Question 4 – Undergraduate Degree and MBA Major (3 parts, 14 marks)

The MBA program was experiencing problems scheduling its courses. The demand for the

program’s optional courses and majors was quite variable from one year to the next. In one

year, students seem to want marketing courses; in other years, accounting or finance are the

rage. In desperation, the dean of the business school turned to a Statistics professor for

assistance. The Statistics professor believed that the problem may be the variability in the

academic background of the students and that the undergraduate degree affects the choice

of major. As a start, he took a random sample of last year’s MBA students and recorded the

undergraduate degree and the major selected in the graduate program. The undergraduate

degrees were BA (=1), BEng (=2), BBA (=3), and several others (=4). There are three possible

majors for the MBA students: Accounting (=1), Finance (=2), and Marketing (=3). Can the

Statistics professor conclude that the undergraduate degree affects the choice of major?

a) [2 Marks] Create a cross-classified (or contingency) table with undergraduate degree as

the row and MBA major as the column. The data in this table should be deemed as

observed counts.

b) [3 Marks] Create another table with the corresponding expected counts and having row

totals, column totals, and grand total. Round each cell value to two decimal places.

c) [9 Marks] Perform a chi-square test to assess the association (or independence) between

an undergraduate degree and choice of MBA major at 5% level of significance. Verify the

assumptions required for the chi-square test of independence. Make sure you follow all

the steps for hypothesis testing indicated in the Instructions section and show your

computations.

Using techniques from an earlier section, we can find a confidence interval for μ_d. Consider a random sample of n matched data pairs A, B. Let d = B − A be a random variable representing the difference between the values in a matched data pair. Compute the sample mean

d

of the differences and the sample standard deviation s_d. If d has a normal distribution or is mound-shaped, or if n ≥ 30, then a confidence interval for μ_d is as follows.

d − E < μ_d < d + E

where E = t_c

c = confidence level (0 < c < 1)

t_c = critical value for confidence level c and d.f. = n − 1

(a) Using the data above, find a 95% confidence interval for the mean difference between percentage increase in company revenue and percentage increase in CEO salary. (Round your answers to two decimal places.)

(b) Use the confidence interval method of hypothesis testing to test the hypothesis that population mean percentage increase in company revenue is different from that of CEO salary. Use a 5% level of significance.

Since μ_d = 0 from the null hypothesis is in the 95% confidence interval, reject H₀ at the 5% level of significance. The data do not indicate a difference in population mean percentage increases between company revenue and CEO salaries.Since μ_d = 0 from the null hypothesis is not in the 95% confidence interval, do not reject H₀ at the 5% level of significance. The data indicate a difference in population mean percentage increases between company revenue and CEO salaries.    Since μ_d = 0 from the null hypothesis is in the 95% confidence interval, do not reject H₀ at the 5% level of significance. The data do not indicate a difference in population mean percentage increases between company revenue and CEO salaries.Since μ_d = 0 from the null hypothesis is not in the 95% confidence interval, reject H₀ at the 5% level of significance. The data indicate a difference in population mean percentage increases between company revenue and CEO salaries.

Massmart, the second largest retailer in Africa, is a subsidiary of Wal-Mart Inc., a U.S. company. Massmart reports its accounts in its local currency, the rand (R). Wal-Mart’s fiscal year ends January 31. On February 1, 2018, Massmart reports facilities with original cost of R500 million and accumulated depreciation of R280 million in its noncurrent assets, as follows:

• Buildings acquired at a cost of R175 million when the exchange rate was $0.15/R, with accumulated depreciation of R100 million. The buildings are being depreciated on a straight-line basis over 25 years.

• Equipment acquired at a cost of R325 million when the exchange rate was $0.12/R, with accumulated depreciation of R180 million. The equipment is being depreciated on a straight-line basis over 10 years.

Additional exchange rates:

Massmart still holds these facilities at January 31, 2019.

