On January 1, 2020, Ivanhoe Company has the following defined benefit pension plan balances.

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $506,000 are created. Other data related to the pension plan are as follows.

1.Prepare a pension worksheet for the pension plan for 2020 and 2021. (Enter all amounts as positive.)

2. For 2021, prepare the journal entry to record pension-related amounts

On January 1, 2020, Sage Company has the following defined benefit pension plan balances.

Projected benefit obligation$4,571,000

Fair value of plan assets4,210,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $492,000 are created. Other data related to the pension plan are as follows.

2020

2021

Service cost

$152,000 $179,000

Prior service cost amortization

0 89,000

Contributions (funding) to the plan

236,000 285,000

Benefits paid

198,000 275,000

Actual return on plan assets

252,600 261,000

Expected rate of return on assets

6% 8%

Q. Prepare a pension worksheet for the pension plan for 2020 and 2021

Q. For 2021, prepare the journal entry to record pension-related amounts.

Mac Leasing Company (lessor) and Ash Corporation (lessee) signed a four-year lease on January 1, 2020. The underlying asset has an estimated life of six years, and the property reverts to Mac at the end of the lease term. Lease payments of $34,577 are payable on January 1 of each year and were set to yield Mac a return of 8%, which was known to Ash. The estimated residual value at the end of the lease term is $29,000 and is guaranteed by Ash Corporation. Ash expects the estimated residual value at the end of the lease term to be $29,000. The lease contains no purchase option.

a) Prepare an amortization schedule of the lease liability.

b)Prepare the entries for Ash Company for 2020.

c)Let’s now assume that Ash Corporation expects the estimated residual value at the end of the lease term to be $10,150 instead. Prepare the entries for Ash Corporation for 2020.

On October 1st American Company purchased this 1,000,000 peso CD when the peso was worth 10 cents

This 2 year CD pays interest at 12% with interest paid each April 1st and October 1st

American Company purchased this 1,000,000 peso CD when the peso was worth 10 cents

On December 31st The peso was worth 8 cents

On April 1st 2020 the peso was worth 9 cents

On October 1st 2020 the peso was worth 11 cents

On December 1st 2020 the peso was worth 10 cents

On April 1st 2021 the peso was worth 8 cents

On October 1st 2021 the peso was worth 9 cents

REQUIRED: MAKE ALL THE JOURNAL ENTRIES AMERICAN MAKES IN CONNECTION WITH THIS CD

DON'T FORGET THE INITIAL PURCHASE OF THE CD AND THE NECESSARY ADJUSTING ENTRIES AT YEAR END

Sheffield Corporation, a clothing retailer, had income from operations (before tax) of $427,500, and recorded the following before-tax gains/(losses) for the year ended December 31, 2020:

Sheffield also had the following account balances as at January 1, 2020:

As at January 1, 2020, Sheffield had one piece of land that had an original cost of $142,000 that it accounted for using the revaluation model. It was most recently revalued to fair value on December 31, 2019, when its carrying amount was adjusted to fair value of $246,240. In January 2020, the piece of land was sold for proceeds of $246,240. In applying the revaluation model, Sheffield maintains the balance in the Revaluation Surplus (OCI) account until the asset is retired or disposed of.

In 2015, Sheffield purchased a portfolio of debt investments that the company intended to hold for longer term and classified the portfolio of investments as fair value through other comprehensive income (FV-OCI) with gains/losses recycled through net income. The investments in the portfolio are traded in an active market. Sheffield records unrealized gains and losses on these investments as OCI, and then books these gains and losses to net income when they are impaired or sold. The portfolio’s carrying amount on December 31, 2019, was $125,400. The entire portfolio was sold in November 2020 for proceeds of $143,640.

Sheffield’s income tax expense for 2020 was $112,860. Sheffield prepares financial statements in accordance with IFRS.

Calculate net income for the year ended December 31, 2020.

Calculate retained earnings as at December 31, 2020.

Calculate net income for the year ended December 31, 2020, if Sheffield prepares financial statements in accordance with ASPE. Sheffield’s income tax expense would not change.

Calculate retained earnings as at December 31, 2020, if Sheffield prepares financial statements in accordance with ASPE. Assume that under ASPE, Sheffield’s retained earnings at January 1, 2020, would be $530,100.

Will the sum of the Accumulated Other Comprehensive Income and Retained Earnings under IFRS equal the balance of Retained Earnings under ASPE at December 31, 2020? Prepare a continuity schedule of the related accounts to demonstrate your answer.

