1.a.)When using FIFO for inventories, market value generally refers to ________ under U.S. GAAP and ________ under IFRS.

A) current replacement cost; historical cost

B) historical cost; net realizable value

C) historical cost; current replacement cost

D) net realizable value; net realizable value

b. Margaret Company reported the following information for the current year:

Industry Averages available are:

How do the inventory turnover and gross profit percentage for Margaret Company compare to the industry averages for the same ratios? (Round inventory turnover to two decimal places. Round gross profit percentage to the nearest percent.)

A) Margaret Company has superior gross profit percentage and inventory turnover.

B) Margaret Company has superior gross profit percentage and inferior inventory turnover.

C) Margaret Company has inferior gross profit percentage and superior inventory turnover.

D) Margaret Company has inferior gross profit percentage and inventory turnover.

c.)Ending inventory for the year ended December 31, 2019, is understated by $8,000. How will this affect net income for 2019 and 2020?

A) Net income will be understated by $8,000 in 2019 and 2020.

B) Net income will be overstated by $8,000 in 2019 and 2020.

C) Net income will be understated by $8,000 in 2019 and overstated by $8,000 in 2020.

D) Net income will be overstated by $8,000 in 2019 and understated by $8,000 in 2020.

d.) Ending inventory for the year ended December 31, 2019, is understated by $23,000. How will this error affect net income for 2020?

A) Net income will be understated by $46,000.

B) Net income will be overstated by $46,000.

C) Net income will be understated by $23,000.

D) Net income will be overstated by $23,000.

e.) Beginning inventory for the year ended December 31, 2019, is understated. How will this error affect net income for 2019 and 2020?

A) 2019 overstated; 2020 understated

B) 2019 understated; 2020 overstated

C) 2019 overstated; 2020 no effect

D) 2019 understated; 2020 no effect

f.)Beginning inventory for the year ended December 31, 2019, is understated. How will this error affect net income for 2019 and 2020?

A) 2019 overstated; 2020 understated

B) 2019 understated; 2020 overstated

C) 2019 overstated; 2020 no effect

D) 2019 understated; 2020 no effect

For each of the following intragroup transactions, assume that the consolidation process is being undertaken at 30 June 2020, and that an income tax rate of 30% applies. Prepare the consolidation worksheet adjustment entries for these transactions or where adjustment entries are given, explain the transaction that took place. All parts are independent unless specified. Riverland Ltd owns all the share capital of Eastwood Ltd.
i. Eastwood Ltd imports certain items from Germany which are then marketed and sold through Riverland Ltd. In October 2019, Eastwood Ltd sold such items costing $45 000 to Riverland Ltd for $55 000 on credit. Riverland Ltd sold 75% of these transferred items to external parties by 30 June 2020. Moreover, Riverland paid 60% of the outstanding amount to Eastwood on 1 May 2020.

ii. In June 2019 Riverland Ltd sold inventories to Eastwood Ltd for $60 000 and recorded a profit of $12 000. All of these inventories were on hand at 30 June 2019. Eastwood Ltd had sold 70 per cent of these inventories to Dora Ltd (an external party) by 30 June 2020 but the rest remained on hand at the end of the reporting period.

iii. Riverland Ltd manufactures items of machinery which are used as property, plant and equipment by other companies, including Eastwood Ltd. Riverland Ltd sold one of such machines to Eastwood Ltd for $90 000 on 1 January 2019. It cost $82 000 to Riverland Ltd manufacture this machine. Eastwood Ltd charges depreciation on similar machines at 10% p.a. on the diminishing value.

iv. During the year ended 30 June 2020, Riverland Ltd paid a rent charge of $7 500 to Eastwood Ltd for the use of a warehouse owned by Eastwood Ltd.

v. On 1 July 2019 Eastwood Ltd issued 3 000 debentures at the nominal amount of $100. The interest on debentures is 7% p.a. payable on 30 June each year. Debentures are to be redeemed after 5 years. Riverland Ltd took 20% of the debentures issued.

vi. The following intragroup journal entries were recorded at 30 June 2020. Explain what sort of original transactions between Riverland Ltd and Eastwood Ltd would have led to these entries.

Dividend revenue
Dr
10 000
Dividend declared
Cr
10 000
Dividend payable
Dr
10 0000
Dividend receivable
Cr
10 000

Analyzing and Interpreting Equity Accounts and Comprehensive Income
Following is the shareholders' equity section of the 2010 balance sheet for Procter & Gamble Company and its statement of shareholders' equity.

(a) What does the term convertible (in reference to the company's Class A preferred stock) mean?

Convertible means the holder of the security has an option to sell the security at any time.

Convertible means the holder of the security has an option to surrender the security and to receive cash at any time.

Convertible means the holder of the security has an option to convert (exchange) the security into another security.

Convertible means the holder of the security has an obligation to convert (exchange) the security into another security.

(b) How many shares of common stock did Procter & Gamble issue when convertible Class A preferred stock was converted during fiscal 2010?
Answerthousand shares

(c) For "employee plan issuances," at what average price was the common stock issued as of year-end 2010? (Round your answer to two decimal places.)
$Answer

(d) What is the accumulated other comprehensive income account? Explain.

The accumulated other comprehensive income account reflects the cumulative change in balance sheet accounts not recorded in net income nor arising from transitions with shareholders.

The accumulated other comprehensive income account reflects the cumulative profit recognized by the company less the cumulative dividends that have been paid to shareholders.

The accumulated other comprehensive income account reflects the cumulative amount by which the company's common stock has increased or decreased since issuance.

The accumulated other comprehensive income account reflects the cumulative profit on transactions with shareholders.

a.  Determine the amounts of the components of pension expense that should be recognized by the company in 2020.

b.  Prepare the journal entry to record pension expense and the employer's contribution to the pension plan in 2020.

c.  Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Ferreri Company for the year 2020.

XYZ Medical Ltd a Melbourne based company enters into a non-cancellable purchase commitment of US$50,000 with an American supplier on 1 April 2020 to buy the face masks in a bulk for medical staff. These face masks are to be shipped on the 1st of May 2020. The amount owing on the purchase is payable on 31 July 2020. XYZ Ltd observed that exchange rate is very volatile due to the current trade war between America and China. XYZ decided to enter into a forward rate contract. On 1 April 2020 a forward-exchange contract for US$50,000 as taken out with Westpac Bank Ltd at a cost of $76 923 (which is US$50,000 ÷ 0.65 with AU$1.00 = US$0.65 being the agreed forward rate). XYZ Ltd uses cash flow hedge accounting and its reporting date is 30 June. Date Spot rate Forward rate 1 st April 2020 0.67 0.65 1 st May 2020 0.61 0.59 30th June 2020 0.55 0.57 31st July 2020 0.64 0.64 Required: i. Calculate the gain or loss on the forward contract for each significant date. ii. Prepare the journal entries to account for the transactions including 31/7/2020.

(b)    The global Gini coefficient has declined from about 0.68 to 0.62 during 1990 to 2010. However, in the same period, inequality was increasing in the vast majority of countries in the world. Explain why the world inequality can decrease in the period. (3 points)

XYZ stock price and dividend history are as follows:

Year     Beginning-of-year Price       Dividend paid at Year-End

2010           $100                                $4

2011           $110                                $4

2012           $90                                  $4

2013           $95                                  $4

Compute the standard deviation of stock return.

On January 1, 2005, a person’s savings account was worth $250,000. Every month thereafter, this person makes a cash contribution of $750 to the account. If the fund is expected to be worth $500,000 on January 1, 2010, what annual rate of interest is being earned on this fund?

At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had the balance sheet shown here (in thousands of dollars). The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202 Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Chapter 24 Bankruptcy, Reorganization, and Liquidation 957 the mortgage bondholders, brought in $400,000, while the current assets were sold for another $200,000. Thus, the total proceeds from the liquidation sale were $600,000. The trustee’s costs amounted to $50,000; no single worker was due more than the maximum allowable wages per worker; and there were no unfunded pension plan liabilities. Balance Sheet (Thousands of Dollars) Current assets $ 400 Accounts payable $   50 Net fixed assets 600 Accrued taxes 40 Accrued wages 30 Notes payable 180 Total current liabilities $ 300 First-mortgage bonds a 300 Second-mortgage bonds a 200 Debentures 200 Subordinated debentures b 100 Common stock 50 Retained earnings (150) Total assets $1,000 Total liabilities & equity $1,000 Notes: a All fixed assets are pledged as collateral to the mortgage bonds. b Subordinated to notes payable only. a. How much will McDaniel’s shareholders receive from the liquidation? b. How much will the first mortgage bondholders receive from collateralized assets? Will they receive their full claim? If not, how much is their remaining claim? c. How much will the second mortgage bondholders receive from collateralized assets? Will they receive their full claim? If not, how much is their remaining claim? d. Who are the other priority claimants (in addition to the mortgage bondholders)? How much will they receive from the liquidation? e. Who are the remaining general creditors? How much will each receive from the distribution before subordination adjustment? How much will each receive after subordination? How much in total will the second mortgage holders receive (include the amount received from collateral)