Alumni donations are an important source of revenue for college and universities. If administrators could determine the factors that could lead to increases in the percentage of alumni who make a donation, they might be able to implement policies that could lead to increased revenues. Research shows that students who are more satisfied with their contact with teachers are more likely to graduate. As a result, one might suspect that smaller class sizes and lower student-faculty ratios might lead to a higher percentage of satisfied graduates, which in turn might lead to increases in the percentage of alumni who make a donation. Table 15.13 shows data for 48 national universities (America’s Best Colleges, Year 2000 Edition). The column labeled Graduation Rate is the percentage of students who initially enrolled at the university and graduated. The column labeled % of Classes Under 20 shows the percentage of classes offered with fewer than 20 students. The column labeled Student-Faculty Ratio is the number of students enrolled divided by the total number of faculty. Finally, the column labeled alumni Giving Rate is the percentage of alumni that made a donation to the university.

The exchange rate of a currency is the price paid in one country's currency for the currency of another country. If a company in the United States sources parts from a company in Europe, dollars will need to be converted to euros to pay for the parts. This need to convert currency introduces uncertainty as to the actual cost of the parts, since the exchange rate at the time the price is quoted may be different from the rate when payment is made. If the value of the euro appreciates, it will take more dollars to make payment in euros. If the value of the euro depreciates, it will take fewer dollars.

This exercise is designed to give you practice with currency exchange and help you better understand fluctuations in the exchange rates in CountryManager.

1. COUNTRYMANAGER

   
   In the table below, given the value of 1 USD in each of the countries, fill in the exchange rates for all the other combinations.

2. An Argentine retailer has ordered BRL 100,000 worth of product from a manufacturer in Brazil. Using the rates in the table in question 1, how much will the order cost in Argentine pesos?

3. A US firm has a subsidiary in Japan which earned YEN 1.5 billion last year. How much is that in US dollars at the rate of exchange in the table?

4. If the subsidiary in Japan increases earnings to YEN 1.7 billion, and the exchange rate rises to YEN/USD 92.1749, what are the earnings in USD? What if the rate goes down to 71.3687?

5. In CountryManager, you do not have any way of mitigating the risk of exchange rate fluctuations. What can an international business do in the real world to reduce the risk?

1.

On January 1, 2020, Ginseng Inc. entered into a forward contract to purchase U.S. $6,000 for $6,336 Canadian in 30 days. On January 15, the fair value of the contract was $40 (reflecting the present value of the future cash flows under the contract). Assume that the company would like to update its records on January 15. (a) Prepare only the necessary journal entries on January 1 and 15, 2020.

2.

(Derivative Transaction) On April 1, 2020, Petey Ltd. paid $175 for a call to buy 700 shares of NorthernTel at a strike price of $27 per share any time during the next six months. The market price of NorthernTel's shares was $27 per share on April 1, 2020. On June 30, 2020, the market price for NorthernTel's stock was $38 per share, and the fair value of the option was $10,000.

Instructions

a. Prepare the journal entry to record the purchase of the call option on April 1, 2020.

b. Prepare the journal entry(ies) to recognize the change in the call option's fair value as at June 30, 2020.

c. Prepare the journal entry that would be required if Petey Ltd. exercised the call option and took delivery of the shares as soon as the market opened on July 1, 2020.

3.

(Issuance and Conversion of Bonds) The following are unrelated transactions.

1. On March 1, 2020, Loma Corporation issued $300,000 of 8% non-convertible bonds at 104, which are due on February 28, 2040. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase one of Loma's no par value common shares for $50. The bonds without the warrants would normally sell at 95. Loma prepares its financial statements in accordance with IFRS.
2. Grand Corp. issued $10 million of par value, 9% convertible bonds at 97. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 93. Grand Corp. has adopted ASPE, and would like to explore all options available to report the convertible bond.
3. Hussein Limited issued $20 million of par value, 7% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $6. Hussein Limited has adopted ASPE.
4. On July 1, 2020, Tien Limited called its 9% convertible bonds for conversion. The $10 million of par value bonds were converted into 1 million common shares. On July 1, there was $75,000 of unamortized discount applicable to the bonds, and the company paid an additional $65,000 to the bondholders to induce conversion of all the bonds. At the time of conversion, the balance in the account Contributed Surplus—Conversion Rights was $270,000, and the bond's fair value (ignoring the conversion feature) was $9,955,000. The company records conversion using the book value method.
5. On December 1, 2020, Horton Company issued 500 of its $1,000, 9% bonds at 103. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 of Horton's common shares. On December 1, 2020, the fair value of the bonds, without the stock warrants, was 95. Horton Company prepares its financial statements in accordance with IFRS.

