Acorn Limited is a listed company based in Vermont. On January 1, 2018, the company granted 1,000 share units to its CFO. Each share unit has a contractual service period of three years and a vesting condition based on the details below.

At the end of 2020, each share unit is convertible into 100 common shares of Acorn Limited if both of the following criteria are met:

2018-2020 Accumulated company net income is greater than $5 million.

2018-2020 Stock price increase is greater than 25%.

On the grant date, the company’s common shares had a fair value of $6 per share and the company was expected to meet both of the criteria above.

During 2018 and 2019, the company was expected to meet both of the criteria above. However, during 2020 the company’s stock price decreased and the company did not meet the stock price increase criteria at the end of the year.

The company’s accountant has asked for your help to check the compensation costs recorded for these share units during 2018-2019 and record the appropriate journal entry at the end of 2020.

End of 2018 -> 100*6*(1/3)=200

End of 2019-> (100*6(2/3))-200=200

Ignore the effects of taxes.

what are the journal entries for 2018,2019,&2020?

Reporting Earnings per Share Disclosures

Siera Inc. had 350,000 shares of no par common stock outstanding throughout 2020 that declared and paid dividends of $75,000 in 2020. The company also had 45,000 shares of preferred stock that paid dividends of $7,500 in 2020 (declared in 2020). The company reported the following amounts in its income statement for the year ended December 31, 2020 (pretax).

Required

a. Prepare the earnings per share section of the income statement for the year ended December 31, 2020, assuming a tax rate of 25%.

• Use a negative sign to indicate a loss.
• Round the per share amounts to two decimal places.

Required

b. Repeat requirement of part a except now assume that the company reported income from discontinued operations of $52,500.

• Use a negative sign to indicate a loss.
• Round the per share amounts to two decimal places.

Translation and Remeasurement of Account Balances

U.S. Industries has a subsidiary in Switzerland. The subsidiary’s financial statements are maintained in Swiss francs (CHF). Exchange rates ($/CHF) for selected dates are as follows:

The following items appear in the subsidiary’s trial balance at December 31, 2020:

1. Cash in bank, CHF4,000,000.

2. Inventory, CHF3,000,000. The inventory was acquired on November 30, 2020.

3. Machinery and equipment, CHF11,000,000. A review of the records indicates that the company bought equipment costing CHF5,000,000 in January 2018 (20 percent of this was sold in January 2020) and additional equipment costing CHF7,000,000 in January 2019. Ignore accumulated depreciation.

4. Depreciation expense on machinery and equipment, CHF1,100,000 (depreciated over ten years, straight-line basis).

Required

Calculate the dollar amount for each of the above items, assuming the functional currency of the Swiss subsidiary is

(a) the U.S. dollar and

(b) the Swiss franc.

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

Bonobo’s Balloons Inc. purchased the $60,000 par value bonds of Gnomes R Us on January 1, 2020. The coupon rate is 8% and the bonds mature in 5 years. The market rate of interest is 12%. The bonds pay interest semi-annually every June 30 and December 31. The bonds were purchased for $51,167.90 and were classified as available-for-sale. Bonobo’s Balloons uses the effective-interest rate method to amortize bond discounts and premiums. At December 31, 2020, the market value of the bonds was $65,000. Bonobo’s Balloons sold the bonds on January 1, 2021, for $65,000.

Instructions

1. Compute the carrying value of the investment at December 31, 2020.

2. Compute the amount of interest revenue earned on this investment at June 30, 2020.

3. Compute the amount of unrealized gain or loss recognized on December 31, 2020. In which financial statement should this amount be reported?

4. Compute the amount of gain or loss recognized on the sale of the investment at January 1, 2021. In which financial statement should this amount be reported?

5. If this investment was instead classified as held-to-maturity, how would this have affected the amount of unrealized gain or loss on December 31, 2020, and how would this have affected its reporting?

On December 31, 2019, Sumner Company held Wall Company bonds in its portfolio of trading securities. The bonds have a par value of $40,000, carry a 10% annual interest rate, mature in 2026, and had originally been purchased at par. The market value of the bonds on December 31, 2019 was $38,000.

