1. Robert started an accounting firm in 2020 and organized as a partnership. Performance of services began on July 1, 2020. The following expenditures were associated with the partnership’s activities in 2020:
   
   

1. What is the total amount of the start-up costs expenditures? What is the total amount of organizational expenditures?
2. Ignore your answer in a. Assume that the total amount of start-up costs expenditure is $48,200 and the total amount of the organizational expenditure is $17,900. What amount of the start-up costs may the partnership immediately expense in 2020? What amount of the organizational expenditures may the partnership immediately expense in 2020?
3. Ignore your answer in a. Assume that the total amount of start-up costs expenditure is $48,200 and the total amount of the organizational expenditure is $17,900. Also, assume that the company immediately expensed $5,000 of start-up costs and $5,000 organizational cost. What amount can the partnership deduct as amortization expense for the organizational expenditures for 2020 (not including the amount it immediately expensed)? What amount can the partnership deduct as amortization expense for the start-up costs for 2020 (not including the amount it immediately expensed)?

Blue Company sold 30,000 units of its only product and incurred a $85,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2020’s activities, the production manager notes that variable costs can be reduced 25% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $175,000. The maximum output capacity of the company is 55,000 units per year. Blue Company Contribution Margin Income Statement For Year Ending December 31, 2019 Sales $900,000 Variable $680,000 Contribution Margin $220,000 Fixed Cost $305,000 Net Loss $(85,000) Compute the break-even point in dollar sales for year 2019. (Round your answers to 2 decimal places.) Compute the predicted break-even point in dollar sales for year 2020 assuming the machine is installed and there is no change in the unit selling price. (Round your answers to 2 decimal places.)

In 2020, Oriental Company sold 800 units at RM500 each. Variable costs were RM250 per unit, and fixed costs were RM200,000. The selling price is expected to increase by 10% for 2021 and unit sold is 1,250 units. Oriental Company is tentatively planning to invest in equipment that would increase fixed costs to RM255,000, while decreasing variable costs per unit by 12%.
Instructions
(a) Compute the break-even point in Ringgit Malaysia (RM) for the year 2020 by using mathematical equation. (Show all workings).                                    
(b) Compute the break-even point in Ringgit Malaysia (RM) for the year 2021 by using mathematical equation. (Shows all workings).                                            
(c) Compute the total sales in Ringgit Malaysia (RM) that the company need to generate, if the company wish to earn net income of RM900,000 in the year 2021 by using mathematical equation. (Shows all workings).                                                                                                                
(d) Compute margin of safety in Ringgit Malaysia (RM) and in ratio for the year 2021. (Show all workings).                                

B. Please read the brief description and respond to the questions. Please be clear and specific. Check your work as this is not an easy problem. Situation: A small Canadian company has contracted to purchase 200,000 toys for 3.50 British pounds each, from a British company. The Canadians have agreed to pay for the toys in British pound sterling. The Canadians have also agreed to sell the toys to a U.S. company for USD$ 5.50 per toy. The Canadian company has agreed to accept U.S. dollars from the U.S. sales but plans to convert these revenues to Canadian dollars. The Canadian company estimates its marginal (additional cost per unit) costs (warehousing, insurance, transportation, and so on) as an additional Cnd$.75 per toy. Exchange rates at the time of signing the agreements are as follows: Cnd$ 1 = USD$ .68 Cnd$ 1 = British pound .54 Questions:

1. On the line below indicate whether the firm earned a profit or loss from this deal and what was the dollar amount of the profit or loss in total. (Clearly state if a profit or loss was earned, what it was in total (not per unit) and show profit or loss calculation clearly with labels in space below)
_________Place word profit or loss on line.
_________Place amount on line. Show work clearly below: 2. a) What impact would a depreciation of the U.S. dollar relative to the Canadian dollar have on the Canadian company’s profits/loss? You must look at the impact on Revenue and/or Costs for # 2,3, and 4. (chose increase profit, increase loss, decrease profit, decrease loss, or no change and place on line below) _________Ans. Why?

3. a) What impact would a depreciation of the British pound relative to the Canadian dollar have on the Canadian company’s profit/loss? (increase profit, decrease profit, increase loss, decrease loss, or no change on line below) ____________Ans. Why?
4. a) What impact would a depreciation of the British pound relative to the U.S. dollar have on the Canadian company’s profit/loss? ((increase profit, decrease profit, increase loss, decrease loss, or no change on line below) ____________Ans. Why?
5. If exchange rates changed to the exchange rate shown below, state/show the amount of the Canadian company’s total profit or loss on the deal now? (Show profit or loss calculation clearly). Cnd$ 1 = USD$ .64 Cnd$ 1 = British pound .40 _________Place word profit or loss on line. _________Place amount on line. Show work clearly below:

Overview

How we account for and present debt and equity investments on the financial statements is an important part of U.S. GAAP as we move towards an asset/liability approach as to how certain transactions are recorded. The application of the principles of fair value accounting in regards to these assets can be extremely important in how investors determine a company's financial position. It is an area that has had some interesting ramifications in the financial world.

