A study of the career paths of hotel general managers sent questionnaires to an SRS of 250 hotels belonging to major U.S. hotel chains. There were 129 responses. The average time these 129 general managers had spent with their current company was 10.33 years. (Take it as known that the standard deviation of time with the company for all general managers is 2.1 years.)

(a) Find the margin of error for an 85% confidence interval to estimate the mean time a general manager had spent with their current company: _____ years

(b) Find the margin of error for a 99% confidence interval to estimate the mean time a general manager had spent with their current company: _____ years

Wiley Coyote Company placed an order to purchase 10,000 rocket packs from Acme Company on December 28, 2019. Acme shipped the rocket packs on December 29, 2019 and they arrived at Wiley Coyote’s plant on January 3, 2020. Discuss which company would include these materials in its ending inventory at December 31, 2019, based on whether the shipping terms were FOB Shipping Point or FOB Destination.   Be sure to explain why your answer might differ based on the shipping terms.

On May 22, 2018, for the purpose of transporting company officials to remote location, Oil & Gas Ltd. purchased a small airplane costing $120,000 and paid $20,000 for painting and lettering.

The company paid $25,000 in cash and signed a one-year notes payable for the balance.

The airplane is expected to have a useful life of 16 years or 1,500,000 kilometers, with a salvage value of $20,000.

Required

1. Calculate the cost of the airplane and prepare a journal entry

2. Compute depreciation expense for the year ended December 31, 2018, assuming the company uses the straight-line method of depreciation and prepare a journal entry
3. Compute depreciation expense for the year ended December 31, 2018, assuming the company uses the double-declining-balance method of depreciation and prepare a journal entry
4. Compute depreciation expense for the year ended December 31, 2018, assuming the company uses the units-of-production method of depreciation and that the airplane was flown 96,000 kilometers during the year and prepare a journal entry
5. During 2020, management has decided that, as a result of heavy usage, the total life of the airplane would only be 13 years instead of the original estimate of 16 years. The salvage value was expected to be $15,000 at the end of the airplane’s useful life. Revise the depreciation expense for the year ended December 31, 2020, assuming the company uses the straight-line method of depreciation, and prepare a journal entry

Case study 5:

Scenario 1:

ABC S.A.O.G was incorporated with an authorized capital of 300 million shares, ordinary shares of 500 baiza each. The company has in issue 100 million shares. On 15-january-2017 the company has repurchased 8 million shares at the rate of 3.250 each after the completion of all the requirements posed by capital market Authority-CMA. The company re issued such shares in the march 2018 @ rate of 4.000 R.O per share. The general rules set by CMA is that the company cannot repurchase more than 10% of its share capital at one time and there should be a minimum gap of 2 years between any repurchase. On 13-february-2020, the company again has repurchased 10 million shares at the rate of R.O 4.550 each.

Analyse the above situation and answer the following questions:

1. Explain in your own words impact of each repurchase on company’s share capital? Justify it with proper calculations? (1.5 marks-Min 75 words)
2. Has the company carried out the procedure of repurchase within the guidelines of CMA or not? Justify your answer with necessary data? (1.5 marks-Min 75 words)
3. What is the impact on corporation’s financial statements if all of such repurchased stock is reissued in the year 2020 @ R.O 4.000 each (2 marks-Min 100 words)

ABC Inc, a Canadian retailer which operates more than 1,000 stores in Canada, reported the following balances as at December 31, 2019:

7% Par $100 convertible bonds, issued at par                                          $     250,000

      3,000 call options, each entitled to purchase 1 common share

Cumulative Preferred shares, 36,000 convertible shares outstanding      $     960,000

Common shares, 112,500 shares issued and outstanding                             2,880,000

Contributed surplus on repurchase of common shares                                      31,200

Retained earnings                                                                                         1,032,000

ABC Inc. applies IFRS. The company also informed you details related to the following transactions during 2020:

a]   On February 1, the company declared and distributed a 20% stock dividend for its common shareholders. The shares were being traded in the market at $30.

b]  On March 1, it acquired 18,000 of its own common shares in the market at $30.00 per share and retired them on the same day.

