Question 2: The following information is extracted from several articles2 about oil market.

An intensifying oil price war between Saudi Arabia and Russia has created “very painful” market conditions for the world’s largest crude oil producers. International benchmark Brent crude traded at $32.97 Thursday, down almost 8%, while U.S. West Texas Intermediate (WTI) stood at $30.40, around 7.8% lower. Oil prices have almost halved since the start of the year.

Last week, Saudi Arabia failed to secure Moscow’s support for deeper output cuts at a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC plus. OPEC had proposed to deepen cuts by 1.5 million barrels per day and Russia was asked to cut an extra 300,000 bpd.

“There was no point in cutting until after everyone understood how sharply demand could fall. We cannot fight a falling demand situation when there is no clarity about where the bottom (of demand) is,” Pavel Sorokin, the Russia’s deputy energy minister, said.

“It is very easy to get caught in a circle when, by cutting once, you get into an even worse situation: oil prices would shortly bounce back before falling again as demand continued to fall.”

Cooperation between two (Saudi Arabia and Russia) of the world’s three largest oil producers — the third is the United States — appears to be at an end.

2How a Saudi-Russian Standoff Sent Oil Markets Into a Frenzy. 9th March 2020. New York Times Russia to OPEC - deeper oil cuts won't work. 12th March 2020. Reuter The losers — and even bigger losers — of an oil price war between Saudi Arabia and Russia. 12th March 2020. CNBC

a) With aid of diagram, explain how the fall in crude oil demand affect the output of OPEC plus members.

b) Discuss why Russia refuse to follow Saudi Arabia’s proposal to cut crude oil production with aid of diagram.

Ethekwini Builders Ltd provides a unique scope of services in the home renovations industry. They deliver quality, reliability and impeccable customer service while staying on time and on budget, ensuring a hassle-free renovation experience for their customers. Being experienced specialists in renovation design and building, they employ efficient systems, top quality modern materials and finishes and talented artisans at the forefront of their trade, all at very competitive costs.

On 01 March 2019, the legal department of Ethekwini Builders Ltd had entered into a contract. The contract was undertaken to build a Gym in the La Mercy area. The legal team of Ethekwini Builders was instructed to draw up the contract between the necessary the parties by the Director of the company. The financial year of the company ends on the 28 February of each year. The contract will be completed by 28 February 2020. The Management Accountant of Ethekwini Builders Ltd supplied the following details with regard to the contract:

Salary and wages R212 500

Equipment hire R5 500

Machinery and plant sent to site R400 500

Other contract expenses R42 200

Payments received from Debtor AA Mathew was R706 500

Statistics South Africa’s figures released on Thursday showed that the steel production in South Africa fell strongly in December 2019, dropping by 7.5% from a year earlier, suggesting that the effect of work stoppages owing to the “wild cat” strikes at the steel industry during the third quarter continued to be felt in the fourth. The December fall follows a 3.8% drop year on year in November, revised down from the previously reported 4.5% fall.

The “wild cat” strikes caused a panic among buyers and this led to a sharp increase in steel prices. Ethekwini Builders decided to absorb the increases in steel prices due to the company’s slogan of keeping to the budget quoted. The site manager indicated:

Raw materials issued from warehouse R185 000

Raw materials delivered to site by suppliers R165 500

Raw materials returned: Warehouse R 5 500

Supplier R1 155

He further stipulated that raw materials on site (28 February 2020) amount to R 38 800 and plant on site (28 February 2020) amount to R388 500.

The Architect indicated that the Work certified (Debtors) amount to R785 000.

Additional information:  An amount of R1 800 relates to salaries and wages. This amount is due and payable at year-end but no entries have been put through the books.

Required:

1.1 Prepare a Contract account in which you clearly indicate the amount to be transferred to the profit and loss account at the 28 February 2020.

1.2 Prepare the debtors account

Round off to the nearest whole number

Write a class FinancialAidApplicant which describes an applicant for financial aid and will be used by a financial aid officer.

Qualification is based on annual household income and the number of people in the household. If the household income is less than $20,000, the applicant automatically qualifies regardless of how few people are in the household. If the household income is at least $20,000 but at most $60,000 and there are 4 or more people in the household, the applicant qualifies. If the household income is more than $60,000 but at most $150,000 and there are 6 or more people in the household, the applicant qualifies. For all other cases, the applicant does not qualify.

A tester program is provided to you in Codecheck, but there is no starter code for class FinancialAidApplicant.

You should declare static constants for the numbers mentioned above.