Instructions

Buckingham Company holds a large portfolio of debt securities as investments. The total fair value of the portfolio is greater than its total original cost, even though some of the individual debt securities have decreased in value. Julia, the CFO, and Sam, the Controller, are near year-end in the process of classifying, for the first time, this investment portfolio in accordance with U.S. GAAP. Julia wants to classify those securities that have increased in value during the period as trading securities in order to increase net income this year, and wants to classify those that have decreased in value as held-to-maturity. Sam, on the other hand, disagrees. He wants to classify the securities that have decreased in value as trading securities and those that have increased in value as held-to-maturity. He contends that the company is having a good earnings year and the recognizing the losses will help to smooth the income this year, and thus the company will have built-in gains for future periods when the company may not be as profitable.

Answer the following questions:

1- Will classifying the portfolio as each proposes actually have the effect on earnings that each says it will? Why or why not?

2- Is there anything unethical in what each of them proposes? Who are the stakeholders affected by their proposals? Be sure to include a solid analysis of current U.S. GAAP standards that the company should be following for debt investments, including properly cited references.

3- Assume that Julia and Sam end up properly classifying the entire portfolio into proper categories, but then each makes a different proposal just before year end: Julia wants to sell those securities with gains and Sam wants to sell only those with losses to accomplish their individual desired effects on net income. Is this unethical? Why or why not?

4- Is the financial community in the U.S. in agreement with the current U.S. GAAP standards as to how to present investments at fair value (often called mark-to-market accounting)? What impact did these standards have in the 2008 financial crisis? Research this on the internet and summarize what you find, being sure to include properly cited references.

Trecek Corporation incurs research and development costs of $695,000 in 2017, 30 percent of which relate to development activities subsequent to IAS 38 criteria having been met that indicate an intangible asset has been created. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for 10 years.

Assume that a U.S based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes.

Requried:

a. Prepare journal entries for research and development costs for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.

(1) Record the research and development costs as per U.S. GAAP

(2) Record the research and development costs as per IRFS

(3) Record the amortization expense as per U.S. GAAP

(4) Record the amortization expense as per IFRS.

b. Prepare the entry(ies) that Trecek would make on the December 31, 2017, and December 31, 2018, conversion worksheets to conver U.S. GAAP balances to IFRS

(1) Record the conversion entry needed for the research and development costs for 12/31/17

(2) Record the conversion entry needed for the research and development costs for 12/31/18

(3) Record the conversion entry needed for the amortization expense for 12/31/18

Recording Income Tax Expense
The Boeing Company reports the following tax information in Note 4 to its 2014 financial report.

a. Record Boeing's provision for income taxes for 2014 using the financial statement effects template.

Use negative signs with answers when appropriate. When applicable, enter total amount for liabilities.

b. Record Boeing's provision for income taxes for 2014 using journal entries.

Please answer all parts of the question.

Foreign Capital Budgeting

The South Korean multinational manufacturing firm, Nam Sung Industries, is debating whether to invest in a 2-year project in the United States. The project's expected dollar cash flows consist of an initial investment of $1 million with cash inflows of $700,000 in Year 1 and $600,000 in Year 2. The risk-adjusted cost of capital for this project is 12%. The current exchange rate is 1,054 won per U.S. dollar. Risk-free interest rates in the United States and S. Korea are:

1. If this project were instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value generated by this project? Do not round intermediate calculations. Round your answer to the nearest dollar.

   $  

   What would be the rate of return generated by this project? Do not round intermediate calculations. Round your answer to two decimal places.

       %

2. What is the expected forward exchange rate 1 year from now? (Hint: Take the perspective of the Korean company when identifying home and foreign currencies and direct quotes of exchange rates.) Do not round intermediate calculations. Round your answer to two decimal places.

      won per U.S. dollar

   What is the expected forward exchange rate 2 years from now? (Hint: Take the perspective of the Korean company when identifying home and foreign currencies and direct quotes of exchange rates.) Do not round intermediate calculations. Round your answer to two decimal places.

      won per U.S. dollar

3. If Nam Sung undertakes the project, what is the net present value and rate of return of the project for Nam Sung? Do not round intermediate calculations. Enter your answer for the net present value in millions. For example, an answer of 1.23 million won should be entered as 1.23, not 1,230,000. Round your answers to two decimal places.

   NPV:  million won

   Rate of return:   %