Answer all of these questions with the right question number next to the correct choice (letter).
11) You are the CEO of Cute Pups Company, which makes blue jeans for dogs. Sales of your products are taking off so you decide to go public. However, without an MBA, you have no clue how to price and distribute your stock. You would probably hire the services of a(n):
Investment banking house
Savings and loan
Commercial bank
Mutual fund
12)
The SEC (Securities and Exchange Commission) requires companies to file annual financial statements. This disclosure is an example of:
Allocational efficiency
Operational efficiency
Informational efficiency
Frictionless markets
13)
Which of the following describes the main role of financial intermediaries:
Set the price of stocks, bonds, and other assets
Bridge gaps between savers and debtors
All of the above
Help the Federal Reserve set interest rates for other investors
15) After graduation you decide it is time to start planning for the future. You set up a retirement fund that is estimated to earn 5% interest over the next 20 years. What type of markets are you most likely to invest in?
Capital markets
Money markets
It is impossible to tell from the information given.
Private markets
In: Finance
The starting salaries of individuals with an MBA degree are normally distributed with a mean of $90,000 and a standard deviation of $20,000. Suppose we randomly select 16 of these individuals with an MBA degree. What is the standard deviation of the average starting salary for these individuals?
| a. |
$4,000 |
|
| b. |
$5,000 |
|
| c. |
$20,000 |
|
| d. |
$1,666.67 |
In: Statistics and Probability
Janice acquired an apartment building on June 4, 2020, for $1,600,000. The value of the land is $300,000. Assume Janice sold the apartment building on November 29, 2026.
If required, round your answers to the nearest dollar.
Click here to access the depreciation table to use for this problem.
a. How is the property classified for
MACRS?
b. What is the life of the asset for
MACRS?
c. Determine Janice's cost recovery deduction
for 2020 and 2026.
2020: $
2026: $
On April 30, 2019, Leo purchased and placed in service a new car that cost $78,600. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any § 179.
If required, round your answers to the nearest dollar.
Click here to access the depreciation table of the textbook. Click here to access the limits for certain automobiles.
a. What MACRS convention applies to the new
car?
b. Is the automobile considered "listed
property"?
c. Leo's cost recovery deduction in 2019 is $ and for 2020 is $.
In: Accounting
ABC, Inc. acquired 15% of EFG Corporation on January 1, 2019, for $125,000 when the book value of EFG's net assets was $950,000. During 2019, EFG reported net income of $530,000 and paid dividends of $40,000. On January 1, 2020, ABC purchased an additional 15% of EFG for $550,000. Any excess of cost over book value was attributable to goodwill (No amortization). On that same date, ABC changed to the equity method. During 2020, EFG reported net income of $730,000 and paid dividends of $90,000.
Required:
A. What type and amount of income(s) did ABC record from EFG in 2019?
B. What type and amount of income(s) did ABC record from EFG in 2020?
C. What was the balance in the Equity Investment in EFG account at December 31, 2020?
In: Accounting
At the beginning of 2019, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a 10-year service life and no residual value. The straight-line depreciation method was used to measure depreciation for 2019 and 2020. Late in 2021, it became apparent that sales of the new frozen food line were significantly below expectations. The company decided to continue production for two more years (2022 and 2023) and then discontinue the line.
At that time, the equipment will be sold for minimal scrap values. The controller, Heather Meyer, was asked by Harvey Dent, the company’s chief executive officer (CEO), to determine the appropriate treatment of the change in service life of the equipment.
Heather determined that there has been an impairment of value requiring an immediate write-down of the equipment of $12,900,000. The remaining book value would then be depreciated over the equipment’s revised service life.
The CEO does not like Heather’s conclusion because of the effect it would have on 2021 income. “Looks like a simple revision in service life from 10 years to 5 years to me,” Dent concluded. “Let’s go with it that way, Heather.”
Required:
1. What is the difference in before-tax income between the CEO’s and Heather’s treatment of the situation?
2. Discuss Heather Meyer’s ethical dilemma.
In: Accounting
The following account balances are for the Agee Company as of January 1, 2017, and December 31, 2017. All amounts are denominated in kroner (Kr).
January 1, 2017 December 31, 2017
Accounts payable (18,000) (32,500)
Accounts receivable 51,000 101,000
Accumulated depreciation—buildings (42,000) (47,000)
Accumulated depreciation—equipment 0 (7,200)
Bonds payable—due 2020 (61,000) (61,000)
Buildings 131,000 103,500
Cash 57,000 10,200
Common stock (66,000) (76,000)
Depreciation expense 0 37,000
Dividends (10/1/17) 0 54,000
Equipment 0 61,000
Gain on sale of building 0 (8,200)
Rent expense 0 20,700
Retained earnings (52,000) (52,000)
Salary expense 0 42,000
Sales 0 (151,000)
Utilities expense 0 5,500
Additional Information
Agee issued additional shares of common stock during the year on April 1, 2017. Common stock at January 1, 2017, was sold at the start of operations in 2010.
