At December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Machinery and equipment—Straight line; 10 years.
Automobiles and trucks—150% declining balance; 5 years, all acquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2018 and other information:

a.On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. in exchange for 34,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $210,000 and $630,000, respectively.

b.On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $246,000. These expenditures had an estimated useful life of 12 years.

c.The leasehold improvements were completed on December 31, 2014, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2020, was renewable for an additional four-year term. On April 30, 2018, Cord exercised the renewal option.

d.On July 1, 2018, machinery and equipment were purchased at a total invoice cost of $334,000. Additional costs of $10,000 for delivery and $59,000 for installation were incurred.

e.On August 30, 2018, Cord purchased a new automobile for $13,400.

f.On September 30, 2018, a truck with a cost of $24,900 and a book value of $10,800 on date of sale was sold for $12,400. Depreciation for the nine months ended September 30, 2018, was $2,430.

g.On December 20, 2018, a machine with a cost of $21,500 and a book value of $3,200 at date of disposition was scrapped without cash recovery.

Required:

1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2018. Do not analyze changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2018

Bust-A-Knee Inc. (Bust-A-Knee) is a medical device company that specializes in developing knee replacement hardware. In 2020, Bust-A-Knee acquired 100 percent equity ownership of MD International (MD) for a purchase price of $15 million. MD is a pharmaceutical company that is developing two drugs: (1) a drug to cure cancer, Drug X, and (2) a pain medication, OuchX. Bust-A-Knee acquired the entity to expand into a new sector within the medical field.

Bust-A-Knee concluded the acquisition of MD was a business combination. In purchase accounting, Bust-A-Knee recognized intangible assets for the in-process research and development (IPR&D) related to the ongoing development of Drug X and OuchX, among other acquired intangible assets. The IPR&D of Drug X and OuchX had acquisition-date fair values of $4 million and $3 million, respectively.

During 2021, Bust-A-Knee determined its operations could not support the continued development of Drug X because significant efforts were being put forth in the development of OuchX. Since the date of acquisition, Bust-A-Knee had not invested any additional funding in the development of Drug X. Bust-A-Knee determined that there was no change in the carrying amount recorded on the date of acquisition.

Rather than abandon the development project, Bust-A-Knee entered into an agreement with Pharmers Company (Pharmers) to transfer its ownership interests in (and control of) the IPR&D for Drug X. Pharmers, the market’s largest pharmaceutical company, will use Drug X’s IPR&D to continue its development, and obtain FDA approval to sell the drug on the open market. Selling IPR&D is not part of Bust-A-Knee’s ordinary activities and therefore Pharmers is not a customer of Bust-A-Knee (as defined by ASC 606).

In return, Pharmers will pay Bust-A-Knee (1) a nonrefundable fixed fee of $2 million at contract execution; (2) a contingent future payment of $500,000, when Drug X is FDA approved; and (3) a 10 percent royalty fee based on the annual sales earned by Pharmers for the sale of Drug X in each of the subsequent five years following FDA approval.

On the date of transfer, Bust-A-Knee estimates that the total consideration (nonrefundable fixed fee and contingent future fees) will be between $5 million and $6.5 million and that the weighted average expected amount of consideration Bust-A-Knee expects to be entitled to (at an 80 percent probability) is $5.5 million. Under the agreement, Pharmers paid $2 million when it obtained control of the IPR&D of Drug X and will pay the additional amounts if and when the associated contingencies related to such amounts are resolved.

Required:

• On the date of transfer to Pharmers, how should Bust-A-Knee record the transaction?

Bust-A-Knee Inc. (Bust-A-Knee) is a medical device company that specializes in developing knee replacement hardware. In 2020, Bust-A-Knee acquired 100 percent equity ownership of MD International (MD) for a purchase price of $15 million. MD is a pharmaceutical company that is developing two drugs: (1) a drug to cure cancer, Drug X, and (2) a pain medication, OuchX. Bust-A-Knee acquired the entity to expand into a new sector within the medical field. Bust-A-Knee concluded the acquisition of MD was a business combination. In purchase accounting, Bust-A-Knee recognized intangible assets for the in-process research and development (IPR&D) related to the ongoing development of Drug X and OuchX, among other acquired intangible assets. The IPR&D of Drug X and OuchX had acquisition-date fair values of $4 million and $3 million, respectively. During 2021, Bust-A-Knee determined its operations could not support the continued development of Drug X because significant efforts were being put forth in the development of OuchX. Since the date of acquisition, Bust-A-Knee had not invested any additional funding in the development of Drug X. Bust-A-Knee determined that there was no change in the carrying amount recorded on the date of acquisition. Rather than abandon the development project, Bust-A-Knee entered into an agreement with Pharmers Company (Pharmers) to transfer its ownership interests in (and control of) the IPR&D for Drug X. Pharmers, the market’s largest pharmaceutical company, will use Drug X’s IPR&D to continue its development, and obtain FDA approval to sell the drug on the open market. Selling IPR&D is not part of Bust-A-Knee’s ordinary activities and therefore Pharmers is not a customer of Bust-A-Knee (as defined by ASC 606). In return, Pharmers will pay Bust-A-Knee (1) a nonrefundable fixed fee of $2 million at contract execution; (2) a contingent future payment of $500,000, when Drug X is FDA approved; and (3) a 10 percent royalty fee based on the annual sales earned by Pharmers for the sale of Drug X in each of the subsequent five years following FDA approval. On the date of transfer, Bust-A-Knee estimates that the total consideration (nonrefundable fixed fee and contingent future fees) will be between $5 million and $6.5 million and that the weighted average expected amount of consideration Bust-A-Knee expects to be entitled to (at an 80 percent probability) is $5.5 million. Under the agreement, Pharmers paid $2 million when it obtained control of the IPR&D of Drug X and will pay the additional amounts if and when the associated contingencies related to such amounts are resolved.