The sum of the AOCI and Retained Earnings under IFRS equal the balance of Retained Earnings under ASPE as follows:

Dave Solomon is 59 years of age and is planning for his retirement. Dave is a barrister at a leading law firm. His gross salary for the 2019–2020 income year totals $345,000. He has decided to sell the majority of his assets as detailed below:

•  A two-storey residence at St Lucia, described in PoTL end of chapter question 11.6 (a)

•  A painting, described in PoTL end of chapter question 11.6 (b)

•  A parcel of shares, described in PoTL end of chapter question 11.6 (d).

•  A unit in a unit complex that he holds as a residential rental property investment. Davepurchased the unit ‘off plan’ on 1 January 2012 for $350,000. The unit was tenanted from that day. On 1 August 2019, Dave replaced the stove in the unit with a new one that cost him $1,800. He uses the diminishing value method for income tax purposes, and the effective life of the stove is 12 years. Dave sold the unit on 29 February 2020 for $450,000, and applies an apportionment of 0.2% on the sale of depreciating assets as set out in the ATO Rental properties Guide for rental property owners. During the 2019–2020 income year, Dave received rent totalling $16,800. By 30 June 2019, Dave had claimed Div 43 capital works deductions totalling $52,500.

  You are required to:

  Calculate Dave’s taxable income for the 2019–2020 income year. Show all your calculations and provide reasons for your answer, referencing relevant sections of the Income Tax Assessment Acts.

  Question 2

  Your client is a wealthy investor and property owner. Your client provides you with information (as detailed below) about various transactions that took place between 1 July 2019 and 30 June 2020.

1. 1) Warehouse: On 30 April 1985 your client acquired a large parcel of vacant land at Rocklea, a suburb in Brisbane with a significant number of commercial buildings. The purchase price was $180,000 and your client incurred $2,000 in legal fees and $18,000 in transfer duty when purchasing the land. In April 2000 your client signed a contract for the construction of a large warehouse on the land. The final construction cost was $1,000,000. The warehouse is used tohouse your client’s extensive motor vehicle collection. Your client signs the contract to sell the warehouse for $2,200,000 on 1 June 2020. Your client receives the proceeds on 1 July 2020. At the time of sale, an independent valuation revealed the land component of the sale price was $1,200,000. Your client paid $80,000 to insure the warehouse building against flood and fire damage.

2. 2) Boat: Your client owned a luxury motor cruiser that was moored at the Manly Yacht Club. Your client used the boat to go fishing over weekends and to cruise the waters of Moreton Bay. Your client purchased the vessel in late 2006 for $140,000 and sells the vessel on 1 June 2020 to a local boat broker for $90,000. During the period of ownership, your client paid a total of $25,000 in weekly mooring fees to the Manly Yacht club and also incurred $20,000 in repairs on the vessel.

3. 3) Dining Table: Your client acquires a large, hand crafted, English oak dining table for $8,000 in April 2001. The table is very old, having been constructed sometime during 1910 and was used by your client and his family in their formal dining room. Your client auctions the table on 2 April 2020 and it sells for a record price of $50,000. Your client pays $2,000 in auction fees. Duringyour client’s period of ownership they paid $3,000 to insure the table against loss or damage.

4. 4) Your client also has a capital loss carried forward from the 2017–2018 income year of $10,000.

You are required to:

Calculate which amount(s), if any, must be returned as assessable income for the 2019–2020 income year. Show all your calculations and provide reasons for your answer, referencing relevant sections of the Income Tax Assessment Acts.

Read the section titled "Selecting Employees in a Global Labor Market." In this activity, you will analyze the responses of candidates during their interview for an international assignment and evaluate the strengths and weaknesses of each candidate.

For firms operating in multiple countries, being able to effectively select and manage employees in global markets is a critical human resource management skill. Done correctly, it can even become a source of competitive advantage. Training and development programs are essential for all participating employees, regardless of their country of origin. Culture shock can make an expatriate working away from the home country feel disillusioned and isolated, unless the employee has been well prepared in advance. Once a need for a parent-country national to work in an internationally located operation has been made, selecting the best person for the job is a task that can make or break the assignment.

Read the case below and answer the questions that follow.

Roger's United States-based company is planning on opening a new subsidiary in Brazil. Corporate headquarters has identified three candidates—David, Megan, and Mary Ann—who all have the technical skills necessary to run the new subsidiary successfully. Roger has been asked to interview each candidate to see who would be the most likely to succeed in this role. Read the brief excerpts from Roger's interview with each candidate and evaluate the strengths and weaknesses of each.

