Asia Pacific Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Asia Pacific Ltd. All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Asia Pacific Ltd. At 30 June 2020 Asia Pacific Ltd estimates the following:  The aggregate annual salaries of all employees hired on 1 July 2017 is now $1,200,000.  The aggregate annual salaries of all current employees hired on 1 July 2019 is now $800,000.  The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 40 per cent.  The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 20 per cent.  Salaries are expected to increase indefinitely at 1 per cent per annum. The interest rates on high-quality corporate bonds are as follows: Corporate bonds maturing in seven years 6% Corporate bonds maturing in eight years 8% Corporate bonds maturing in nine years 8% Corporate bonds maturing in ten years 10% At 30 June 2019 the provision for long-service leave was $12,000. Required: a) Calculate the total accumulated long-service leave benefit as at 30 June 2020. b) What amount should be reported for the long-service leave provision as at 30 June 2020 in accordance with AASB 119? c) Prepare the journal entry for the provision for long-service leave for 30 June 2020 in accordance with AASB 119. d) Which employee benefits are required to be discounted in accordance with AASB 119? (1 mark, maximum 100 words)

Asia Pacific Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Asia Pacific Ltd. All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Asia Pacific Ltd. At 30 June 2020 Asia Pacific Ltd estimates the following:  The aggregate annual salaries of all employees hired on 1 July 2017 is now $1,200,000.  The aggregate annual salaries of all current employees hired on 1 July 2019 is now $800,000.  The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 40 per cent.  The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 20 per cent.  Salaries are expected to increase indefinitely at 1 per cent per annum. The interest rates on high-quality corporate bonds are as follows: Corporate bonds maturing in seven years 6% Corporate bonds maturing in eight years 8% Corporate bonds maturing in nine years 8% Corporate bonds maturing in ten years 10% At 30 June 2019 the provision for long-service leave was $12,000. Required: a) Calculate the total accumulated long-service leave benefit as at 30 June 2020. b) What amount should be reported for the long-service leave provision as at 30 June 2020 in accordance with AASB 119? c) Prepare the journal entry for the provision for long-service leave for 30 June 2020 in accordance with AASB 119. d) Which employee benefits are required to be discounted in accordance with AASB 119? (1 mark, maximum 100 words)

Asia Pacific Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Asia Pacific Ltd.
All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Asia Pacific Ltd.
At 30 June 2020 Asia Pacific Ltd estimates the following:
 The aggregate annual salaries of all employees hired on 1 July 2017 is now $1,200,000.
 The aggregate annual salaries of all current employees hired on 1 July 2019 is now $800,000.
 The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 40 per cent.
 The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 20 per cent.
 Salaries are expected to increase indefinitely at 1 per cent per annum.
The interest rates on high-quality corporate bonds are as follows:
Corporate bonds maturing in seven years 6%
Corporate bonds maturing in eight years 8%
Corporate bonds maturing in nine years 8%
Corporate bonds maturing in ten years 10%
At 30 June 2019 the provision for long-service leave was $12,000.
Required:
a) Calculate the total accumulated long-service leave benefit as at 30 June 2020.
b) What amount should be reported for the long-service leave provision as at 30 June 2020 in accordance with AASB 119?
c) Prepare the journal entry for the provision for long-service leave for 30 June 2020 in accordance with AASB 119.
d) Which employee benefits are required to be discounted in accordance with AASB 119? (1 mark, maximum 100 words)

