Question 1

During the year to 31 December 2013, Acacia Mining Ltd built a new mining facility to take advantage of new laws regarding on-shore gas extraction. The construction of the facility cost K10 million, and to fund this, Acacia Mining Ltd took out a K10 million 6% loan on 1 January 2013, which will not be repaid until 2016. The 6% interest was paid on 31 December 2013. Construction work begun on 1st January 2013, and the work was completed on 30 November 2013. As not all funds were required immediately, Acacia Mining Ltd invested K3 million of the loan in 4% bonds from 1 January 2013 until 30 April 2013. Mining commenced on 1 December 2013 and is expected to continue for 10 years. As a condition of being allowed to construct the facility, Acacia Mining Ltd is required by law to dismantle it on 1 January 2024. Acacia Mining Ltd estimated that this would cost a further K3 million. As the equipment is extremely specialized, Acacia Mining Ltd invested significant resources in recruiting and training employees. Acacia Mining Ltd spent K600,000 on thus process in the year to 31 December 2013, believing it to be worthwhile as it anticipates that most employees will remain on the project for the entire 10 year duration. Acacia Mining Ltd has a cost of capital of 6%.

Required: Show, using extracts, the correct financial reporting treatment for the above items in financial statements for Acacia Mining Ltd for the year ended 31 December 2013.

On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019.

Expenditures on the project were as follows:

On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019.

Expenditures on the project were as follows:

On January 1, 2018, the company obtained a $4,600,000 construction loan with a 15% interest rate. The loan was outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-term notes of $2,000,000 and $8,000,000 with interest rates of 8% and 12%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.

Required:
1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.

Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method and interest expense that will appear in the 2018 and 2019 income statements. (Enter your answers in dollars.)

What is the total cost of the building? (Enter your answer in dollars.)

On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019.

Expenditures on the project were as follows:

On January 1, 2018, the company obtained a $3,800,000 construction loan with a 15% interest rate. The loan was outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.

Required:
1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.

1 & 3. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method and interest expense that will appear in the 2018 and 2019 income statements. (Enter your answers in dollars.)

2. What is the total cost of the building? (Enter your answer in dollars.)

On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2022. Expenditures on the project were as follows:

On January 1, 2021, the company obtained a $4,900,000 construction loan with a 12% interest rate. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $2,000,000 and $8,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.

Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the specific interest method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.

Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the specific interest method and interest expense that will appear in the 2021 and 2022 income statements. (Do not round intermediate calculations.)

What is the total cost of the building? (Do not round intermediate calculations.)

Management Accounting, Case 4-20...I need to see the answer to this question in an excel spreadsheet...

ACCT505 – Managerial Accounting

Case Study 2

Chapter 4 – Process Costing

Team Assignment (2-3 Team members recommended)

CASE 4–20 Ethics and the Manager, Understanding the Impact of Percentage Completion on Profit—Weighted-Average Method [Course Objective B] Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo, California. Production managers are paid a salary and get an additional bonus equal to 5% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to stockholders.

Shortly after the beginning of the New Year, Mary received a phone call from Gary that went like this:

Gary: How’s it going, Mary?

Mary: Fine, Gary. How’s it going with you?

Gary: Great! I just got the preliminary profit figures for the division for last year and we are within $200,000 of making the year’s target profits. All we have to do is pull a few strings, and we’ll be over the top!

Mary: What do you mean? Gary: Well, one thing that would be easy to change is your estimate of the percentage completion of your ending work in process inventories. Mary: I don’t know if I can do that, Gary. Those percentage completion figures are supplied by Tom

Winthrop, my lead supervisor, who I have always trusted to provide us with good estimates.

Besides, I have already sent the percentage completion figures to corporate headquarters. Gary: You can always tell them there was a mistake. Think about it, Mary. All of us managers are doing as much as we can to pull this bonus out of the hat. You may not want the bonus check, but the rest of us sure could use it.

The final processing department in Mary’s production facility began the year with no work in process inventories. During the year, 210,000 units were transferred in from the prior processing department and 200,000 units were completed and sold. Costs transferred in from the prior department totaled $39,375,000. No materials are added in the final processing department. A total of $20,807,500 of conversion cost was incurred in the final processing department during the year.

Required:

1.            Tom Winthrop estimated that the units in ending inventory in the final processing department were 30% complete with respect to the conversion costs of the final processing department. If this estimate of the percentage completion is used, what would be the Cost of Goods Sold for the year? (Note: Since all units completed were sold, the cost of goods transferred out = Cost of Goods Sold.)

2.            Gary is recommending that the completion percentage by adjusted by 10 percentage points in order to assist the team in making their bonus.

a. Calculate the cost of goods sold if the ending inventory is 20% complete in regard to conversion costs. Would net income increase or decrease if this option was chosen over the 30% completion percentage? How much is the increase?

b. Calculate the cost of goods sold if the ending inventory is 40% complete in regard to conversion costs. Would net income increase or decrease if this option was chosen over the 30% completion percentage? How much is the increase?

c. Based on your calculations, which percentage is Gary suggesting that Mary use for her ending inventory calculations.

3.            Do you think Mary James should go along with the request to alter estimates of the percentage completion? Why or why not?

Deliverables:

Submit an Excel spreadsheet that documents the calculations made for steps 1 and 2 above. All items should be clearly labeled, and appropriate formulas should be used to perform your calculations.

For step 3, submit a 5-7 minute narrated PowerPoint (preferably using VoiceThread) that highlights your discussion of the operational and ethical issues that Mary is facing as a result of the request to change the percent complete on ending inventory. Be sure to make a recommendation in regard to making this decision. The presentation should be 3-4 slides.

