Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an inves\tment banker. He feels that an MBA degree would allow him to achieve his goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its student to work while enrolled in its MBA program. Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $70,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 37 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 28 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $65,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expected that after graduation from Wilton, he will receive a job offer for about $100,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4% per year. Because of the higher salary, his average income tax rate will increase to 32 percent. The Bradley School of Business at Mount Perry College began its MBA 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated, oneyear program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $3,000. Ben thinks that he will receive an offer of $85,000 per year upon graduation, with a $10,000 signing bonus. The salary at this job will increase at 3.5 percent. His average tax rate at this level of income will be 30 percent. Both schools offer a health insurance plan that will cost $2,500 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $15,000 per year at either school. The appropriate discount rate is 6 percent.

What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

Manhattan is a thriving technology company that has had success producing smartphone games with in-app purchases. Manhattan has recently acquired two other companies to expand its game offerings and increase its workforce. The Founder and CEO started the company a few years ago and is an app developer himself. He does not have any training or experience in accounting or finance but has decided it is important to surround himself with the best people possible. He has hired several accountants with professional designations to help with the financial reporting.

The company’s accounting relies heavily on estimates because most of the company’s assets relate to work in progress as new games are always being developed. Once a game has been released it can generate significant revenue, but consumers tend to tire of games quickly and the long-term value of the product is never certain. As a result, assets are hard to value and complex accounting methods must be used.

The CFO is a designated accountant and a former partner at an audit firm. She has used the company’s technology skills to ensure that the IT controls around accounting information are strong. She has placed a real emphasis on segregation of duties and accounting staff take turns checking each other’s work as a means of detecting mistakes and learning from each other.

Required:

As an auditor how would you assess the control risk, high or low? Provide two reasons to support your assessment.

In order to address the course learning objective. "...demonstrate your ability to justify if current Corporate Strategies work to achieve competitive advantage'..."

An eBay executive was once asked a question about some of the firm's new acquisitions. The question and his answer follows:

Q - With your other acquisitions, what have you learned about how to make them work, how to integrate them into the culture?

A - We think about acquisitions in three categories: acquisitions to strengthen our core, adjacent acquisitions, and capability acquisitions. The easiest are the first kind, like the acquisition two years ago of (the Korean auction site) Gmarket. We’re letting adjacent acquisitions, such as StubHub and Bill Me Later, run relatively independently. With Bill Me Later we’ve integrated core capabilities into PayPal and eBay. Positronic, a small search company, is in the third category. In many cases we’re buying the people—Christopher Payne, who’s running eBay North America now, was a founder of Positronic—which helps us integrate faster and acquire great talent.

---

Now it is your turn. Please address the following questions:

1. What benefits would eBay have from allowing an acquired firm, such as "Bill Me Later" to function relatively independently?
2. Is it a good idea to impose the acquiring firm’s culture onto the acquired firms? Why? Why not?   

Suppose that GMAT scores of all MBA students in Canada are normally distributed with a mean of 550 and a standard deviation of 120.

a. A university (that is representative of the MBA students in the U.S.) claims that the average GMAT scores of students in its MBA program are at least 550. You take a sample of 121 students in the university and find their mean GMAT score is 530. Can you still support the University’s claim? Test at 5% significance level. Interpret the test result.

b. Calculate the p-value for the test in part (a). If the hypothesis was to be tested at 10% significance level instead of 5% would your answer to part (a) change? Explain why without actually conducting the test.

c.Do you need the assumption that “GMAT scores of all MBA students in the U.S. are normally distributed” to answer part (a) or (b)? Explain.

d. You discover that the population standard deviation you’ve been using is actually the sample standard deviation. All other sample information holds. If you were still conducting the hypothesis test as you set up in part (a), would your test statistic/ distribution change? How?

And would you need the assumption of normality of the population now? Why?

In 2020, Tom and Amanda Jackson (married filing jointly) have $300,000 of taxable income before considering the following events:

(Use the dividends and capital gains tax rates and tax rate schedules.)