Required

a. Assume that Massmart’s functional currency is the rand. Calculate Massmart’s translated facilities, at cost, and related accumulated depreciation, at January 31, 2019, and its translated depreciation expense for fiscal 2019.

b. Now assume that Massmart’s functional currency is the U.S. dollar. Calculate Massmart’s remeasured facilities, at cost, and related accumulated depreciation, at January 31, 2019, and its remeasured depreciation expense for fiscal 2019.

Enter answers using all zeros (do not abbreviate to millions or thousands).

I am able to figure the facilities at cost but having problems with the rest

Eliseth Ltd is a public company whose shares are traded on the ASX. A former executive was formally accused of fraud last month. This executive used his influence with three major suppliers to increase the price of the inventories’ contracts for the last three years. Eliseth identified those contracts and estimated a loss around AUD 5 billion which this amount was paid by Eliseth in the past three years. The inventory was recorded at cost. Using the appropriate accounting standard and the new conceptual framework issued by IASB in 2018 respond:

What would you recommend Eliseth to do? You must provide the basis of your recommendation.

1a. PA Company is involved in a lawsuit brought by former employees. The employees are suing for a recovery of $350,000 for injury at work. The legal advisor is quite pessimistic about the lawsuit and believes that it is probable (more likely than not) that the company will lose the litigation and pay the full amount of the claim.

Required: Discuss the proper accounting treatment, including any required disclosure, for PA Company regarding the above ongoing litigation (no journal entry is required).

1b. PA Company sells computers for $1,500 each and gives each computer a two-year assurance-type warranty that requires the company to perform periodic maintenance services and to replace defective parts.

• On December 31, 2018, the company sold 700 computers on account.
• The computers sold have a cost of $1,000 each. The company adopts a perpetual inventory system.
• Based on past experience, the company has estimated that the total 2-year warranty costs for each computer are $90.
• In 2018, PA Company incurred none warranty costs related to the 2018 computer sales.
• The fiscal year-end is December 31.

Required: Prepare the journal entries for PA Company on December 31, 2018

Organizational form: List some common forms of business organization, and discuss how access to capital differs across these forms of organization. If you had your own company, what form of business would you have and how would you access capital? Starting a business: What are some of the things that the founder of a company must do to launch a new business? Provide examples on what you would do and what type of business you would have.

On July 1, 2019, ABB Company, Inc. purchased 30% of the outstanding ordinary shares of ABC Company for P5,160,000 cash, including transaction cost of P160,000. ABB Company gained ability to exercise influence over ABC Company as a result of this acquisition. On the date of acquisition, the fair value of ABC’s net assets was P12,400,000. ABB Company has determined that the excess of the cost of the investment over its share of ABC’s net assets is attributable to goodwill. ABC’s profit for the year ended December 31, 2019 was P3,600,000. During 2019, ABC Company declared and paid ABB cash dividends of P400,000. There were no other transactions between the two companies. There was no indication of goodwill impairment.  

The following are the 2 questions:

1. What is the carrying value of the investment at December 31, 2019?  

2. Assuming that the excess of acquisition cost over carrying value of the net assets acquired is attributable to depreciable assets with a remaining life of 10 years, what is the net share of ABB Company on the income reported by ABC Company during 2020?

memo format( word doc )

The MBA Decision

Raj Danielson graduated from university six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Assiniboine University or the University of Passy. Both schools encourage internships, but to get class credit for the internship, no salary can be accepted. Other than internships, neither school allows its students to work while enrolled in its MBA program.
Raj currently works at the money management firm of Prash and Sid. His annual salary at the firm is $63,000 and his salary is expected to increase at 5 percent per year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 24 percent. Raj has a savings account with enough money to cover the entire cost of his MBA program.