On January 1, 2020, Sumner acquired bonds of Doherty Company with a par value of $30,000 for $30,200. The Doherty Company bonds carry an annual interest rate of 12% and mature on December 31, 2024. Additionally, on the same date, Sumner acquired Maggio Company bonds with a face value of $20,000 for $19,500. The Maggio Company bonds carry an 8% annual interest rate and mature on December 31, 2029. At the end of 2020, the respective market values of the bonds were: Wall, $39,000; Doherty, $31,000; and Maggio, $21,000. Sumner classifies all of the debt securities as trading. Assume that Sumner uses the straight-line method to amortize any discounts or premiums.

Required:

Complete the following worksheet for Appliance Repair for the year ended 30 June 2020.

Additional information to complete the worksheet:

1. The equipment of $67,500 was purchased on 1 March 2020. The straight-line depreciation method is used with a useful life of 3 years and a scrap value of $2,700. No depreciation is ever recorded.
2. The $75,000 bank loan was borrowed on 1 May 2020. It is an interest only loan. The interest rate is 0.8% per month. No interest is ever paid or recorded.
3. The supplies on hand at 30 June 2020 were $650.
4. The prepaid insurance balance represents the annual premium paid on 1 April 2020.
5. $2,500 of unearned revenue has been earned by 30 June 2020.

   	trial balance (unadjusted)		adjustments		trial balance(adjusted)		Incomestatement
   account title	debit	credit	debit	credit	debit	credit	debit	credit
   cash at bank	37,500
   account payable	127,500
   prepaid insurance	1,800
   suppliers	900
   equipment	67,500
   accumulated depreciation -equipmeny
   accounts payable		2,700
   unearned revenue		3,150
   interest payable
   bank loan (due in 2028)		75,000
   capital		49,950
   service revenue		157,500
   wages expense	52,500
   supplies expense	600
   depreciation expense - equipment
   insurance expense
   interest expense
   	288,300	288,300

DigitalHall operates three divisions within the same building, namely, Print, Video and Sound. The following information has been obtained from DigitalHall:

The common costs of RM160, 000 are allocated across all three divisions, based on divisional sales.

Required:

1. Prepare a divisional performance report.
2. Sarah, the manager of the Video division, suggests that the Print division should be closed, because this division is making losses. Kim, the manager of the Print division, indicates that DigitHall will have lower overall profits if the Print division is closed, unless certain steps are put in place. Kim knows that the Print division needs to be downsized because print media is becoming less popular, rather than closed, to serve some regular customers who are dependent on this division. In addition, alternative actions should be pursued to protect overall profit, and she wants to oversee this process. Patricia, the general manager, suggests that Kim should prepare a brief report explaining why overall profits would drop and suggest two strategies that DigitalHall could pursue to prevent a drop in overall profits. You are interning at DigitalHall, and Kim asks for your help in preparing this report.

Required:

Prepare a brief report for Kim that she could present to Patricia.

Start typing here

(15 + 6 = 21 marks)

Harold Dean became Chief Executive Officer of Wriston Manufacturing two years ago. At that
time, the company was reporting lagging profits, and Harold was brought in to “stir things up.”
The company has three divisions; electronics, fiber optics, and plumbing supplies. Harold has no
interest in plumbing supplies, and one of the first things he did was to put pressure on his
accountants to reallocate some of the company’s fixed costs away from the other two divisions to
the plumbing division. This had the effect of causing the plumbing division to report losses
during the last two years; in the past it has always reported low, but acceptable, net income.
Harold felt that this reallocation would shine a favorable light on him in front of the board of
directors because it meant that the electronics and fiber optics divisions would look like they were
improving. Given that these are “businesses of the future,” he believed that the stock market
would react favorably to these increases, while not penalizing the poor results of the plumbing
division. Without this shift in the allocation of fixed costs, the profits of the electronics and fiber
optics divisions would not have improved. But now the board of directors has suggested that the
plumbing division be closed because it is reporting losses. This would mean that nearly 500
employees, many of whom have worked for Wriston their whole lives, would lose their jobs.

a) If a division is reporting losses, does that necessarily mean that it should be closed? Explain.
b) Was the reallocation of fixed costs across divisions unethical? Explain.
c) What should Harold do now that the plumbing division may be closed?

Hammond Manufacturing Inc. was legally incorporated on January 2, 2017. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $14.0 noncumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: