Consider the following independent situations, all of which apply to audits of entities for the year ended 31 December 2019:

(i) In July 2019, Alpha Ltd started using a new general ledger software package. The Financial Controller is impressed with the new system, because management accounts are easily produced and allow detailed comparisons with budgets and prior-period figures across product lines and geographical areas. The conversion to the new system went smoothly. As it is a popular computer package, it required only minor modifications.

(ii) As part of a computer systems conversion in Beta Ltd, the position of Systems Administrator was created. This position is responsible for all systems maintenance, including data backups and modifications. These tasks were previously the responsibility of the Accountant.

(iii) Gamma Ltd is a large supermarket chain with outlets in all major cities in the country. In August 2019 Gamma Ltd contracted out its payroll data processing in each city to an independent computer service provider.

(iv) Delta Ltd is a long established firm which has been operating a hotel for over 10 years. During this time, it has adopted a conservative business strategy that has seen it produce adequate, though slightly unimpressive, results. A new CEO was appointed to run the firm from September 2019. He has already released his plans for renovating the hotel, despite not officially serving as CEO yet. You have also heard him discuss the implementation of a new marketing strategy to improve occupancy rates.

Required:

For each situation (i) to (iv) above.

(a) State whether Inherent Risk, Control Risk or Detection Risk have increased or decreased.

(b) Provide an explanation for your answer in (a)

Goodfood is a supermarket chain. During the current year it started building a new store. The directors are aware that in accordance with IAS23 Borrowing costs certain borrowing costs have to be capitalised.

Details relating to the construction of Goodfood’s new store:

Goodfood took out a €10 million loan with an interest rate of 7.5% per annum on 1 April 2017. The loan was specifically taken to finance the building of the new store which meets the definition of a qualifying asset in IAS23. Construction of the store started on 1 May 2017 and it was completed and ready for use on 28 February 2018.

Questions:

Goodfood’s new store meets the definition of a qualifying asset in IAS23. Which of the following describes a qualifying asset?

Group of answer choices

An asset that takes a substantial period of time to get ready for use or sale

A non-current asset that is classified as held-for-sale

An asset that is intended for use rather than sale

An asset that is ready for use or sale when purchased

Rather than take out a loan specifically for the new store Goodfood could have funded the store from existing borrowings which are:

• 10% bank loan of €50 million
• 8% bank loan of €30 million

In this case it would have applied a capitalisation rate to the expenditure on the asset. What would that rate have been?

Group of answer choices

9.25%

10%

9%

8.75%

What is the total of the finance costs which can be capitalized in respect of Goodfood’s new store?

Group of answer choices

€625,000

€750,000

€600,000

€500,000

Goodfood issued a loan on 1 April 2017. Three events or transactions must be taking place for capitalisation of borrowing costs to commence. Which one is NOT one of these?

Group of answer choices

Physical construction of the asset is nearing completion

Necessary activities are in progress to prepare the asset for use or sale

Borrowing costs are being incurred

Expenditure on the asset is being incurred

The following income statement items appeared on the adjusted trial balance of CoronaCorporation for the year ended December 31, 2019($ in 000s):

sales revenue, $22,600;

cost of goods sold, $14,650;

selling expense, $2,330;

general and administrative expense, $1,230;

dividend revenue from investments, $230;

interest expense, $330.

Income taxes have not yet been accrued. The company's income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company's income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2019($ in 000s). All transactions are material in amount.

1)Investments were sold during the year at a loss of $330. Corona also had an unrealized loss of $230 for the year on investments. The unrealized loss represents a decrease in the fair value of debt securities and is classified as part of other comprehensive income.

2)One of the company's factories was closed during the year. Restructuring costs incurred were $2,300.

3)During the year, Coronacompleted the sale of one of its operating divisions that qualify as a component of the entity according to GAAP regarding discontinued operations. The division had incurred an operating income of $830 in 2019 prior to the sale, and its assets were sold at a loss of $1,740.

4)A positive foreign currency translation adjustment for the year totaled $570.

Required. Prepare Corona's single, continuous statement of comprehensive income for 2019, including earnings per share disclosures. Use a multiple-step income statement format. Three million shares of common stock were outstanding throughout the year.