The class has a constructor that takes a String, a double, and an int as parameters

public FinancialAidApplicant(String name, double income, int numberOfPeople)

It also has four methods:

• public String getName() Gets the applicant's name.

• public void setNumberOfPeopleInHousehold(int people) Sets number of people in the household

• public void setHouseholdIncome(double income) Sets a new household income

• public boolean qualifies() Returns true if the applicant qualifies and false

Method qualifies should have one if-else if-else statement instead of multiple if statements.

Code check:

public class FinancialAidApplicantTester
{
   public static void main(String[] args)
   {
       FinancialAidApplicant applicant =
          new FinancialAidApplicant("Joe Programmer",19999, 1);
         
       System.out.printf("The name of the applicant: %s.%n", applicant.getName());
       System.out.println("Expected: The name of the applicant: Joe Programmer.");

       System.out.println(applicant.qualifies());
       System.out.println("Expected: true");
       
       applicant.setHouseholdIncome(20000);
       applicant.setNumberOfPeopleInHousehold(3);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: false");
       
       applicant.setNumberOfPeopleInHousehold(4);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: true");

       applicant.setHouseholdIncome(60000);
       applicant.setNumberOfPeopleInHousehold(4);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: true");
       
       applicant.setNumberOfPeopleInHousehold(3);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: false");
       
       applicant.setHouseholdIncome(60001);
       applicant.setNumberOfPeopleInHousehold(6);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: true");
       
       applicant.setNumberOfPeopleInHousehold(5);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: false");
       
       applicant.setHouseholdIncome(150000);
       applicant.setNumberOfPeopleInHousehold(6);
       System.out.println(applicant.qualifies());
       System.out.println("Expected: true");
       
       applicant =
          new FinancialAidApplicant("Mary Rowe",150001, 10);
 
       System.out.printf("The name of the applicant: %s.%n", applicant.getName());
       System.out.println("Expected: The name of the applicant: Mary Rowe.");

       System.out.println(applicant.qualifies());
       System.out.println("Expected: false");
   }
}

The Bridgeport Corporation had income from continuing operations of $12 million in 2020. During 2020, it disposed of its restaurant division at a loss of $98,000 (net of tax of $38,000). Before the disposal, the division operated at a loss of $202,000 (net of tax of $135,000) in 2020. Blue Collar also had an unrealized gain-OCI of $44,000 (net of tax of $18,000) related to its FV-OCI equity investments. Bridgeport had 10 million common shares outstanding during 2020.

Prepare a partial statement of financial performance for Bridgeport, beginning with income from continuing operations.

4. Suppose you are hired on January 1, 2020 and start depositing $400 at the end of each month, with the first deposit on February 1, 2020, in a pension fund that pays interest of 9% per year compounded monthly on the minimum monthly balance and credited at the end of each month.  

(a) How much money is in the pension fund on March 1, 2020?

(b) How much money is in the pension fund on April 1, 2020?

(c) How much money will be in the pension fund on January 1, 2040?

(d) What is the total amount of interest earned in this pension fund during these 20 years?

(a) ABC Company purchased land at a cost of $400,000,000 during 2018. ABC chooses to use the revaluation method of accounting for land. The fair value of the land is as follows at December 31, 2018 2019 and 2020:

2018 - $450,000,000
2019 - $360,000,000
2020 - $385,000,000

Required
(a) Record the journal entries to account for revaluation of the land at 31 December 2018, 2019 and 2020.

(b) Assume ABC Company chooses to apply the cost method for the land and that the above amounts are the recoverable amount of the land at 31 December each year. Record the necessary journal entries to account for the land at 31 December 2018, 2019 and 2020.

Tim (40) and Tina (42) live in California. They have one son, Todd (age 10; Todd is a qualifying child of Tim and Tina). Tim’s brother, Bob, lives in New York. Although Bob did not live with Tim and Tina at all in 2020, Tim and Tina provided 90% of Bob's support. Bob is single and had $1,000 gross income in 2020.

What is the amount of Tim and Tina’s 2020 child tax credit (including other dependent tax credit)?

Assume that Tim and Tina's 2020 AGI is below the phaseout threshold for the child tax credit.

On January 1, 2018, Grumpy Contractors agreed to construct a building at a contract price of $5,000,000. Grumpy estimates that the project will be finished in 2020. Information related to the costs and billings for this contract are as follows:

Instructions:
Assuming the building was finished in 2020, calculate the gross profit that would be recorded for 2018, 2019 and 2020 using the:

a) Completed contract method.

b) Percentage of completion method.