The Sentinel School of Business at Assiniboine University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $65,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $4,500 per year. Raj expects that after graduation from Assiniboine, he will receive a job offer for about $88,000 per year, with a $14,000 signing bonus. The salary at this job will increase at 5.5 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.
The Pond School of Business at the University of Passy began its MBA program 16 years ago. The Pond School is smaller and less well known than the Sentinel School. It offers an accelerated one-year program, with a tuition cost of $90,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $3,000. Raj thinks that he will receive an offer of $85,000 per year upon graduation, with a
$9,000 signing bonus. The salary at this job will increase at 3.7 percent per year. His average tax rate at this level of income will be 31 percent.
Both schools offer a health insurance plan that will cost $2,500 per year, payable at the beginning of the year. Raj also estimates that room and board expenses will cost
$20,000 per year at both schools. The appropriate discount rate is 6.5 percent.
You are required to:

1.   (1%) How does Raj’s age affect his decision to get an MBA?
2.   (1%) What other, perhaps non-quantifiable, factors affect Raj’s decision to get an MBA?
3.   (4%) Assuming all salaries are paid at the end of each year, what is the best option for Raj from a strictly financial standpoint? Show your assumptions, calculations and explain why one of the option is better than the other alternatives.
There are three options to compare: remain at his current job, pursue a Wilton MBA, or pursue a Mt. Perry MBA. Compare the options using after-tax cash flows. Hint: room and board costs are irrelevant since presumably they will be the same whether he attends college or keeps his current job. Take in account the opportunity costs: lost salary during the MBA.
4.   (2%) What initial salary would Raj need to receive to make him indifferent between attending Assiniboine University and staying in his current position?
Since the first salary payment will not be received for three years, you need to compound this value two years into the future to arrive at the salary amount after graduation.
5.   (1%) Suppose, instead of being able to pay cash for his MBA, Raj must borrow the money. Explain how would this affect his decision?

5) For each of the following situations, select the best answer concerning accounting for foreign currency transactions:

(G) Results in a foreign exchange gain.

(L) Results in a foreign exchange loss.

(N) No foreign exchange gain or loss.

_____1. Export sale by a U.S. company denominated in dollars, foreign currency of buyer appreciates.

_____2. Export sale by a U.S. company denominated in foreign currency, foreign currency of buyer appreciates.

_____3. Import purchase by a U.S. company denominated in foreign currency, foreign currency of buyer appreciates. _____4. Import purchase by a U.S. company denominated in dollars, foreign currency of buyer appreciates.

_____5. Import purchase by a U.S. company denominated in foreign currency, foreign currency of buyer depreciates. _____6. Import purchase by a U.S. company denominated in dollars, foreign currency of buyer depreciates.

_____7. Export sale by a U.S. company denominated in dollars, foreign currency of buyer depreciates.

_____8. Export sale by a U.S. company denominated in foreign currency, foreign currency of buyer depreciates.

Question 1

a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework.

b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain.

c) AASB 101 stipulates a number of disclosures that many reporting entities are required to make. What specific disclosures are required by AASB 101 in relation to assets?

d) Is depreciation an allocation process or a valuation process? Provide reasons for your answer

e) In an article that appeared in The Australian Financial Review on 26 August 2011 ('Apple could easily flounder without its founder' by Mark Ritson), it was reported: The news that Steve Jobs has resigned from Apple and will be replaced as CEO by Tim Cook made global headlines yesterday What has followed since has been a frenzied discussion of what the loss of Jobs will mean for new product development timelines, share price issues and corporate culture. Apple's share price fell 5 per cent on the news of the resignation as questions were raised about Apple's prospects without its creative guru at the helm. But the real question for Apple as it enters its post-Jobs period is how well the brand will survive without the founder. Required The fact that the share prices fell following the departure of Steve Jobs is consistent with the view that Jobs was an 'asset' to the company. How do you think this 'asset' would have been disclosed in the financial statements of Apple?

f) What is a contingent asset? When should a contingent asset be disclosed within the notes to the financial statements? If something is initially disclosed as a contingent asset, when can it subsequently be recognised as an asset within the financial statements? Briefly explain.

Please don't copy other CHEGG ANSWERS because they are not answered according to the question. please answer according to question and marks