a) A manager of a firm in the area of Dukagjini region is considering to knocking down the old barn to provide much needed parking space for tractors and equipment. This project would require an immediate expense of £110,000 to remove the asbestos and to knock down the barn. Building the car park would then cost £17,000. The space created would have spare capacity, which will be rented out at £45,000 (pre-tax) per year for parking and other uses. This project also lasts five years and has no residual value at the end. The farmer is able to depreciate the total cost of removing the asbestos, knocking down the building and building the car park. This is done over the five years of the project using the straight-line method. The corporate tax rate is 28%. The nominal discount rate is 3% and all cash flows are nominal values. . At the moment the farmer is paying £3,000 per year (post-tax) to park these on a neighbour’s land.

Calculate the net present value of this project.

b) An alternative is to expand its production capacities. The only possible location is an old barn owned by the farm but not utilised because of asbestos contamination. For legal reasons the building cannot be sold or leased. At a cost of £2,000, the farmer hired an environmental expert, who produced a report with detailed plans for the removal of the asbestos in compliance with environmental regulations. To refurbish the barn—including removing the chemical substances it is expected to cost £350,000. The cheesemaking equipment costs £150,000. Starting at the end of year one, cheese production is expected to yield £170,000 yearly for five years in pre-tax revenue minus cash expenses. The firm depreciates the refurbishment cost and the cost of the cheese-making equipment over the five years of the project using the straight-line method. There is no residual value at the end of the project. The corporate tax rate is 28%. The nominal discount rate is 7% and all values are nominal values.

Calculate the net present value of this project.

c) The farmer asks for your advice on how to choose between the two projects using the information in Parts (a) and (b. What would be your advice to the farmer? Explain.

d) Why might it be appropriate to use different discount rates for different projects, such as those in Parts (a) and (b)? Briefly explain.

How to make a Revenue Recognition memo with this information?

Background: Using Implementation Guidance Heavenly Tours Heavenly Tours (HT) was the brainchild of four college friends: Bart, Ava, Carla and Dave. They wanted to create a one-stop, high-touch, discounted tour experience for visitors to two local theme parks. Park Survival provides various simulated survival experiences. Park Adrenaline provides numerous adventures guaranteed to provide visitors with adrenaline rushes. Bart is responsible for managing the relationship with both parks and obtaining discounted admissions for HT’s customers. Ava is responsible for the tour guides, who help customize the experience for visitors. Carla is responsible for working with high-end restaurants in the area surrounding the parks to obtain discounts on food and beverages. Dave is responsible for merchandise, which can be sold to HT’s customers. Historically, HT has reported all cash collected as revenue. A private investor is requesting financial information prepared in accordance with generally accepted accounting principles before investing in HT. The investor has indicated a particular interest in HT’s total revenues. The four friends are meeting with their local accountant to discuss next steps. The accountant informs them they will need to analyze each revenue stream to determine whether HT is acting as a principal or an agent. The accountant states this determination is necessary for proper accounting treatment because when a principal satisfies a performance obligation, the gross amount of consideration is recorded as revenue; however, when an agent satisfies a performance obligation, only the amount of the fee or commission earned is recorded as revenue. Background: The accountant asked Bart to explain the relationship with both parks. Bart explained that he had been able to obtain a 15% discount from Park Survival. HT customers can access Park Survival’s website and use a discount password provided by HT. Under this agreement, HT’s customers are charged 90% of the full entrance price on their credit card when their order is accepted on Park Survival’s website. Once the order is processed on Park Survival’s website, the customer is given a pass that can be used for entrance to Park Survival and 5% is remitted to HT. The negotiations with Park Adrenaline had been more difficult because it was a newer park and in need of cash. Accordingly, HT purchased 100 passes for 90% of the face value. These passes are good for one year from the date of purchase. Any passes that are not used during the year would simply expire. HT has obtained the right to each pass purchased to provide the pass holder with access to the park. HT is free to sell these passes to its customers at any price, as long it doesn’t exceed the face value of the pass. The customer pays an agreed-upon amount when an order is accepted on HT’s website. Park Adrenaline retained the full responsibility for fulfilling its obligation to customers who entered the park with a pass purchased from HT.

ASSIGNMENT REQUIREMENTS:

Read ASC 606-10-55-36 through 40 in ASC 606, Revenue from Contracts with Customers, discussing implementation guidance for principal versus agent determination.

Review the examples in ASC 606-10-55-316 through 334F.

1. For each park, determine if HT is a principal or an agent and, accordingly, how the revenue should be recorded.

2. Prepare a professional accounting research memorandum in proper form with reference to the appropriate sections of the FASB codification.

3. In the memo provide a thorough explanation of your conclusions and the rationale behind your conclusion referencing the appropriate sections of the FASB codification.

1. Kolyesna Hotels Group acquired some financial data for the years 2010 and 2011

Using the financial data table, calculate the required ratios for the Kolyesna Hotel Group in 2011 (assume there are 365 days in a year).
a) Profit margin ratio

b) Return on assets (ROA)

c) Return on equity (ROE)

d) Earnings per share (EPS) with common stock

e) Earnings per share (EPS) with preferred stock

f) Price/Earnings ratio (P/E) for both common and preferred stock

2. The return on asset (ROA) and profit margin ratio for Tiggie’s Quick Food Corp. were 11.25% and 24.80% in 2013. If the total asset value of this firm was $25 million at the end of 2013, what is the total revenue generated in 2013?

