Indigo Company manufactures equipment. Indigo’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Indigo has the following arrangement with Winkerbean Inc.

Indigo delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately.

How should the transaction price of $970,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to 0 decimal places.)

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List of Accounts

Prepare the journal entries for Indigo for this revenue arrangement on June 1, 2020 and September 30, 2020, assuming Indigo receives payment when installation is completed. (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.)

show work and explain

WASHINGTON—The biggest U.S. banks will face restrictions on dividends and share buybacks for another three months, the Federal Reserve said Wednesday, citing the need to conserve capital during the coronavirus-induced downturn.

The Fed said it would maintain prohibitions on share buybacks and a cap on dividend payments by 33 banks with more than $100 billion in assets until the end of year. The restrictions, imposed for the third quarter, were due to expire Wednesday.

The action is intended to “ensure that large banks maintain a high level of capital resilience,” the central bank said in a statement. “The capital positions of large banks have remained strong during the third quarter while such restrictions were in place.”

In another sign of the uncertainty facing the industry and the broader economy, the Fed has required big banks to undergo a second round of so-called stress tests later this year, based on two coronavirus-related recession scenarios. Results of the tests, designed to ensure banks can continue to lend in a crisis, will be announced by the end of the year.

Banks are in a much stronger position now than they were during the financial crisis of 2008. But an analysis the Fed conducted this summer found that if the economy takes a long time to recover, banks could experience losses on a similar scale. It said at the time that limiting shareholder payouts would help keep banks healthy during the recession.

The biggest U.S. banks, including Bank of America Corp. and JPMorgan Chase & Co., had already voluntarily halted share buybacks through the second quarter. Buybacks are the main way U.S. banks return capital to shareholders. Under the dividend restrictions, banks won’t be able to make payouts that are greater than their average quarterly profit from the four most recent quarters.

The Fed’s restrictions come as many bank shares have plunged as the coronavirus pandemic took a toll on banks’ bread-and-butter lending businesses. Short-term interest rates near zero and tens of billions of dollars set aside to cover bad loans have cut into profits.  

Bank executives “are biting their tongues with the Fed, with fingers crossed they can buy back stock someday soon at these cheap prices,” said Christopher Marinac, director of research for Janney Montgomery Scott LLC.

The Fed’s decision to allow banks to continue paying dividends drew a dissent from Lael Brainard, an Obama appointee still on the Fed board, who has said allowing banks to deplete capital buffers could force them to tighten credit in a protracted downturn.

Some former U.S. regulators have said the Fed should order the largest banks to suspend payouts to preserve capital at a time of soaring unemployment and business disruption that may eclipse the 2008 financial crisis.

“If things work out well, banks can distribute income later on,” Janet Yellen, a former Fed chairwoman, told The Wall Street Journal this spring. “If not, they’ll have a buffer that will be needed to support the credit needs of the economy.”

The Fed committed earlier this month to support the economic recovery by setting a higher bar to raise interest rates and by signaling it expected to hold rates near zero for at least three more years.

In new projections released after a two-day policy meeting in mid-September, all 17 officials who participated said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023.

1. Shareholders like dividends and share buy backs. Explain what dividends and share buy backs are and what limits the Federal Reserve has placed on bigShareholders like dividends and share buy backs. Explain what dividends a banks' ability to pay dividends and buy back shares, How do dividends and share buy backs affect a bank’s (or any corporation’s) resiliency, that is their ability to survive during an economic downturn.   (14 points. 7-8 sentences should be sufficient)
2. The Federal Reserve is concerned that paying large dividends and buying back shares may be imprudent for large banks and the economy at this time. Lael Brainard, a Federal Reserve official, and others felt the Federal Reserve should have imposed stricter limits than it did on the banks. What policy did Brainard want to see adopted?   Explain what Brainard is worried about and why – that is how would the economy be affected if Brainard’s fears come true? (10 points. 6-7 sentences)
3. Banks are frustrated (“biting their tongues with their fingers crossed”) about not being allowed right now to buy back their shares? What has happened to the banking business and bank shares that makes the present time an attractive time for banks to buy back their shares?   (9 points. 5-7 sentences.)

Fed Caps Big Banks’ Dividends, Halts Share Buybacks in Fourth Quarter

Central bank extends restrictions on dividends, buybacks, amid cloudy economic outlook

By

WASHINGTON—The biggest U.S. banks will face restrictions on dividends and share buybacks for another three months, the Federal Reserve said Wednesday, citing the need to conserve capital during the coronavirus-induced downturn.

The Fed said it would maintain prohibitions on share buybacks and a cap on dividend payments by 33 banks with more than $100 billion in assets until the end of year. The restrictions, imposed for the third quarter, were due to expire Wednesday.

The action is intended to “ensure that large banks maintain a high level of capital resilience,” the central bank said in a statement. “The capital positions of large banks have remained strong during the third quarter while such restrictions were in place.”