On May 12, 2020, they sold a painting (art) for $122,500 that was inherited from Grandma on July 23, 2018. The fair market value on the date of Grandma’s death was $96,250 and Grandma’s adjusted basis of the painting was $27,500. They applied a long-term capital loss carryover from 2019 of $11,250. They recognized a $12,625 loss on the 11/1/2020 sale of bonds (acquired on 5/12/2010). They recognized a $4,750 gain on the 12/12/2020 sale of IBM stock (acquired on 2/5/2020). They recognized a $20,000 gain on the 10/17/2020 sale of rental property (the only §1231 transaction), of which $10,000 is reportable as gain subject to the 25 percent maximum rate and the remaining $10,000 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2014). They recognized a $13,250 loss on the 12/20/2020 sale of bonds (acquired on 1/18/2020). They recognized a $7,625 gain on the 6/27/2020 sale of BH stock (acquired on 7/30/2011). They recognized an $12,250 loss on the 6/13/2020 sale of QuikCo stock (acquired on 3/20/2013). They received $1,000 of qualified dividends on 7/15/2020. After completing the required capital gains netting procedures, what will be the Jacksons’ 2020 tax liability? (Do not round intermediate calculations.)

In 2020, Tom and Amanda Jackson (married filing jointly) have $228,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.)

1. On May 12, 2020, they sold a painting (art) for $113,500 that was inherited from Grandma on July 23, 2018. The fair market value on the date of Grandma’s death was $91,750 and Grandma’s adjusted basis of the painting was $25,700.
2. They applied a long-term capital loss carryover from 2019 of $10,350.
3. They recognized a $12,175 loss on the 11/1/2020 sale of bonds (acquired on 5/12/2010).
4. They recognized a $4,210 gain on the 12/12/2020 sale of IBM stock (acquired on 2/5/2020).
5. They recognized a $17,840 gain on the 10/17/2020 sale of rental property (the only §1231 transaction), of which $8,560 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,280 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2014).
6. They recognized a $12,350 loss on the 12/20/2020 sale of bonds (acquired on 1/18/2020).
7. They recognized a $7,175 gain on the 6/27/2020 sale of BH stock (acquired on 7/30/2011).
8. They recognized an $11,350 loss on the 6/13/2020 sale of QuikCo stock (acquired on 3/20/2013).
9. They received $640 of qualified dividends on 7/15/2020.
   
   After completing the required capital gains netting procedures, what will be the Jacksons’ 2020 tax liability? (Do not round intermediate calculations.)

Ben bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow hi to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.

Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a saving account with enough money to cover the entire cost of his MBA program.

The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase a 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.

The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent.

Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. HIs room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 5.5 percent.

5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision?

The Government has recently launched a new and innovative transport system in the country, which is managed by the Metro Express Co Ltd. The CEO of the company is aware that a big challenge lies ahead in managing a new company and to run it efficiently. The Chairperson of the Board of Directors has stated, at the first meeting, that “Managing an organisation requires various skills and the ability to organise various resources. All these tasks must be executed with an understanding of how actions influence the organisation, both internally and externally.” Furthermore, the Board of Directors of the Metro Express Co Ltd has stressed that one of the significant influences on how an organisation is managed is the system of corporate governance. The CEO has been informed that you are enrolled for an MBA course and he has appointed you to advise him manage the company.

You are requested to advise him on:

(i) all the factors he must consider, including accounting information, to manage the decision making process of the company?

Accounting for Restricted Stock Awards

Geelong Technology (GT) is a software company based in Boston. Since January 1, 2015, the company has granted restricted stock to its CEO at the beginning of each year to help boost future company performance. Vesting for each award occurs if the CEO stays employed at the company for a period of two years from the grant of the award.

The par value of the stock is $1.

It is now September 13, 2018 and the CEO leaves the company.

Create the Journal Entries with calculations in accordance for US GAAP for all events.

NEED EXCEL USE OF PV and FV.Thanks

Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program. Ben currently works at the money management firm of Dewey and Louis. On average, his annual salary until retirement is expected to be $80,000 per year. He is currently 28 years old and expects to work for 40 more years. His current job includes a fully paid health insurance plan, and the tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $80,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $3,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer of approximately $135,000 annual salary on average until retirement. Because of the higher salary, his average income tax rate will increase to 32 percent. The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated, one-year program, with a tuition cost of $100,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,500. Ben thinks that he will receive an offer of approximately $118,000 annual salary on average until retirement. His average tax rate at this level of income will be 29 percent. Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $2,000 more per year at both schools than his current expenses, payable at the beginning of each year. The appropriate discount rate is 6 percent.