Derek and Meagan Jacoby recently graduated from State University and Derek accepted a job in business consulting while Meagan accepted a job in computer programming. Meagan inherited $75,000 from her grandfather who recently passed away. The couple is debating whether they should buy or rent a home. They located a rental home that meets their needs. The monthly rent is $2,250. They also found a three-bedroom home that would cost $475,000 to purchase. The Jacobys could use Meagan’s inheritance for a down payment on the home. Thus, they would need to borrow $400,000 to acquire the home. They have the option of paying 2 discount points to receive a fixed interest rate of 4.50 percent on the loan or paying no points and receiving a fixed interest rate of 5.75 percent for a 30-year fixed loan.

Though anything could happen, the couple expects to live in the home for no more than five years before relocating to a different region of the country. Derek and Meagan don’t have any school-related debt, so they will save the $75,000 if they don’t purchase a home. Also, consider the following information:

• The couple’s marginal tax rate is 24 percent.
• Regardless of whether they buy or rent, the couple will itemize their deductions.
• If they buy, the Jacobys would purchase and move into the home on January 1, 2018.
• If they buy the home, the property taxes for the year are $3,600.
• Disregard loan-related fees not mentioned above.
• If the couple does not buy a home, they will put their money into their savings account where they earn 5 percent annual interest.
• Assume that all unstated costs are equal between the buy and rent option.

Required: Help the Jacobys with their decisions by answering the following questions: (Leave no answer blank. Enter zero if applicable.)

a. If the Jacobys decide to rent the home, what is their after-tax cost of the rental for the first year? (include income from the savings account in your analysis.)

b. What is the approximate break-even point in years for paying the points to receive a reduced interest rate? (To simplify this computation, assume the Jacobys will make interest-only payments, and ignore the time value of money.) (Do not round intermediate calculations. Round your final answer to 1 decimal place.)

c. What is the after-tax cost (in interest and property taxes) of living in the home for 2018? Assume that the Jacobys' interest rate is 5.75 percent, they do not pay discount points, they make interest-only payments for the first year, and the value of the home does not change during the year.

d. Assume that on March 1, 2018, the Jacobys sold their home for $525,000, so that Derek and Meagan could accept job opportunities in a different state. The Jacobys used the sale proceeds to (1) pay off the $400,000 principal of the mortgage, (2) pay a $10,000 commission to their real estate broker, and (3) make a down payment on a new home in the different state. However, the new home cost only $300,000. Assume they make interest-only payments on the loan.

Required:

1. d1. What gain or loss do the Jacobys realize and recognize on the sale of their home?
2. d2. What amount of taxes must they pay on the gain, if any?

Anna Sheen, upon graduating from a Boston-area university with a degree in journalism and operations research, returned to her hometown of Hamptonshire, Pennsylvania, to start a daily newspaper. The Hamptonshire Express emphasized local news, which Sheen believed was not adequately covered by big-city newspapers such as the The Philadelphia Inquirer, Pittsburgh Post-Gazette, and The New York Times.

Working in leased space that cost approximately $10 per day, Sheen wrote stories and articles daily around news and feature material that she gathered from around town, and then typeset the newspaper using desktop software. A local printer printed the newspapers overnight at a marginal cost of $0.20 per copy. Anna sold the copies the following morning from 6 a.m. to 10 a.m. from a newsstand at the intersection of Main Street and Center Street in the center of Hamptonshire. Newsstand rental was $30 per day. Express was sold to consumers for $1 per copy. Copies not sold by 10 a.m. were discarded.

Demand for newspapers was unpredictable; Sheen estimated demand daily before delivering the typeset paper to the printer. Based on data from similar entrepreneurial ventures and interviews with potential Hamptonshire customers, she estimated that daily demand for the Express was normally distributed with a mean of 500 and standard deviation of 100.

a. How many newspapers should Sheen stock (i.e., order from the printer)? What is the profit at this stocking quantity?

b. Verify that the value derived in part (a) is consistent with the optimal stocking quantity in the Newsvendor model using excel: Q*= µ + Normsinv(Cu/Cu+Co))σ

*Please show work

If you understand the meanings of many words, you can be said to have a "good vocabulary." Words are the basis of thought. We think with words, we understand words, and we communicate with words.

