Elaborate a list of personal pitfalls-the aspects (any) of your previous problem set that you wish to work on in the near future

1. Saudi Arabia has always been a popular country with Americans; current approval ratings are near 90%.

1. True
2. False

Exercise 5-20 Long-term contract; revenue recognition upon project completion; loss projected on entire project [LO5-8, 5-9] On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,025,000. During 2018, costs of $2,010,000 were incurred, with estimated costs of $4,010,000 yet to be incurred. Billings of $2,512,000 were sent, and cash collected was $2,260,000.

In 2019, costs incurred were $2,512,000 with remaining costs estimated to be $3,615,000. 2019 billings were $2,762,000, and $2,485,000 cash was collected. The project was completed in 2020 after additional costs of $3,810,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.

2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).

3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.

3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

Air-pollution-control authorities in southern California propose to control mobile-source emissions by requiring that a certain percentage of all new cars sold in the region be electric. Contrast the different perspectives that would be involved in analyzing this proposal with (a) economic impact analysis, (b) cost-effectiveness analysis, and (c) benefit-cost analysis.

. In January, Arco Company purchased the rights to a natural resource for $3,000,000. The estimated recoverable units from the natural resource amount to 3,000,000 units. During the year, Arco sold 100,000 units of the natural resource at $6 per unit and incurred operating costs other than depletion of $4.50 per unit. Assume a 15 percent specified depletion percentage. Based on these facts, compute the company's depletion deduction using both cost depletion and percentage depletion and choosing the higher figure.

In January, Arco Company purchased the rights to a natural resource for $3,000,000. The estimated recoverable units from the natural resource amount to 3,000,000 units. During the year, Arco sold 100,000 units of the natural resource at $6 per unit and incurred operating costs other than depletion of $4.50 per unit. Assume a 15 percent specified depletion percentage. Based on these facts, compute the company's depletion deduction using both cost depletion and percentage depletion and choosing the higher figure.

No. 165 No. 172 Number of machines produced and sold 80 100 Warranty costs: Average repair cost per unit $1,200 $400 Percentage of units needing repair 70% 10% Reliability engineering at $150 per hour 1,600 hours 2,000 hours Rework at AT’s manufacturing plant: Average rework cost per unit $1,900 $1,600 Percentage of units needing rework 35% 25% Manufacturing inspection at $50 per hour 300 hours 500 hours Transportation costs to customer sites to fix problems $29,500 $15,000 Quality training for employees $35,000 $50,000 Requirements: 1. Classify the preceding costs as prevention, appraisal, internal failure, or external failure. 2. Using the classifications in requirement (1), compute AT’s quality costs for machine no. 165 in dollars and as a percentage of sales revenues. Also calculate prevention, appraisal, internal failure, and external failure costs as a percentage of total quality costs. 3. Repeat requirement (2) for machine no. 172. 4. Comment on your findings, noting whether the company is “investing” its quality expenditures differently for the two machines. 5. Quality costs can be classified as observable or hidden. What are hidden quality costs, and how do these costs differ from observable costs?

After analysing the financial data of Q-Constructions, you notice that they are trending in the right direction. A new 12-month construction proposal has come to the company worth $1,000,000 and an important question is whether it will be financially viable. They want you to analyse the proposal, in particular, the recommended cash flow schedule and to understand the key financial points during the construction project. The following cash flow schedule is summarised below.

To ensure that all upfront and on-going outlay costs are covered in advance, Q-Constructionsincur an initial start-up cost of $200,000. The proposal states that they will receive a deposit from the client of 10% of the total project cost at the beginning. They then receive four equal instalment payments of 20% of the total project cost associated to project milestones from the client at the end of the 2^nd, 6^th, 8^thand 10^thmonth. Finally, they receive the last 10% project milestone on lock-up which occurs at the end of the 12^thmonth. Q-Constructionshas ongoing project costs of $20,000 to pay salaries and services at the end of each month. In additional, there are material costs of $100,000 associated for each of the project milestones at the end of the 2^nd, 6^th, 8^thand 10^thmonth. The current cost of capital for company is 8% per annum compounded monthly. You have been tasked with the important objective to determine whether this future project is financially viable. In addition, they want you to determine which milestone is needed to be completed in the project proposal such that it will be financially viable.  It’s time to show your Quants knowledge andexpertise with Excel to determine the financial viability of this project.

1. In a worst-case scenario where the project does not proceed, and the initial outlay is paid. Calculate the amount of interest that would have accrued on an amount of $200,000 at the end of 12 months with an interest rate of 8% p.a compounded monthly. Do not use EXCEL for this calculation.

b. Set up a cash inflow and outflow for the 12-month construction project proposal based on the information provided by the company above. By using the current 8% p.a compounded monthly cost of capital, calculate the Net Present Value of this proposal and whether it is financially viable project. Use EXCEL to calculate the net present value of the current situation.

- The full spreadsheet with all completed entries.  Show how you entered cash inflow and cash outflow amounts at the beginning, 1^st, 2^nd, 3^rdmonths.  You can type this in Word.

2. The NPV calculation (showing the calculation via the Excel function NPV and Excel cell references is OK).  You can show this either in the spreadsheet or type it in Word.    

EXCEL Instructions:  Set up your spreadsheet as below and add yourinitials to column names (i.e. unless your initials really are NFY!).  The coloured boxes below contain instructions.  We used the NPV function in Lectures (Week 2) – see lecture recordings for a demonstration.

3. The company wants to know at which milestone in the project proposal would be financially viable if the contract has terminated was early. Determine the milestone in the construction proposal for which the project would be financially viable.

d. Q-Constructionswould like you to create a visualisation of the completed NPV spreadsheet from part (b).  Include the graph here.