Mikkeli OY acquired a brand name with an indefinite life in 2015 for 43,000 markkas. At December 31, 2017, the brand name could be sold for 37,600 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 45,200 markkas, and the present value of this amount is 36,600 markkas.
Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes.
Required:
In: Accounting
Please answer the following questions based on the Columbia Sportswear Company 2017 10-K.
(Link to the Columbia's 10K: http://files.shareholder.com/downloads/COLM/6230778634x0x977594/E27E55DB-E7E3-4C4A-BA09-B8BB85FB2893/2018_Combined_Shareholder_Letter_and_10-K.pdf)
1. Assets classified as Property, Plant and Equipment can be either
acquired for use in operations, or acquired for resale.
a. True
b. False
2. What is the December 31, 2017 balance (in thousands) of Land and Improvements for Columbia Sportswear Company?
a. $21,065
b. $21,862
c. $21,049
d. $20,862
3. What is the December 31, 2017 balance (in thousands) of Furniture and Fixtures for Columbia Sportswear Company?
a. $79,103
b. $93,782
c. $83,613
d. $75,682
4. What is the December 31, 2017 balance (in thousands) of total Accumulated Depreciation for Property, Plant, and Equipment for Columbia Sportswear Company ?
a. $281,394
b. $279,650
c. $408,676
d. $455,811
5. Which depreciation method does Columbia Sportswear Company use?
a. Straight-line method
b. SYD method
c. DDB method
d. Activity Based method
6. Columbia Sportswear Company uses an estimated useful life for land improvements of:
a. 5 years
b. 7 years
c. 10 years
d. 15 years
7. Columbia Sportswear Company depreciates leasehold improvements over:
a. 5 years
b. 15 years
c. The greater of the estimated useful life of the improvement or the remaining term of the lease.
d. The lesser of the estimated useful life of the improvement or the remaining term of the lease.
8. When should long-lived assets be measured for impairment using the Recoverability test?
a. Quarterly
b. Semi-annually
c. Annually
d. When circumstances change indicating a carrying amount may not be recoverable
e. None of the above
9. To perform a Recoverability test for long-lived assets, the asset’s carrying amount is compared to
a. The sum of the expected future net cash flows (discounted) from the use of that asset and its disposition
b. The sum of the expected future net cash flows (undiscounted) from the use of that asset and its disposition
c. The asset’s original historical cost
d. The asset’s fair market value
10. If the Recoverability test indicates an impairment, the loss for an asset held for use is the amount by which the carrying amount of the asset exceeds
a. The book value of the asset
b. The historical cost of the asset
c. The sum of the expected future cash flows (undiscounted) from the use of the asset and its disposition
d. The fair value of the asset
In: Accounting
John is looking at several options to fund his son’s 4-year university degree.
The university fees of $45,000 a year will have be paid starting 11 years from today. He is analysing an insurance plan that pays out $45,000 a year for 4 years with the first payout 11 years from today. The insurance plan has several payment options:
Option 1 Pay $60,000 today.
Option 2 Beginning 1 year from today, pay $12,000 a year for the next 8 years.
Option 3 Beginning 1 year from today, make payments each year for the next 8 years. The first payment is $11,000 and the amount increases by 5% each year.
Answer the following questions regarding the options above:
(a) Calculate the present value of each option. Use a 10% discount rate.
(b) Analyse which option John should choose.
(c) If the discount rate is not given to you, what would be an appropriate discount rate to use?
In: Finance
John is looking at several options to fund his son’s 4-year
university degree.
The university fees of $45,000 a year will have be paid starting 11
years from today. He is analysing an insurance plan that pays out
$45,000 a year for 4 years with the first payout 11 years from
today. The insurance plan has several payment options:
Option 1
Pay $60,000 today.
Option 2
Beginning 1 year from today, pay $12,000 a year for the next 8 years.
Option 3
Beginning 1 year from today, make payments each year for the
next 8 years. The first payment is $11,000 and the amount increases
by 5% each year.
Answer the following questions regarding the options above:
(a) Calculate the present value of each option. Use a 10% discount
rate.
(b) Analyse which option John should choose.
(c) If the discount rate is not given to you, what would be an
appropriate discount rate to use?
In: Finance
John is looking at several options to fund his son’s 4-year university degree. The university fees of $45,000 a year will have be paid starting 11 years from today. He is analysing an insurance plan that pays out $45,000 a year for 4 years with the first payout 11 years from today. The insurance plan has several payment options:
Option 1 Pay $60,000 today.
Option 2 Beginning 1 year from today, pay $12,000 a year for the next 8 years.
Option 3 Beginning 1 year from today, make payments each year for the next 8 years. The first payment is $11,000 and the amount increases by 5% each year. Answer the following questions regarding the options above:
(a) Calculate the present value of each option. Use a 10% discount rate.
(b) Analyse which option John should choose.
(c) If the discount rate is not given to you, what would be an appropriate discount rate to use?
In: Finance
In: Finance
QUESTION 1:
Researchers claim that women speak significantly more words per day than men. One estimate is that a woman uses about 20,000 words per day while a man uses about 7,000. To investigate such claims, one study used a special device to record the conversations of male and female university students over a four- day period. From these recordings, the daily word count of the 20 men in the study was determined. Here are their daily word counts:
| 28401 | 10093 | 15933 | 21682 | 37778 |
| 10573 | 12881 | 11063 | 17791 | 13180 |
| 8910 | 6495 | 8145 | 7018 | 4430 |
| 10050 | 4000 | 12646 | 10971 | 5247 |
What value we should remove from observation for applying t procedures?
