You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020. When would you recognize revenue for this payment?

• What method of accounting would you use for this construction project and why?
• What would be the benefits and challenges with your method selection?

If the following quotes are from March 15, 2013, what was the yield to maturity for the PO.BN bonds with $1,000 face values and semiannual payments? Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Paul Orts (PO.BN) 10.20 Mar 15, 2020 92.368 ?? 2,860 (Do not include the percent sign (%).Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

An accountant has calculated the following ratios for his company for the last three years.

(Remember: To convert turnovers into time periods, divide 365 days by the turnover.)

Required:

i) Calculate the Operating Cash Cycle time for each of the three years.

ii) Comment on the significance of the Operating Cash Cycle for the management

An accountant has calculated the following ratios for his company for the last three years.

(Remember: To convert turnovers into time periods, divide 365 days by the turnover.)

Required:

i) Calculate the Operating Cash Cycle time for each of the three years.

ii) Comment on the significance of the Operating Cash Cycle for the management.

Sigma plc’s income statement for the year ended 31 March 2020 and the statements of financial position as at 31 March 2019 and 2020 are provided below.

Additional information for the year ended 31 March 2020 were as follows:

1. During the year, Sigma plc sold an item of plant for £25m. This item of plant was purchased several years ago for £50m and at the date of disposal, its accumulated depreciation amounted to £30m.
2. Sigma plc also purchased additional equipment to be used in its usual operations. The amount paid for the purchase was £120m.
3. Except for the above, there were no other non-current acquisitions or disposals. The company policy is to charge a full year’s depreciation in the year of acquisition and no depreciation on disposed assets in the year of disposal.   
4. A dividend of £25m was paid on ordinary shares during the year.
5. The interest income of £12m was equal to the actual cash inflow for the year.

REQUIRED

1. Prepare the statement of cash flows for the year-ended 31 March 2020 for Sigma plc using the indirect method.
2. Analyse and discuss Sigma plc’s statement of cash flows (prepared in part (a)) from a potential investor's perspective, highlighting any material items of interest or concern.   

Renew Energy Ltd. (REL) manufactures and sells directly to customers a special long-lasting rechargeable battery for use in digital electronic equipment. Each battery sold comes with a guarantee that the company will replace free of charge any battery that is found to be defective within six months from the end of the month in which the battery was sold. On June 30, 2020, the Warranty Liability account had a balance of $45,000, but by December 31, 2020, this amount had been reduced to $5,000 by charges for batteries returned.

REL has been in business for many years and has consistently experienced an 7% return rate. However, effective October 1, 2020, because of a change in the manufacturing process, the rate increased to a total of 9%. Each battery is stamped with a date at the time of sale so that REL has developed information on the likely pattern of returns during the six-month period, starting with the month following the sale. (Assume no batteries are returned in the month of sale.)

For example, for January sales, 20% of the returns are expected in February, 30% in March, and so on. Sales of these batteries for the second half of 2020 were:

REL’s warranty also covers the payment of the freight cost on defective batteries returned and on new batteries sent as replacements. This freight cost is 10% of the sales price of the batteries returned. The manufacturing cost of a battery is roughly 60% of its sales price, and the salvage value of the returned batteries averages 14% of the sales price. Assume that REL follows IFRS and that it uses the expense approach to account for warranties.

Calculate the warranty expense that will be reported for the July 1 to December 31, 2020 period.

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Calculate the amount of the accrual that you would expect in the Warranty Liability account as at December 31, 2020, based on the above likely pattern of returns.

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Would your answer to any of the above situations change if REL followed ASPE?

Choose the answer from the menu in accordance to the question statement                                                                      YesNo

To add to his growing chain of grocery stores, on January 1, 2016, Danny Marks bought a grocery store of a small competitor for $520,000. An appraiser, hired to assess the acquired assets’ values, determined that the land, building, and equipment had market values of $200,000, $150,000, and $250,000, respectively.

Required:

Danny plans to depreciate the operating assets on a straight-line basis for 20 years. Determine the amount of depreciation expense for 2016 on these newly acquired assets. You can assume zero residual value for all assets.

GoodJob Inc. Unadjusted Trial Balance December 31,2020 Account Debit Credit Cash 304,150 Accounts Receivable 99,000 Office supplies 880 Prepaid rent. 3,960 Unexpired insurance 1,650 Office equipment 79,200 Accumulated depreciation: office equipment 26,400 Accounts payable 4,400 Notes payable (due 3/1/12) 66,000 Interest payable 660 Income taxes payable 9,900 Dividends payable 3,500 Unearned consulting fees 24,200 Capital stock 220,000 Retained earnings 44,000 Dividends 3,500 Consulting fees earned 550,000 Rent expense 16,170 Insurance expense 2,420 Office supplies expense 4,950 Depreciation expense: office equipment 12,100 Salaries expense 363,000 Utilities expense 5,280 Interest expense 3,300 Income taxes expense 49,500 Totals 949,060 949,8060

6. Compute the company’s average monthly rent expense for January through May 2020 (5 points).

7. If the company purchased all of its office equipment when it first incorporated, for how long has it been in business as of December 31, 2020? (5 points).

8. Using the financial statements prepared in part b., evaluate the company ́s (i) profitability, (ii) liquidity, and (iii) solvency. (15 points).