Week 6 Asia Pacific Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Asia Pacific Ltd. All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Asia Pacific Ltd. At 30 June 2020 Asia Pacific Ltd estimates the following:  The aggregate annual salaries of all employees hired on 1 July 2017 is now $1,200,000.  The aggregate annual salaries of all current employees hired on 1 July 2019 is now $800,000.  The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 40 per cent.  The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 20 per cent.  Salaries are expected to increase indefinitely at 1 per cent per annum. The interest rates on high-quality corporate bonds are as follows: Corporate bonds maturing in seven years 6% Corporate bonds maturing in eight years 8% Corporate bonds maturing in nine years 8% Corporate bonds maturing in ten years 10% At 30 June 2019 the provision for long-service leave was $12,000. Required: a) Calculate the total accumulated long-service leave benefit as at 30 June 2020. b) What amount should be reported for the long-service leave provision as at 30 June 2020 in accordance with AASB 119? c) Prepare the journal entry for the provision for long-service leave for 30 June 2020 in accordance with AASB 119. d) Which employee benefits are required to be discounted in accordance with AASB 119? (1 mark, maximum 100 words)

John Thompson, CEO of NewVenture, Inc., seeks to raise $5 million in equity for his early
stage venture in January 2016. NewVenture is a subscription-based software company that has
experienced 75% revenue growth over the last year. The company generated $2.5 million of
revenue in 2015, with an operating loss of ($450,000). Thompson projects that NewVenture
will achieve $30 million in revenue by 2020. Samantha Jones of Gorsuch Capital is considering
an investment in January 2016, offering pre-money valuation of $14.75 million.
a. What is the post-money valuation of NewVenture?
b. What share of the company will Samantha Jones require?
c. The company has 1,000,000 shares outstanding before the investment. How many new
shares should she purchase, and at what price per share?

Samantha Jones believes Thompson will have to grant generous stock options in addition to
the salaries projected in his business plan. From experience, she thinks management should
have the ability to own at least a 15% share of the company in the form of options by the end
of year 5.

f. What share of the company should Samantha insist on getting today if an option pool is
created after her investment? (in order to ensure that she will still maintain the same
ownership level noted above)
g. How many shares are allocated to Jones and the option pool in this case?

Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows:

Additional Information:

1. The company's effective income tax rate is 25% for all years.
2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $94,600.
3. 7,900 units remained in inventory at the end of 2021.

Required:
1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.
2. What is the effect of the change in methods on 2021 net income?

Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

What is the effect of the change in methods on 2021 net income?

part a

Under its executive stock option plan, N Corporation granted options on January 1, 2018, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2020 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives?

Multiple Choice

$0.

$90 million.

$20 million.

$60 million

part b

When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:

Multiple Choice

The price of the stock quoted on the stock exchange.

The appraised value of the property received.

The average book value of outstanding stock.

The selling price of the stock in a recent transaction.

Part c

Under IFRS, a deferred tax asset for stock options:

Multiple Choice

Isn't created if the award is "in the money;" that is, it has intrinsic value.

Is the portion of the options' intrinsic value earned to date times the tax rate.

Is the tax rate times the amount of compensation.

Is created for the cumulative amount of the fair value of the options the company has recorded for compensation expense.

RED Corp. granted options for 20,000 common shares to certain executives on January 1, 2019, when the market price was $52 per share. The option price is $44 per share and the options must be exercised between January 1, 2021, and December 31, 2023, after which time they expire. The options state that the related service period is January 1, 2019 to December 31, 2020. An options pricing model determined that, at the date of grant, the estimated fair value of these options was $1,000,000. Assume that RED Corp. follows IFRS.

REQUIRED:

(a) Calculate total compensation expense, consistent with IFRS.

(b) Explain when compensation expense should be recognized, consistent with IFRS. Is this reasonable? Explain.

(c) Prepare journal entries for the following, consistent with IFRS (items 3 and 4 are independent assumptions). :

1. To record the issuance of the options (grant of options) on January 1, 2019.

2. To record the compensation expense, if any. Date the entry(ies). Assume all employees remain employed by RED Corp.

3. To record the exercise of the options, assuming all of the options were exercised on the earliest possible date, January 1, 2021.

4. To record the expiration of the options, assuming all of the options were not exercised because the market price fell below the exercise price before January 1, 2021 and stayed below the exercise price for the balance of the option period.