Tesco is the largest chain of supermarkets in the United Kingdom. The have expanded internationally and have recently also opened stores in Morocco. However, Tesco has since experienced a variety of issues with the Moroccan market. As business development analyst you only see the three following options for Tesco business in Morocco: Today is December 31, 2020. Suppose you have the following information about the financial implications of Tesco’s three strategic options. Option 1: Scale down operations Tesco immediately starts to scale down its operations and plans to eventually leave the Moroccan market effective as of Jan. 01, 2026 (i.e. after 5 more years). At the end of 2021, Tesco operations in Egypt are projected to generate a loss of £10 million. However, due to the effects of scaling down operations and a number of efficiency increases, Tesco estimates a profit of £8,2 million at the end of 2022, which is then expected to increase by 3% on a yearly basis until Dec. 31, 2025. All forecasts for this option are based on assumptions and considered as risky. Option 2: New local partners The NPV of acquiring new local partners has already been calculated for you: £14 million Option 3: Sell business entirely Tesco immediately sells its Moroccan operations to a local investor. The local investor is willing to pay a total £16 million, in three parts of £10 million (today) and £4 million (on Dec. 31, 2021) and £2 million (on Dec. 31, 2022). Since the local investor has also presented a bank guarantee for the whole acquisition price (issued by a well-known British bank), option 3 is considered to be risk-free. The risk-free interest rate is 1,5% EAR. Tesco continuing operations in Morocco are seen as risky and the appropriate risk premium is 7%.
a. Calculate the net present values (NPVs) of options 1 and 3 indicated above. b. Clearly indicate which option (Option 1, Option 2 or Option 3) should be chosen by Tesco's management, and explain the reasons for your choice in one or two sentences.
In: Finance
a. Compare the interactions of protons/alpha particles to electrons with absorber materials? What properties are factors in slowing down and ultimately stopping these particles?
b. Do you expect neutrons to slow down as a result of the same interactions? What type of material do you think could be used to slow down a neutron? Why? Hint: In a nuclear reactor, neutrons produced in the fuel are slowed down in the water. Think about why water is effective at slowing down the neutrons.
In: Chemistry
PART A
Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalise your timesheet and head to a monthly tax-update webinar:
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From: Ahmed Sent: Wednesday, 16 September 2020, 3:58PM Subject: URGENT: Lisa Eastwood meeting scheduled, task assigned Good afternoon, I have just spoken with Lisa Eastwood (new client) over her tax position for the current tax year. I will be getting further documentation tomorrow; however, I need you to examine my notes below and determine the tax consequences arising from her various activities. Lisa has recently moved to Melbourne from Darwin, after being appointed as Regional Manager at the company, Dial Before You Dig. Lisa’s Darwin Home Lisa sold her home in Darwin (contract date September 2019, settlement December 2019), receiving $1,220,000 at settlement. This is after legal fees ($12,000), advertising ($2,000) and real estate commissions ($25,000) were deducted.
Sculpture Lisa gave a sculpture, valued at $18,900, to her friend in June 2020. The sculpture was purchased for $480 in December 2000 and repaired in March 2016 for $1,250. Vase When Lisa was playing with her cat in September 2019, the cat accidentally knocked over and broke a vase given to her by her grandmother in September 2018 (worth $6,100 at that time). The vase dated back to the Australian gold rush (circa 1850's) and, after undertaking some research, she discovered it was currently worth approximately $27,000. Lisa did not have insurance for the item. Cryptocurrency Lisa converted cryptocurrency into $27,200 Australian dollars in October 2019. To complete the transaction, she incurred $950 in transaction fees. Therefore, Lisa received $26,250 in cash. Lisa had acquired the cryptocurrency in September 2018 for $9,200 Australian dollars. Shares Lisa sold shares she held in a construction company in March 2020 for $182,000. She had purchased the shares for $37,200 in December 1986. Lisa has indicated that she has carried forward losses from prior years of $180,000 relating to a prior disposal of shares and land. We will have a meeting first thing Monday morning, so please complete your analysis by the end of Friday so I can review her circumstances over the weekend. Regards, Ahmed. Senior Accountant M&M Tax Accountants |
Required: You are required to calculate Lisa’s Net Capital Gain (loss) for the year ending 30 June 2020 based on the above information provided. In doing so, you must present an accurate and complete analysis.
