Jackson Auto Parts Manufacturer, a U.S. based manufacturer of piston rings and other auto parts sold parts to a South Korean Auto Manufacturer on December 1, 2020 with payment in 10 million South Korean Won to be received on March 31, 2021. The following exchange rates are relevant:
Date: Spot Rate Forward Rate
Dec 1, 2020 $0.0035 $0.0034
Dec 31, 2020 $0.0033 $0.0032
March 31 2021 $0.0038 $0.0032
Assuming Jackson did not hedge its foreign exchange risk, how much foreign exchange gain or loss should it report on its fiscal year end December 31, 2020 financial statements/
Assuming that Jackson did in fact decide to hedge its foreign exchange risk and entered into a forward exchange contract to sell 10 million South Korean Won on December 1, 2020 as a fair value hedge of a foreign currency receivable, what is the net impact on Jackson’s 2020 net income resulting from a fluctuation in the value of the Won? Ignore time value of money.
Defend your answer.
In: Accounting
E18.17 (Sales with Returns) On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool sets and received a credit to its account. . Assume that instead of selling the tool sets on credit, that Steele sold them for cash.
Instructions
a. Prepare journal entries for Steele to
record (1) the sale on March 10, 2020, (2) the return on March 25,
2020, and (c) any adjusting entries required on March 31, 2020
(when Steele prepares financial statements). Steele believes the
original estimate of returns is correct.
b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information related to the Barr sale.
In: Accounting
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020.
Sales units:First quarter 5,000; second quarter 6,900; third quarter 7,300.
Ending raw materials inventory:40% of the next quarter’s production requirements.
Ending finished goods inventory:25% of the next quarter’s expected sales units.
Third-quarter production:7,360 units.
The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $6 per pound.
Prepare a production budget by quarters for the 6-month period ended June 30, 2020.
HARDIN COMPANY
Production Budget
For the Six Months Ending June 30, 2020For the Quarter Ending June 30, 2020June 30, 2020
HARDIN COMPANY
Direct Materials Budget
For the Six Months Ending June 30, 2020June 30, 2020For the Quarter Ending June 30, 2020
In: Accounting
Yes, this is a Taxation subject. But the system does not have that category, so selected Accounting.
Zero Corporation is the parent corporation of a consolidated group of corporations that file a consolidated calendar year tax return. Its members include subsidiaries Loss Corporation and Gain Corporation. As of the end of 2019, the consolidated group hada net operating loss carryforward of $5 million. All of the net operating loss carryforward is attributable to losses of Loss Corporation.
On April 30, 2020, Zero Corporation sold all of the stock of Loss Corporation at a purchase price that resulted in a gain of $100,000. Loss corporation’s taxable income for 2020 is $1.2 million, $400,000 of which was earned in the first 4 months of 2020.
For 2020, Zero Corporation earned $2 million of taxable income, including the $100,000 gain on the sale of loss corporation, and Gain corporation earned $4 million of taxable income.
How much of the $5 million net operating loss carryforward will Loss Corporation take with it when it leaves the Zero consolidated group on April 30, 2020? How must Loss corporation report its taxable income for 2020?
In: Accounting
Bridgeport Inc. has a defined benefit plan for its employees. On December 31, 2019 the company’s records showed the following information related to the plan:
| Pension plan assets | $843,000 | |
| Defined benefit obligation | 923,000 |
All employees are expected to receive benefits under the plan. The
company’s actuary provided the following information as at December
31, 2020:
| Current year service cost | $178,000 | |
| Past service benefits, granted July 1, 2020 | 29,000 | |
| Discount rate | 5% | |
| Actual return on assets | 6% | |
| Contributions for the year | 265,000 | |
| Benefits paid to retirees | 125,000 |
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.
Calculate pension expense for Bridgeport Inc. for 2020, assuming ASPE is used.
| Pension expense, 2020 | $Enter your answer in accordance to the question statement |
eTextbook and Media
Assistance Used
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.
