Pearson Industries uses platinum in its manufacturing process.  The company will need 1,000 troy ounces of platinum in January of 2020 for a production run in that month.  The company is concerned that the price of platinum will rise during the next several months.  On October 14, 2019, Pearson acquired a futures contract to buy 1,000 troy ounces of platinum On January 2, 2020 at a price of $480 per troy ounce.   Spot prices and current futures prices per troy ounce of platinum are as follows:

                                                            Oct. 14            Dec. 31            Jan 2               

Futures price per oz (current)              $480                $525                $525                             

Spot price per oz                                 $480                 $524               $525    

Fair Value of Contract            $  0    

On January 2, 2020, the company settled the options and purchased 1,000 troy ounces of platinum for $525 per ounce.

11)  This is:   A Fair Value Hedge      A Cash Flow Hedge      Not a Hedge            Pick one

12) On the December 31, 2019 Statement of Financial Position, what amount, if any, would be listed for the Derivative- Platinum Futures Contract?    

13) If your answer to 12 was not zero, would the amount be an asset or liability? If zero put neither.

14) On the December 31, 2019 Statement of Financial Position, what amount, if any, would be listed for the Inventory of Platinum?    

15) If your answer to 14 was not zero, would the amount be an asset or liability? If zero put neither.

16)  On the Income Statement for year ended December 31, 2019, what amount, if any, would appear as a gain or loss from the Derivative- Platinum?  

17) If your answer to 16 is nonzero, is it a gain or loss? If zero put neither.  

18)  On the Statement of Comprehensive income for year ended December 31, 2019, what amount, if any, would appear as a gain or loss as Other Comprehensive Income?  

19) If your answer to 18 is nonzero, is it a gain or loss? If zero put neither.                                       

20) Assume the platinum purchased on January 2, 2020 was used to make inventory that was sold in 2020. On the Income Statement for year ended December 31, 2020, what amount, if any, would be included in cost of goods sold related to the platinum?  ___________________

The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: Determine the specific citation for accounting for the following:

A)When a company assigns goodwill to a reporting unit acquired in a business combination, it must record an impairment loss if the fair value of the reporting unit is less than its carrying value and the carrying value of goodwill is more than the implied value of its goodwill.

B)The preferred method of presenting a noncontrolling interest in a consolidated balance sheet would be as a separate item within the stockholders' equity section.

C)Where in the FASB code is it discussed how to record the initial measurement of a Variable Interest Entity in a Business Combination?

According to John Connors, former CFO of Microsoft, how does a company decide whether to increase its dividend, have a special dividend, or repurchase its stock to return capital to investors? Be DETAILED in your answer 3

1. According to the Economist Big Mac index in January 2020, the British pound sterling (GBP) was 22% undervalued against the U.S. dollar. Explain what this implies based upon the theory of purchasing power parity and describe the limitations of this approach

Discuss the following quote from Steve Jobs, Co-Founder of Apple, Inc. Also, detail whether you agree/disagree with the quote and why. Please support your stance with specific details.

"Apple is a very disciplined company, and we have great processes. But that's not what it's about. Process makes you more efficient." (min 200 words)

Discuss the following quote from Steve Jobs, Co-Founder of Apple, Inc. Also, detail whether you agree/disagree with the quote and why. Please support your stance with specific details.

"Apple is a very disciplined company, and we have great processes. But that's not what it's about. Process makes you more efficient." (min 200 words)

DD LTD

DD Ltd operates a business to do with warehousing and distribution of books and CD’s for K Ltd, an on-line business. For this purpose, DD rented warehouses in each major town in the country and the actual delivery of orders was outsourced to a courier service. The market was becoming increasingly competitive and the year ending 31 December 2015 had not been as successful as the previous years. The founder and CEO was very frustrated with the complex integrated computer system that dealt with all the logistics. The system is down most of the time; as a result, money is lost through lost business and poor service delivery.

The CEO has is of the view that there is real fear that K Ltd may penalize the company or indeed engage another company in the place of DD. A lot of money is spent on computer consultants who practically live at DD’s offices and what is worse they do not appear to make any difference.

Since the logistical system was linked to the general ledger, all the problems had been making meaningful reporting and financial management extremely difficult. This has caused the DD accountant to quit just before year end and in desperation he had come to you for help. The bookkeeper extracted the following information for the year ending 31 December 2015 and forwarded it to you (all accounts are to be prepared to the nearest K1000):

