You recently ran into one of your former high school teachers. You were surprised to learn that he’d left teaching, gone back to school, and, a little more than a year ago, started a business that creates websites for small companies. It so happens that he needs a loan to expand his business, and the bank wants financial statements. When he found out that you were studying accounting, he asked whether you’d look over a set of statements that he’d just prepared for his first year in business. Because you’re anxious to show off your accounting aptitude, you agreed.

First, he showed you his income statement. It looked fine: revenues (from designing websites) were $94,000, expenses were $86,000, and net income was $8,000. When you observed how unusual it was that he’d earned a profit in his first year, he seemed a little uneasy.

“Well,” he confessed, “I fudged a little when I prepared the statements. Otherwise, I’d never get the loan.”

He admitted that $10,000 of the fees shown on the income statement was for work he’d recently started doing for a client (who happened to be in big trouble with the IRS). “It isn’t like I won’t be earning the money,” he explained. “I’m just counting it a little early. It was easy to do. I just added $10,000 to my revenues and recorded an accounts receivable for the same amount.”

You quickly did the math: without the $10,000 payment for the client in question, his profit of $8,000 would become a loss of $2,000 (revenues of $84,000 less expenses of $86,000).

As your former teacher turned to get his balance sheet, you realized that, as his accountant, you had to decide what you’d advise him to do. The decision is troublesome because you agree that if he changes the income statement to reflect the real situation, he won’t get the bank loan.

1. What did you decide to do, and why?

2. Assuming that he doesn’t change the income statement, will his balance sheet be incorrect? How about his statement of cash flows? What will happen to next year’s income: will it be higher or lower than it should be?

3. What would happen to your former teacher if he gave the bank the fraudulent financial statements and the bank discovered the truth? How could the bank learn the truth?

Jesse’s former residence was rented almost immediately with occupancy commencing April 1, 2018, under the following terms: one-year lease, $2,400 per month due the first day of the month, first and last months’ rent in advance, $2,000 damage deposit, lawn care included but not utilities. The tenant complied with all terms except that the December rent payment was not made until January 1, 2019, because the tenant took an extended holiday trip that started on Thanksgiving Day (November 22) through Christmas Day (December 25). Expenses in connection with the property were as follows: property taxes, $2,600; repairs, $320; lawn maintenance, $540; insurance, $1,800; and street paving assessment, $2,100. The property is located at 12120 Lake Road, Harvey, MI 49855.

How would this be presented on a tax return? What expenses would be included/excluded and what income would be recognized? United States Tax Laws

(C++) D.Va's Mech System

D.Va is a former professional gamer who now uses her skills to pilot a state-of-the-art mech in defense of her homeland. Her real name is Hana and you can read more about her story here (Links to an external site.).

We are writing a program for D.Va's mech to load up before combat. D.Va's mech has two main systems, the micro missile system and the damage matrix system. The micro missile system is used to give damage to the enemies while the damage matrix system is used to absorb damage from enemies. You've seen how D.Va combats on the field during class and we are writing a short program to help D.Va prepare her mech systematically. The link of the video "Shooting Star" is here (Links to an external site.) in case you missed class.

D.Va will be fighting many enemy bots and one enemy boss for each combat. Each enemy bots may have different power values. D.Va would need a damage matrix system strong enough to take all damages from enemies and enough micro missiles to destroy all enemies. D.Va's mech has default power for both the damage matrix system and the micro missile system. If the default power isn't enough, our system would need to load more power to either or both of the systems for D.Va to win the combat.

System Detail

Our system will first have some variables with initial values indicating enemy information and some default value for D.Va’s mech. It will then run three steps to analyze and prepare the mech for combat. First step is to calculate how much power D.Va needs given the number of enemies she's facing in combat. The second step is to load D.Va's mech with required power to fight the combat. Finally, the system will write the combat report into a file that D.Va can review before she goes into combat.

1. Initialization

Your system should start with variables initialization as following:

//Enemy Information
const int enemy_bots = 5;
int enemy_bot_power[enemy_bots] = {2, 5, 3, 7, 1};
float enemy_boss_power = 27.24;

//D.Va Default Spec
int micro_missiles = 10;
float defense_matrix_power = 100.0;

This would give you some enemy information including the number of enemy bots, their corresponding power(int), and enemy boss's power(float). This will also give you the default power of D.Va's mech including the number of micro missiles are loaded and how much power can the defense matrix absorb by default.

2. Calculate Power Needed

Then your system needs to calculate power needed for both the defense matrix system and the micro missile system. Please write two functions here, one to calculate the power needed by the defense matrix system and another to calculate the power needed by the micro missile system.

1. Matrix Power: D.Va's matrix power would need to take all damage from bots and the boss. The damage of a bot is twice as strong as its power and the damage of a boss is four times stronger than its power. For example, if you have two bots with power 3 and 8 and a boss with power 13.2, the total damage would be  3*2 + 8*2 + 13.2*4 = 74.8. We will make a function named total_damage which takes in an array of ints indicating bots' power, an int indicating number of enemy bots we have, and a float indicating the boss's power. It would return a float telling us the total damage all enemies would give D.Va. That would then be how much power D.Va needs for her defense matrix system.
2. Missile Power: D.Va's micro missile system would need to be five times stronger than the enemies' power. We will make a function named missile_power which takes in an int or a float as the parameter indicating the power of the enemy and return 5 times the parameter value as the power needed for the missile system. Note that this function would only take one number at a time, and the reason that the value could be an int or a float is that the power for the enemy bot is an int and for the enemy boss is a float. The return value would match the type of the parameter. For example, missile_power(5) would return 25, while missile_power(2.5) would return 12.5. Therefore you would want to use templates for this function. The total missile power needed for D.Va will then be the sum of all the returned values from the missile_power function. Make sure you calculate missile power for both the bots and the boss and add them all together in main.

3. Load D.Va

Now that we know how much power is needed for both D.Va's systems, let's load the power to D.Va's mech. You would want to write two functions here with the same name load_dva. Both load_dva() functions should have type void and take in two parameters. Their behaviors are slightly different. This is where we would use function overloading.

1. Load Defense Matrix: To load the damage matrix, you want to change the value of the defense_matrix_power. If the power needed is less than the default defense_matrix_power value then we don't change it, if it's larger, we update the defense_matrix_power value with the power needed. Therefore this function would take in two parameters, the defense_matrix_power and the matrix power needed we calculated from step 2. Given that the function would update the value of one of its parameters, defense_matrix_power, please make sure you use pass by reference to update the value that's passed in.
2. Load Micro Missiles: To load the micro missile system, you want to update the number of micro_missiles value, which indicates how many micro missiles we need in the mech. If the number of missiles needed is less than the default missiles then we don't need to change it, but if it's larger, we update the micro_missiles value. The number of micro missiles we need is equal to missile power needed(from step 2) divided by 100. Make sure you round this up to an integer, you can use ceil() from <cmath> to round up the float. For example, ceil(23.6) would return integer 24. Make sure you include <cmath> to use the function ceil. Similar to the other load_dva function, this load_dva function will also take two parameters, micro_missiles and the missile power needed that we calculated from step 2. Again, this function would modify the value of micro_missiles so make sure you pass in by reference instead of pass in by value.

Now in your main function you would have these two lines to load D.Va's mech:

//Load D.Va
load_dva(defense_matrix_power, matrix_power_needed);
load_dva(micro_missiles, missile_power_needed);

These two lines would update the value of defense_matrix_power and the micro_missiles.

4. Report

Finally, let's write a summary report for D.Va to read before she heads into the combat. Write a file name "report.txt" into the current directory. The content of the report should look likes this:

D.Va's Combat Report
Combat with 5 enemy bots and one enemy boss with power 27.24.
Loaded mech with 10 micro missiles and the defense matrix with power 144.96.
Ready for combat!

Note that the number of enemy bots, the boss power, the number of missiles, and the defense matrix power in the file are all results calculated from your program and inserted into the file. Please don't hard code the output file. I may change the value from step1 to test your code to see whether the report makes sense. Take the results from your previous calculation to write into the report file.

Please make sure you have logic to check file open in your code and close the file after you finish the file operations.

Hallmark Cards, Inc. v. Murley

When a former Hallmark employee breaches a term in her severance contract, how much can Hallmark recover as damages?

iStockPhoto.com/RiverNorthPhotography

BACKGROUND AND FACTS Janet Murley was the vice president of marketing at Hallmark Cards, Inc., until Hallmark eliminated her position as part of a corporate restructuring. As a vice president, Murley had access to Hallmark’s confidential information, including its business plans, market research, and financial statements. In 2002, Murley and the company entered into a separation agreement. Murley agreed not to work in the greeting card or gift industry for a period of eighteen months and not to disclose any confidential information or retain any business records or documents relating to Hallmark. In exchange, Hallmark paid $735,000 to Murley as part of her severance package.

