense for each interest period during the term to maturity.
2-b. Prepare amortization schedules that indicate Barnwell’s effective interest revenue for each interest period during the term to maturity.
3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell’s investment on February 1, 2018.
4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020.

(Req-3 JE's: FEB 1, 2018: Record the issuance of the bonds by Cromley. FEB 1 2018: Record the Bond investment by Barnwell.)

(Req-4(Cromley): 1 Record the payment of interest for Cromley Company. 2 Record the accrued interest for Cromley Company. 3 Record the payment of interest for Cromley Company. 4 Record the payment of interest for Cromley Company. 5 Record the accrued interest for Cromley Company. 6 Record the payment of interest for Cromley Company.)

(Req-4(Barnwell): 1 Record the receipt of interest for Barnwell Company. 2 Record the accrued interest for Barnwell Company. 3 Record the receipt of interest for Barnwell Company. 4 Record the receipt of interest for Barnwell Company. 5 Record the accrued interest for Barnwell Company. 6 Record the receipt of interest for Barnwell Company.)

The following are several figures reported for Allister and Barone as of December 31, 2021:

Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $80,000 that was unrecorded on its accounting records and had a four-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $142,000 to Allister for $204,000. Of this amount, 10 percent remains unsold in Allister's warehouse at year-end.

Determine balances for the following items that would appear on Allister's consolidated financial statements for 2021:

Inventory

Sales

Cost of Goods Sold

Operating Expenses

Net Income Attributable to Noncontrolling Interest

Jade MacIntire is a famous singer. Jade Aquarium, Inc. isa 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: 1) 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. 2) 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 willever personally perform. 3) 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 willbolster the artist’s popularity, increasing the demand for her albums. 4) 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. 5) Jade Aquarium produced a guitar music app that individuals can download for $2.99, with20,000 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. 6) 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.

Benito Company reported the following information for the financial year ended 30/06/2020:

Required:

l. What is the net cash inflow (outflow) from operating activities?   

ll. What is the net cash inflow (outflow) from investing activities?

lll. What is the net cash inflow (outflow) from financing activities?

IV. Determine the cash & cash equivalents as of 30/06/2020.

V. Determine the total cash flow from operations as of the end of the year. Opening Balance of Cash at the start of the year is $100,000.

19. Benito Company reported the following information for the financial year ended 30/06/2020:

Required:

l. What is the net cash inflow (outflow) from operating activities?   

ll. What is the net cash inflow (outflow) from investing activities?

lll. What is the net cash inflow (outflow) from financing activities?

IV. Determine the cash & cash equivalents as of 30/06/2020.

V. Determine the total cash flow from operations as of the end of the year. Opening Balance of Cash at the start of the year is $100,000.

Assume that you are deciding whether or not to acquire a four-year university degree in economics. Your only consideration at this moment is the degree as an investment for yourself. The direct costs per year are the tuition fees of $1,500 and purchases of books and other course material of $400. The government pays the university an amount equal to four times the amount of tuition fees to cover the cost per student. If you do not go to university, you will earn $20,000 per year as an acrobat during the first four years with a salary increase of 5% from the fifth year on. With a university degree, however, you know that you can earn $30,000 per year as a circus manager for the first four years after graduation with an annual increase of 6% thereafter. Because of the nature of the chosen occupation, your time horizon for the investment decision is exactly 10 years after graduating from university : that is, if the investment decision is to be worthwhile it must be so within a 10 year period. The market rate of interest rate is 5%. Would you make the investment in the degree?

Use either the present value or internal rate of return approach for your calculation

(Please provide detail step by step explanation to get to the right answer in the form of word)

When it comes to the CEO or CFO doing the embezzlement, do you think the company as a whole should be held responsible for those funds and punished as well. If so, how? If not please explain why not, list all the parties affected and how you think it should be handled.

The Egyptian Pound (EGP) went through some volatility since it was floated in November 2016 until today. This could be broken down in 4 main phases as follows:

Phase 1: From floatation till June 2018

Phase 2: From June 2018 – December 2018

Phase 3: From January 2019 – February 2020

Phase 4: Coronavirus worldwide outbreak

Required:

1. Analyze what happened during each of the above 4 phases and explain in full details how these factors impacted the EGP exchange rate versus the Dollar.

• What made the EGP appreciate / depreciate. Your analysis should be based on how the BOP components impacted the exchange rate.
• What actions (if any) were taken by the Central Bank of Egypt in response to these market changes. What was the intended outcome which made CBE take such actions?
• What major actions related to interest rates on EGP saving instruments were taken by the largest public sector banks (National Bank of Egypt and Banque Misr). Why do you think these actions were taken?

2. What do you think will happen to the EGP exchange rate against the Dollar by end of 2020? (EGP will appreciate / Depreciate or remain the same at the current level of US$ / EGP 15.7). Justify your expectation based on the BOP components analysis.

3. A company has calculated their point price elasticity of demand to be -0.8 when they sell 6,000 units a month at a price of $120 per unit.

3. (a) The CEO is planning to implement an aggressive price cut in order to increase the quantity sold and, therefore, the revenue of the company. What would be your feedback on such plan? Justify your answer using the economic intuition behind the concept of price elasticity of demand.

(b) What is the expected percentage change in the monthly quantity of units sold if the company raises the price by 30%? How many monthly units do they expect to sell after this change in price? Calculate price elasticity of demand at the new price and quantity.

(c) What should be the price in order to sell 7,200 units?

(d) The production manager informs the CEO of the company they just discovered a new and cheaper way to produce the good they sell. His advice is to double production because the new procedure halves the cost per unit, so costs will remain unchanged. Should the recommendation be followed? Relate your answer to the concept of elasticity.