A 90% confidence interval (±±10) for the mean number of words per day of men at this university is from to words.
Is there evidence at the 10% level that the mean number of words per day of men at this university differs from 9000?
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QUESTION 2:
Cola makers test new recipes for loss of sweetness during storage. Trained tasters rate the sweetness before and after storage. Here are the sweetness losses ( sweetness before storage minus sweetness after storage) found by 10 tasters for one new cola recipe:
| 1.8 | 0.4 | 0.6 | 2 | -0.6 |
| 2.4 | -1.2 | 1.1 | 1.2 | 2.2 |
Take the data from these 10 carefully trained tasters as an SRS from a large population of all trained tasters.
Is there evidence at the 5% level that the cola lost sweetness?
If the cola has not lost sweetness, the ratings after should be the
same as before it was stored.
The test statisic is t = (±±0.001)
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In: Statistics and Probability
Assume that Pomo Limited, a US based firm, expects to receive S$800,000 in one year. The existing spot rate of the Singapore dollar is US$0.74. The one-year forward rate of the Singapore dollar is US$0.76. Pomo created a probability distribution for the future spot rate in one year as follows:
Future Spot | Rate Probability
US$0.75 | 20%
US$0.77 | 50%
US$0.81 | 30%
Assume that one-year put options on Singapore dollars are available, with an exercise price of US$0.77 and a premium of US$0.04 per unit. One-year call options on Singapore dollars are available with an exercise price of US$0.74 and a premium of U$0.03 per unit. Assume the following money market rates:
U.S. | Singapore
Deposit rate: 9% | 6%
Borrowing rate: 10% | 7%
Given this information, determine whether a forward hedge, money market hedge, or a currency options hedge would be most appropriate. Then compare the most appropriate hedge to an unhedged strategy, and decide whether Pomo Limited should hedge its receivables position.
a. Calculate the forward contract hedge.
b. Calculate the money market hedge.
c. Calculate the option hedge.
d. Briefly discuss the optimal hedge against the no hedge position of the company.
e. Discuss whether the multi-national corporation (MNC) like Pomo Limited will risk be over-hedged its position to the extent affect the company's financial position.
In: Finance
Van Hatten Consolidated has three operating divisions: DeMent
Publishing Division, Ankiel Security Division, and Depp Advisory
Division. Each division maintains its own accounting system but
follows IFRS.
| DeMent Publishing Division The DeMent Publishing Division sells large volumes of novels to a few book distributors, which in turn sell to several national chains of bookstores. DeMent allows distributors to return up to 30% of sales, and the distributors give the same terms to bookstores. While returns from individual titles fluctuate greatly, the returns from distributors have averaged 20% in each of the past five years. A total of $7 million of paperback novel sales were made to distributors during fiscal 2020. On November 30, 2020 (the end of the fiscal year), $1.5 million of fiscal 2020 sales were still subject to return privileges over the next six months. The remaining $5.5 million of fiscal 2020 sales had actual returns of 21%. Sales from fiscal 2019 totalling $2 million were collected in fiscal 2020 less 18% returns. This division records revenue according to the revenue recognition method when the right of return exists. |
| Ankiel Security Division The Ankiel Security Division works through manufacturers’ agents in various cities. Orders for alarm systems and down payments are forwarded from agents, and the division ships the goods f.o.b. factory directly to the customers (usually police departments and security guard companies). Customers are billed directly for the balance due plus actual shipping costs. The company received orders for $6 million of goods during the fiscal year ended November 30, 2020. Down payments of $600,000 were received, and $5.2 million of goods were billed and shipped. Actual freight costs of $100,000 were also billed. Commissions of 10% on product price are paid to manufacturing agents after goods are shipped to customers. Such goods are covered by the warranty for 90 days after shipment, and warranty claims have been about 1% of sales. Revenue is recognized at the point of sale by this division. |
| Depp Advisory Division The Depp Advisory Division provides asset management services. This division grew out of Van Hatten’s own treasury and asset management operations, which several of its customers asked to have access to. On January 1, 2020, Depp entered into a contract with Scutaro Co. to perform asset management services for one year. Depp receives a quarterly management fee of 0.25% on Scutaro’s assets under management at the end of each quarter. In addition, Depp receives a performance-based incentive fee of 20% of the fund’s annual return in excess of the return on the S&P 500 index at the end of the year. At the end of the first quarter of 2020, Depp was managing $2.4 million of Scutaro assets. The annualized return on the portfolio was 6.2%. (The S&P 500 index had an annualized return of 5.7%.) |
(a)
For each division’s revenue arrangements, identify the separate
performance obligations, briefly explain the allocation of the
transaction process to each performance obligation, and indicate
when the performance obligations are satisfied.
In: Accounting
On November 1, 2017, Whispering Company adopted a stock-option
plan that granted options to key executives to purchase 27,300
shares of the company’s $10 par value common stock. The options
were granted on January 2, 2018, and were exercisable 2 years after
the date of grant if the grantee was still an employee of the
company. The options expired 6 years from date of grant. The option
price was set at $30, and the fair value option-pricing model
determines the total compensation expense to be $409,500.
All of the options were exercised during the year 2020: 18,200 on
January 3 when the market price was $68, and 9,100 on May 1 when
the market price was $78 a share.
Prepare journal entries relating to the stock option plan for the
years 2018, 2019, and 2020. Assume that the employee performs
services equally in 2018 and 2019. (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. Round intermediate
calculations to 5 decimal places, e.g. 1.24687 and final answers to
0 decimal places, e.g. 5,125.)
In: Accounting