Bramble Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $7,500,000 on January 1, 2020. Bramble expected to complete the building by December 31, 2020. Bramble has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019 $3,000,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 2,100,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 1,500,000

Assume that Bramble completed the office and warehouse building on December 31, 2020, as planned at a total cost of $7,800,000, and the weighted-average amount of accumulated expenditures was $5,400,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)

Compute the depreciation expense for the year ended December 31, 2021. Bramble elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $450,000. (Round answer to 0 decimal places, e.g. 5,275.)

Problem Three:

For the financial year ending 30 June 2020, Malkin Ltd has some liability issues for which it seeks your help:

1. The company sells widgets and provides a one-year warranty. 100,000 widgets were sold for the year ended 30 June 2020, and 150,000 are expected to be sold next year. 2% of units sold are estimated to require warranty work, at an average cost of $3 per unit. Actual repairs incurred for units sold in the year just ended were $1,800. In the unadjusted trial balance, the Warranty Provision account has a $1,200 debit balance.
   1. Prepare the AJE required to update the Warranty Provision.
   2. What balance should be shown for Warranty Provision on the 30 June 2020 Balance Sheet?
2. Employees are paid $2,980 cash in hand every two weeks (wages and salaries), representing 10 days of work. At the same time, $1,200 of PAYE is withheld by Malkin Ltd, which it will pay to the IRD on the employees’ behalf. 30 June was on a Tuesday, and the last payroll run was the previous Friday (26 June). Employees do not work weekends. Prepare the AJE required on 30 June.
3. Malkin Ltd’s management is having trouble distinguishing provisions, contingent liabilities, and liabilities such as accounts or notes payable. Explain to Malkin Ltd’s management the key differences between these three categories, including their reporting implications, e.g., recognition or not; if not, what then?

The comparative balance sheets of NCAA Corporation are the following:

Additional data related to 2020 are as follows:                                                                                              

1. Equipment that had cost $351,000 and was 80% depreciated at time of disposal was sold for $140,400.                                                    

2. $380,250 of the long-term note payable was paid by issuing common stock.                                             

3. Cash dividends paid were $227,500.                                                               

4. On January 1, 2020, the building was completely destroyed by a flood. Insurance proceeds on the

building was $750,750 (after netting $15,015 taxes).  

5. Investments (available-for-sale) were sold at $71,500 below their cost. The company has made similar sales and investments in the past.                                                                                     

6. A long-term note for $1,316,250 was issued for the acquisition of equipment.                                          

Instructions: Prepare a statement of cash flows using the indirect method.

LarkspurFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $6,000,000 on January 1, 2020. Larkspur expected to complete the building by December 31, 2020. Larkspur has the following debt obligations outstanding during the construction period.

A. Assume that Larkspur completed the office and warehouse building on December 31, 2020, as planned at a total cost of $6,240,000, and the weighted-average amount of accumulated expenditures was $4,320,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)

B. Compute the depreciation expense for the year ended December 31, 2021. Larkspur elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $360,000. (Round answer to 0 decimal places, e.g. 5,275.)

Please reply to DIscussion 1 and Discussion 2 in your own words:

Discussion 1: Virgin Atlantic Airways positions itself as a very high-quality airline. Their mission to deliver high quality and exception service is, in my opinion, not reflected on its website. The website depicts Virgin Atlantic as a fun, cool airline to fly with. Much of this vibe is from a direct influence from Virgin Records. David Aaker, author of Strategic Market Management goes on to describe Virgin as “a feisty, fun-loving, rule-breaker” (2014, p. 158).

Virgin Atlantic Airways is known for being a first mover in innovation. Virgin was the first airline to offer individual TV screens for its passengers (Virgin Atlantic Airways, 2018). In 2008, Virgin was the first airline to power a commercial jet solely on biofuel (Virgin Atlantic Airways, 2018). Despite Virgin’s features, it is committed to keeping its prices reasonable.

Virgin Atlantic Airways brand-building program is unique. Richard Branson, founder of Virgin Records and Virgin Atlantic Airways, has continuous used the money received from Virgin Records for signing popular artists and used it to build Virgin Atlantic Airways (Virgin Atlantic Airways, 2018). This influence of money from a previous business is why more brands cannot emulated Virgin’s brand-building programs.

Discussion 2: Virgin Atlantic Airlines brand identity is associated with “its image of service quality, value for money, being the underdog, and having an edgy personality” (Aaker, 2014, pg. 158).

No, all potential dimensions are consistent within their brand identity. They are a company who through their consistent innovation and caring attitude coupled with the exceptional ways they find to deliver their customer service have stayed completely inline with their brand identy.

The identity has been brought to life through the personality that the brand has emulated. Virgin Atlantic has a personality that “spans some extremes, from competent to a feisty, fun-loving, rule-breaker” (Aaker, 2014, pg. 158).

Virgin Atlantic has many proof points. Virgin Atlantic goes above and beyond at providing superior service to its customers to include “sleeper seats, in-flight massages, limo service, individual TVs” (Aaker, 2014, pg. 158). They provide more value for your money by offering a little more bang for your buck, “Virgin’s Upper Class is priced at the business class level, mid-class offered at full-fare economy prices…” (Aaker, 2014, pg. 158). As the underdog, they join markets who have large brands that have been around for quite some time. They position themselves as a company who “cares, innovates, and delivers an attractive, viable alternative to customers” (Aaker, 2014, pg. 158). Much of their “edgy” personality has been accredited to founder and owner Richard Branson and his own colorful personality.

More brands should emulate Virgin’s brand-building programs. That may be easier said then achieved. The company’s brand identity seems to stem heavily from Richard Branson who has successfully immersed his own values and personality into the core culture of the company. This would be a difficult thing for other brands to copy if they do not have similar attributes within their company’s wheelhouse.

In his book in 1984 Michael Porter stated that companies that tried to be BOTH a cost lead AND a differentiator would be 'stuck in the middle.' In 2020 we know that is no longer true. What was Porter's initial argument about why both strategies were contradictory and could not co-exist? What has changed during the past 30 years that resulted in the creation of a 'best cost' strategy? Identify a company that employs this type of strategy and explain why you think it is 'best cost'.

XYZ Company purchased a land for $ 1,000,000 during 2017 and chooses the revaluation model in accounting for its land.  

Below are the following information:

A. If the land was sold on January 10, 2020, for $ 1,115,000, how much is the gain on sale of land? ____

B. How much is the accumulated other comprehensive income to be recycled to the retained earnings as a result of the gain on sale of land? ____

Niles Company granted 9 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share on January 1, 2020, the grant date of the restricted stock award. When calculating diluted EPS at December 31, 2021, what will be the net increase in the weighted-average number of shares outstanding if the market price of the common shares averaged $5 per share during 2021?

Trainor Corporation purchased equipment on January 1, 2020, at a cost of $500,000. The equipment has an estimated residual value of $50,000 and an estimated life of 5 years. At the end of two years, Trainor revaluated the useful life of the equipment. Management extended the total useful life an additional 5 years but estimated that the equipment would have no residual value at the end of this time.

If the company uses straight-line depreciation, what amount would be recorded as depreciation expense each year, beginning with the third year?