In another sign of the uncertainty facing the industry and the broader economy, the Fed has required big banks to undergo a second round of so-called stress tests later this year, based on two coronavirus-related recession scenarios. Results of the tests, designed to ensure banks can continue to lend in a crisis, will be announced by the end of the year.

Banks are in a much stronger position now than they were during the financial crisis of 2008. But an analysis the Fed conducted this summer found that if the economy takes a long time to recover, banks could experience losses on a similar scale. It said at the time that limiting shareholder payouts would help keep banks healthy during the recession.

The biggest U.S. banks, including Bank of America Corp. and JPMorgan Chase & Co., had already voluntarily halted share buybacks through the second quarter. Buybacks are the main way U.S. banks return capital to shareholders. Under the dividend restrictions, banks won’t be able to make payouts that are greater than their average quarterly profit from the four most recent quarters.

The Fed’s restrictions come as many bank shares have plunged as the coronavirus pandemic took a toll on banks’ bread-and-butter lending businesses. Short-term interest rates near zero and tens of billions of dollars set aside to cover bad loans have cut into profits.  

Bank executives “are biting their tongues with the Fed, with fingers crossed they can buy back stock someday soon at these cheap prices,” said Christopher Marinac, director of research for Janney Montgomery Scott LLC.

The Fed’s decision to allow banks to continue paying dividends drew a dissent from Lael Brainard, an Obama appointee still on the Fed board, who has said allowing banks to deplete capital buffers could force them to tighten credit in a protracted downturn.

Some former U.S. regulators have said the Fed should order the largest banks to suspend payouts to preserve capital at a time of soaring unemployment and business disruption that may eclipse the 2008 financial crisis.

“If things work out well, banks can distribute income later on,” Janet Yellen, a former Fed chairwoman, told The Wall Street Journal this spring. “If not, they’ll have a buffer that will be needed to support the credit needs of the economy.”

The Fed committed earlier this month to support the economic recovery by setting a higher bar to raise interest rates and by signaling it expected to hold rates near zero for at least three more years.

In new projections released after a two-day policy meeting in mid-September, all 17 officials who participated said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023.

Shareholders like dividends and share buy backs. Explain what dividends and share buy backs are and what limits the Federal Reserve has placed on bigShareholders like dividends and share buy backs. Explain what dividends a banks' ability to pay dividends and buy back shares, How do dividends and share buy backs affect a bank’s (or any corporation’s) resiliency, that is their ability to survive during an economic downturn.   (14 points. 7-8 sentences should be sufficient)

The Federal Reserve is concerned that paying large dividends and buying back shares may be imprudent for large banks and the economy at this time. Lael Brainard, a Federal Reserve official, and others felt the Federal Reserve should have imposed stricter limits than it did on the banks. What policy did Brainard want to see adopted?   Explain what Brainard is worried about and why – that is how would the economy be affected if Brainard’s fears come true? (10 points. 6-7 sentences)

Banks are frustrated (“biting their tongues with their fingers crossed”) about not being allowed right now to buy back their shares? What has happened to the banking business and bank shares that makes the present time an attractive time for banks to buy back their shares?   (9 points. 5-7 sentences.)

Consider two countries, the United States (U.S.) and Japan. In the U.S., there are two firms, Pikes Peak Steel (PPS) and General Motors (GM), both owned by U.S. citizens. In Japan, there is one firm, Toyota, owned by Japanese citizens. All of the employees of PPS and GM are U.S. citizens and all of the employees of Toyota are Japanese citizens. In a given year, PPS produces $6000 worth of steel and pays wages of $1500. It sells $2000 worth of steel to GM and $4000 worth of steel to Toyota. GM buys $2000 worth of steel from PPS and pays wages of $4000. GM produces $8000 worth of cars during the year; it sells $5500 worth of cars to consumers in the U.S., $1500 worth of cars to the U.S. government, and $1000 worth of cars to consumers in Japan. Toyota buys $4000 worth of steel from PPS and pays wages of $2500. Toyota produces $9500 worth of cars during the year; it sells $5000 worth of cars to consumers in the U.S., $1000 worth of cars to the Japanese government, and $3500 worth of cars to consumers in Japan. For the U.S. and Japan, calculate the following (please show your work) a. Gross domestic product (GDP) using the income and expenditure approaches

Vigor Corporation reports a net income before tax for 2020 of $512,800, has a tax rate of 21% and provides the following selected information (covers the three tax difference items) from its ledger as at December 31, 2019 and 2020:

                                                                                                    2019             2020

                        Equipment, at cost                                  900,000 DR 900,000 DR

                        Accumulated depreciation, equipment    450,000 CR 525,000 CR

                        Deferred Tax Asset                                   10,080 DR                   ?

                        Warranty Liability                                     48,000 CR    56,000 CR

                        Deferred Tax Liability                              47,250 CR                   ?

