In January 2019, Miller Construction Corp. contracted to construct a building for $3,600,000. Construction started in early 2019 and was completed in 2020. The following additional information is available:

                                                                                          2019               2020

       Costs incurred...................................................... $1,458,000          $1,620,000

       Estimated costs to complete.................................. 1,560,000                         —

       Billed ……………………………………………….    1,700,000           1,900,000

       Collections during the year.................................... 1,440,000            2,160,000

Miller uses the percentage-of-completion method.

Instructions

Under the contract-based approach for percentage completion,

a) How much revenue should Miller report for 2019 and 2020?

b) Prepare all journal entries for 2019 and 2020 for this contract.

c)    What amounts would be presented on Miller’s December 31, 2019 Balance Sheet?

d)    What is the gross profit on the project for each of 2019 and 2020?

Pronghorn Company’s net income for 2020 is $53,200. The only potentially dilutive securities outstanding were 1,000 options issued during 2019, each exercisable for one share at $6. None has been exercised, and 10,700 shares of common were outstanding during 2020. The average market price of Pronghorn’s stock during 2020 was $25.

(a) Compute diluted earnings per share. (Round answer to 2 decimal places, e.g. $2.55.)

(b) Assume the same facts as those assumed for part (a), except that the 1,000 options were issued on October 1, 2020 (rather than in 2019). The average market price during the last 3 months of 2020 was $25. (Round answer to 2 decimal places, e.g. $2.55.)

On April 1, 2020, Mendoza Company (a U.S.-based company) borrowed 504,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2020, and will make a second interest payment on March 31, 2021, when the loan is repaid. Mendoza prepares U.S. dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro:

The DeVille Company reported pretax accounting income on its income statement as follows:

   
Included in the income of 2018 was an installment sale of property in the amount of $62,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $24,800 in 2019, $31,000 in 2020, and $6,200 in 2021.

Included in the 2020 income was $26,000 interest from investments in municipal bonds.

The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond.

Required:
Prepare the year-end journal entries to record income taxes for the years 2018, 2019,  2020 , 2021.

Greek Tavern Co was established on July 1, 2020 by a cash investment of $100,000. The following is the Trial Balance prepared on September 30, 2020.

During the three month period, the following activities occurred: 1. The physical checkup revealed that $4,000 worth of supplies is still on hand on September 30. 2. The annual depreciation of office equipment is $15,000. The equipment were purchased on August 1, 2020. 3. The unearned revenue was created on September 1, 2020 by an advance payment from a major customer for services extending over the period August 1 till December 31, 2020. 4. The loan was borrowed on July 1, 2020 for 5 years from BOND Bank. The bank charges 9% interest. 5. The firm pays its 5 employees a weekly salary of $6250. The policy is that it pays every Monday of the week for the previous 5 days' work, Monday through Friday. September 30, 2020 is a Tuesday. Last time the firm paid salary was on Monday September 29, 2020 for the week from 22 till 25. 6. Rogelio paid $50,000 cash on July 1, 2020 for 2 years' office rent.

Rogelio Legal Advisory firm follows the fiscal year extending from July 1 till September 30 and adjust Quarterly.

A. Journalize all the necessary adjusting entries on September 30, 2020 showing all the calculations.

B. Compute the Net Income.

Can you do a 5 force analysis on the company Google and how they acquired Fitbit please.

Ramsey Corporation acquired a machine (7-year property) on December 31, 2017, at a cost of $2230000. Ramsey Corproation has a taxable income from its business in 2017 of $1000000 and elects to expense the maximum amount under section 179 but elects out of bonus depreciation for the machine. Compute Ramsey's allowable expensing deduction under Section 179 and MACRS depreciation deduction for the machine for 2017. Assume the machine is the only depreciable personal property acquired by Ramsey Corporation during 2017.

James Inti acquired a block of land on 1 July 2013 at a cost $1.4 million and valued it according to the cost model. Three years on, the management found out that the area where the land was acquired has been contaminated due to a chemical incident.

On 30 June 2015, the management is provided with the following information:

The value in use $1.3 million

Net selling price $1.2 million

REQUIRED

Describe the accounting treatment required under Accounting Standard to record the drop in the value of the land?

John Adams, Thomas Jefferson, and the Barbary Pirates: An Illustration of Relevant Costs for Decision Making

Dennis Caplan, Assistant Professor

Iowa State University.

