ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.

REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step).

You are recruited by the founder of a start-up company to advise her on the optimal capital structure for her company. The sole project of the company will require an initial outlay (at date 0) of £150,000, and is expected to generate a single cash flow in one year (at date 1). The project cash flow at date 1 will take one of two equally likely values depending on the state of the economy: if the economy is strong, then the cash flow will be high at £300,000; in a weak economy the cash flow will be only £140,000. Based on evidence of companies with comparable projects, the project's cost of capital has been estimated as 10% per annum. The rate of return on effectively risk-free treasury securities is expected to remain constant over the project life at 5% per annum.

a) Suppose the entrepreneur finances the project using only equity (zero debt). Assuming that the company operates in perfect capital markets, calculate the market value of (unlevered) equity at date 0.

b) Now suppose that instead of using all-equity financing as in part a), the entrepreneur finances £50,000 of the initial project outlay using debt and the rest using equity. The company promises to repay the debt along with a single interest payment of £2,500 at date 1, and the company can borrow the £50,000 of debt at a cost of debt capital of 5% per annum. Assuming that the company operates in perfect capital markets, calculate the current market value at date 0 of the ‘levered equity’ of this company.

c) Compare and contrast the expected return to shareholders in the all-equity financed company in part a) and in the levered company of part b), and explain the difference (if any).

d) Suppose the company has to pay corporate tax at the statutory rate of 35% per annum. All other assumptions of perfect capital markets continue to hold. Compare and contrast the current market values (at date 0) of the all-equity financed firm of part a) and of the levered company of part b). Explain the difference (if any).

e) Now suppose corporate tax is abolished and the company again operates in perfect capital markets. The entrepreneur decides to issue zero-coupon debt with a face value of £150,000 that matures at date 1. The details of the project are as in part a), and the risk-free rate is 5% per annum.

i. Explain how and why the equity and debt of the levered company can be interpreted and valued as options, and how to determine the underlying asset(s), the maturities, the strike prices and the payoffs at maturity to the holders of these options.
ii. Using the option framework of the previous part e)i., briefly outline the main agency conflicts between shareholders and debtholders.
iii. Using the replicating-portfolio approach in the binomial model and put-call parity, calculate the values of the call and put options in part e)i. For the purpose of your calculation, assume the firm pays no dividends, and there is just a single share outstanding (so the share price equals the market value of the firm’s assets). Clearly show your workings and explain each step in your calculation.

1.   The CEO of the firm you work for is reading some research about the market you firm is in. He keeps coming across this concept of p-value and is perplexed by what it means. He asks you to explain it to him in a way he can understand it. (He took stats 40 years ago at an inferior university). Write up an explanation of p-value and use an example that will clearly explain this concept to him.    Remember, he basically has no background in statistics.

Can a corporation's annual profit be predicted from information about the company's CEO? Forbes (May 1999) presented data (shown in TABLE 2) on company profit (y) in (millions of dollars), CEO's annual income (x1) (in thousands of dollars) and percentage of the company's stock owned by the CEO (x2). Use the data in the TABLE below and answer the following questions.

(a) Fit a multiple regression model of y on x1 and x2 (MODEL 1). Fit two simple linear regressions: (I) y on x1 (MODEL2); (II) y on x2 (MODEL 3). Discuss results on statistical significance of explanatory variables in each model. Compare the results of fitting the three models to the data using various measures of goodness of fit and model selection criteria discussed in class. Rank the models in terms of usefulness and briefly comment on their performance.

(b) Do you find any signs of multicollinearity?

(c) Use the printout to test the following hypotheses using a significance level of 5%: (I) increasing the CEO's annual income (other things constant) will increase the company profit; (II) increasing the percentage of company stock owned by the CEO will increase the company profit.

TABLE: Company profit (y), CEO's annual income (x1), and the company stock owned by the CEO (x2)

You are the accountant of a Company whose operations have been largely impacted by COVID-19 and is consequently facing cash flow issues.

(a) The Company will be receiving government subsidy to cover some of its employee costs for the next three months. For tax accounting purposes, how do you think this subsidy should be treated. Provide justifications for your answer.

(b) The Company has a loan of $8 million with an Australian bank. Given its current financial situation, the Company has qualified to defer its monthly loan repayments for the next six months, with its interest capitalised.

The Chief Executive Officer (CEO) of the company advises you that you do not need to include the loan in the general-purpose financial statements ending 30 June 2020, but instead in the financial reports for the year ending 30 June 2021. Do you agree with this advice? Provide justifications for your answer

BTN 2-4) Assume you are preparing for a second interview with a manufacturing company. The company manufactures customer-order holiday decorations and display items. During your first interview, you learned that the managers are not currently pleased with the timeliness of information and inventory measurements. Discuss both A) what type of cost accounting system this company should use, and B) the documents that you would recommend as part of the cost accounting system.

PLEASE DONT COPY PASTE ANSWERS. I NEED THE ANSWER IN 350 WORDS AND IN WORD FORMAT " NO PICTURES". I am not interested in paying my money for easy work looking people.

Ahmad company (the 80%-owned subsidiary); in 1/5/2018 sold land to Fatima Company (the subsidiary) at selling price $125,000, the cost of land $100,000. During 2020, Fatima Company sold the land at $140,000. Net income for Fatima Company as follows: 2018 2019 2020 Net Profit 80,000 100,000 60,000 Instructions: 1. Journalize the above transactions in Parent Company records and in the Subsidiary Company records. 2. Calculate the Parent company from the subsidiary’s net income? 3. Calculate the Minority interest from the subsidiary’s net income? 4. Prepare the working paper in Journal entries format for 2018; 2019 and 2020?

The given data represent the total compensation for 10 randomly selected CEOs and their​ company's stock performance in 2009. Analysis of this data reveals a correlation coefficient of requals=negative 0.2324−0.2324.

What would be the predicted stock return for a company whose CEO made​ $15 million? What would be the predicted stock return for a company whose CEO made​ $25 million?

What would be the predicted stock return for a company whose CEO made​ $ 15 million?

What would be the predicted stock return for a company whose CEO made​ $ 25 million

Q2)

A listed company has been recently trying to adhere to corporate governance provisions who are a requirement of the Stock Exchange.

The company’s CEO holds 60% of the company’s share capital with the remaining holding being widely disbursed. The CEO also took up the role of the Chairman in an attempt to minimize costs as he has stated, however analysts have been claiming that he took up this role to avoid questioning of his decisions.  

Required:

Taking into account the necessity of good corporate governance principles within the company, critically evaluate the issues arising from the case.