Agee purchased buildings in 2011 and sold one building with a book value of Kr 22,500 on July 1 of the current year.
Equipment was acquired on April 1, 2017.
Relevant exchange rates for 1 Kr were as follows:
2010 $2.75
2011 2.55
January 1, 2017 2.85
April 1, 2017 2.95
July 1, 2017 3.15
October 1, 2017 3.25
December 31, 2017 3.35
Average for 2017 3.05
Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2017? The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $145,200, which included a remeasurement loss of $28,300.
Assuming the foreign currency is the functional currency, what is the translation adjustment for 2017? The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $162,250, and a cumulative translation adjustment of $9,650 (credit balance).
(Input all answers as positive.)
1-Reasurement: Gain: ________________
2-Translation adjustment: Positive:______________
In: Accounting
Problem 10-34 (LO 10-3, 10-4)
The following account balances are for the Agee Company as of January 1, 2017, and December 31, 2017. All amounts are denominated in kroner (Kr).
January 1, 2017 December 31, 2017
Accounts payable (24,000 ) (31,500 )
Accounts receivable 45,000 95,000
Accumulated depreciation—buildings (36,000 ) (41,000 )
Accumulated depreciation—equipment 0 (6,600 )
Bonds payable—due 2020 (55,000 ) (55,000 )
Buildings 125,000 100,500
Cash 51,000 9,600
Common stock (60,000 ) (71,000 )
Depreciation expense 0 31,000
Dividends (10/1/17) 0 48,000
Equipment 0 46,000
Gain on sale of building 0 (7,600 )
Rent expense 0 18,100
Retained earnings (46,000 ) (46,000 )
Salary expense 0 36,000
Sales 0 (133,000 )
Utilities expense 0 7,500
Additional Information
*Agee issued additional shares of common stock during the year on April 1, 2017. Common stock at January 1, 2017, was sold at the start of operations in 2010.
*Agee purchased buildings in 2011 and sold one building with a book value of Kr 5,100 on July 1 of the current year.
*Equipment was acquired on April 1, 2017.
Relevant exchange rates for 1 Kr were as follows:
2010 $ 2.45
2011 2.25
January 1, 2017 2.55
April 1, 2017 2.65
July 1, 2017 2.85
October 1, 2017 2.95
December 31, 2017 3.05
Average for 2017 2.75
a) Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2017? The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $96,600, which included a remeasurement loss of $13,000.
b) Assuming the foreign currency is the functional currency, what is the translation adjustment for 2017? The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $112,500, and a cumulative translation adjustment of $10,800 (credit balance).
In: Accounting
2. GMAT scores are required for admission to JHJ’s MBA program. GMAT scores are known to be normally distributed with a mean of 490 points and a standard deviation of 61 points. a. 25% of the scores of applicants are less than what score? b. 75% of the scores of applicants are less than what score? c. 25% of the scores of applicants are less than what score? d. 80% of the scores of applicants are more than what score? e. Only applicants in the top 10% of all GMAT scores, are admitted to the MBA program. What score is required to be admitted to the MBA program.
In: Statistics and Probability
Students taking the Graduate Management Admissions Test (GMAT) were asked about their undergraduate major and intent to pursue their MBA as a full-time or part-time student. A summary of their responses follows. Undergraduate Major Business Engineering Other Totals Intended Enrollment Status Full-Time 371 197 251 819 Part-Time 150 161 194 505 Totals 521 358 445 1,324 If required, round your answers to four decimal places. (a) Develop a joint probability table for these data. Undergraduate Major Business Engineering Other Totals Intended Enrollment Status Full-Time Part-Time Totals (b) Use the marginal probabilities of undergraduate major (business, engineering, or other) to comment on which undergraduate major produces the most potential MBA students. P(B) = , P(E) = , and P(O) = , so business is the undergraduate major that produces the most potential MBA students. (c) If a student intends to attend classes full-time in pursuit of an MBA degree, what is the probability that the student was an undergraduate engineering major? P (Engineering | Full-Time) = (d) If a student was an undergraduate business major, what is the probability that the student intends to attend classes full-time in pursuit of an MBA degree? P (Full-Time | Business) = (e) Let F denote the event that the student intends to attend classes full-time in pursuit of an MBA degree, and let B denote the event that the student was an undergraduate business major. Are events F and B independent?
In: Statistics and Probability
Eagle Corporation operates under ideal conditions of certainty. It acquired its sole assets (a pen making machine) on January 1, 2020. The asset will yield $500 cash for 4 years at the end of the year; from 2020 to 2023, inclusive, after which it will have no salvage value or disposal costs. The interest rate in the economy is 4%. The purchase of the asset was financed by the issuance of common shares. Eagle Corporation will pay no dividend at the end of each year.
Required
Prepare a balance sheet AND income statement as at the end of
December 31, 2020.
b. Under ideal conditions, what is the relationship between present
value and market value? Explain why
In: Accounting