The concepts of incremental cost, opportunity cost, sunk cost, and cost allocation are identified and discussed in the context of early U.S. foreign policy. The case is derived from an authentic exchange of views between Thomas Jefferson and John Adams about how the United States should protect its merchant shipping against the Barbary pirates. Both men compare the cost of waging war against the Barbary States with the cost of paying ransom for captured U.S. seamen and bribes to protect future shipping. Adams quantifies the opportunity cost associated with not taking any action. Jefferson articulates an incremental costing argument, on the assumption that the U.S. should build a navy regardless of U.S. policy toward the Barbary States. The case constitutes a brief introduction to management accounting by illustrating various cost concepts. The case lends itself to a discussion of how cost information can be chosen to support a particular course of action, and it can also prompt a discussion of the historical origins of management accounting.

The Barbary Pirates Throughout the seventeenth and eighteenth centuries, the North African Barbary States of Morocco, Algiers, Tunis, and Tripoli engaged in piracy of European merchant shipping. The Barbary pirates routinely captured and confiscated ships and cargo, and enslaved or ransomed their crews and passengers. England, France, and Spain entered into treaties with the Barbary States, in effect, paying ìprotection moneyî for their merchant shipping. These powerful European nations preferred bribery to war, in part because they perceived an economic benefit from the threat the pirates posed to the merchant shipping of other European nations. John Adams, Thomas Jefferson, and the Barbary Pirates: An Illustration 267 Issues in Accounting Education, August 2003 Until the Revolutionary War, merchant ships from the American Colonies were protected by the British Navy and by treaties between England and the Barbary States. American shipping lost this protection after the war. Within three years of the Treaty of Paris, which formally ended the war in 1783, three American ships were captured, one by Morocco and two by Algiers. Morocco soon freed the American crew in exchange for a ransom of 5,000 pounds sterling (about $25,000).1 The crews held by the Algerians were captive throughout 1786 and for some time thereafter. See Exhibit 1. Historical Background The capture of American ships by the Barbary pirates created an early and important foreign policy crisis for the United States. The U.S. response to the Barbary crisis was strongly influenced by two factors: one military and the other financial. The military consideration was that the U.S. had no navy. The Continental Navy of the Revolutionary War was disbanded in 1784, and the navy was not reestablished until the Navy Act of 1794. During the intervening years, the U.S. had minimal naval power. Disbanding the Continental Navy was primarily a cost-savings measure. However, there were also important nonfinancial arguments for and against the navy. Some Americans who favored reestablishing close ties with England feared that the presence of a U.S. navy on the high seas would lead to confrontations with the British Navy. Other Americans, including John Adams, viewed a strong navy as the best national defense against foreign threats. Many Americans preferred the prospect of building a navy over an army due to their general distrust of standing armiesóthe result of their experience with the British occupation in America during the latter part of the Colonial Era. The financial factor that influenced the U.S. response to the Barbary pirates was that any effective response would require a significant expense relative to the governmentís available funds. The U.S. government found itself in a precarious financial condition in the years immediately following the Revolutionary War. The Continental Congress and individual states borrowed over $40 million to finance the war, including about $6 million from France. From 1781 to 1788, the period during which the United States operated under the Articles of Confederation, the federal government did not have the power to tax its citizens, levy tariffs, or regulate commerce. The cost of operating the government during this time was about $500,000 annually, not including funding the debt (Hicks et al. 1970, 103). Some income was generated by the post office and from sales of public lands, but the two principal revenue sources available to the government were requesting support from the states and issuing paper money. State contributions to the federal government constituted only a small fraction of what was needed, and issuing paper money was an inflationary measure that had already been used extensively during the Revolutionary War. The financial plight of the new nation was sufficiently acute that during this period, the government borrowed from foreign sources just to meet the interest obligations on existing foreign debt. The ratification of the Constitution in 1788 greatly enhanced the powers of the federal government and allowed the new Congress to levy and collect duties and taxes. However, the ability of the new government to actually enact and enforce revenue-generating measures was untested, and evolved over time. In 1786, during the Confederation period, and again in 1794, during Washingtonís presidency, popular opposition to taxation led to civil unrest. The first incident, Shaysí Rebellion, arose in Massachusetts when the State Legislature levied taxes to pay off the war debt. The second incident, the Whiskey Rebellion, occurred in Western Pennsylvania when the federal government imposed an excise tax on distilled liquor. Also, although