Conch Republic Electronics Part 1

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company's finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market, and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smart phone that has all the features of the existing smart phone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone.

Conch Republic can manufacture the new smart phones for $215 each in variable costs. Fixed costs for the operation are estimated to run $6.1 million per year. The estimated sales volume is 155,000, 165,000, 125,000, 95,000, and 75,000 per year for the next five years, respectively. The unit price of the new smart phone will be $520. The necessary equipment can be purchased for $40.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $6.1 million.

As previously stated, Conch Republic currently manufactures a smart phone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smart phone, sales will be 95,000 units and 65,000 units for the next two years, respectively. The price of the existing smart phone is $380 per unit, with variable costs of $145 each and fixed costs of $4.3 million per year. If Conch Republic does introduce the new smart phone, sales of the existing smart phone will fall by 30,000 units per year, and the price of the existing units will have to be lowered to $210 each. Net working capital for the smart phones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a required return of 12 percent.

Shelley has asked Jay to prepare a report that answers the following questions.

Conch Republic Electronics Part 2

Shelley Couts, the owner of Conch Republic Electronics, had received the capital budgeting analysis from Jay McCanless for the new smart phone the company is considering. Shelley was pleased with the results, but she still had concerns about the new smart phone. Conch Republic had used a small market research firm for the past 20 years, but recently the founder of that firm retired. Because of this, she was not convinced the sales projections presented by the market research firm were entirely accurate. Additionally, because of rapid changes in technology, she was concerned that a competitor could enter the market. This would likely force Conch Republic to lower the sales price of its new smart phone. For these reasons, she has asked Jay to analyze how changes in the price of the new smart phone and changes in the quantity sold will affect the NPV of the project.

Shelley has asked Jay to prepare a memo answering the following questions.

QUESTIONS

1.What is the payback period of the project?

2.What is the profitability index of the project?

3.What is the IRR of the project?

4.What is the NPV of the project?

5.How sensitive is the NPV to changes in the price of the new smart phone?

6.How sensitive is the NPV to changes in the quantity sold of the new smart phone?

PLEASE ATTATCH EXCEL FILE FOR ANSWER THANK YOU!!!!!

ABC Corp, a public limited company, operates in the energy and power sector. The company has experienced significant growth in recent years and has expanded its operation internationally by the acquisition of overseas subsidiaries. Group policy is to translate the financial statements of these subsidiaries using the closing rate method with goodwill calculated at the rate of exchange ruling at the date of acquisition.
One of these subsidiaries, XYZ, is incorporated in a country that is suffering from a very high inflation (120% over the last 3 years) as a result of political and economic problems. Additionally, it is difficult to repatriate funds from the country. ABC Corp owned 91% of the shares of XYZ, with the foreign government owning the balance. Most of the products produced by XYZ are sold locally, but approximately 10 % of the product sold at cost to ABC. Because of a dispute XYZ has created a provision for doubtful debt against an intercompany amount owing from ABC. As a part of its risk management policies, ABC hedges the profit made by XYZ and denominates XYZ’s Financial Statements in US $ rather than the local currency. XYZ non-current assets are carried at a US dollar valuation, which is prepared by the chief accountant.

Discuss and Comment the treatment by ABC Corp based on IAS 29

7. You are a member of the senior executive group at your company. The company has a reputation of compensating its executives at a very high level. In fact your own compensation appears to be at least 50% above that of your peers in like companies. Due to pressure from the founder who has a controlling interest in the company and now lives in another state the company is considering developing an incentive system for all employees who other than the executives are paid significantly below the levels of peer companies. You have been able to achieve this pay structure due to the limited other job opportunities in the immediate area. In addition to concentrating compensation at the top of the org chart most decisions are also made at the highest levels and little or no planning or financial information is shared outside this group. You recently received input from a group of investors who are very vocal and have accumulated a significant amout of stock in your company. They feel that overall employee pay, the salary and benefits line on the income statement, in total is excessive and they are demanding this issue be addressed. You have been considering stock options, profit sharing and cash bonuses as alternatives for an employee incentive system. 1) Given these facts and the culture in your company and the pressure from investors and the founder discuss these two alternatives for an incentive system.

