Question 2: Preparation and Presentation of the Income Statement Flexible and Confused Limited has just employed you as the new finance director. The first task you have been assigned to complete is to prepare the income statement for the 12-month period ended March 31, 2018. On your desk on your first day, the previous finance director left valuable information to complete the task. 1. During the year Flexible and Confused Limited – a company that sells dishwashers – sold a total of 13,187,000 units at an average sales price of $41.25. 2. The old finance director also indicated that direct labour, direct material and applied overhead were equal to 20%, 12% and 25% of total sales revenue. 3. Following is a list of other expenses incurred by the company. Expense Account Total Incurred Advertising and Marketing Costs $5,512,000.00 Sales Entertainment $2,561,000.00 Selling Insurance $690,000.00 Office Repairs and Maintenance $1,590,000.00 Office Depreciation $14,457,000.00 Wages of General Operations Staff $12,801,000.00 Salaries Sales Staff $11,036,000.00 Administrative Travel Costs $1,260,000.00 4. On January 1, 2018, the company sold a piece of equipment held for investment and recognized a loss on the sale of $4,221,000. 5. The company also enjoyed revenue from other sources noted as: Other Income totalling $9,050,000 and Interest Revenue totalling $8,661,000. 6. On April 1, 2017, the company sold land that resulted in a loss of $4,891,000. 7. If the company reports a profit during the year, the effective corporate tax rate is 25%. If a loss is reported the effective tax rate is zero. 8. The company incurred finance interest charges during the accounting period of $22,890,000. 9. The company is involved in joint venture operations. As a result of goof financial conditions, the company recorded a net gain of $6,079,000 from its share of the joint venture operations. 10. From the operations of its associate firms, the company expects to record a net gain of $42,287,000 for the financial period ended March 31, 2019. Required: Using the information supplied, prepare an income statement for Flexible and Confused Limited for the accounting period that conforms with IFRS IAS 1 recommendation and course requirements. (Hint: Expenses should be classified by function (e.g., cost of goods sold) not nature.

explain and justify all your answer clearly with steps thanks

2016

2017

Monty Corporation is authorized to issue 53,000 shares of $5 par value common stock. During 2017, Monty took part in the following selected transactions.

Can you please explain how you get to this answer? Thank you!

---

Suppose Home has unit Labor requirements: 3 units of labor (hours) to produce one pound of apples, 2 units of labor (hours) to produce one pound of banana. Suppose Foreign has unit Labor requirements: 5 units oflabor (hours) to produce a pound of apples, 1 unit of labor (hours) to produce one pound of banana.

1) Draw the Relative Supply of Apples for the world (Home and Foreign).
2) Suppose the Relative Demand for Apples is as follows: Relative Demand: (Qa/Qb)^D = (PB/PA)
If Both countries trade, what will be the traded relative price of Apples, (PA/PB) ?
3) Show that Home Benefits from trade.

1)Suppose that the Fed is fixing the dollar-pound exchange rate at $2.75 = £1. If the Fed's reserve of pounds falls by £100 million, by how much would the supply of dollars increase, all other things equal?

a)275 million

b)500 million

c)0

d)-500 million

2) In 2009, the United States:

a)imported more services than it exported.

b)imported more goods than it exported.

c)traded mainly with developing nations such as Mexico and India.

d)had a small trade surplus in goods and services.

3) You know that (1 + 0.08)³ = 1.26. What is the present value of $126 received in three years if the annual interest rate is 8 percent?

a)$100

b)$10

c)$126

d)$144

INSTRUCTIONS

You will be performing an analysis of McDonald’s, Wendy’s or Burger King. Place the name on the line below. Using online and/or library resources, including Web sites on the fast food industry and your company’s Web site and annual report, fill out the following External Environment Worksheet for that company:

External Environment Worksheet    - _____________________________

MACROENVIRONMENT

Laws and regulations (5 Points)

What are some key laws and regulations under which this company and the fast food industry must operate?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The economy (5 Points)

How does the state of the economy influence the sales of this company’s products?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Technology (5 Points)

What new technologies strongly affect the company you have selected?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Demographics (5 Points)

What changes in the population might affect the company’s customer base?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Social Issues (5 Points)

What changes in society affect the market for your company’s food products?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

ORGANIZATION COMPETITIVE ENVIRONMENT

Suppliers (3 Points)

How does your company’s relationship with suppliers affect its profitability? Provide specifics related to the company.