the federal government had more potential resources under the Constitution than under the Articles of Confederation, it soon had more obligations. In 1790, under a plan advanced by Secretary of the Treasury Alexander Hamilton, the federal government assumed the remaining war debts that were owed by the individual states. However, despite financial tribulations at both the state and federal levels, economic conditions in the United States during this period were generally good. A short recession that occurred after the Revolutionary War was followed by a period of economic growth. The strong economy led to increased federal revenues, and that fact, combined with the success of American leaders in keeping the nation out of the growing conflict between England and France, enabled the government to become current on its obligations under the national debt during Jeffersonís administration. THE ADAMSñJEFFERSON CORRESPONDENCE In 1786, John Adams was the leading U.S. diplomat in London, and Thomas Jefferson was the U.S. ambassador to France. A few years earlier, in 1784, the Continental Congress had authorized Adams and Jefferson to negotiate treaties with the Barbary States (Kitzen 1993, 10). Consequently, the responsibility to negotiate the release of the captured American seamen, and to establish U.S. foreign policy that would protect U.S. shipping in the Mediterranean, fell largely to these two men. Against this backdrop, Adams sent Jefferson a letter that included the following analysis: Adams to Jefferson Grosvenor Square June 6. 1786 Dear Sir ... The first Question is, what will it cost us to make Peace with all [of the Barbary States]? Set it if you will at five hundred Thousand Pounds Sterling, tho I doubt not it might be done for Three or perhaps for two. The Second Question is, what Damage shall we suffer, if we do not treat. Compute Six or Eight Per Cent Insurance upon all your Exports, and Imports. Compute the total EXHIBIT 1 Timeline Government under Articles of Washingtonís Adamsís Jeffersonís Madisonís Confederation Presidency Presidency Presidency Presidency 1781ñ1788 1789ñ1797 1797ñ1801 1801ñ1809 1809ñ1817 1783: Treaty of Paris 1793: Algiers 1797: U.S.S. 1801: Start of 1812: Jefferson ends the Revolutionary seizes more Constitution Tripolitan and Adams War ships and launched War resume hostages correspondence 1784ñ1785: Jefferson 1798ñ1801: 1803ñ1804: after 12-year hiatus joins Adams in Europe; 1794: Quasi-War Heaviest they are authorized Congress with France naval action 1812ñ1814: to negotiate with the passes Navy of the war War of 1812 Barbary States; Morocco Act and Algiers seize three 1805: 1815: Naval merchant ships; 1795ñ1797: Tripoli action against Continental Navy Algiers signs signs treaty Algiers disbanded treaty, favorable to hostages U.S. 1786: Morocco signs released treaty John Adams, Thomas Jefferson, and the Barbary Pirates: An Illustration 269 Issues in Accounting Education, August 2003 Loss of all the Mediterranean and Levant Trade. Compute the Loss of half your Trade to Portugal and Spain. These computations will amount to more than half a Million sterling a year. The third Question is what will it cost to fight them? I answer, at least half a Million sterling a year without protecting your Trade, and when you leave off fighting you must pay as much Money as it would cost you now for Peace. The Interest of half a Million Sterling is, even at Six Per Cent, Thirty Thousand Guineas a year. For an Annual Interest of 30,000 £ st. then and perhaps for 15,000 or 10,000, we can have Peace, when a War would sink us annually ten times as much. (Cappon [1959] 1988, 133ñ134) In the last paragraph of the excerpt, Adams states interest expense in terms of guineas. A guinea was worth about one pound sterling. Jefferson responded to Adams a few weeks later: Jefferson to Adams Paris July 11. 1786 Dear Sir ... I ask a fleet of 150. guns, the one half of which shall be in constant cruise. This fleet built Ö will cost 450,000 £ sterling. Its annual expence is 300 £ sterl. a gun, including every thing: this will be 45,000 £ sterl. a year. Ö Were we to charge all this to the Algerine war it would amount to little more than we must pay if we buy peace. But as it is proper and necessary that we should establish a small marine force (even were we to buy a peace from the Algerines,) and as that force laid up in our dockyards would cost us half as much annually as if kept in order for service, we have a right to say that only 22,500 £ sterl. per ann. should be charged to the Algerine war. (Cappon [1959] 1988, 142ñ143) Correspondence between Adams and Jefferson tapered off in the early 1790s, when their political differences became increasingly irreconcilable, and ceased altogether shortly after Jefferson defeated Adams in the Presidential election of 1800. However, beginning in 1812, after both men had retired from public life, they renewed their friendship and began an active correspondence that would continue for the rest of their lives. Adams and Jefferson both died on July 4, 1826, the fiftieth anniversary of the signing of the Declaration of Independence. One of the letters from this latter period is relevant to the current discussion, because it reveals Jeffersonís attitude toward the navy, and more specifically, his assessment of the economic life of a ship: Jefferson to Adams Monticello Nov. 1. 1822. Dear Sir ... Yet a navy is a very expensive engine. It is admitted that in 10. or 12. years a vessel goes to entire decay; or, if kept in repair costs as much as would build a new one. And that a nation who could count on 12. or 15. years of peace would gain by burning itís navy and building a new one in time. (Cappon [1959] 1988, 584ñ585)

