QUESTION 1

1. Even though an investee may be an associate of an investor, if the shares of that associate are traded in an active market, AASB128 Investment in Associates and Joint Ventures requires the application of the:

   		market valuation.
   		consolidation method.
   		equity method.
   		valuation made by an independent evaluator.

QUESTION 2

1. Indicia of an investor’s incapacity to exert significant influence over the policy-making decisions of an investee include:

   		the existence of a small group of ‘non-investor’ shareholders representing the majority of voting power in the investee.
   		the investor attempting to gain, but not gaining, board representation.
   		the investor attempting to gain, but not gaining, the financial information necessary to calculate its equity in the fair value of the investee’s net assets at the date of acquisition, or its equity in the post-acquisition earnings of the investee.
   		all of the above.

QUESTION 3

1. The accounting method applied to investments in associates, known as the equity method, is also known as the:

   		significant influence method.
   		multi-line consolidation method.
   		entity method of consolidation.
   		one-line consolidation method.

QUESTION 4

1. Goodwill acquired in an associate is:

   		amortised across its useful life.
   		carried as a separate asset in the accounting records of the investor.
   		written off immediately against the carrying amount of the investment.
   		not subject to amortisation.

QUESTION 5

1. Red Limited acquired a 30% investment in Blue Limited for $1,000,000. Blue declared and paid a dividend of $20,000 during the current year. Red Limited prepares consolidated financial statements. Which of the following is the appropriate entry for Red Limited to record this dividend?

   		DR    Dividends payable                   $6,000                CR                  Cash                                 $6,000
   		DR    Dividend revenue         $6,000                CR                  Investment in associate      $6,000
   		DR    Cash                                        $6,000                CR                  Dividend revenue         $6,000
   		DR    Cash                                           $6,000                CR                  Investment in associate      $6,000

Making Business Decisions: Analyzing Apple’s Inventory Turnover Ratio

You are considering an investment in the common stock of Apple Inc. The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 (in millions of dollars):

The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 for Hewlett-Packard Company (in millions of dollars):

Use 360 days a year.

Required:

1. Calculate the inventory turnover ratios for Apple Inc. and Hewlett-Packard Company for the years ending September 26, 2015 and October 31, 2015, respectively. If required, round your answers to one decimal place.

2. Which company appears to be performing better?
A. Helett-Packard

B. Apple Inc.

3. Assume Company A has an inventory turnover ratio of 52.8 times and Company B has inventory turnover ratio of 12.6. Based on this information, which of the following statement is correct?

A. Company A is performing better, when it comes to inventory management.

B. Company B is performing better, when it comes to inventory management.

C. Company A sells its product every 6.2 days.

D. Company B sells its products every 4.9 days.

Casino Ltd is a company that owns a large holiday resort on Queensland’s Gold Coast. Casino Ltd employs 100 people who work in the catering, cleaning and the hospitality outlets of the resort. The company and its employees have had a history of industrial disputes involving wages and conditions. After the most recent dispute, Casino Ltd and its employees came to an agreement on 1 July 2005, under which it was agreed that all of its employees were to be paid wages and salaries that are in excess of other employees working in similar resorts in Australia. One month after the agreement was made, a new company was incorporated which is a wholly owned subsidiary of Casino Ltd. The new company is called Caterers Ltd. It has three directors, all of whom are appointed from the board of five directors of Casino Ltd. Caterers Ltd.’s constitution had a clause which stated that all of the profits of Caterers Ltd will be distributed as dividend to Casino Ltd. The incorporation of Caterers Ltd was preceded by a meeting between the board of directors and the senior managers of Casino Ltd where the reason for the creation of the new entity was discussed. The senior managers of Casino Ltd devised a strategic plan which called for a new corporate structure which will take into account that the catering and entertainment services of Casino Ltd has the potential to become a significant operation in its own right both within and outside the resort. The directors of Casino Ltd were genuinely impressed with the plan and believed it was in the long term interests of the company. They passed a resolution that the management of Casino Ltd put into place matters that will allow Caterers Ltd to pursue this new strategic objective. The redevelopment of the current resort was central to the management plan approved by the board of Casino Ltd in relation to the creation of Caterers. This meant closure of many of the restaurants in the resort and the redundancy of 60 employees. These redundant employees were offered new, but identical, positions working in Caterers Ltd. Faced with the choice of an uncertain future, all 60 employees accepted the job offer with Caterers Ltd. As a result, the redundant employees no longer work under the previous 1 July 2005 contract of employment they had while working for Casino Ltd. Instead, they work under wages and conditions that are not as favourable as they had while working for Casino Ltd. However, these wages and conditions are comparable to people who work in similar industries. Caterers Ltd, through its employees, started running the catering and entertainment services in the resort and due to the huge success of the business, Caterers expanded beyond the resort and started leasing outside premises to run a bigger catering and entertainment business. The Trade Union, on behalf of the 60 employees working for Caterers Ltd is concerned about the practical effect of this corporate reorganization on employment conditions. Assuming that the 1 July 2005 agreement between Casino Ltd and its employees is valid and that Caterers Ltd has been validly incorporated, advice the trade union as to its chances of success in enforcing that agreement. Refer to relevant statutes and case law based on Company Law.  