Calculate pension expense for Bridgeport Inc. for 2020, assuming IFRS is used.
| Pension expense, 2020 | $Enter your answer in accordance to the question statement |
In: Accounting
Beavis Construction Company was the low bidder on a construction
project to build an earthen dam for $1,730,000. The project was
begun in 2020 and completed in 2021. Cost and other data are
presented below:
| 2020 | 2021 | |||||
| Costs incurred during the year | $ | 476,000 | $ | 1,030,000 | ||
| Estimated costs to complete | 884,000 | 0 | ||||
| Billings during the year | 470,000 | 1,260,000 | ||||
| Cash collections during the year | 370,000 | 1,360,000 | ||||
Assume that Beavis recognizes revenue on this contract over time
according to percentage of completion.
Required:
Compute the amount of gross profit recognized during 2020 and
2021.
Beavis Construction Company was the low bidder on a construction
project to build an earthen dam for $1,730,000. The project was
begun in 2020 and completed in 2021. Cost and other data are
presented below:
| 2020 | 2021 | |||||
| Costs incurred during the year | $ | 476,000 | $ | 1,030,000 | ||
| Estimated costs to complete | 884,000 | 0 | ||||
| Billings during the year | 470,000 | 1,260,000 | ||||
| Cash collections during the year | 370,000 | 1,360,000 | ||||
Assume that Beavis recognizes revenue on this contract over time
according to percentage of completion.
Required:
Compute the amount of gross profit recognized during 2020 and
2021.
In: Accounting
In: Accounting
Stenberg plc is preparing its financial statements for
the year ended 30 November 2020.
On 1 May 2020, the company purchased a factory for the manufacture
of optical disks,
paying £24,000,000. The factory will be depreciated over its
estimated life of 10 years
using the straight line method on a full year basis with no
residual value.
The asking price for the factory had been £30,000,000. However,
Stenberg plc estimated
the net present value of the factory’s future expected net cash
flows at £28,500,000 and
the price eventually agreed with the vendor was £24,000,000.
During October 2020 a rival company announced that it had patented
a new technology
which has been enthusiastically greeted by the major players in the
industry. Stenberg
plc now feels that it may be necessary to revise downwards its
expectations for the
factory. It now believes that the net present value of the expected
net cash flows from the
factory as at 30 November 2020 was £20,500,000. The net realisable
value of the factory
was estimated at £14,000,000 as at 30 November 2020.
Required:
Discuss whether or not there is evidence of impairment and describe
how the factory
should be treated in the financial statements for the year ended 30
November 2020.
In: Accounting
a) Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system, receiving a $5,000 zero-interest-bearing note on January 1, 2020. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2020, and compute the total amount of revenue to be recognized in 2020.
b) Colbert sells 20 nonrefundable $100 gift cards for 3D printer
paper on March 1, 2020. The paper has a standalone selling price of
$100 (cost $80). The gift cards expiration date is June 30, 2020.
Colbert estimates that customers will not redeem 10% of these gift
cards. The pattern of redemption is as follows.
| Redemption Total | |||
| March 31 | 50 | % | |
| April 30 | 80 | ||
| June 30 | 85 | ||
Prepare the 2020 journal entries related to the gift cards at March
1, March 31, April 30, and June 30.
In: Accounting
On January 1, 2020, Nivtop Corp. leased a machine from Nosnah
Inc. The lease agreement calls for
Nivtop to make four annual lease payments of $559,113 each January
1, with the first payment to be
made on January 1, 2020. Nivtop’s incremental borrowing rate is 8%;
this is the same rate Nosnah
used to calculate the lease payments. The fair market value of the
machine is $2,000,000 and its
expected useful life is 5 years. This is a non-specialized
machine.
Nosnah purchased the machine from a vendor on December 31, 2019 for
$1,573,000.
Required
a. List the 5 criteria used to determine whether a lease qualifies
as finance/sales-type or
operating. Review each criterion to determine which (if any) this
lease meets.
b. What type of lease is this for Nivtop?
c. What type of lease is this for Nosnah?
d. Show all of Nivtop’s journal entries relative to this lease
at
1) January 1, 2020
2) December 31, 2020
3) January 1, 2021
e. Show all of Nosnah’s journal entries relative to this lease
at
1) January 1, 2020
2) December 31, 2020
3) January 1, 2021
In: Accounting