One team member should post the PowerPoint and workbook on behalf of the team to the Week 3 Dropbox for the case study.

NOTE: as a team project, a team collaboration tool (such as Cisco Spark) should be used for the students to collaborate on the project!

ACCT505 – Managerial Accounting

Case Study 2

Chapter 4 – Process Costing

Team Assignment (2-3 Team members recommended)

CASE 4–20 Ethics and the Manager, Understanding the Impact of Percentage Completion on Profit—Weighted-Average Method [Course Objective B] Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo, California. Production managers are paid a salary and get an additional bonus equal to 5% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to stockholders.

Shortly after the beginning of the New Year, Mary received a phone call from Gary that went like this:

Gary: How’s it going, Mary?

Mary: Fine, Gary. How’s it going with you?

Gary: Great! I just got the preliminary profit figures for the division for last year and we are within $200,000 of making the year’s target profits. All we have to do is pull a few strings, and we’ll be over the top!

Mary: What do you mean? Gary: Well, one thing that would be easy to change is your estimate of the percentage completion of your ending work in process inventories. Mary: I don’t know if I can do that, Gary. Those percentage completion figures are supplied by Tom

Winthrop, my lead supervisor, who I have always trusted to provide us with good estimates.

Besides, I have already sent the percentage completion figures to corporate headquarters. Gary: You can always tell them there was a mistake. Think about it, Mary. All of us managers are doing as much as we can to pull this bonus out of the hat. You may not want the bonus check, but the rest of us sure could use it.

The final processing department in Mary’s production facility began the year with no work in process inventories. During the year, 210,000 units were transferred in from the prior processing department and 200,000 units were completed and sold. Costs transferred in from the prior department totaled $39,375,000. No materials are added in the final processing department. A total of $20,807,500 of conversion cost was incurred in the final processing department during the year.

Required:

1.            Tom Winthrop estimated that the units in ending inventory in the final processing department were 30% complete with respect to the conversion costs of the final processing department. If this estimate of the percentage completion is used, what would be the Cost of Goods Sold for the year? (Note: Since all units completed were sold, the cost of goods transferred out = Cost of Goods Sold.)

2.            Gary is recommending that the completion percentage by adjusted by 10 percentage points in order to assist the team in making their bonus.

a. Calculate the cost of goods sold if the ending inventory is 20% complete in regard to conversion costs. Would net income increase or decrease if this option was chosen over the 30% completion percentage? How much is the increase?

b. Calculate the cost of goods sold if the ending inventory is 40% complete in regard to conversion costs. Would net income increase or decrease if this option was chosen over the 30% completion percentage? How much is the increase?

c. Based on your calculations, which percentage is Gary suggesting that Mary use for her ending inventory calculations.

3.            Do you think Mary James should go along with the request to alter estimates of the percentage completion? Why or why not?

Deliverables:

Submit an Excel spreadsheet that documents the calculations made for steps 1 and 2 above. All items should be clearly labeled, and appropriate formulas should be used to perform your calculations.

For step 3, submit a 5-7 minute narrated PowerPoint (preferably using VoiceThread) that highlights your discussion of the operational and ethical issues that Mary is facing as a result of the request to change the percent complete on ending inventory. Be sure to make a recommendation in regard to making this decision. The presentation should be 3-4 slides.

One team member should post the PowerPoint and workbook on behalf of the team to the Week 3 Dropbox for the case study.

NOTE: as a team project, a team collaboration tool (such as Cisco Spark) should be used for the students to collaborate on the project!

What happens to the magnetic domain structure of a ferromagnet when it is placed in an external magnetic field?

- Domains whose magnetisation is at odds with the direction of the external field will vanish spontaneously at the expense of their neighbouring domains.

- Domains will re-orientate their magnetisation parallel with the external field, starting with the domain which is most add odds with the external field direction.

- Magnetic moments near Bloch walls will reorientate themselves in parallel with the external field.

- Magnetic moments near Bloch walls will reorientate themselves in line with the orientation of the adjacent domain if this means they will be closer to parallel alignment with the external field.

Explain what will happen as a result of the following events. In each case, draw an aggregate demand and short-run aggregate supply diagram showing the initial equilibrium output level (Y0) and price level (P0). Show any changes and indicate the final equilibrium output level and price level.

A. The economy is operating near full capacity. Now environmental pollu¬tion standards are tightened substan¬tially.

B. The economy is operating near full capacity. An import tax (tariff) is imposed on foreign consumer goods, and the central bank tries to maintain the interest rate.

Farmers would like to know the amount of sunshine in given locations they may buy land.  They hypothesize that a place near the coast may have different cloud cover than a place further from the coast at the same latitude so that the sun angles are the same.   In the data sheet you have daily noontime reports of the fraction of cloud cover near the coast and inland.  Justify your acceptance or rejection of the hypothesis using these numbers, and state the confidence level you would use.

Cld cover coast: ,71,26,100,16,100,83,61,32,84,15

Cld cover inland: ,60,9,6,29,12,19,21,62,82,0,4,84,51,4,19

Which of these are actual evidence for the existence of a black hole in the center of the Milky Way, and which are not?

Stars are observed to disappear into the black hole

Bright quasar emission is detected from the center of the galaxy

Telescopes have been used to take high resolution images of the black hole's event horizon

Astronomers observe an extremely bright and compact radio source

The closest approach of stellar orbits near the center of the galaxy indicate the object is smaller than the solar system

Stellar velocities near the center of the galaxy indicate 4 million times the mass of the sun inside their orbit