                        Depreciation expense, equipment             75,000 DR   75,000 DR

                        Warranty expense                                     27,000 DR   30,000 DR

                        Municipal bond interest (tax exempt)       17,800 CR    18,800 CR

The tax basis of the equipment (book value for tax purposes or the amount of the cost of the asset not yet deducted for tax purposes) is $225,000 at December 31, 2019 and $112,500 as at December 31, 2020. The tax deduction for warranties is limited to actual warranty payments.

Required:

1. What is the tax deduction for warranties on Vigor’s 2020 tax return?
2. What is taxable income for 2020?
3. What is income tax expense/benefit, current portion for 2020?
4. What is the amount of the deferred tax asset at December 31, 2020?
5. What is the amount of the deferred tax liability at December 31, 2020?
6. What was income tax expense/benefit, deferred portion for 2020?
7. What is Vigor’s effective income tax rate (ETR) for 2020?

On 1 June2020, Purchase Limited enters into a firm commitment Supply Limited to buy USD 100,000 of inventory. On 1 July 2020, the Purchase Limited enters into a hedging arrangement which meets the hedge accounting criteria stipulated by the accounting standards (Australian Accounting Standards Board (AASB) 9). Purchase Limited has designated the firm commitment hedging arrangement as a fair value hedge. On 1 August 2020, Supply Limited transfers the inventory to Purchase Limited, and on that date, the Purchase Limited makes the payment. The spot and forward rates are as follows. Date Spot rate in AUD Forward rate in AUD 1 June 2020 0.19 0.2 30 June 2020 0.2 0.25 1 August 2020 0.3 0.3 Required: a) Explain at least two determinants of determining an effectiveness of a hedge instrument against a he

ue

2. What is your subject?

dge 5 Marks b) Provide journal entries to account for the hedged item (firm commitment to buy inventory) 8 Marks i. On 1 June 2020 ii. On 30 June 2020 iii. On 1 August 2020 c) Provide journal entries to account for the hedge instrument (forward contract) 7 Marks i. On 1 June 2020 ii. On 30 June 2020 iii. On 1 August 2020

Complete the required tasks utilizing excel and label everything. All work must be shown to receive credit. A 20% late penalty will be assessed for each 24 hours submitted late. Below is the activity (purchases and Sales) for inventory held by Random Creations for the month of January, 2020: Beginning Inventory: January 1, 2020 80 Units @ $50 per unit Total $ 4,000 Purchases: January 18, 2020 40 Units @ $51 per unit Total $ 2,040 January 28, 2020 40 Units at $52 per unit Total $ 2,080 Sales: January 12, 2020 Sold 30 Units January 22, 2020 Sold 30 Units January 31, 2020 Sold 45 Units Using the information above, answer the following:

a) Compute the January 31, 2020 Ending Inventory and Cost of Goods Sold assuming Random Creations uses FIFO

b) Compute the January 31, 2020 Ending Inventory and Cost of Goods Sold assuming Random Creations uses LIFO and the Perpetual System

c) Compute the January 31, 2020 Ending Inventory and Cost of Goods Sold assuming Random Creations uses LIFO and the Periodic System

d) Compute the January 31, 2020 Ending Inventory and Cost of Goods Sold assuming Random Creations uses Average Cost and the Perpetual System REMEMBER ALL WORK MUST BE SHOWN TO RECEIVE CREDIT

Exercise 10-4 a-b (Video)

Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

Fixed overhead costs per month are Supervision $4,100, Depreciation $2,000, and Property Taxes $500. The company believes it will normally operate in a range of 7,100–12,800 direct labor hours per month.

Assume that in July 2020, Myers Company incurs the following manufacturing overhead costs.

(a) Prepare a flexible budget performance report, assuming that the company worked 10,900 direct labor hours during the month. (List variable costs before fixed costs.)

Summary:

       The country focus explains that ‘offshoring’ has become a trend for white collar job positions. The expectancy of globalization has become a problem because the loss of jobs on our home country. The idea of labor positions or better referred as ‘blue-collar’ positions where more popular and helped free trade because it helped countries with low-wages. The more high-skilled and wage worthy ‘white-collar’ where traditionally performed in the U.S but due to the slow economy these had to be transferred to countries such as India, and the Philippines. The company’s spokespersons explain that the cost of performance is cheaper and allows for profit to be generated for the company. The IT specialists and drafting positions have been replaced in these developing countries because they are paid twenty-dollar an hour while at our country it would cost a hundred (Hill, 2011). The companies that have taken the steps to this transition are Bank of America, Fluor, and Procter and Gamble proving that offshoring helps increase profit but also increases unemployment rates in the U.S.

Reread the Country Focus “Moving U.S. White-Collar Jobs Offshore.”

b)Will developed nations like the United States suffer from the loss of high-skilled and high-paying jobs?(50 – 75 words).