A large vocabulary is a significant asset. It allows us to use precise words that say exactly what we intend. In addition, we understand more effectively what we hear and read. A large vocabulary also enables us to score well on employment and intelligence tests. Lewis M. Terman, who developed the Stanford-Binet IQ tests, believed that vocabulary is the best single indicator of intelligence.

In the business world, where precise communication is extremely important, surveys show a definite correlation between vocabulary size and job performance. Skilled workers, in the majority of cases, have larger vocabularies than unskilled workers. Supervisors usually know the meanings of more words than the workers they direct, and executives generally have larger vocabularies than employees working for them.  

Having a good vocabulary at our command doesn't necessarily ensure our success in life, but it certainly gives us an advantage. Improving your vocabulary will help you expand your options in an increasingly complex world.  

Vocabulary can be acquired in three ways: accidentally, incidentally, and intentionally. Setting out intentionally to expand your word power is, of course, the most efficient vocabulary-building method.  In addition, with all of the technology and tools at our disposal, such as the Internet, Siri, Wikipedia, Dictionary.com, it is easy to look up and expand our vocabulary daily.

Why might it be of value to intentionally expand your vocabulary? Explain.

If you understand the meanings of many words, you can be said to have a "good vocabulary." Words are the basis of thought. We think with words, we understand words, and we communicate with words.

A large vocabulary is a significant asset. It allows us to use precise words that say exactly what we intend. In addition, we understand more effectively what we hear and read. A large vocabulary also enables us to score well on employment and intelligence tests. Lewis M. Terman, who developed the Stanford-Binet IQ tests, believed that vocabulary is the best single indicator of intelligence.

In the business world, where precise communication is extremely important, surveys show a definite correlation between vocabulary size and job performance. Skilled workers, in the majority of cases, have larger vocabularies than unskilled workers. Supervisors usually know the meanings of more words than the workers they direct, and executives generally have larger vocabularies than employees working for them.  

Having a good vocabulary at our command doesn't necessarily ensure our success in life, but it certainly gives us an advantage. Improving your vocabulary will help you expand your options in an increasingly complex world.  

Vocabulary can be acquired in three ways: accidentally, incidentally, and intentionally. Setting out intentionally to expand your word power is, of course, the most efficient vocabulary-building method.  In addition, with all of the technology and tools at our disposal, such as the Internet, Siri, Wikipedia, Dictionary.com, it is easy to look up and expand our vocabulary daily.

Consider your childhood--who/what was the most influential component of you developing your vocabulary? Explain.  

How strong is your vocabulary?

If you understand the meanings of many words, you can be said to have a "good vocabulary." Words are the basis of thought. We think with words, we understand words, and we communicate with words.

A large vocabulary is a significant asset. It allows us to use precise words that say exactly what we intend. In addition, we understand more effectively what we hear and read. A large vocabulary also enables us to score well on employment and intelligence tests. Lewis M. Terman, who developed the Stanford-Binet IQ tests, believed that vocabulary is the best single indicator of intelligence.

In the business world, where precise communication is extremely important, surveys show a definite correlation between vocabulary size and job performance. Skilled workers, in the majority of cases, have larger vocabularies than unskilled workers. Supervisors usually know the meanings of more words than the workers they direct, and executives generally have larger vocabularies than employees working for them.  

Having a good vocabulary at our command doesn't necessarily ensure our success in life, but it certainly gives us an advantage. Improving your vocabulary will help you expand your options in an increasingly complex world.  

Vocabulary can be acquired in three ways: accidentally, incidentally, and intentionally. Setting out intentionally to expand your word power is, of course, the most efficient vocabulary-building method.  In addition, with all of the technology and tools at our disposal, such as the Internet, Siri, Wikipedia, Dictionary.com, it is easy to look up and expand our vocabulary daily.

What are some strategies and methods you might use to expand your vocabulary (intentionally)?