2) Which would you recommend and how would you fund the program?

a. Three-fourths of the work related to $13,000 cash received in advance is performed this period.
b. Wages of $11,000 are earned by workers but not paid as of December 31, 2016.
c. Depreciation on the company’s equipment for 2016 is $10,600.
d. The Office Supplies account had a $480 debit balance on December 31, 2015. During 2016, $5,596 of office supplies are purchased. A physical count of supplies at December 31, 2016, shows $610 of supplies available.
e. The Prepaid Insurance account had a $5,000 balance on December 31, 2015. An analysis of insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2016.
f. The company has earned (but not recorded) $650 of interest from investments in CDs for the year ended December 31, 2016. The interest revenue will be received on January 10, 2017.
f. The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the year ended December 31, 2016. The company must pay the interest on January 2, 2017.

Required: For each of the above separate cases, prepare adjusting entries required for financial statements for the year ended (date of) December 31, 2016. (Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.)

For the year ended Dec 31, 2020, King Inc. reported pretax accounting income of $800,000.

Select information is listed below:

1) In 2019, the company purchased a piece of equipment with a cost of $500,000. For financial reporting purposes, the company used the straight-line method over a 5-year service life with no residual value expected. For tax purposes, the equipment was scheduled to be depreciated by $160,000, $140,000, $120,000, $50,000 and $30,000 in years 2019 through 2023, respectively.

2) During 2020 loss contingency accrued for financial reporting purpose was $45,000. The loss contingency was due to the pending patent lawsuit brought by its long-time competitor, Queen Inc. The payment for the lawsuit is expected to be paid in 2022.

3) In 2020, the company earned $10,000 interest income from municipal bonds. The interest earned on municipal bonds are exempted for tax purposes. King Inc.’s income tax rate is 30%. At January 1, 2020, the deferred tax asset balance was $0 and the deferred tax liability was $12,000.

Required:

What is taxable income for 2020?

What is the ending balance of DTA on 12/31/2020?

What is the ending balance of DTL on 12/31/2020?

Prepare journal entry to record income taxes for year 2020.

The owner of a restaurant that serves Continental-style entrées has the business objective of learning more about the patterns of patron demand during the Friday-to-Sunday weekend time period. She decided to study the i.) demand for dessert during this time period, ii.) the gender of the individual, and iii.) whether or not a beef entrée was ordered. Data were collected from 630 customers and organized in the following contingency tables:

gender

beef entree

1. At the ? = 0.05 level of significance, is there evidence of a difference between males and females in the proportion who order dessert?

2. At the ? = 0.05 level of significance, is there evidence of a difference in the proportion who order dessert based on whether a beef entrée was ordered?

The owner of a restaurant that serves Continental-style entrées has the business objective of learning more about the patterns of patron demand during the Friday-to-Sunday weekend time period. She decided to study the i.) demand for dessert during this time period, ii.) the gender of the individual, and iii.) whether or not a beef entrée was ordered. Data were collected from 630 customers and organized in the following contingency tables:

gender

beef entree

1. At the ? = 0.05 level of significance, is there evidence of a difference between males and females in the proportion who order dessert?

2. At the ? = 0.05 level of significance, is there evidence of a difference in the proportion who order dessert based on whether a beef entrée was ordered?

The owner of a restaurant that serves Continental-style entrées has the business objective of learning more about the patterns of patron demand during the Friday-to-Sunday weekend time period. She decided to study the i.) demand for dessert during this time period, ii.) the gender of the individual, and iii.) whether or not a beef entrée was ordered. Data were collected from 630 customers and organized in the following contingency tables:

Gender

Beef Entree

1. At the a = 0.05 level of significance, is there evidence of a difference between males and females in the proportion who order dessert?

2. At the a = 0.05 level of significance, is there evidence of a difference in the proportion who order dessert based on whether a beef entrée was ordered?

1. Explain the difference between an incorporated and non-incorporated company in the US and give examples of the latter