(Present your answers in thousands of dollars, except earnings per share. Amounts to be deducted should be indicated with parentheses. Round Earnings per share answers to two (2) decimal places.)

You make a 5 year investment. The investment returns in each of the 5 years are: 3%, 10%, -15%, 0%, and 25% What is the holding period return of your stock investment? What is the arithmetic mean annual return of the investment? What is geometric mean annual return of the investment?

If the order of the returns were reversed (so 25%, 0%, -15%, 10%, 3%), would the ending value of your investment be different?

• The following condensed balance sheet is for Bach Company for the current fiscal year. The current year sales total $600,000 and net income is $30,000. Bach’s dividend payout ratio is 40%.
  
• Cash $50,000 A/Payable $75,000
• A/Receivable 80,000 Accruals 10,000
• Inventories 60,000 Notes Payable 25,000
• Total Current Assets $190,000 Total Current Liabilities $110,000
• Fixed assets, net 110,000 Long-term Debt 50,000
• Common Stock 80,000
• Retained Earnings 60,000
• Total Assets $300,000 Total Liab. & Equity $300,000
• For the coming fiscal year, the company expects sales growth of 20%.
  Assuming the company is operating at full capacity and hence increase in sales results in increase in all assets, calculate the external funds need (EFN) for the coming year
  
• a. -$600
• b. $16,400
• c. $21,400
• d. $23,400
• problem above. Assume the firm has unused capacity. So only current assets change spontaneously with changes in sales. What will be the external funds needed (EFN) with this assumption?
• a. -$600
• b. $16,400
• c. $21,400
• d. $23,400

• problem above Assume Bach has unused capacity. It wants to change its dividend payout ratio such that its EFN will be zero. What should be its dividend payout ratio?
  
• a. 20%
• b. 32%
• c. 52%
• d. 42%

Same question,in parts

According to a research​ institution, the average hotel price in a certain year was ​$91.85. Assume the population standard deviation is ​$18.00 and that a random sample of 41 hotels was selected. Complete parts a through d below. a. Calculate the standard error of the mean. sigma Subscript x overbarequals​$ nothing ​(Round to two decimal places as​ needed.) b. What is the probability that the sample mean will be less than ​$93​? Upper P left parenthesis x overbar less than $ 93 right parenthesisequals nothing ​(Round to four decimal places as​ needed.) c. What is the probability that the sample mean will be more than ​$96​? Upper P left parenthesis x overbar greater than $ 96 right parenthesisequals nothing ​(Round to four decimal places as​ needed.) d. What is the probability that the sample mean will be between ​$91 and ​$92​? Upper P left parenthesis $ 91 less than or equals x overbar less than or equals $ 92 right parenthesisequals nothing ​(Round to four decimal places as​ needed.) Enter your answer in each of the answer boxes.

A poll was taken this year asking college students if they considered themselves overweight. A similar poll was taken 5 years age. Five years age, a sample of 270 students showed that 120 considered themselves overweight. This year a poll of 300 students showed that 140 considered themselves overweight. At a 5% level of significance, test to see if there is any difference in the proportion of college students who consider themselves overweight between the two polls. What is your conclusion?

ABC Inc., began the year with 10,000 units in stock but finished with 5,000 units. It produced 45,000 units for the period. Its selling price is $12 per unit, variable manufacturing cost is $5 per unit, and variable selling is $3 per unit. Fixed manufacturing and selling costs are $100,000 and $72,000 respectively. The firm notes that variable cost per unit (both mfg and SGA) was the same this and the prior year. What is the income under variable costing?

2. Refer to the prior problem. The firm informs you that inventory values under absorption costing decreased by $39,000. Compute (Income as reported under variable costing - Income as reported under absorption costing), noting that it is change in FMOH between the opening and closing inventory accounts.

If a project has a cost of $10,000, expected net cash flows of $1500 a year for 12 years and you use a discount rate of 6%, what is the following:

1. Payback period (no application of discount rate)
2. Payback period (using discount rate)
3. NPV
4. IRR
5. Should the project be accepted?

If another project has a cost of $10,000 and has expected life of 8 years and it will generate $3000 a year should you accept the project if your boss says the cost of capital is 5%?