She Shed. Corp was organized in 2017. These business events occurred during the year, affecting intangible assets. 1. Purchased a license for $20,000 on July 1, 2017. The license gives She Shed exclusive rights to sell its sheds in the tri-state region and will expire on July 1, 2025. 2. Purchased a patent on January 2, 2018, for $40,000. It is estimated to have a 5-year life. 3. Costs incurred to develop an exclusive Internet connection process as of June 1, 2018, were $45,000. The process has an indefinite life. 4. On April 1, 2018, She Shed. purchased a small circuit board manufacturer for $350,000. Goodwill recorded in the transaction was $90,000. 5. On July 1, 2018, legal fees for successful defense of the patent purchased on January 2, 2018, were $11,400. 6. Research and development costs incurred as of September 1, 2018, were $75,000. (a) Prepare the journal entries to record all the entries related to the patent during 2018. (b) At December 31, 2018, an impairment test is performed on the license purchased in 2017. It is estimated that the net cash flows to be received from the license will be $13,000, and its fair value is $7,000. Compute the amount of impairment, if any, to be recorded on December 31, 2018. (c) What is the amount to be reported for intangible assets on the balance sheet at December 31, 2017?

On January 1, 2018, the Allegheny Corporation purchased machinery for $170,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. The machine is expected to produce 300,000 units during its life. Required: Calculate depreciation for 2018 and 2019 using each of the following methods.

1. Straight line.

2. Sum-of-the-years'-digits.

3. Double-declining balance.

4. One hundred fifty percent declining balance.

5. Units of production (units produced in 2018, 45,000; units produced in 2019, 40,000).

Required 1

Calculate depreciation for 2018 and 2019 using straight line method

Required 2

Calculate depreciation for 2018 and 2019 using sum-of-the-years' digits.

Required 3

Calculate depreciation for 2018 and 2019 using double-declining balance.

Company XYZ has appointed you as an Accountant and you are asked to review the following transactions as at 30 June 2018, which is the current year before any adjusting entries have been made.

1 (a) 08/09/2017 Purchase equipment for cash $5000

(b) 18/10/2017 Provide services to a client A for $500 on account

(c) 20/10/2018 pay the bank loan for $10000

(d) 11/12/2018 Invest additional $30000 cash into the business by the owner

(e) 01/18/2018 Collect an account receivable in cash from client A

(f) 31/01/2018 Pay wages to employees for $5000

(g) 04/02/2018 Paid the electricity bill for $100

(h) 06/04/2018 Sell a piece of equipment for $3000 in cash

(i) 05/05/2018 Withdraw cash by the owner for private usage for $500

(j) 06/06/2018 Borrow money on a long-term basis from a bank for $100000

Requirement:

1. List the effect of each of the following transactions upon any or all of the four financial statements of a business. Apart from indicating the financial statement(s) involved, use appropriate phrases such as ‘increase total assets’, ‘decrease equity’, ‘increase income’, ‘decrease cash flow’ to describe the transaction concerned.

2. Record all the necessary journals following the template below.

3. Options contracts for corn are listed below. A single option contract is for 5,000 bushels, but prices are quoted per bushel. For example, if someone wanted to purchase a December 2018 put option with a strike price of $3.60, then the premium would be $400 (= $0.08 x 5,000 bushels). The maturity dates are the same as the futures contracts.

Firm A needs to purchase 10,000 bushels of corn in December 14, 2018. The current price per bushel of corn is $3.60. Assume the firm cannot pass on any increased costs due to changes in price to their customers.

Suppose Firm A decides to purchase option contracts to protect itself from corn prices above $3.90 per bushel.

(a) What will be the total premium Firm A has to pay for these contract(s)?

(b) What would be the total payoff if the price of corn at maturity is $3.70?

(c) What would be the total payoff if the price of corn at maturity is $4.00?

(d) What would be the total payoff if the price of corn at maturity is $4.20?

You are in charge of the audit of “cash and bank” at Beachbreak (Pty) Ltd for the financial year – end February 2018. During the interim audit conducted during late December 2017, you had audited the bank reconciliation at 30 November and found it to be correct. During March, as part of your normal year – end procedures, you are preparing to audit the bank reconciliation prepared by Otis Redding and presented below.

Bank reconciliation at 29 February 2018 – Beachbreak (Pty) Ltd
Balance as per cashbook $127 261.30
Add: outstanding cheques
49378 3 October 2017 4 447.35
52133 10 December 2017 15 210.65
52876 18 February 2018 9 316.00
53192 22 February 2018 943.89
53193 22 February 2018 47 209.11 77 126.00
204 387.30
Add: direct deposit: Note 1 18 649.30
223 036 60
Less: bank charges and fees for February 2018 (163.00)
Balance as per Bank statement 28 February 2018 222 873.60
Note 1: This represents a deposit credited in error by the bank, to Beachbreak (Pty ) Ltd’s account on the 17 February 2018.
YOU ARE REQUIRED TO describe the audit procedures you would conduct on the bank reconciliation of Beachbreak (Pty) Ltd at 28 February 2018. (25)

A major overhaul of the Federal Tax structure was enacted at the end of 2017, effective beginning with the 2018 tax year. This assignment consists of calculations to gauge effects on situations as described.