1. K Ltd was DD’s only customer and all sales were made on credit. DD processed 1.62 million orders during the year and charged K Ltd K20 per order fulfilled.
2. The delivery charge paid to the courier was treated as the cost of goods sold and it was K6.50 per order
3. At the time of setting up DD K20 million ordinary shares of par value K1 per share were issued. There has been no further share issue since then.
4. General and administrative expenses for the year were worth K6.2 million
5. Selling and marketing expenses were estimated at 2½% of sales.
6. The non-current assets consisted of IT infrastructure and warehouse equipment. They were valued at K57.63 million after depreciation expense for the year of K4.34 million
7. There was no long-term loan or overdraft. Hence there was no interest expense in the year.
8. K Ltd takes a long time to settle its accounts and as at year end was taking 56.7 days to settle their account.
9. The goods in the DD’ s warehouse belonged to K Ltd. Packaging material and consumables on hand at 31 December 2015 were valued at K0.420 million.
10. Retained earnings b/f on 1/1/2015 was K50.948 million.
11. The couriers were owed K0.610 million at 31/12/2015.
12. Company income tax rate was 25% and company dividend policy was to pay half the earnings after tax as dividend.
13. The CEO knew that they had a lot of money in the bank at the year end, had not received the bank statement and no reconciliation statement had been prepared.

The CEO wanted you not only to finalise the accounts for the year ending 31/12/2015 but also needed serious advice about the financial implications of ideas he had for the following year. The large IT company that supplied and supported the IT infrastructure had approached him with a proposal. They suggested that DD sell them the system and outsource the entire function to them. He really liked the idea of getting rid of this headache and would need the cash if he was going to explore his other ideas. For the last two years DD had not been happy with the property developers who leased the warehouse to DD. The CEO felt that they were too expensive and did not honour the accepted responsibilities of a landlord. He had spoken to them and discovered that as landlords they were in fact keen to get out of industrial property altogether. They offered to sell the buildings to DD for a reasonable price and the CEO liked the idea of not being held at ransom by them in the future. It was however a big decision for him to make and would necessitated DD borrowing quite a lot of money for the first time ever. After discussions with you and his operating team, he asked you to prepare a budget projection based on the following information:

• Transaction volume would increase by 30%. K Ltd were not prepared to put up their rate, so it would remain at K20 per order fulfilled
• DD would sell their IT infrastructure for its book value of K34.8 million and the outsourced service provider would charge them a flat fee of K1 per transaction
• Cost of sales would rise to K7.50 per transaction as the IT cost of K1 would be added to the existing delivery charge of K6.50 which would not change from last year
• The warehouses would be purchased for an amount of K92 million and to help fund this CEO had sourced a long-term loan of K54 million. The interest on this loan would be K6.83 million for the year
• The warehouses were not going to be depreciated at all, so the charge for the year ended 31/12/2016 would drop to K2.77 million
• Stock levels were predicted to increase to K0.72 million by year end
• The tax rate and company divided policy were not expected to change
• The CEO was determined to manage the K Ltd account better during the following year and felt that he could get their average time to payment down to 51.5 days. However, as the delivery courier was pushing for even earlier payment the CEO felt that it would be prudent to budget creditors as exactly the same nominal value as last year
• General and administrative costs would be reduced to K4.2 million for the year and this would enable the CEO to up marketing expenses to 4% of sales. He felt that it was a good idea to for him to look for new clients to reduce his dependency on K Ltd and help utilize spare capacity
• The CEO still did not want to have an overdraft and wondered what cash position the above scenario would leave the company with.

ASSIGNMENT 1

1. Prepare the statement of income for the year ending 31/12/2015
2. Prepare the statement of financial position as at 31/12/2015
3. Prepare a cash flow statement for the year ending 31/12/2015

Janine has been an employee of Dress Me Inc. a national chain of clothing stores for women (the "Company") for the last 10 years. She began as a sales person and later, in 2017, after completing an MBA, was promoted by the Company to her current position as Senior Sales Manager. The position requires that Janine work regular office hours from Monday to Friday, as well as take occasional trips to visit major clients, which often exceed the traditional office hours. In January 2020, Janine was involved in a car accident that luckily did not leave her with any significant physical injury but the trauma is still evident. She suffers from bad quality of sleep and increased anxiety. She cannot drive anymore and using public transportation to visit clients does not really work. Janine requests to work in the form of fixed hours of work, weekdays only, 9:00am to 5:00pm with a 30 minute break at 12:00pm. She also requests to meet clients on zoom. The Company refuses her request. They say that it was vital that the hours of work of the Senior Sales Manager include occasional longer days and evenings to fit the needs of clients and that there is "an added value to client visits on site". If she can't do longer hours and visit clients -- they say -- she can go back to her old job as a sales person. Janine files a human rights complaint against the Company.

Briefly describe the legal arguments of both parties (Janine and the Company) in relation to the human rights complaint. [4 marks]

Accounting for Restricted Stock Awards

Geelong Technology (GT) is a software company based in Boston. Since January 1, 2015, the company has granted restricted stock to its CEO at the beginning of each year to help boost future company performance. Vesting for each award occurs if the CEO stays employed at the company for a period of two years from the grant of the award.

The par value of the stock is $1.

It is now September 13, 2018 and the CEO leaves the company.

** Provide in journal entry format the reversal journal entry(s) to correct the CEO's early departure. (Keep in mind the two year award process)