Required: • On the date of transfer to Pharmers, how should Bust-A-Knee record the transaction?

Chapter 11, #4

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Equipment—Straight line; 10 years.
Automobiles and trucks—200% declining balance; 5 years, all acquired after 2017.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2021 and other information:

1. On January 6, 2021, a plant facility consisting of land and building was acquired from King Corp. in exchange for 19,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $60 a share. Current assessed values of land and building for property tax purposes are $207,000 and $483,000, respectively.
2. On March 25, 2021, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $156,000. These expenditures had an estimated useful life of 12 years.
3. The leasehold improvements were completed on December 31, 2017, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2023, was renewable for an additional four-year term. On April 30, 2021, Cord exercised the renewal option.
4. On July 1, 2021, equipment was purchased at a total invoice cost of $319,000. Additional costs of $11,000 for delivery and $44,000 for installation were incurred.
5. On September 30, 2021, Cord purchased a new automobile for $11,900.
6. On September 30, 2021, a truck with a cost of $23,400 and a book value of $8,000 on date of sale was sold for $10,900. Depreciation for the nine months ended September 30, 2021, was $1,800.
7. On December 20, 2021, equipment with a cost of $14,000 and a book value of $2,825 at date of disposition was scrapped without cash recovery.

Required:

1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2021. Do not analyze changes in accumulated depreciation and amortization.

2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2021. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

At December 31, 2020, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Equipment—Straight line; 10 years.
Automobiles and trucks—200% declining balance; 5 years, all acquired after 2017.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2021 and other information:

1. On January 6, 2021, a plant facility consisting of land and building was acquired from King Corp. in exchange for 35,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $60 a share. Current assessed values of land and building for property tax purposes are $255,000 and $595,000, respectively.
2. On March 25, 2021, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $252,000. These expenditures had an estimated useful life of 12 years.
3. The leasehold improvements were completed on December 31, 2017, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2023, was renewable for an additional four-year term. On April 30, 2021, Cord exercised the renewal option.
4. On July 1, 2021, equipment was purchased at a total invoice cost of $335,000. Additional costs of $11,000 for delivery and $60,000 for installation were incurred.
5. On September 30, 2021, Cord purchased a new automobile for $13,500.
6. On September 30, 2021, a truck with a cost of $25,000 and a book value of $11,000 on date of sale was sold for $12,500. Depreciation for the nine months ended September 30, 2021, was $2,475.
7. On December 20, 2021, equipment with a cost of $22,000 and a book value of $3,225 at date of disposition was scrapped without cash recovery

For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2021. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Make a list of all the possible sets of quantum numbers that an electron in an atom can have if n = 4. How many different states with n = 4 are there? Indicate on your list which states are degenerate (i.e. have the same energy as other n = 4 states). Assume that the electron is in a multi-electron atom (i.e. not the Hydrogen atom). Does the total number of states agree with the general rule that the number of states is equal to 2n^2.

1/1/2020: Opened the business, invested $1,000,000 cash in the business.

1/1/2020: bought a building for the business purpose for $100,000 cash. The building has a useful economic life of 10 years.

1/1/2020: purchased 100 luxury watches for $200,000 with $100,000 cash payment, the remaining amount payable on 2/1/2021. (each watch costs $2,000)

3/1/2020: purchased 50 luxury watches for $250,000 with cash. Each watch costs $5,000.

4/1/2020: purchased 40 luxury watches for $240,000 with cash. Each costs $6,000.

6/1/2020: Sold 130 watched for $1,300,000. Of which $300,000 cash was received at the time of sale. The remaining amount to be received on 5/2/2021.

7/1/2020: paid $1,200 in advance for 12 months’ property insurance (7/1/20 to 7/1/21).

8/1/2020: borrowed $500,000 from a local Chase bank. Interest rate is 12%/year. Interest is paid every 6 months- the first payment date is 2/1/2021. Principal would be paid on 8/1/2021.