After the expiration of her noncompete agreement, Murley accepted a consulting position with Recycled Paper Greetings (RPG) for $125,000 and disclosed confidential Hallmark information to RPG. Hallmark filed a suit in a federal district court against Murley, alleging breach of contract. A jury returned a verdict in Hallmark’s favor and awarded $860,000 in compensatory damages (the $735,000 severance payment and $125,000 that Murley received from RPG). Murley appealed.

IN THE WORDS OF THE COURT …

BYE, Circuit Judge.

* * * *

With respect to the $735,000, Murley contends Hallmark was not entitled to a return of its full payment under the parties’ separation agreement because Murley fulfilled several material terms of that agreement (e.g., the * * * non-compete provisions). Under the circumstances, we cannot characterize the jury’s reimbursement of Hallmark’s original payment under the separation agreement as grossly excessive or glaringly unwarranted by the evidence. Hallmark’s terms under the separation agreement clearly indicated its priority in preserving confidentiality. At trial, Hallmark presented ample evidence that Murley not only retained but disclosed Hallmark’s confidential materials to a competitor in violation of the terms and primary purpose of that agreement. Thus, the jury’s determination that Hallmark was entitled to a full refund of its $735,000 is not against the weight of the evidence.

With respect to the remaining $125,000 of the jury award, Murley argues Hallmark can claim no entitlement to her compensation by RPG for consulting services unrelated to Hallmark. We agree. In an action for breach of contract, a plaintiff may recover the benefit of his or her bargain as well as damages naturally and proximately caused by the breach and damages that could have been reasonably contemplated by the defendant at the time of the agreement. Moreover, the law cannot elevate the non-breaching party to a better position than she would have enjoyed had the contract been completed on both sides. By awarding Hallmark more than its $735,000 severance payment, the jury award placed Hallmark in a better position than it would find itself had Murley not breached the agreement. The jury’s award of the $125,000 payment by RPG was, therefore, improper. [Emphasis added.]

DECISION AND REMEDY The U.S. Court of Appeals for the Eighth Circuit vacated the award of damages but otherwise affirmed the judgment in Hallmark’s favor. The appellate court remanded the case to the lower court to reduce the award of damages to include only the amount of Hallmark’s severance payment.

Question: Do you agree or disagree with the Court's decision and how would you have ruled? Fully explain.

A U.S.-based company, Stewart, Inc., arranged a 2-year, $1,000,000 loan to fund a project in Mexico. The loan is denominated in Mexican pesos, carries a 10.0% nominal rate, and requires equal semiannual payments. The exchange rate at the time of the loan was 5.75 pesos per dollar, but it dropped to 5.10 pesos per dollar before the first payment came due. The loan was not hedged in the foreign exchange market. Thus, Stewart must convert U.S. funds to Mexican pesos to make its payments. If the exchange rate remains at 5.10 pesos per dollar through the end of the loan period, what effective interest rate will Stewart end up paying on the loan?

E10.15 Reporting the Provision for Income Taxes. Smith & Sons Company presented the following information in the income tax footnote in its annual report:

Note 13. Income Taxes Provision for income taxes includes the following (in thousands)

Current payable End-of-year

U.S. ....................................................... $4,028

Foreign .................................................... 438

Deferred

U.S. ....................................................... 2,880

Foreign .................................................... (174)

Total ........................................................ $7,172

How much tax expense did Smith & Sons report on its income statement for the year? How much of the

reported income tax expense was paid currently and how much was deferred to a future period for payment?

What is implied by the negative foreign deferred income taxes of $174

Cash paid for taxes?

Tax deferred (indicate if asset or liability balance)?

Tax expense?

Please give a breakout of the solution - trying to understand this concept

Question 2 (a) A project in South Korea requires an initial investment of 2 billion South Korean won. The project is expected to generate net cash flows to the subsidiary of 3 billion and 4 billion won in the 2 years of operation, respectively. The project has no salvage value. The current value of the won is 1,100 won per U.S. dollar, and the value of the won is expected to remain constant over the next 2 years. (i). What is the NPV of this project if the required rate of return is 13 percent? (ii). Repeat the question, except assume that the value of the won is expected to be 1,200 won per U.S. dollar after 2 years. Further assume that the funds are blocked and that the parent company will only be able to remit them back to the United States in 2 years. How does this affect the NPV of the project?

Early in 2020, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2020 and was completed on December 31, 2020. Dobbs made the following payments to Kiner, Inc. during 2020:

In order to help finance the construction, Dobbs issued the following during 2020:

In addition to the 9% bonds payable, the only debt outstanding during 2020 was a $518,500, 12% note payable dated January 1, 2016 and due January 1, 2023, with interest payable annually on January 1.

Compute the amounts of each of the following: