SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2021. The options permit holders to acquire 23 million of the company’s $1 par common shares for $12 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $14 per share. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $3.60 per option.

Required:

1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2021, 2022, and 2023. Record the exercise of the options if all of the options are exercised on May 11, 2025, when the market price is $15 per share.

On January 1, 2020, Spalding Company sold 12% bonds having a maturity value of $1,000,000 for $1,075,815, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020 and they mature on January 1, 2025, with semiannual interest payable on July 1 and January 1 each year. The company uses the effective-interest method. Instructions:

a) Prepare a complete amortization schedule for these bonds in good form.

b) Prepare the journal entry needed to record the issuance of bonds on January 1, 2020.

c) Prepare the journal entry needed to record the payment accrual of interest on July 1, 2020. Show all calculations.

d) Determine how much interest expense will be on the income statement for the year ended December 31, 2020.

e) Show what will be on the balance sheet related to these transactions as of December 31, 2020. Indicate clearly if any assets or liabilities are current or noncurrent.

Clearview Pty Ltd (Clearview) is a manufacturer of glass fencing for swimming pools and balconies. Clearview operates from a large production facility, where it undertakes continuous production 24 hours a day, seven days a week. Also on this site are two warehouses, where the company’s raw materials and finished goods are stored. Clearview’s year end is 30 June. Clearview is finalising the arrangements for the year-end inventory count, which is to be undertaken on 30 June 2017.

The finished glass fence panels are stored within 25 aisles in the first warehouse. The second warehouse is for large piles of raw materials, such as sand, used in the manufacture of glass. The following arrangements have been made for the inventory count:

The warehouse manager will supervise the count, as he is most familiar with the inventory. There will be ten teams of counters and each team will contain two members of staff, one from the finance and one from the manufacturing department. None of the warehouse staff, other than the manager, will be involved in the count.

Each team will count an aisle of finished goods by counting up and then down each aisle. As this process is systematic, it is felt that the team will not need to flag areas once counted. Once the team has finished counting an aisle, they will hand in their sheets and be given a set for another aisle of the warehouse. In addition to the above, to assist with the inventory counting, there will be two teams of counters from the internal audit department and they will perform inventory counts.

The count sheets are sequentially numbered, and the product codes and descriptions are printed on them, but no quantities. If the counters identify any inventory which is not on their sheets, then they are to enter the item on a separate sheet, which is not numbered. Once all counting is complete, the sequence of the sheets is checked and any additional sheets are also handed in at this stage. All sheets are completed in ink. Any damaged goods identified by the counters will be too heavy to move to a central location, hence they are to be left where they are located, but the counter is to make a note on the inventory sheets detailing the level of damage.

As Clearview undertakes continuous production, there will continue to be movements of raw materials and finished goods in and out of the warehouse during the count. These will be kept to a minimum where possible.

The level of work-in-progress in the manufacturing plant is to be assessed by the warehouse manager. It is likely that this will be an immaterial balance. In addition, the raw materials quantities are to be approximated by measuring the height and width of the raw material piles. In the past this task has been undertaken by a specialist; however, the warehouse manager feels confident that he can perform this task.

REQUIRED:

(a) List four (4) sources of information that would be of use in gaining an understanding of Clearview, and for each source describe what information you would expect to obtain.

(b) (i) Identify and explain five (5) internal control weaknesses in the inventory count arrangements of Clearview. (ii) Explain the impact of these weaknesses on the audit.

(c) Describe a recommendation to address each internal control weakness identified in requirement (b)(i).

1. ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

On March 8, 2018, President Trump used his authority granted under the Trade Expansion Act of 1962 to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, effective March 28, 2018. Initially, Canada, Mexico, and members of the European Union were exempt from these tariffs, but this exemption was taken away on June 1. Tariffs, or taxes on imported goods, are the most widely used type of trade barrier and are often considered economically inefficient. Do some research on these tariffs and then address the following:

1. What official reason was given for the implementation of these tariffs?
2. Who will receive the most benefit from these tariffs and who will be harmed by them?
3. Relate these tariffs to the economic principle of comparative advantage and discuss what will happen to production and prices of those products that use steel and aluminum.
4. Explain why some American companies might be opposed to these tariffs.
5. What do you think will be the economic consequences of these tariffs, both domestically and globally?
6. Do you believe the implementation of these tariffs was a good idea? Why or why not?

The price of Jamaican Blue Mountain coffee is $100 per bag in 2018. In 2019, it rises to $110 per bag. However, the overall quantity of Jamaican Blue Mountain coffee does not change. What is the most likely explanation?

(A) Both supply and demand increase.

(B) Both supply and demand decrease.

(C) Supply increases, while demand decreases. (D) Supply decreases, while demand increases.

Which of the following is the best example of an inferior good?

(A) A Lamborghini. (B) Instant coffee. (C) Silk scarves. (D) Electricity.

Which of the following is the best summary of Karl Popper's definition of 'science?'

1. (A) Science is the study of the natural world, through observation and experimentation.
2. (B) Science is a set of statements that can be falsfied with data.
3. (C) Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe
4. (D) ... Kanye is the GOAT.

Which of the following pairs of goods is most likely to be substitutes?

(A) PS4 and Fortnite.

(B) Marijuana and potato chips. (C) Xbox and Nintendo Switch. (D) Guns and roses.

If a nation’s economy is sliding into recession, and you are an economist, would you recommend that the government cut taxes and then make up for the drop in taxes collected by the government by cutting government spending? If not, what would you recommend? Explain your answer.

Permanent Income Hypothesis holds true (by friedman) then government stabilization policies would be ineffective. However, empirically, the data shows that for example, tax cuts/credits can encourage more consumer spending. How do you explain this?

What societal changes have affected the cost of health care? How has the government responded to contain and reduce health care spending? What role should government play in controlling the cost of care and ensuring health coverage?