9/1/2020: to expand business, you rent a showroom in the next building. Paid $24,000 cash in advance for 12 month’s rent.

12/31/2020: Paid 2020 utilities expense, advertising expense, and miscellaneous expense for $5000, $15,000, and $4,000, respectively.

Salary is paid on the last day of each month. Each month’s salary expense is $20,000.

Notes:

• On 12/31/2020: Physical inventory showed that there were 60 luxury watches on hand at the end of the period. The company used periodic inventory system, and used FIFO costing method.
• Your business used straight-line depreciation method for all fixed assets.
• Ignore tax.

Requirement:

1. Prepare all journal entries, adjusting entries, closing entries needed for the period ending on 12/31/2020 based on above economic events

Insurance companies know the risk of insurance is greatly reduced if the company insures not just one person, but many people. How does this work? Let x be a random variable representing the expectation of life in years for a 25-year-old male (i.e., number of years until death). Then the mean and standard deviation of x are μ = 48.7 years and σ = 10.3 years (Vital Statistics Section of the Statistical Abstract of the United States, 116th Edition).

Suppose Big Rock Insurance Company has sold life insurance policies to Joel and David. Both are 25 years old, unrelated, live in different states, and have about the same health record. Let x₁ and x₂be random variables representing Joel's and David's life expectancies. It is reasonable to assume x₁ and x₂ are independent.

Joel, x₁: 48.7; σ₁ = 10.3
David, x₂: 48.7; σ₁ = 10.3

If life expectancy can be predicted with more accuracy, Big Rock will have less risk in its insurance business. Risk in this case is measured by σ (larger σ means more risk).

(a) The average life expectancy for Joel and David is W = 0.5x₁ + 0.5x₂. Compute the mean, variance, and standard deviation of W. (Use 2 decimal places.)

(b) Compare the mean life expectancy for a single policy (x₁) with that for two policies (W).

The mean of W is larger.The means are the same.     The mean of W is smaller.

(c) Compare the standard deviation of the life expectancy for a single policy (x₁) with that for two policies (W).

The standard deviation of W is smaller.The standard deviation of W is larger.     The standard deviations are the same.

Insurance companies know the risk of insurance is greatly reduced if the company insures not just one person, but many people. How does this work? Let x be a random variable representing the expectation of life in years for a 25-year-old male (i.e., number of years until death). Then the mean and standard deviation of x are μ = 52.4 years and σ = 12.1 years (Vital Statistics Section of the Statistical Abstract of the United States, 116th Edition).

Suppose Big Rock Insurance Company has sold life insurance policies to Joel and David. Both are 25 years old, unrelated, live in different states, and have about the same health record. Let x1 and x2 be random variables representing Joel's and David's life expectancies. It is reasonable to assume x1 and x2 are independent.

Joel, x1: 52.4; σ1 = 12.1 David, x2: 52.4; σ2 = 12.1

If life expectancy can be predicted with more accuracy, Big Rock will have less risk in its insurance business. Risk in this case is measured by σ (larger σ means more risk). (a) The average life expectancy for Joel and David is W = 0.5x1 + 0.5x2. Compute the mean, variance, and standard deviation of W. (Use 2 decimal places.)

μ

σ2

σ

(b) Compare the mean life expectancy for a single policy (x1) with that for two policies (W).

The mean of W is larger.

The means are the same.

The mean of W is smaller.

(c) Compare the standard deviation of the life expectancy for a single policy (x1) with that for two policies (W).

The standard deviation of W is smaller.

The standard deviations are the same.

The standard deviation of W is larger.

Insurance companies know the risk of insurance is greatly reduced if the company insures not just one person, but many people. How does this work? Let x be a random variable representing the expectation of life in years for a 25-year-old male (i.e., number of years until death). Then the mean and standard deviation of x are μ = 52.5 years and σ = 10.1 years (Vital Statistics Section of the Statistical Abstract of the United States, 116th Edition). Suppose Big Rock Insurance Company has sold life insurance policies to Joel and David. Both are 25 years old, unrelated, live in different states, and have about the same health record. Let x1 and x2 be random variables representing Joel's and David's life expectancies. It is reasonable to assume x1 and x2 are independent.

Joel, x1: 52.5; σ1 = 10.1 David, x2: 52.5; σ1 = 10.1

If life expectancy can be predicted with more accuracy, Big Rock will have less risk in its insurance business. Risk in this case is measured by σ (larger σ means more risk).

(a) The average life expectancy for Joel and David is W = 0.5x1 + 0.5x2. Compute the mean, variance, and standard deviation of W. (Use 2 decimal places.) μ σ2 σ

(b) Compare the mean life expectancy for a single policy (x1) with that for two policies (W). The mean of W is smaller. The mean of W is larger. The means are the same.

(c) Compare the standard deviation of the life expectancy for a single policy (x1) with that for two policies (W). The standard deviation of W is larger. The standard deviation of W is smaller. The standard deviations are the same.