• Assume that you are a partner of Apples and Oranges, CPAs. During the last year, you were part of the team that audited Parker and Smith, Inc., a small publicly held company. The audit went quite well, and the client had high praise for the work done by you and the other members of the audit team. One day six months after the completion of the audit, you receive this email from Jerome Parker, a president of Parker and Smith:

Hi [your name],

We are still talking around here about the good job you and the other members of the audit team did on our audit. You all seemed to have a thorough understanding of our business, and we found working with you a pleasure. Based on the good experience we had with the audit, we would like to engage your firm to do additional work for us. Specifically, we’d like your help in designing a new financial information system for our company. We’re also considering investing in stock being offered by one of our suppliers, and we’d like your input into that decision. Hope you can help us here! Looking forward to hearing from you. Regards, Jerome.

Write a letter to Mr. Parker in response to his email. Remember that you want to maintain a good working relationship with Parker and Smith. You also want to maintain proper professional and ethical standards.

Margaret Jones established the “Jones Family Trust” in 2000 with XYZ Pty Ltd as the corporate trustee. Margaret and her husband Dean are the directors of the trustee company. The trust holds a variety of investments in property and cash. The trust was established to protect investments as Dean is always concerned that he could be sued for negligence.

The trust records for the 2019-20 income tax year disclose the following:

Receipts ($)

95,000 Rent from investment properties

5,000   Interest from a bank account

Payments ($)

1,500   Accounting expenses for tax return

12,000 Repairs to investment properties

8,000   Interest on a loan for the investment property

2,000   Legal expenses incurred in defending a claim by a tenant

Margaret does not work. Dean is a senior tax manager and received a salary of $180,000 in 2019-20 income tax year.

They have three children:

•           a son, Paul, aged 22 years, a student at university who earned $10,000 for the year;

•           a daughter, Racheal, aged 18, also a university student who earned only $3,000 for the year; and

•           a second daughter, Kate, aged 14 years, a full time high school student with no other income.

Dean has his grandfather living with him and he had no income for the year. All family members are beneficiaries of the trust and Dean had also established a corporate beneficiary which was able to receive trust distributions.

Required:

Advise as to how the net income can be distributed in the most tax-effective way citing relevant legislation to support your answer.

Sandhill Holdings Inc., a publicly listed company in Canada, ventured into construction of a mega-shopping mall in Edmonton, which is rated as the largest shopping mall in North America. The company’s board of directors, after much market research, decided that instead of selling the shopping mall to a local investor who had approached them several times with excellent offers that he steadily increased during the year of construction, the company would hold this property for the purposes of capital appreciation and earning rental income from mall tenants. Sandhill Holdings retained the services of a real estate company to find and attract many important retailers to rent space in the shopping mall, and within months of completion at the end of 2017, the shopping mall was fully occupied.

According to the company’s accounting department, the total construction cost of the shopping mall was $50 million. The company used an independent appraiser to determine the mall’s fair value annually. According to the appraisal, the fair values of the shopping mall at December 31, 2017, and at each subsequent year end were:

The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $8 million.

Note that the mall’s rental income and expenses would be the same and thus can be omitted from the analysis for this exercise.

Prepare the necessary journal entries for 2018, 2019, and 2020 if it decides to treat the shopping mall as an investment property under IAS 40: Use fair value model. (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. Record journal entries in the order presented in the problem.)

__________

___________

_____________

Prepare the necessary journal entries for 2018, 2019, and 2020 if it decides to treat the shopping mall as an investment property under IAS 40: Use Cost model. (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. Record journal entries in the order presented in the problem.)

_________________

__________________

___________________

XYZ company is a well-known property and construction company in the USA. XYZ company has embarked on an expansion plan to increase its income. XYZ issued the following debt security to raise the needed funds. the accounting periods ends on 31 December.

On 1 June 2020, XYZ company issued 12% bonds dated 1 June 2020, with a principal amount of $60,000,000. The bonds will mature on 30 May 2025. On the issuance date, for bonds of similar risk and maturity, the market yield is 10%. interest paid semiannually on 1 June and 1 December. on 1 October 2021 ABC company redeemed half of the bond payable at a price of $30,150,000 including accrued interest.

Required:

1) Prepare the journal entry to record the bond payables. show all computations.

2)Compute the gain/loss on the redemption of bond payable. prepare journal entries to record the redemption of bond payables.

3)Prepare a partial statement of financial position for XYZ company, to show presentation of bond payables as at 31 December 2021. show all computations.