Question 6
A.6 Determine the Net Capital Gain and/or Loss for Lisa. Briefly justify your answer/show all workings.
Hint: it is recommended you use a table format to present your answer.
In: Accounting
The financial year for Crystal Catering Services ends on 30 June. After analysing the accounting records and other data for the business of Crystal Catering Services, the following information is made available for the year ended 30 June 2020.
Required:
Using the information above, make the necessary adjusting entries for Crystal Catering Services for the year ended 30 June 2020.
In: Accounting
On January 8, 2017, Whitewater Riders purchased a van to transport rafters back to the point of departure after completing the on-the-water portion of the rafting adventures they operate. The cost of the van is $44,000 and Whitewater Rider expects to use the van for four years or 60,000 miles. The estimated selling price after four years is $2,000. The van was driven 12,000 miles in 2017, 18,000 miles in 2018, 21,000 miles in 2019, and 10,000 miles in 2020.
Required:
On the following Whitewater Riders worksheet, compute the annual depreciation expense and ending book value of the van using straight-line, double-declining, and units-of-production methods. In addition, answer the three questions below:
1. Which method results in the highest net income for Whitewater Riders?
a. 2017 b. 2018 c. 2019. d. 2020
2. Which method results in the lowest income tax liability for Whitewater Riders?
a. 2017 b. 2018 c. 2019. d. 2020
3. Which method would you recommend Whitewater Riders use and why?
Whitewater Riders
Schedule of Van Depreciation for years 2017- 2020
Depreciation Method Year Depreciation expense Ending Book Value
Straight-line 2017
Straight-line 2018
Straight-line 2019
Straight-line 2020
Double-declining 2017
Double-declining 2018
Double-declining 2019
Double-declining 2020
Units-of-production 2017
Units-of-production 2018
Units-of-production 2019
Units-of-production 2020
In: Accounting
Exercise 22-23
Sandhill Corp. was a 30% owner of Teal Company, holding 216,000 shares of Teal’s common stock on December 31, 2019. The investment account had the following entries.
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Investment in Teal |
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| 1/1/18 Cost | $3,050,000 | 12/6/18 Dividend received | $150,000 | ||
| 12/31/18 Share of income | 400,000 | 12/5/19 Dividend received | 240,000 | ||
| 12/31/19 Share of income | 500,000 | ||||
On January 2, 2020, Sandhill sold 108,000 shares of Teal for
$3,360,000, thereby losing its significant influence. During the
year 2020, Teal experienced the following results of operations and
paid the following dividends to Sandhill.
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Teal |
Dividends Paid |
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| 2020 | $310,000 | $47,000 |
At December 31, 2020, the fair value of Teal shares held by
Sandhill is $1,820,000. This is the first reporting date since the
January 2 sale.
(b) Compute the carrying amount of the investment
in Teal as of December 31, 2020 (prior to any fair value
adjustment).
| Carrying amount | $ |
(c) Prepare the adjusting entry on December 31,
2020, applying the fair value method to Sandhill’s long-term
investment in Teal Company securities. (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.)