questions:

5- Adams advocates negotiating with the Barbary States, and Jefferson argues in favor of fighting them. In comparing Adamsís letter to Jeffersonís 1786 letter, where do these men agree, and where do they disagree? How does each man present cost data in a way that supports his position? Your analysis should distinguish between differences in underlying cost assumptions, and differences in the types of costs that each man proposes are relevant. Do you consider either man more ìcorrectî in his analysis?

6. A complete analysis of the alternative courses of action for responding to the pirates requires a consideration of noneconomic factors. What noneconomic factors can you identify that you think Adams and Jefferson should consider in weighing the pros and cons of fighting the pirates?

Strategic Management ABB, headquartered in Zurich, Switzerland, is a major competitor in the power and automation technologies industries across the major markets globally. It has 140,000 employees operating in almost 100 countries. In fact, it has five major businesses—power products, power systems, discrete automation, low voltage products, and process automation. It operates in eight major regions: (1) Northern Europe, (2) Central Europe, (3) the Mediterranean, (4) North America, (5) South America, (6) India, the Middle East, and Africa, (7) North Asia, and (8) South Asia. Over time, ABB has been a successful company using its geographic diversification across the globe to its advantage. It also exemplifies the difficulty of managing an international strategy and operations. For example, its power systems business has experienced performance problems in recent years due to poor performance in some countries due primarily to the economy downturn. Notwithstanding the difficulty of managing in emerging economies, much of its growth is focused on improving country infrastructure such as power systems and grids. In 2014, the firm announced that the Asia, Middle East, and Africa (AMEA) region currently contributes about 37 percent of ABB’s total revenue, or about $15.3 billion, and “emerging markets were planned to contribute to two-thirds of the forecast growth between 2015 and 2020.” In recent years, most of ABB’s entries to new mar- kets and expansions in existing markets have come from acquisitions of existing businesses in those mar- kets. Recently, it acquired Siemens’ solar energy busi- ness, Power-One, and U.S.-based Los Gatos Research, a manufacturer of gas analyzers used in environmental monitoring and research. The purchase of Power-One represents a major risk as the solar power industry is in a downturn. Yet some analysts predict a brighter future for the industry over the long term. ABB also uses other modes of entry and expansion, exemplified by the 2013 joint venture with China’s Jiangsu Jinke Smart Electric Company to design, manufacture, and provide follow-up service on high voltage instrument transformers. It also recently procured major contracts for business in Brazil and South Africa. Partly due to the global economic recession that began in 2008, recent weak economic performance, and some poor expansion decisions, ABB’s performance has been weaker than expected. As a result, the CEO and chief technology officer announced their resignations in 2013. Despite these changes, ABB is a highly respected global brand, and, after its recent changes (e.g., closing some country operations), its revenues and earnings have started to rise. These positive changes have been largely attributed to the success of its North American businesses. Its acquisitions of Baldor (maker of indus- trial motors) in 2010 and Thomas & Betts in 2012 greatly enhanced its North American operations and revenues. It has also had success in manufacturing equipment and robots with its robotics business headquartered in the United States. It is even moving to help small com- panies, such as ones in the beer industry, to automate their production processes. Therefore, even in turbulent times, ABB’s future looks bright. Case study: An International Strategy Powers ABB’s Future 1. What are the dominant reason’s for ABB to enter into international markets? 2. Which corporate international strategy would you classify ABB as using? Explain your answer. 3. Why has ABB used acquisitions and joint ventures as dominant entry modes in international markets? 4. What are the main political and economic risks that ABB must deal with given that it has a strong focus on entering emerging economies? 5. What are the significant organizational complexities that ABB encounters as it tries to manage its international strategy?