As an auditor, a common task is to verify that expenditures of a company are properly classified as capital or revenue expenditures. Discuss the determinants of such classifications. If an expenditure is capitalized, is such expenditure ever expensed? If so, how?

Drawing on the influences (determinants) of price elasticity of demand, explaining whether the demand for petrol in Australia is elastic or inelastic. Illustrate the effect of price rise on the total revenue of a petrol station.

Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. Prepare the required journal entry for Romano Services on April 30th, May 30th, June 30th

Asiacentric Communication Ethics and Competence Asia is diverse and dynamic. It is a region of cultural complexity, continuity, and change, although the term signifies a certain geographical location in the world, designates a common historical and political struggle against Western imperialism and colonialism, and implies shared religious-philosophical foundations and cultural heritage (Miike, 2003a). Asian nations are plural societies. They “have a dominant community and a number of minority communities divided on the basis of language, religion, caste, and ethnicity living together under a single polity” (Goonasekera, 2003, p. 368). Chen and Starosta (2003) vividly depict such a place of remarkable variety and vitality: Indonesia is largely Muslim, yet it contains a large Hindu enclave in Bali. Indians were also imported to parts of Malaysia, and Buddhism, started in India, [but] can hardly be found there now, except [as] a political reaction to casteism. Instead, it has taken root in China, Sri Lanka, and elsewhere. Shintoism thrives in Japan, but maybe nowhere else. Asia has some massive cities, but 80% of some Asian countries are rural. India and China have 800 language varieties or dialects. (p. 1) Obviously, therefore, all Asian communicators do not subscribe to the above-discussed five propositions. These propositions do not necessarily reflect the way Asians actually communicate in real-life situations. Nevertheless, they serve as theoretical lenses from which to see an Asian version of humanity and to view Asian thought and action. They are designed to provide much food for thought in rethinking the nature and ideal of human communication in Asia and beyond from an alternative vantage point. For example, the advent of the global village and the crisis of the human condition have made it compelling to ruminate on communication ethics and competence in intercultural contexts (Chen, 2005; Miike, 2009b; Tehranian, 2007). There have been extensive discussions on Eurocentric biases in the definitions and components of these key concepts (e.g., Chen & Starosta, 2008; Ishii, 2009; Shuter, 2003; Xiao & Chen, 2009). We can reexamine current conceptualizations of communication ethics and competence from the five Asiacentric propositions. They suggest that an ethical communicator can (1) remind herself or himself and others of interrelatedness and inter- dependence through communication, (2) discipline and cultivate herself or himself without being overly self-centered through communication, (3) develop her or his altruistic sensitivity to the sufferings of others, (4) feel her or his obligation to remember the debts that she or he has received and to try to return them in one way or another, and (5) speak up for greater harmony and morality. Just like many proponents of Asian values who are often misunderstood by Western conservative intellectuals (Mahbubani, 2002), I am not asserting that these Asiacentric viewpoints on humans communicating are superior to Eurocentric ones, but I am protesting that they are not inferior to them. They are rooted in the Asian worldview and yet may be sharable along with those rooted in, say, the African worldview toward what Tu (2006, 2007) calls “a dialogical civilization” or what Sitaram (1998) calls “a higher humanity.” In Sitaram’s (1998) view, such a truly human civilization “is not an extension of any one culture; rather it would be the essence of all cultures of the entire humanity” (p. 13). Hence, there is room for Asiacentric, as well as Afrocentric and other non-Western, contributions. As Asante (1993) avers, there is also “space for Eurocentricity in a multicultural enterprise so long as it does not parade as universal. No one wants to banish the Eurocentric view. It is a valid view of reality where it does not force its way” (p. 188).

Summarize, with examples, the five Asiacentric communication propositions.

Asiacentric Communication Ethics and Competence

Asia is diverse and dynamic. It is a region of cultural complexity, continuity, and change, although the term signifies a certain geographical location in the world, designates a common historical and political struggle against Western imperialism and colonialism, and implies shared religious-philosophical foundations and cultural heritage (Miike, 2003a). Asian nations are plural societies. They “have a dominant community and a number of minority communities divided on the basis of language, religion, caste, and ethnicity living together under a single polity” (Goonasekera, 2003, p. 368). Chen and Starosta (2003) vividly depict such a place of remarkable variety and vitality:

Indonesia is largely Muslim, yet it contains a large Hindu enclave in Bali. Indians were also imported to parts of Malaysia, and Buddhism, started in India, [but] can hardly be found there now, except [as] a political reaction to casteism. Instead, it has taken root in China, Sri Lanka, and elsewhere. Shintoism thrives in Japan, but maybe nowhere else. Asia has some massive cities, but 80% of some Asian countries are rural. India and China have 800 language varieties or dialects. (p. 1)

Obviously, therefore, all Asian communicators do not subscribe to the above-discussed five propositions. These propositions do not necessarily reflect the way Asians actually communicate in real-life situations.

