On January 1, 2018, a machine was purchased for $100,000. The machine has an estimated salvage value of $6,400 and an estimated useful life of 5 years. The machine can operate for 104,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 20,800 hrs; 2019, 26,000 hrs; 2020, 15,600 hrs; 2021, 31,200 hrs; and 2022, 10,400 hrs.

Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)

On January 1, 2018, a machine was purchased for $100,000. The machine has an estimated salvage value of $6,400 and an estimated useful life of 5 years. The machine can operate for 104,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 20,800 hrs; 2019, 26,000 hrs; 2020, 15,600 hrs; 2021, 31,200 hrs; and 2022, 10,400 hrs.

Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)

Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods. (Round answers to 0 decimal places, e.g. 45,892.)

Mars Dump is a multinational company that is caught by the Emissions Trading Scheme (ETS).

Details of ETS are as follows:

It is a cap and trade scheme in which permits are traded in an active market. Its annual compliance period is from 1 July of the current period to 30 June of the following year.

Each participating company receives an allocation of free permits each year based on their reporting carbon emissions from the previous period. In the case of Mars Dump Ltd, permits to emit 36 000 tonnes of carbon dioxide equivalents have been issued on the first day of the current period (i.e. 1 July 2019) when the market price of a permit was $25 per tonne of carbon dioxide equivalents.

During the 2019/2020 financial year, Mars Dump emitted 37 000 tonnes of carbon dioxide equivalents, which exceeded its permitted emissions of 36 000 tones. This occurred despite the managers of Mars Dump estimating that it had emitted 19 000 tonnes of carbon dioxide equivalents by 31 March 2020 and was therefore on target to emit 36 000 tonnes by 30 June 2020. The market price of a permit is $27 on 31 March 2020. As a result of exceeding allowed emission levels, on 30 June 2020, Mars Dump purchased 1 000 permits at a market price of $33 per tonne. Mars Dump uses the cost model in accordance with AASB 138, and amortises any deferred income arising from the permits using the proportion of actual emissions to estimated total emissions.

Required

1. How can stakeholder theory be used to explain companies voluntarily undertaking corporate social responsibility reporting? Discuss.                                                                            
2. “There is no mandatory reporting of corporate social responsibility in Australia.” What is your understanding of this phrase? Explain.                                                          
3. Account for above events in the books of Mars Dump Ltd for the period 1 July 2019 to 30 June 2020 in accordance with the requirements of Interpretation 3 and AASB138.                                                                                                                                                                     

Corporate Social Responsibility (CSR)

Mars Dump is a multinational company that is caught by the Emissions Trading Scheme (ETS).

Details of ETS are as follows:

It is a cap and trade scheme in which permits are traded in an active market. Its annual compliance period is from 1 July of the current period to 30 June of the following year.

Each participating company receives an allocation of free permits each year based on their reporting carbon emissions from the previous period. In the case of Mars Dump Ltd, permits to emit 36 000 tonnes of carbon dioxide equivalents have been issued on the first day of the current period (i.e. 1 July 2019) when the market price of a permit was $25 per tonne of carbon dioxide equivalents.

During the 2019/2020 financial year, Mars Dump emitted 37 000 tonnes of carbon dioxide equivalents, which exceeded its permitted emissions of 36 000 tones. This occurred despite the managers of Mars Dump estimating that it had emitted 19 000 tonnes of carbon dioxide equivalents by 31 March 2020 and was therefore on target to emit 36 000 tonnes by 30 June 2020. The market price of a permit is $27 on 31 March 2020. As a result of exceeding allowed emission levels, on 30 June 2020, Mars Dump purchased 1 000 permits at a market price of $33 per tonne. Mars Dump uses the cost model in accordance with AASB 138, and amortises any deferred income arising from the permits using the proportion of actual emissions to estimated total emissions.

Required

1. How can stakeholder theory be used to explain companies voluntarily undertaking corporate social responsibility reporting? Discuss.                                                                            
2. “There is no mandatory reporting of corporate social responsibility in Australia.” What is your understanding of this phrase? Explain.                                                          

Account for above events in the books of Mars Dump Ltd for the period 1 July 2019 to 30 June 2020 in accordance with the requirements of Interpretation 3 and AASB138.

In 2022, Draper Company discovered errors made in 2019-2021, its first three years of operation.

Restated 2020 Net Income will be:

Select one:

a. $25,250

b. $26,600

c. $25,200

d. $24,550

e. $25,450

Plastix Inc. bought a molding machine for $600,000 on July 1, 2017. The company expected to use this machine to extrude plastic toys for the next eight (8) years, when the machine would be sold for $40,000. On July 1, 2020, their major customer, WalMart, gave notification that they were terminating Plastix Inc. as a supplier. Plastix Inc.’s accountants estimate that the machine will generate $360,000 in future cash inflows from other customers and the fair value of the machine is $350,000. Plastix uses straight-line depreciation. What is the impairment loss on July 1, 2020?

Exercise 14-20 At December 31, 2017, Grouper Company has outstanding three long-term debt issues. The first is a $2,050,000 note payable which matures June 30, 2020. The second is a $5,920,000 bond issue which matures September 30, 2021. The third is a $12,810,000 sinking fund debenture with annual sinking fund payments of $2,562,000 in each of the years 2019 through 2023. Prepare the required note disclosure for the long-term debt at December 31, 2017. Long-term Debt 2018 $ 2019 $ 2020 $ 2021 $ 2022 $

Lee Furniture Company manufactures office chairs. The 2020 operating budget is based on sales of 50,000 units at $65 per chair. Budgeted variable costs are $40 per unit, fixed costs are $800,000, and operating income is projected to be $450,000. Regarding actual results, 54,000 units were sold at $70 each, actual variable costs were $38 per unit and fixed costs were $750,000. Resulting in 2020 actual income of $978,000.

Required: Prepare a variance analysis report with both flexible-budget and sales-volume variances.

combos Company purchases a delivery truck for $12,000 on January 1, 2019. combos expects to use the truck only two years and to sell it for $4,000. The company’s policy is to use straight-line depreciation but depreciation in 2019 is not recorded. Rather, the accountant charges the entire cost to delivery expense in 2019. The controller discovers the error late in 2020.

REQUIRED:

Provide the 2020 entries to record depreciation and the error correction and indicate the amounts of the prior period adjustments appearing in the 2019 and 2020retained earnings sections of the statement of stockholders’ equity. The tax rate is 25%.

PEI Real Estate company believes that their average house price in 2020 of $290,000 is higher than the mean price of all houses sold in 2019 of $270,000. Assuming that their estimate was based on the first 40 sales in 2020 and the population standard deviation of $70,000, test this hypothesis at the 95% confidence interval.

1. State the hypotheses based on a one-tailed test.

2. What is the level of significance?

3. Select a test statistic.  

4. Formulate the decision rule. Sketch this on a graph.

5. Calculate the test value.

6. What is the decision?

7. Does your conclusion change if the 90% confidence interval is selected? Explain.