Instructions

Present the required entry(ies) to record each of the above transactions. For transaction 4, prepare the journal entries if Tien Limited prepares its financial statements using IFRS and if it uses ASPE.

4.

(Issuance, Exercise, and Termination of Stock Options) On January 1, 2020, Waldorf Corporation granted 40,000 options to key executives. Each option allows the executive to purchase one share of Waldorf's common shares at a price of $30 per share. The options were exercisable within a two-year period beginning January 1, 2022, if the grantee was still employed by the company at the time of the exercise. On the grant date, Waldorf's shares were trading at $25 per share, and a fair value options pricing model determined total compensation to be $1,680,000. Management has assumed that there will be no forfeitures because they do not expect any of the key executives to leave.

On May 1, 2022, 12,000 options were exercised when the market price of Waldorf's shares was $34 per share. The remaining options lapsed in 2023 because executives decided not to exercise them. Management was indeed correct in their assumption regarding forfeitures in that all executives remained with the company. Assume that Waldorf follows IFRS.

Instructions

a. Prepare the necessary journal entries related to the stock option plan for the years ended December 31, 2020 through 2023.

b. What is the significance of the $25 market price of the Waldorf shares at the date of grant? Would the exercise price normally be higher or lower than the market price of the shares on the date of grant?

c. What is the significance of the $34 market price of the Waldorf shares at May 1, 2022, the date of the exercise of the stock options?

d. What likely happened to the market price of the shares in 2023?

5.

(Share Appreciation Rights) Parsons Limited established a share appreciation rights program that entitled its new president, Brandon Sutton, to receive cash for the difference between the shares' fair value and a pre-established price of $32 (also fair value on December 31, 2019), on 50,000 SARs. The date of grant is December 31, 2019, and the required employment (service) period is four years. The president exercised all of the SARs on December 31, 2024. The shares' fair value fluctuated as follows: December 31, 2020, $36; December 31, 2021, $39; December 31, 2022, $45; December 31, 2023, $36; and December 31, 2024, $48. The company recognizes the SARs in its financial statements. Assume that Parsons follows ASPE.

Instructions

a. show a five-year (2020 to 2024) schedule of compensation expense pertaining to the 50,000 SARs granted to Brandon Sutton.

b. Prepare the journal entry for compensation expense in 2020, 2023, and 2024 relative to the 50,000 SARs.

c. From the perspective of the employee, contrast the features of a share appreciation right to the features of a compensatory stock option.

A .Describe a detailed example of how a us financial services company could use export credit insurance to minimize risk when providing financial services to institutions in China

B.List and describe 4 different documents that would be used in an import/export transaction involving the sales of paint by a us distributor to a buyer in Mexico

You are the external auditor of Suleman and Stock Ltd. The CEO, Ahsan Suleman, has contacted you because the company is considering setting up an internal audit department for the first time and he is looking for some guidance as to what is required for an effective internal audit department.

Required:

Explain the key considerations Ahsan Suleman should consider when setting up an internal audit department.

You are the external auditor of Suleman and Stock Ltd. The CEO, Ahsan Suleman, has contacted you because the company is considering setting up an internal audit department for the first time and he is looking for some guidance as to what is required for an effective internal audit department.

Required:

Explain the key considerations Ahsan Suleman should consider when setting up an internal audit department.

You are the external auditor of Suleman and Stock Ltd. The CEO, Ahsan Suleman, has contacted you because the company is considering setting up an internal audit department for the first time and he is looking for some guidance as to what is required for an effective internal audit department.

Required:

Explain the key considerations Ahsan Suleman should consider when setting up an internal audit department.

What are three recruitment strategies for a small business CEO? three examples below

Develop and execute vacancy and non-vacancy recruitment programs utilizing all resources that result in the hiring of top talent.

Develop and execute an employee referral program to increase the number of new hires by referral source by 25%.

Develop marketing materials to brand the company as a great place to work with competitive compensation and benefits.