Nevertheless, they serve as theoretical lenses from which to see an Asian version of humanity and to view Asian thought and action. They are designed to provide much food for thought in rethinking the nature and ideal of human communication in Asia and beyond from an alternative vantage point.

For example, the advent of the global village and the crisis of the human condition have made it compelling to ruminate on communication ethics and competence in intercultural contexts (Chen, 2005; Miike, 2009b; Tehranian, 2007). There have been extensive discussions on Eurocentric biases in the definitions and components of these key concepts (e.g., Chen & Starosta, 2008; Ishii, 2009; Shuter, 2003; Xiao & Chen, 2009). We can reexamine current conceptualizations of communication ethics and competence from the five Asiacentric propositions. They suggest that an ethical communicator can (1) remind herself or himself and others of interrelatedness and inter- dependence through communication, (2) discipline and cultivate herself or himself without being overly self-centered through communication, (3) develop her or his altruistic sensitivity to the sufferings of others, (4) feel her or his obligation to remember the debts that she or he has received and to try to return them in one way or another, and (5) speak up for greater harmony and morality.

Just like many proponents of Asian values who are often misunderstood by Western conservative intellectuals (Mahbubani, 2002), I am not asserting that these Asiacentric viewpoints on humans communicating are superior to Eurocentric ones, but I am protesting that they are not inferior to them. They are rooted in the Asian worldview and yet may be sharable along with those rooted in, say, the African worldview toward what Tu (2006, 2007) calls “a dialogical civilization” or what Sitaram (1998) calls “a higher humanity.” In Sitaram’s (1998) view, such a truly human civilization “is not an extension of any one culture; rather it would be the essence of all cultures of the entire humanity” (p. 13). Hence, there is room for Asiacentric, as well as Afrocentric and other non-Western, contributions. As Asante (1993) avers, there is also “space for Eurocentricity in a multicultural enterprise so long as it does not parade as universal. No one wants to banish the Eurocentric view. It is a valid view of reality where it does not force its way” (p. 188).

Summarize, with examples, the five Asiacentric communication propositions and compare them with the propositions based on the Eurocentric worldview.??

1. Demand is inelastic if the price elasticity of demand is numerically (absolute value terms)
   1.   Equal to 1
   2.   Equal to 0
   3.   Less than 1
   4.   all of the above
   5.   none of the above
2. In the long run a company that produces and sells laundry detergent increases all of its inputs by 25% and its output rises from 1,250 units to 2,000 units. For this range of output, the laundry detergent company exhibits
   1. increasing returns to scale.
   2. constant returns to scale.
   3. decreasing returns to scale.
   4. efficient scale
3. If a profit maximizing firm is producing a quantity at which marginal costs is less than average variable cost, it will
   1.       Keep producing in the short run and exit the market in the long run.
   2. Shut down in the short run but return to production in the long run.
   3.       Shut down in the short run but exit the market in the long run.
   4. Keep producing in both the short and long run
4. Competitive and monopolist firms maximize profits where:
   1.      Total cost equals total revenue.
   2. Price equals marginal cost
   3.      The change in profits is positive.
   4. Where marginal revenue is equal to zero.
   5.      Marginal revenue equals marginal cost
   6.       None of the above.
   7. All of the above.

Exercise 3-05

The ledger of Marigold Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

An analysis of the accounts shows the following.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expenses. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Company had the following account balances, in random order, on December 31, 2020.

Additional Information:

• During the year, Sam Chiang invested $15,000 into the business.
• $7,500 of the notes payable is due this year.

Required:

1. Prepare an income statement for the company for the year ended December 31, 2020.
2. Prepare a statement of owner’s equity for the company for the year ended December 31, 2020.
3. Prepare a classified balance sheet at December 31, 2020.

1. Prepare income statement

2. Prepare statement of owner’s equity

3. Prepare balance sheet