Operating and Capital Leases - The CEO of Smith & Sons, Inc., was considering a lease for a new administrative headquarters building. The building was old, but was very well located near the company’s principal customers. The leasing agent estimated that the building’s remaining useful life was ten years, and at the end of its useful life, the building would probably be worth $100,000. The proposed lease term was eight years, and as an inducement to Smith & Sons’ CEO to sign the lease, the leasing agent indicated a willingness to include a statement in the lease agreement that would allow Smith & Sons to buy the building at the end of the least for only $75,000. As the CEO considered whether or not to sign the lease, she wondered whether the lease could be accounted for as an off-balance-sheet operating lease. What would you advise her?

q1 : what is you opinion ?


The chief executive officer (CEO) of a midsize urban hospital was late one Friday evening, so he took a shortcut that caused him to walk by the employee lounge. He walked inside and shook his head. With all the problems of budget cuts and trying to make ends meet, he realized that little money had been available for upkeep of nonpatient areas such as the employee lounge. The carpet was dirty and worn, the coffee mugs were chipped, the wallpaper was torn, and the refrigerator groaned as it cycled on and off. The CEO decided enough was enough. The employees had worked hard and should, at minimum, have an inviting and pleasant employee lounge.

He marched back to his office and called the chief operating officer (COO) to instruct her to create a weekend miracle by calling in the work crews to update and refurbish the employee lounge. He ordered new carpets, new wallpaper, and new appliances, and he wanted it all done by Monday. The CEO told the COO, “I keep telling the employees how much I appreciate their help, especially in these financially tight times, but now I am going to show them. And be sure to replace those old, chipped coffee mugs.” Early on Monday morning, the CEO walked by the employee lounge. It looked terrific, and someone had already made coffee. He made a note to himself to tell the COO what a great job she had done.

When he got to his office, he found the union steward sitting on the couch. “I need to have a word with you,” the union steward said. He had several words, as it turned out: He said that the CEO had violated the collective bargaining contract and that refurbishing the employee lounge should have been, at minimum, discussed with the union. The union steward spent 20 minutes complaining about violations and procedures.

After the union steward left, the CEO called the COO and told her to put the lounge back the way it was, including the chipped coffee mugs. Then the CEO muttered to himself, “That is the last time I try to do anything nice for anyone around here. I have learned my lesson.”

Metlock Company manufactures equipment. Metlock’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. Metlock has the following arrangement with Winkerbean Inc.

Metlock 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.

(a)

How should the transaction price of $930,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to 0 decimal places.)

Question 1 Provisions and Contingencies                                                     

Below are three independent situations.

1. ABC Ltd is a manufacturer of boats and gives warranties at the time of sale to purchasers of its boats. Pursuant to the warranty terms, ABC Ltd undertakes to make good, by repair or replacement, manufacturing defects that become apparent within three years from the date of sale.
2. ABC Ltd has a number of non-current assets, some of which require, in addition to normal ongoing maintenance, substantial expenditure on major refits/refurbishment at certain intervals or on major components that require replacement at regular intervals.
3. XYZ Ltd is a listed company that provides food to functional centres that host events such as wedding and engagement parties. After an engagement party held by one of XYZ Ltd’s customers in May 2020, 50 people became ill, possibly as a results of food poisoning from products sold by XYZ Ltd. Legal proceedings were commenced seeking damages from XYZ Ltd. XYZ Ltd disputed liability by claiming that the functional centre was at fault for handling the food incorrectly. Up to the date of 30 June 2020 (financial year-end), XYZ Ltd’s lawyers advise that it was probable that XYZ Ltd would not be found liable.

REQUIRED:

Should a liability in the form of a provision be recorded? Briefly justify your decisions.

Below are three independent situations.

1. ABC Ltd is a manufacturer of boats and gives warranties at the time of sale to purchasers of its boats. Pursuant to the warranty terms, ABC Ltd undertakes to make good, by repair or replacement, manufacturing defects that become apparent within three years from the date of sale.
2. ABC Ltd has a number of non-current assets, some of which require, in addition to normal ongoing maintenance, substantial expenditure on major refits/refurbishment at certain intervals or on major components that require replacement at regular intervals.
3. XYZ Ltd is a listed company that provides food to functional centres that host events such as wedding and engagement parties. After an engagement party held by one of XYZ Ltd’s customers in May 2020, 50 people became ill, possibly as a results of food poisoning from products sold by XYZ Ltd. Legal proceedings were commenced seeking damages from XYZ Ltd. XYZ Ltd disputed liability by claiming that the functional centre was at fault for handling the food incorrectly. Up to the date of 30 June 2020 (financial year-end), XYZ Ltd’s lawyers advise that it was probable that XYZ Ltd would not be found liable

   REQUIRED:

   Should a liability in the form of a provision be recorded? Briefly justify your decisions.

Below are three independent situations.
1.   ABC Ltd is a manufacturer of boats and gives warranties at the time of sale to purchasers of its boats. Pursuant to the warranty terms, ABC Ltd undertakes to make good, by repair or replacement, manufacturing defects that become apparent within three years from the date of sale.
2.   ABC Ltd has a number of non-current assets, some of which require, in addition to normal ongoing maintenance, substantial expenditure on major refits/refurbishment at certain intervals or on major components that require replacement at regular intervals.
3.   XYZ Ltd is a listed company that provides food to functional centres that host events such as wedding and engagement parties. After an engagement party held by one of XYZ Ltd’s customers in May 2020, 50 people became ill, possibly as a results of food poisoning from products sold by XYZ Ltd. Legal proceedings were commenced seeking damages from XYZ Ltd. XYZ Ltd disputed liability by claiming that the functional centre was at fault for handling the food incorrectly. Up to the date of 30 June 2020 (financial year-end), XYZ Ltd’s lawyers advise that it was probable that XYZ Ltd would not be found liable.
REQUIRED:
Should a liability in the form of a provision be recorded? Briefly justify your decisions.

A. The countries of Western Europe have greater proportions of immigrants on welfare than are found in the US. Discuss why this difference exists between the US and Western Europe. B. Define the brain drain. Give two separate causes of the brain drain. Further, identify all parties who benefit from the brain drain.

Southern Corporation began operations in January 2019 and purchased a machine for $120,000 at that time. Southern uses straight-line depreciation over a four-year period for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2019, 30% in 2020, and 20% in 2021. Pretax accounting income for 2020 – which is the SECOND year of using this machine – is $150,000, which includes interest revenue of $20,000 from municipal bonds. The enacted tax rate is 30% for all years. There are no other differences between accounting and taxable income.

Prepare the JE for 2020

a. How could you improve the readability of this table?

b. The file GDPyears contains sample data from the United Nations Statistics Division on 30 countries and their GDP values from 2005 to 2010 in U.S. dollars ($). Create a table that provides all these data for a user. Format the table to make it as easy to read as possible. (Hint: It is generally not important for the user to know GDP to an exact dollar. It is more typical to present in millions or billions of dollars).