REQUIRED:

1. For transaction [a], Retained earnings decrease by:

1. $576,000
2. 675,000
3. 3,375,000
4. None of the above

2. For transaction [a], the journal entry is:

1. To debit common shares and credit retained earnings
2. To debit retained earnings and credit dividends payable
3. To debit retained earnings and credit common shares
4. None of the above

3. For transaction [b], common shares is decreased by

1. $474,000
2. 540,000
3. 460,800
4. None of the above

4. For transaction [b], retained earnings is decreased by

1. $66,000
2. 31,200
3. 540,000
4. 34,800

5. The journal entry to record transaction [b] is

1. Debit common shares, debit contributed capital, debit retained earnings and credit cash
2. Debit common shares, debit retained earnings and credit cash
3. Debit common shares, credit contributed capital, debit retained earnings and credit cash
4. Debit common shares, credit contributed capital, debit preferred shares, debit retained earnings and credit cash

1. From the FASB, what is the intended purpose of the new converged revenue recognition standard?

2.How prevalent is sustainability reporting in (a) the U.S. and (b) globally? In citing specific statistics, indicate the size of the company to which the information pertains.

3. What standards or guidelines should accounting professionals involved in sustainability reporting be familiar with?

A U.S. investor is considering a portfolio consisting of 60% invested in the U.S. equity index fund and 40% invested in the British equity index fund. The expected returns for the funds are 10% for the U.S. and 8% for the British, standard deviations of 20% for the U.S. and 18% for the British, and a correlation coefficient of 0.15 between the U.S. and British equity funds. What is the standard deviation of the proposed portfolio?

You are Head of Sales & Marketing and a member of the Strategic Management Team for a medium sized organization that manufactures and sells specialized oil and gas exploratory, drilling and production equipment to a wide range of global oil and gas companies. One of the major strategic initiatives being considered by the Strategic Team is expanding the organization’s existing U.S. based manufacturing operations of this equipment to both South America and the African continent to reduce shipping distance of material and establish a local presence.

The targeted country in Africa being considered is Nigeria, which would allow shipment of equipment to African oil producers in Angola, Ivory Coast, Ghana, Cameroon, Gabon, DRC and Equatorial Guinea. The targeted country in Latin America under consideration is Venezuela, which would allow shipment of equipment to Latin American oil producers in Brazil, Mexico and Colombia.

The company’s CEO asks you to prepare an environmental scan that will focus on key strategic decision making that need to be examined for both countries under consideration, Venezuela and Nigeria, and to be “brutally honest” in your evaluation and comments.

Please type your answer under the right section in the table below:

You have the following information about a company.

·       Sales in 2019 were £2000 million. Sales are expected to grow at a rate of 15% in 2020, and afterwards the growth rate will drop to 3%.

·       EBIT margin is expected to stay constant at 15%.

·       The corporate tax rate is 40%.

·       Net working capital each year is expected to stay constant at 10% of next year's sales.

·       To generate sales growth, each year t, capital expenditure net of depreciation (i.e., Capex- Depreciation) is expected to be 1/3 of the sales increase from year t to year t+1.

·       The debt-to-equity ratio (D/E) of the company is expected to stay constant at 1/2 and its equity cost of capital is 15%.

·       The firm has perpetual bonds outstanding with a coupon rate of 9% paid annually. The bonds are currently selling at par and have a AAA credit rating.

Question: Compute the value of the company at the beginning of 2020 using the WACC method. You may assume that all cash flows occur at the end of each year.

Gro-right manufactures and sells greenhouses to large commercial farms. The 2020 Budget for the company shows the following information:

Required:

1. Find the break-even level of sales in units for 2020 based on the budgeted information.
2. Find the level of sales in sales dollars needed to achieve the desired budgeted net income of the company.
3. Create a Contribution format income statement for the level of sales needed to achieve the desired level of net income.
4. At the level of sales to achieve the desired net income, what is the margin of safety in dollars?
5. What is the margin of safety percentage? What is the margin of safety percentage indicating?
6. At the level of sales to achieve the desired net income, what is the degree of operating leverage for the company?
7. Using the operating leverage, if sales were to increase by 10% by what percent would the operating income increase?