t December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Machinery and equipment—Straight line; 10 years.
Automobiles and trucks—150% declining balance; 5 years, all acquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2018 and other information:

1. On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. in exchange for 34,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $210,000 and $630,000, respectively.
2. On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $246,000. These expenditures had an estimated useful life of 12 years.
3. The leasehold improvements were completed on December 31, 2014, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2020, was renewable for an additional four-year term. On April 30, 2018, Cord exercised the renewal option.
4. On July 1, 2018, machinery and equipment were purchased at a total invoice cost of $334,000. Additional costs of $10,000 for delivery and $59,000 for installation were incurred.
5. On August 30, 2018, Cord purchased a new automobile for $13,400.
6. On September 30, 2018, a truck with a cost of $24,900 and a book value of $10,800 on date of sale was sold for $12,400. Depreciation for the nine months ended September 30, 2018, was $2,430.
7. On December 20, 2018, a machine with a cost of $21,500 and a book value of $3,200 at date of disposition was scrapped without cash recovery.

Required:

1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2018. Do not analyze changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2018.

Sax Co. sells insurance, and it has recently become a listed company. In accordance with corporate governance guidelines, the finance director of Sax is reviewing the company’s corporate governance practices.

Bill Bassoon is the chair of Sax. Bill vacated the CEO position last year to become the chair of the board, and a new CEO has not yet been found. Bill is unsure if Sax needs more non-executive directors. There are currently six members on the board, which consists of four executive directors and two non-executive directors. He is considering appointing one of his brothers, who is a retired chief executive of a manufacturing company, as a non-executive director. Bill wants to ensure the board focuses on the strategic direction of Sax and not the day-to-day decision-making. To do this, he has reduced the number of board meetings.
The finance director, Jessie Oboe, is considering setting up an audit committee, but has not undertaken this task yet as she is very busy. A new board director was appointed nine months ago. He has yet to undertake his board training as this is normally provided by the chief executive and this role is still vacant.

There are many shareholders and therefore the directors believe that it is impractical and too costly to hold an annual general meeting of shareholders. Instead, the board has suggested sending out the financial statements and any voting resolutions by email; shareholders can then vote on the resolutions via email.

Which of the following are corporate governance weaknesses with Sax? Multiple answers, please explain

The CEO of Garneau Cinemas is considering making a movie and must decide between a comedy and a thrillerlong dashit ​doesn't have the production space to make both. The comedy is expected to cost ​$20 million up front​ (at t​ = 0). After​ that, it is expected to make ​$13 million in the first year​ (at t​ = 1) and ​$4 million in each of the following two years​ (at t​ = 2 and t​ = 3). In the fourth year​ (at t​ = 5), it is expected that the movie can be sold into syndication for ​$2 million with no further cash flows back to Garneau Cinemas. The thriller is expected to cost ​$35 million up front​ (at t​ = 0). After​ that, it is expected to make ​$15 million in the first year​ (at t​ = 1) and ​$3 million in each of the following four years​ (at t​ = 2,​ 3, 4, and​ 5). In the sixth year​ (at t​ = 6), it is expected that the movie can be sold into syndication for ​$30 million with no further cash flows back to Garneau Cinemas. The cost of capital is 10​%, and Garneau usually requires projects to have a payback within four years. Determine each​ project's payback and​ NPV, and advise the CEO what she should do.

The payback for the comedy is? years, and the NPV of the comedy is ?

The payback for the thriller is ? ​years, and the NPV of the thriller is ?

​(Round to two decimal places as​ needed.)

Advise the CEO. Choose the correct answer below.

A. Since the thriller has the higher​ NPV, it should be selected.

B. Since the comedy has the higher​ NPV, it should be selected.

C. Since one project has a negative​ NPV, the other project should be selected even though it has a payback greater than four years. If that​ project's longer payback period is​ unacceptable, then neither project should be accepted.

D. Since only one of the projects has a payback period of less than four​ years, it should be selected. Projects that pay the company back quicker are always preferable to projects that do not pay the company back as quickly.

Do the roles of the CEO and CFO overlap? If so, how?

What are the issues with CEO compensation? Do you agree?

Ariel Tax Services prepares tax returns for individual and corporate clients. As the company has gradually expanded to 10 offices, the founder, Max Jacobs, has begun to feel as though he is losing control of operations. In response to this concern, he has decided to implement a performance measurement system that will help control current operations and facilitate his plans of expanding to 20 offices.

Jacobs describes the keys to the success of his business as follows:

“Our only real asset is our people. We must keep our employees highly motivated and we must hire the 'cream of the crop.' Interestingly, employee morale and recruiting success are both driven by the same two factors—compensation and career advancement. In other words, providing superior compensation relative to the industry average coupled with fast-track career advancement opportunities keeps morale high and makes us a very attractive place to work. It drives a high rate of job offer acceptances relative to job offers tendered.”

“Hiring highly qualified people and keeping them energized ensures operational success, which in our business is a function of productivity, efficiency, and effectiveness. Productivity boils down to employees being billable rather than idle. Efficiency relates to the time required to complete a tax return. Finally, effectiveness is critical to our business in the sense that we cannot tolerate errors. Completing a tax return quickly is meaningless if the return contains errors.”

“Our growth depends on acquiring new customers through word-of-mouth from satisfied repeat customers. We believe that our customers come back year after year because they value error-free, timely, and courteous tax return preparation. Common courtesy is an important aspect of our business! We call it service quality, and it all ties back to employee morale in the sense that happy employees treat their clients with care and concern.”

“While sales growth is obviously important to our future plans, growth without a corresponding increase in profitability is useless. Therefore, we understand that increasing our profit margin is a function of cost-efficiency as well as sales growth. Given that payroll is our biggest expense, we must maintain an optimal balance between staffing levels and the revenue being generated. As I alluded to earlier, the key to maintaining this balance is employee productivity. If we can achieve cost-efficient sales growth, we should eventually have 20 profitable offices!”

Required:

Create a balanced scorecard for Ariel Tax Services. Link your scorecard measures using the framework from Exhibit 9–5. Indicate whether each measure is expected to increase or decrease.

0n 4/21/2020, Netflix reported 16 million new subscribers during the first quarter of 2020. Streaming services are a bright spot during this economic shutdown due to the Coronavirus outbreak, but the company faces negative factors as well. Increased operating costs may explain the results, discussed late in the article, that profit of $709.1, or $1.57 a share, was achieved while “the company was expected to earn $1.64 a share.” Nonetheless, shares rose in after-hours following Netflix’s release of its video to discuss financial results in the first quarter of 2020.

So, how does the breakdown of Netflix's new subscribers by geographic area help to assess the company’s operating results? Do you think that assessing financial information in addition to subscriber numbers by geographic area would help to further understand Netflix's performance during this period? Explain your reasoning. Is there a specific requirement to provide information about the geographic areas discussed by Netflix and reported in this article? Explain your answer and provide supporting citations to professional literature.

Answer the following questions.

(a) On May 1, 2020, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required fi ve equal annual payments, with the first payment due on May 1, 2020. What present value concept is appropriate for this situation?

(b) On June 1, 2020, Seymour Inc. purchased a new machine that it does not have to pay for until June 1, 2022. The total payment on June 1, 2022, will include both principal and interest. Assuming interest at a 12% rate, the cost of the machine would be the total payment multiplied by what time value of money concept?

(c) Costner Inc. wishes to know how much money it will have available in 5 years if five equal amounts of $35,000 are invested, with the first amount invested immediately. What interest table is appropriate for this situation?

(d) Megan Hoff man invests in a “jumbo” $200,000, 3-year certificate of deposit at First Wisconsin Bank. What table would be used to determine the amount accumulated at the end of 3 years?

Recording Entries for Long-Term Note Receivable; Effective-Interest Method

On January 1, 2020, Jacobs Company sells land financed through a $64,000 note, issued by Andress Company. The note is a $64,000, 8%, annual interest-bearing note. Andress agrees to repay the $64,000 proceeds on December 31, 2021. The prevailing interest rate on similar notes is 9%. Assume that the cost of the land is equal to the fair value of the note.

Required

Prepare all entries for Jacobs over the note term, including any year-end adjustments. Use the effective interest method to amortize the discount.

Bonita Ranch & Farm is a distributor of ranch and farm equipment. Its products include small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company Internet site. However, given some of its specialty products, select farm implement stores carry Bonita’s products. Pricing and cost information on three of Bonita’s most popular products are as follows.

Respond to the requirements related to the following independent revenue arrangements for Bonita Ranch & Farm. IFRS is a constraint.

1. On January 1, 2020, Bonita sells augers to Mills Farm & Fleet for $52,800. Mills signs a six-month note at an annual interest rate of 12%. Bonita allows Mills to return any auger that it cannot use within 60 days and receive a full refund. Based on prior experience, Bonita estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Bonita’s costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entries for Bonita on January 1, 2020.

2.On August 10, 2020, Bonita sells 17 mini-trenchers to a farm co-op in western Canada. Bonita provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Bonita compared with the prior year. Given the slowdown in the farm economy, sales to the co-op have been flat, and it is highly uncertain that the benchmark will be met.

3. Bonita sells three grain/hay dryers to a local farmer at a total contract price of $50,000. In addition to the dryers, Bonita provides installation, which has a stand-alone sales value of $1,020 per unit installed. The contract payment also includes a $1,530 maintenance plan for the dryers for three years after installation. Bonita signs the contract on June 20, 2020, and receives a 20% down payment from the farmer. The dryers are delivered and installed on October 1, 2020, and full payment is made to Bonita.

Prepare the journal entries for Bonita in 2020 related to this arrangement as well as any adjusting journal entries at its December year end

4. On April 25, 2020, Bonita ships 110 augers to Farm Depot, a farm supply dealer in Alberta, on consignment. By June 30, 2020, Farm Depot has sold 70 of the consigned augers at the listed price of $1,320 per unit. Farm Depot notifies Bonita of the sales, retains a 8% commission, and remits the cash due to Bonita.

Prepare the journal entries for Bonita and Farm Depot for the consignment arrangement