The Humpty Doo Rare Earths Mining Company started mining operations on 1 July 2019. In the year to the 30^th June 2020 three areas were explored, Europium, Gadolinium, and Terbium. The following costs were incurred:

Rare earths were discovered at Europium on 17^th January 2020. In April 2020 after a review of the prospects for the Gadolinium site it was decided to abandon operations there. Exploration was still a work in progress at the Terbium site, but no decision had been made about the commercial potential of that site. Development of the Europium site had continued during the year and at 30^th June 2020 $36 million had been incurred. These costs are to be written off on a production basis.

This cost relates to the construction of plant and equipment. It is estimated that there are 150,000 tonnes of rare earth which has a current sale price of $3,500 per tonne. By the 30^th June 2020 15,000 tonnes had been extracted at a production cost of $6 million of which 12,000 tonnes were sold.

Required

Record this first year’s transactions by journal entry using the area of interest method.

Culver Leasing Company agrees to lease equipment to Larkspur Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $575,000, and the fair value of the asset on January 1, 2020, is $755,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Larkspur estimates that the expected residual value at the end of the lease term will be 50,000. Larkspur amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Culver desires a 9% rate of return on its investments. Larkspur’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown. Discuss the nature of this lease for both the lessee and the lessor. Calculate the amount of the annual rental payment required. Compute the value of the lease liability to the lessee. Prepare the journal entries Larkspur would make in 2020 and 2021 related to the lease arrangement. Prepare the journal entries Culver would make in 2020 and 2021 related to the lease arrangement. Suppose Larkspur expects the residual value at the end of the lease term to be $40,000 but still guarantees a residual of $50,000. Compute the value of the lease liability at lease commencement.

The following data were taken from the books of Powell Construction Ltd:

REQUIRED:

Prepare in the general ledger of Powell Construction Ltd for the month of August 2020:

a.       the Sales Ledger Control Account            (15 marks)

b.      Purchases Ledger Control Account            

Total 25 marks

My dream home is a 5 bedroom, 6 bath bay front villa in Miami Beach, Florida. Its recent listed price was $19,900,000 as of November of 2019. I would put down $3,980,000 as my 20% down payment, leaving me with a remaining balance of $15,920,000. Using the 30 year fixed rate from FRED,my interest rate was 3.3% and the total interest rate paid over the term of the loan is $9,274,875.43 with monthly payments of $69,985,77

If my down payment were to decrease to 10%, my monthly payments would be $78437.78, which is over 8 thousand dollars more than with a 20% down payment. If i paid a 30% down payment, monthly payments would be $61,007.16 and total interest $8,032578.22. These numbers tell me that the down payment has a major impact on my monthly mortgage payments.

If the interest rate decreased to 2.3% , monthly payments would be $61,260.37 which is a significant decrease from having a 3.3% interest rate. If i change the term of the loan from a 30 to a 15 year term, monthly payments would be $112,252 and total interest over the term of the loan would be 4,285,385.95, which is significantly less than what I would pay on a 30 year loan if I am able and willing to pay much higher monthly payments.

The down payment played the biggest role in the total amount paid on the loan and is an important factor in determining the monthly payment amounts. I would definitely try to put as much down as I can on a down payment to decrease future mortgage payments. Even if a potential dream home has unfavorable interest rates, putting more money down would help decrease my monthly payments and interest rates.

Required:

Provide feedback on the above financing method (even the property). Are there any similarities or differences in the above response compared to your own?

You own shares of the Nuveen Floating Rate Income Fund (ticker: JFR), which is a closed-end fund. You want to sell your shares. Which statement below applies to your situation?

Group of answer choices

Nuveen only accepts returns of shares if they are proven to be defective

Y must hold your shares because they have not yet matured

You must sell your shares to another investor

You may redeem your shares directly from Nuveen

The primary difference between a balanced fund and an asset allocation is:

Group of answer choices

that an asset allocation fund invests in a mix of stocks and bonds, while a balanced fund does not.

that a balanced fund's asset mix is roughly static while an asset allocation fund is dynamic over time.

that an asset allocation fund's asset mix is roughly static while a balanced fund is dynamic over time.

that a balanced fund invests in a mix of stocks and bonds, while an asset allocation fund does not.

Consider the closed economy Classical model depicted below, where consumption depends positively on disposable income and negatively on the real interest rate.

1) Suppose the government decides to reduce the overall level of taxes. What happens to public savings (Spublic), private savings (Sprivate), and total savings (S)?.

2) ) According to the Classical model, what are the long-run implications of the above change on the real interest rate (r), output (Y), and the expenditure components of output consumption (C), investment (I), and government expenditure (G))?

Explain what happens to saving, investment, and the real interest rate in each of the following scenarios in a closed economy. Illustrate your answer using a saving-investment diagram. Label the axes and curves clearly.

a) Real money supply increases

b) The tax code changes so that business firms face higher tax rates on their revenue (offset by other lump-sum tax changes so there’s no overall change in tax revenue). The rise in taxes reduces desired investment, shifting the Id curve to the left: in equilibrium, this reduce real interest rate, reducing saving as well as investment.

c) Current output rises The rise in output raises desired saving, shifting the Sd curve to the right; in equilibrium, this reduces the real interest rate, increasing investment as well.

d) The average educational level rises, inducing an increase in the future marginal productivity of capital. The rise in future marginal productivity of capital raises desired investment, shifting the Id curve to the right; in equilibrium, this raises the real interest rate, increasing saving as well as investment. 

8) Which of the following reactions with covalently closed, circular double stranded DNA (ccc dsDNA) does NOT result in a new linking number? Select one choice from the list below (A-D) and explain your answer.

A. incubation with a type I topoisomerase

B. incubation with a type II topoisomerase

C. incubation with ethidium bromide

D. a brief incubation with DNase I followed by resealing the breaks in the phosphodiester backbone with another enzyme (DNA ligase)

Consider a static (one-period), closed economy with one representative consumer, one representative firm, and a government. The level of capital K and government expenditures G in the economy are both fixed exogenously. The government levies a lump sum tax T in order to fund its purchases, and the government budget must balance. Suppose the price of consumption is normalized to one (p = 1). The representative consumer has 24 hours of time available (h = 24), which she can use only for labor or leisure. She re- ceives labor income, profits from the firm (π), and pays lump sum taxes. The consumer’s utility function isu(c,l)=1/3 ln(c)+2/3 ln(l),andthefirm’sproductionfunctionisY =zKθN1−θ.

1. List the requirements that must be satisfied to achieve competitive equilibrium in this economy.

2.Suppose z=10,θ=1/4,K=96 and the wage is w=15 per hour of work. Solve the firm’s profit maximization problem for N∗. Compute the firm’s output Y and profit π at the optimal choice of N∗.