David
"I really think this job could put me on strong financial footing, and I'm excited to be considered for this position just three years after starting here. I don't anticipate any relocation problems, since I've traveled extensively in Europe and I can't imagine Brazil is much different since they speak a European language, even if they are in South America. I'm good with languages and took four years of French in high school. My wife works at the university in town and said that finding a comparable job in Brazil might be a challenge, but I'm sure we can work something out. I've never had any health problems either, just a broken bone or two in my younger days. This will be my first position in a managerial role, but I was on good terms with my last boss so I'll just ask her if any problems come up. I work well with my coworkers, as long as they see eye-to-eye with me. One of my strengths is getting people to come around to my point of view. I don't know exactly what my role will be once I get back home, but I'm sure HQ will figure something out, and if things don't work out here, at least the Brazilian assignment will look good on my resume."

Megan
"International business was one of my undergraduate majors, so I've been hoping to get a chance at an international assignment since I joined the company five years ago. I don't speak Portuguese but I'm fluent in Spanish and studied abroad for a year in Argentina, and so even though there are differences between the languages and cultures, I don't anticipate any problems in that respect. My husband was in the Peace Corps in Africa for four years before we met, so he's used to living abroad and we love to travel. He teaches English as a second language, so finding a job for him in Brazil shouldn't be too difficult either. I consider myself an independent thinker, but my time in Argentina also taught me to be flexible and creative. My only health issue is hypothyroidism, but I've had it under control for a decade, and my doctor has checked to make sure getting medicine in Brazil would not be a problem in the big cities. Our kids are in college, so moving won't be a problem. I've talked extensively with my supervisor, and she thinks this assignment fits in nicely with my progression within the company."

Mary Ann
"My grandfather is Brazilian, but we weren't very close so I never picked up much of the language or culture. Honestly, I've never been much for languages, but English is so universal these days it's never been much of a problem. I'm going through a divorce at the moment, so it'll be nice to have a temporary stop overseas to get a bit of a fresh start for whatever lies ahead. We have two kids in middle school, but we're trying to work out an arrangement. My husband travels all the time for work, so we'll probably have to work out some kind of joint custody arrangement. I have pretty bad asthma, but it isn't a problem as long as stress and air pollution isn't too bad. Apparently, my usual medicine isn't available in Brazil, so hopefully I'll be able to find something else that works. I've been with the company for a little over a decade now, so I know the company philosophy well and am comfortable that my decisions will reflect the company mission. I've always gotten along well with coworkers and consider patience to be one of my strengths."

1.Of the three candidates based on the interview details, David appears to have the:

Multiple Choice

a.Least flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

b.Lowest willingness to learn about the foreign country’s culture, language, and customs.

c.Highest level of experience and competency in the employee’s area of expertise.

d.Most flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

e.Best motivation to succeed and would enjoy this international challenge.

2.Of the three candidates based on the interview details, Mary Ann appears to have the:

Multiple Choice

a.Least willingness to learn about the foreign country’s culture, language, and customs.

b.Highest willingness to learn about the foreign country’s culture, language, and customs.

c.Lowest level of experience and competency in the employee’s area of expertise.

d.Most flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

e.Least motivation to succeed in an international challenge.

3.Based on the interview details and of the three candidates, Megan appears to have:

Multiple Choice

a.Highest willingness to learn about the foreign country’s culture, language, and customs.

b.Least willingness to learn about the foreign country’s culture, language, and customs.

c.Lowest level of experience and competency in the employee’s area of expertise.

d.Lowest flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

e.Highest indifference to pursuing an international challenge.

4.Each of the candidates have family and some health issues that impact choosing them for an international assignment. Which statement best reflects the importance of this factor?

Multiple Choice

a.The comfort of the family strongly influences whether an employee completes an international assignment.

b.Family and health issues are of no concern for an international assignment.

c.As long as supporting spouses can find a job, only health issues should impact an international assignment.

d.As long as medical care is available, only family issues should impact an international assignment.

e.Lack of international experience is the only reason not to choose a candidate for this type of assignment.

5.Which statement for each of the three candidates is most likely accurate?

Multiple Choice

a.Megan would experience the least culture shock due to her past experience in Argentina.

b.David would experience the least culture shock due to his experience traveling in Europe.

c.Mary Ann would experience the least culture shock due to having a Brazilian grandfather.

d.Megan would have the longest adjustment period to accept and enjoy the host country’s culture.

e.Mary Ann would have the shortest culture shock period since she is getting divorced.

6.Once the company chooses the best candidate for this assignment, which statement best reflects the training preparations needed for the employee to transition abroad?

Multiple Choice

a.Employee and their families should have cross-cultural training for all phases of an international assignment.

b.Megan would require no training for this international assignment.

c.David would require cross-cultural training for the assignment and when returning home.

d.Mary Ann would require cross-cultural training for the departure and the assignment.

e.Only the chosen employee requires cross-cultural training for departure, the assignment, and returning home.