U.S. Metallurgical Inc. reported the following balances in its financial statements and disclosure notes on December 31, 2020.

Plan assets $410,000

Projected benefit obligation 300,000

U.S.M.’s actuary determined that the 2021 service cost is $61,000. Both the expected and actual rate of return on plan assets is 10%. The interest (discount) rate is 6%. U.S.M. contributed $121,000 to the pension fund at the end of 2021, and retirees were paid $45,000 from plan assets. (Enter your answers in thousands (i.e., 10,000 should be entered as 10).)

Required:

What is the pension expense at the end of 2021?

What is the projected benefit obligation at the end of 2021?

What is the plan assets balance at the end of 2021?

What is the net pension asset or net pension liability at the end of 2021?

Prepare journal entries to record the (a) pension expense, (b) funding of plan assets, and (c) retiree benefit payments.

At December 31, 2020, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Equipment—Straight line; 10 years.
Automobiles and trucks—200% declining balance; 5 years, all acquired after 2017.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2021 and other information:

1. On January 6, 2021, a plant facility consisting of land and building was acquired from King Corp. in exchange for 18,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $40 a share. Current assessed values of land and building for property tax purposes are $136,000 and $544,000, respectively.
2. On March 25, 2021, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $150,000. These expenditures had an estimated useful life of 12 years.
3. The leasehold improvements were completed on December 31, 2017, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2023, was renewable for an additional four-year term. On April 30, 2021, Cord exercised the renewal option.
4. On July 1, 2021, equipment was purchased at a total invoice cost of $318,000. Additional costs of $12,000 for delivery and $43,000 for installation were incurred.
5. On September 30, 2021, Cord purchased a new automobile for $11,800.
6. On September 30, 2021, a truck with a cost of $23,300 and a book value of $7,800 on date of sale was sold for $10,800. Depreciation for the nine months ended September 30, 2021, was $1,755.
7. On December 20, 2021, equipment with a cost of $13,500 and a book value of $2,800 at date of disposition was scrapped without cash recovery.

Required:

2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2021.

You are the CEO of Broadway Medical Center.  Mrs. Sarah Jones is admitted to your hospital preparing to give birth and in a great deal of pain. According to her medical records, her unborn child is suffering from a heart defect and must be operated on quickly to save the life of the child. The surgery that must be done is expensive and can only be performed by a pediatric cardiologist, fetal surgeon, and their medical teams. Mrs. Jones insurance will not pay for the care, and is currently in a legal battle over Mrs. Jones insurance status.  This surgery is extremely dangerous, risky, and will cost the hospital millions in the short term.  The fact is that there is only a 50% chance that the procedure will work.

Knowing all of this, how do you treat Mrs. Jones situation?

What are the legal and ethical issues?

How do you deal with the insurance company and reimbursement?

Can you put any pressure on the insurance company?

After several months of negotiations, the CEO of BIG Pty Ltd made the long-awaited announcement to board members that BIG Pty Ltd would be buying Melbourne based company, YAY Pty Ltd for $25m. The following persons were present at the meeting: Helen and Liam (Company Directors) and Tammy (Receptionist taking meeting minutes). News of the take-over would not be released to the public until the following week.

Question:
Discuss whether Tammy would be breaching any duties if, immediately after leaving the boardroom, she phoned her husband and told him to invest $100,000 in YAY Pty Ltd.

Suggested Answer Structure

Issue: What Tammy would be breaching any….

Rule: According to CA s 182 and 183….

Analyze: Here the facts tell us….

Conclusion: Clear that Tammy would be breaching Duty....

After several months of negotiations, the CEO of BIG Pty Ltd made the long-awaited announcement to board members that BIG Pty Ltd would be buying Melbourne based company, YAY Pty Ltd for $25m. The following persons were present at the meeting: Helen and Liam (Company Directors) and Tammy (Receptionist taking meeting minutes). News of the take-over would not be released to the public until the following week.

Discuss whether Tammy would be breaching any duties if, immediately after leaving the boardroom, she phoned her husband and told him to invest $100,000 in YAY Pty Ltd.

answer structure

Issue: What Tammy would be breaching any….
Rule: According to CA s 182 and 183…
Analyze: Here the facts tell us…
Conclusion: Clear that Tammy would be breaching Duty __

Australia

On January 2, 2020, Pharoah Corp. issues a $8–million, five–year note at LIBOR, with interest paid annually. To protect against the cash flow uncertainty related to interest payments that are based on LIBOR, Pharoah entered into an interest rate swap to pay 8% fixed and receive LIBOR based on $8 million for the term of the note. The LIBOR rate for the first year is 7.6%. The LIBOR rate is reset to 8.7% on January 2, 2021. Pharoah follows ASPE and uses hedge accounting. On December 31, 2020, the fair value of the swap decreased by $13,500: it increased by $4,000 on December 31, 2021. Assume that the criteria for hedge accounting under ASPE are met.

Prepare the journal entries to recognize the swap, assuming the company follows hedge accounting under IFRS

December 31, 2020( to decrease the value of the contract)

December 31,2020 (To record the fix under hedge accounting)

December 31,2022( To record the value of the contract)

December 31, 2022(k To record the fix under hedge accounting)

At the beginning of its fiscal year 2020, an analyst made the following forecast for ABC, Inc. (in millions of dollars):

Suppose these numbers were given to you at the end of 2019, as forecasts, when the book value was 890 million, as indicated and market price of the stock was $10.5 per share. Use a required return of 10 percent for calculations below. Show your working process.

1. Calculate residual earnings and return of common equity (ROCE) for each year, 2020–2024.                                                                                      

[5 marks]

2. Value the firm at the end of 2019 under the assumption that the RE in 2024 will continue at the same level subsequently.                                                            

[2 marks]

3. Based on you analysis, if the number of shares outstanding at the end of 2019 was 220 million, what should be the share price of ABC?                                      

[1 mark]

4. Based on your estimate, should investors buy the share of this company?          

[1 mark]