In all cases, for this assignment, assume that the tax being calculated is for a “Married couple filing jointly” who do not itemize deductions, and have no other additions, subtractions, or any tax situations not specifically stated. Complete the table below, finding the difference between the tax due in 2016 and 2018 (all numbers should be rounded to whole dollars). When your table is complete, save this document and either submit it as an attachment via email or turn in a hard copy in class – this assignment is due no later than Monday, April 23^rd.

Up to (8) “extra credit” points will be added to your score for Current Event Assignment #2.

Consider an economy with the following market prices and production quantities over time:

13. Nominal GDP in 2017 was _____.

A. $1,210

B. $1,347

C. $1,425

D. None of the above/not enough information

14. Nominal GDP in 2018 was _____.

A. $1,180

B. $1,347

C. $1,425

D. None of the above/not enough information

15. Using 2018 as the base year, real GDP in 2017 was _____.

A. $1,264

B. $1,347

C. $1,425

D. None of the above/not enough information

16. Using 2018 as the base year, real GDP in 2018 was _____.

A. $1,290

B. $1,347

C. $1,425

D. None of the above/not enough information

17. The real GDP growth between 2017 and 2018 was _____.

A. 5.93%

B. 6.16%

C. 6.57%

D. None of the above/not enough information

18. Using 2018 as the base year, the GDP deflator in 2017 was _____.

A. 95.73

B. 100

C. 104.46

D. None of the above/not enough information

19. Using 2018 as the base year, the GDP deflator in 2018 was _____.

A. 95.73

B. 100

C. 104.46

D. None of the above/not enough information

Colah Company purchased $1.7 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2018, the Jackson bonds had a fair value of $1.97 million. Colah sold the Jackson bonds on July 1, 2019 for $1,530,000.

The purchase of the Jackson bonds on July 1.

Interest revenue for the last half of 2018.

Any year-end 2018 adjusting entries.

Interest revenue for the first half of 2019.

Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Required:
1. Prepare Colah’s journal entries for above transaction.
2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019.

TABLE:

D’Jais Corporation, a U.S. company, owns 100% of Bar A Corporation, a New Zealand company. Bar A's equipment was acquired on the following dates (amounts are stated in New Zealand dollars):

Jan. 1, 2017 purchased equipment for 40,000 NZ dollars

Jul. 1, 2017 purchased equipment for 80,000 NZ dollars

Jan. 1, 2018 purchased equipment for 50,000 NZ dollars

Jul. 1, 2018 sold equipment purchased on Jan. 1, 2017 for 35,000 NZ dollars

Exchange rates for the NZ dollar on various dates are:

Jan. 1, 2017           $.500                           Jan. 1, 2018           $.530

Jul. 1, 2017           $.520                           Jul. 1, 2018           $.505

Dec. 31, 2017       $.530                           Dec. 31, 2018        $.490

2017 avg. rate       $.515                           2018 avg. rate       $.510

Bar A's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method, calculating depreciation expense on a monthly basis. Bar A's functional currency is the U.S. dollar, but the company uses the NZ dollar for recordkeeping.

Required:

1. Determine the value of Bar A's equipment account on December 31, 2018 in U.S. dollars.

2. Determine Bar A's depreciation expense for 2018 in U.S. dollars.

3. Determine the gain or loss from the sale of equipment on July 1, 2018 in U.S. dollars.

QUESTION 5       

You are in charge of the audit of “cash and bank” at Beachbreak (Pty) Ltd for the financial year – end February 2018. During the interim audit conducted during late December 2017, you had audited the bank reconciliation at 30 November and found it to be correct. During March, as part of your normal year – end procedures, you are preparing to audit the bank reconciliation prepared by Otis Redding and presented below.

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Bank reconciliation at 29 February 2018 – Beachbreak (Pty) Ltd

Balance as per cashbook               $127 261.30 Add: outstanding cheques 49378 3 October 2017    4 447.35 52133 10 December 2017 15 210.65 52876 18 February 2018    9 316.00 53192 22 February 2018       943.89 53193 22 February 2018 47 209.11    77 126.00          204 387.30 Add: direct deposit: Note 1       18 649.30          223 036 60 Less: bank charges and fees for February 2018         (163.00) Balance as per Bank statement 28 February 2018   222 873.60

Note 1: This represents a deposit credited in error by the bank, to Beachbreak (Pty ) Ltd’s account on the 17 February 2018.

YOU ARE REQUIRED TO describe the audit procedures you would conduct on the bank reconciliation of Beachbreak (Pty) Ltd at 28 February 2018.