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Competitors (3 Points)

What companies compete with the firm you have selected? Do they compete on price, on quality, or on other factors? Explain.

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

New Entrants (3 Points)

Are new competitors to the company likely? possible? Give examples.

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Substitutes and Complements (3 Points)

Is there a threat of substitutes for the fast food industry’s existing products? Are there complementary products that suggest an opportunity for collaboration?

Substitutes:_________________________________________________________________________________________________________________________________________________________________________Complements:_______________________________________________________________________________________________________________________________________________________________________

Customers (3 Points)

What characteristics of the company’s customer base influence the company’s competitiveness?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

DISCUSSION QUESTIONS

1. What has the company done to adapt to its environment? (See At the boundaries, at the core Pg. 55-56.)

(5 Points)

__________________________________________________________________________________________     ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. How does the company attempt to influence its environment? (See independent/cooperative strategies Pg. 57-58) (5 Points)     __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

PART A (MAX 500 words in total)

Effective 2019, the new accounting standard on leasing, AASB16 Leases, will replace the existing leases standard, AASB117. It will remove the classification of leases that has been used for decades and which divides leases into operating and financial leases from the perspective of lessees. The new standard requires leases that were formerly known as operating leases (and were kept off balance sheet) to be recognised for balance sheet proposes (both an asset and a liability will be recognised).

Required:

Evaluate how total assets, total liability and equity would be affected by the new accounting standard on leasing from the perspective of lessees. (5 marks)

The changed standard means that leases with a short-term (e.g., several months) will appear on a balance sheet of lessees, as will leases with a long-term (e.g., multiple years). Discuss whether this new approach is consistent or inconsistent with the definitions of assets and liabilities included within the IASB Conceptual Framework. (5 marks)

PART B (MAX 500 words in total)

Microsoft historically followed the practice of recognizing 25% of revenue from its Windows software over three or four years as it promises future upgrades and add-ons. With the launch of Vista in 2008, it changed the policy to record most of the revenue in the period in which the software was sold. In the third quarter for fiscal year 2008, Microsoft reported an increase in earnings of 65%. The increase came from sales of the new Vista program and also from the acceleration in revenue recognition.

Required:

Critically evaluate the revenue recognition policy adopted by Microsoft in accordance with AASB15 Revenue from Contracts with Customers. (5 marks)

Explain the decision of management to change the revenue recognition policy in terms of the debt hypothesis of Positive Accounting Theory. (5 marks)

Students are to complete journal entries for each month, including adjusting and closing, trial balances, and financial statements consisting of Income Statement, Statement of Retained Earnings, and Balance Sheet in classified format. The minimum chart of accounts for the Peavy Cleaning Corporation practice case is the following (more or less may be used):

• Assets – Cash, Accounts Receivable – Regular Customers, Accounts Receivable – Warhawk Gym, Prepaid Insurance, Supplies, Cleaning Equipment, Truck and Land.
• Liabilities – Accounts Payable – Home Improvement, Accounts Payable – Big Sparkle, Notes Payable – Land, Notes Payable – Truck, Unearned Service Revenue
• Stockholder’s Equity – Common Stock, Retained Earnings, Dividends – Mark Peavy
• Revenue – Service Revenue, Sales Discounts
• Expenses – Auto Expense, Insurance Expense, Office Expense, Organization Expense, Rent Expense, Salary and Wage Expense