3. Jamming Luxury Lodging Properties has obtained the financial data as follows:

Based on the financial information given, calculate return on owner’s equity (ROE) for Jamming Luxury Lodging Properties in 2010.

4. The financial data for Millen & Adams Boutique Hotel Inc. in both 2011 and 2012 are as follows:

Based on the financial data table, calculate the earnings per share (EPS) with preferred stock for Millen & Adams Boutique Hotel Inc. in 2012.

Currently, your firm plans on depreciating an upcoming project’s PPE from an initial value of $800k to a final book value of $100k over a 10 year period. You’ve been asked to value a possible change in the depreciation scheme which will accelerate this process by depreciating the machine over a 6 year period (let’s assume this is legal to do). If you accelerate depreciation, you will still be depreciating to a final book value of $100k. If the project’s discount rate is 12% and the firm’s tax rate is 35%, by how much will the project’s NPV change if you switch to the accelerated depreciation schedule?

Use the cost and revenue data to answer the questions.

If the firm is a monopoly, what is marginal revenue when quantity is 2525 ?

MR = $

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What is marginal cost when quantity is 1515 ?

MC = $

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If this firm is a monopoly, at what quantity will marginal profit be $0.00?

quantity =

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If this is a perfectly competitive market, which quantity will be produced?

quantity =

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Comparing monopoly to perfect competition, which of the statements are true? Select all that apply.

The monopoly is likely to be less responsive to consumers.

The perfectly competitive market's ouput is lower.

The monopoly's price is higher.

Total estimated cost of trip $45,500

Assuming that your estimated total cost will grow by 2.5% per year (due to inflation), demonstrate how you would compute the expected future cost of your dream vacation Suppose that you can invest money every month into a fee-free mutual fund and that this fund is expected to have a 10% nominal annual rate of return. Using your estimated future cost (including inflation) as future value, determine the amount of money you must save each month for the next 10 years (i.e., 120 months) to achieve your goal. Then, determine the monthly amount you must save if you delay your trip for an additional 5 years (that is, you will take the trip 15 years from today = 180 months) instead of 10 years from today. (Note: Be sure to add the 5 additional years of inflation to the estimated future cost.) Write an explanation for your calculations so the reader is completely clear on how you derived your required monthly deposits.

Please show formula, do not excel use formatting

I'm having trouble calculating total cost.

The question is: Calculate the total cost for next February when 1,300 tons are expected to be extracted. I understand that trucking and hauling will be 144,970, and I also add 20,000 for depreciation, im not sure about the other costs and how to add.

Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial-reporting and tax purposes. The following selected costs were incurred in December, the low point of activity, when 1,000 tons of ore were extracted:

*Incurred only in December.

Peak activity of 2,300 tons occurred in June, resulting in mining labor/fringe benefit costs of $310,500, royalties of $301,000, and trucking and hauling outlays of $174,970. The trucking and hauling outlays exhibit the following behavior:

Antioch uses the high-low method to analyze costs.

Required:

1. Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed, discretionary fixed, step-fixed, or semivariable.

2. Calculate the total cost for next February when 1,300 tons are expected to be extracted.

3-a. Is hauling 1,000 tons with respect to Antioch’s trucking/hauling cost behavior cost-effective?

3-b. Given the current scenario at what number of tons can cost-effectiveness be achieved?

4. Distinguish between committed and discretionary fixed costs. If Antioch were to experience severe economic difficulties, which of the two types of fixed costs should management try to cut?

5. Speculate as to why the company’s charitable contribution cost arises only in December.

4. The following Table represents a firm’s short run costs.

a. Complete the missing cells in the Table (10 points).

Many hotels have begun a conservation program that encourages guests to re-use towels rather than have them washed on a daily basis. A recent study examined whether one method of encouragement might work better than another. Different signs explaining the conservation program were placed in the bathrooms of the hotel rooms, with random assignment determining which rooms received which sign. One sign mentioned the importance of environmental protection, whereas another sign claimed that 75% of the hotel’s guests choose to participate in the program. The researchers suspected that the latter sign, by appealing to a social norm, would produce a higher proportion of hotel guests who agree to re-use their towels. Researchers used the hotel staff (a mid-sized, mid-priced hotel in the Southwest that was part of a well-known national hotel chain) to record whether guests staying for multiple nights agreed to reuse their towel after the first night.

(a) Identify the observational units, explanatory variable, and response variable in this study.

(b) State the null and alternative hypotheses in symbols, and be sure to define the parameter in the context of this study.

The following table displays the observed data in this study:

(c) Calculate the conditional proportions of re-use in each group.

(e) Use a two-sample z-test to test the hypotheses that you stated in (a). Report the test statistic and p-

value.

(f) Report your test decision at the α = 0.10, 0.05, and 0.01 significance levels. Also summarize what

these test decisions reveal about the strength of evidence for the researchers’ conjecture.

(g) Produce and interpret a 90% confidence interval for the difference in probabilities of re-using towels

between these two signs.