Please Answer Required # 1,2 and 3 as Soon as Possible. Thank you

Fast Pizza hires college students who drive their own cars to deliver pizzas to customers. Fast Pizza is concerned that the company may be liable for damages caused by company employees while they are driving their cars on company business.

Part 1: Discuss the loss exposures to both Fast Pizza’s business operation and to the students who are driving their own cars to deliver pizzas.

Part 2: Identify a commercial auto liability coverage that Fast Pizza could purchase to address their exposures.

Part 3: Discuss how the coverage purchased in Part 2 could impact the student drivers.  Use a loss scenario to illustrate.

Greg’s Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March. Greg's Bicycle Shop uses a periodic inventory system.

  5. Calculate sales revenue and gross profit under each of the four methods. (Round weighted-average cost amounts to 2 decimal places.)
  

Pricing Strategy, Sales Variances

Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.

At the end of the year, actual sales revenue for Product R and Product S was $3,069,900 and $3,480,400, respectively. The actual price charged for Product R was $27 and for Product S was $22. Only $8 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $343,200 for this product.

Required:

1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.

The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below. December 31 is the company’s reporting year-end.

Information necessary to prepare the year-end adjusting entries appears below.

1. The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
2. The office equipment is depreciated at 10 percent of original cost per year.
3. Prepaid insurance expired during the year, $1,650.
4. Accrued salaries at year-end, $1,300.
5. Deferred rent revenue at year-end should be $850.

Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.

From the trial balance and information given, prepare adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.

• The office equipment is depreciated at 10 percent of original cost per year.
• Prepaid insurance expired during the year, $1,650.
• Accrued salaries at year-end, $1,300.
• Deferred rent revenue at year-end should be $850.

Prepare closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Close the revenue accounts using Retained Earnings.
• Close the expense accounts using Retained Earnings.

Prepare a post-closing trial balance.

Take a look at this financial plan for an EcoFriendly cleaning product. Do these financial assumptions make sense? If not, what financial assumptions would you make?

Financial Plan. According to Gallup News website 39% of people are buying green products in east coast of America. We are assuming that 39% in Boston are interested buying green products. The total population in Boston is 673,184, which means that 262,541 are buying green products. We want to reach 1% of the customers within 6 months. We are assuming that we can sell 1000 units in the first month and we will sell 15,249 units by year one as a short term objective. The total start cost is $56,500 and the total funds are $81,000 ending with $24,500 cash. We get $60,000 loan from one member's father and we contribute $7,000 each. Total fixed cost in the first year is $9,550 each month, and $17,470 each month in the second year. We are assuming that we will sell 1000 units in the first month because there are some cleaning companies in Boston that use green products only, and they will try our products. The total revenue in the first month is $4255 with $1000 product cost. By the end of the first month we end up with a negative net income of ($-6,759). We start making profit when the sales unit increases in month six. By the end of the year we are assuming that we will sell 15,249 units with $171,963 revenue, and total cost of good sold of $40,199. Our net income will be $11,596 in first year. Second year, we increase marketing budget and hire more employees to reach $331,614 total revenue. By the end of year 2 our net income will be $39,063 and $72,322 on year 3. We maintain a positive cash flow to service during the first six months where our net income is negative. After six month our cash flow increases because we assuming that we will have a positive net income by six month. There are money companies in the market selling the same products we have and that means that the demand for green products is increasing. Our business makes sense because there are customers buying cleaning products and we are adding the value to customers by providing green cleaning products at a competitive price.

The Complete Accounting Cycle

On April 1, Mr. Oscar Matthews Opened up Oscar’s Home R & M, as a sole proprietor. During April he completed the following transactions:

April    1        Invested $40,000 cash in the business.

2        Purchased a lightly used pickup truck for $25,000, paying $6,000 cash and the balance on account.

3        Purchased supplies for $5,100 on account.

5        Paid $2,400 cash on a 1-year insurance policy effective April 1.

12        Billed customers $6,400 for home repair and maintenance services.

18        Paid $4,000 cash on amount owed on van and $2,100 on amount owed on supplies.

20        Paid $4,000 cash for employee salaries and wages.

21        Collected $4,000 cash from customers billed on April 12.

25        Billed customers an additional $8,000 for services.

30        Paid $400 for the monthly gasoline bill for the van.

30        Withdrew $1,800 cash for personal use.

Instructions:

This project, which must be completely typewritten, covers the entire accounting cycle. (Blank accounting forms may be downloaded from the blackboard). Hand written (in whole or in part) submittals will not be accepted and will receive a grade of zero.

1. Journalize and post the April transactions shown above.
2. Journalize and post the following adjustments:
   1. Unbilled and uncollected revenue for services performed on April 30 were $3,500.
   2. Depreciation on equipment for the month was $400.
   3. Expired insurance (hint: think).
   4. An inventory count shows $1,000 of supplies on hand on April 30.
   5. Accrued but unpaid employee salaries were $1,000.

1. Submit: 1. Adjusted Balance Sheet. 2. Income Statement. 3. Balance Sheet