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Date |
Account Titles and Explanation |
Debit |
Credit |
| Dec. 31, 2020 | |||
In: Accounting
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The New York Division of MVP Sports Equipment Company manufactures baseball |
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gloves. Two production departments are used in sequence: the Cutting Department |
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and the Stitching Department. In the Cutting Department, direct material, consisting |
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of imitation leather is placed into production at the beginning of the process. Direct |
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labor and manufacturing overhead costs are incurred uniformly throughout the |
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process. The material is rolled to make it softer, and is then cut into the pieces |
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needed to produce baseball gloves. The predetermined overhead rate is 150% of |
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direct labor costs. MPV uses weighted average costing. |
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We have the following data about production in the Cutting Department: |
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Goods-in-Process, January 1, 2020 |
10,000 units |
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Direct Material-100% Complete |
$40,000.00 |
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Conversion (Labor & Overhead)- 50% Complete |
120,000 |
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Total cost of Goods in Process, January 1, 2020 |
$160,000.00 |
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Units added in January 2020: |
70,000 units |
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Costs added in January 2020: |
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Direct Material |
$320,000 |
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Direct Labor |
723,840 |
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Factory Overhead |
1,028,160 |
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Total costs added in January 2020 |
$2,072,000 |
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Units in Goods-in-Process, January 31, 2020: |
22,000 units |
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Direct Material-100% Complete |
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Conversion Costs-20% Complete |
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a. |
Analyze the flow of units: |
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b. |
Compute equivalent units. |
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c. |
Compute the per unit costs: (Direct Material, Conversion, and Total) |
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d. |
The value of Goods-in-Process in the Cutting Department on 1/31/2020 is: |
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e. |
The value of Goods-in-Process transferred to the Stiching Department is: |
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In: Accounting
The shareholder’s equity section of Lilac Corporation, a company that follows IFRS, as at December 31, 2020 contained the following data: Preferred shares, $4 non-cumulative, participating, 50,000 shares authorized, 10,000 shares outstanding $ 400,000 Common shares, 1 million shares authorized, 50,000 outstanding 1,225,000 $1,625,000 Net income of $230,000 for 2020 reflects includes a loss from discontinued operations of $5,000. No additional shares were issued or retired during the year.
Required:
1 The company declared and paid dividends totaling $195,000 to the shareholders. There were no dividends in arrears. What amount of this $195,000 went to the preferred shareholders? Preferred share dividends: $__________________________________
2 Assume that instead of your answer calculated in part (a) above, the preferred share dividends for 2020 are a total of $25,000. Calculate the earning per share data for Income from Continuing Operations, Discontinued Operations and Net Income as they should appear in the financial statements of Lilac.
3 At December 31, 2019, Aster Inc. had 600,000 common shares outstanding (no preferred shares issued). On October 1, 2020, an additional 120,000 common shares were issued. Aster also had unexercised call options to purchase 60,000 common shares at $14 per share outstanding throughout 2020. The average market price of Aster's common shares was $20 during 2020. Calculate the number of shares that should be used in calculating diluted earnings per share for 2020. With a strike price of
$ No. of Shares: __________________________________
In: Accounting
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year.
K
Capital 83,887
Sales 259,870
Trade accounts payable 19,840
Returns outwards 13,407
Allowance for doubtful debts 512
Discounts allowed 2,306
Discounts received 1,750
Purchases 135,680
Returns inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage inwards 11,830
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Inventory as at 1st April 2019 15,654
Trade accounts receivable 24,500
Fixtures and fittings - at cost 120,740
Prov. for depreciation on fixtures and fittings – 31/03/2020 63,020
Depreciation 12,074
The following additional information as at 31st March, 2020 is available:
(a) Inventory at the close of business was valued at K17,750
(b) Insurances have been prepaid by K1,120
(c) Heating and lighting is accrued by K1,360
(d) Rates have been prepaid by K5,435
(e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable.
Required:
For the year 2020, prepare Mr Kumar’s:
General Journal recording the adjustments highlighted above.
Trading, Profit or Loss statement for the year ended 31st March, 2020.
Statement of financial position as at 31st March, 2020.
In: Accounting
Sarasota Windows manufactures and sells custom storm windows for three-season porches. Sarasota also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Sarasota enters into the following contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $2,440 and chooses Sarasota to do the installation. Sarasota charges the same price for the windows irrespective of whether it does the installation or not. The customer pays Sarasota $2,040 (which equals the standalone selling price of the windows, which have a cost of $1,130) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2020, Sarasota completes installation on October 15, 2020, and the customer pays the balance due.
Sarasota estimates the standalone selling price of the
installation based on an estimated cost of $420 plus a margin of
30% on cost.
Prepare the journal entries for Sarasota in 2020.
(Credit account titles are automatically indented when
the 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. Round answer to 0 decimal places, e.g.
5,125.)
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Date |
Account Titles and Explanation |
Debit |
Credit |
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Oct. 15, 2020Jul. 1, 2020Sep. 1, 2020 |
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(To record contract entered into) |
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(To record sales) |
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(To record cost of goods sold) |
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(To record payment received) |
show work and explain
In: Accounting