The following information is related to Whispering Company for 2020.
Retained earnings balance, January 1, 2020$1,078,000
Sales Revenue27,500,000
Cost of goods sold17,600,000
Interest revenue77,000
Selling and administrative expenses5,170,000
Write-off of goodwill902,000
Income taxes for 2020 1,368,400
Gain on the sale of investments121,000
Loss due to flood damage429,000
Loss on the disposition of the wholesale division (net of tax)484,000
Loss on operations of the wholesale division (net of tax)99,000
Dividends declared on common stock275,000
Dividends declared on preferred stock88,000
Whispering Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Whispering sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year.
In: Accounting
On January 1, 2020, Caliber Corporation issued 9% bonds dated January 1, 2020, with a face amount of $10 million. The bonds mature in 2029 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid annually on December 31.
1. What is the amount of the annual interest payment?
2. What is the price of the bond on the issue date? (state method used)
3. Was the bond sold at a discount or a premium? Explain why.
4. What is the "actual" cost of this debt?
5. What is the price of the bond if the market yield is 8%? (state method used)
6. Is this bond sold at a discount or premium? Explain why.
7. What is the "actual" cost of this debt?
In: Finance
Marin Construction Company began work on a $424,000 construction contract in 2020. During 2020, Marin incurred costs of $279,500, billed its customer for $204,500, and collected $170,500. At December 31, 2020, the estimated additional costs to complete the project total $150,500. Prepare Marin’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
In: Accounting
Honicker Corporation was well-recognized as a high-quality manufacturer of dashboards for automobiles and trucks. Although it serviced mainly U.S. automotive and truck manufacturers, the opportunity to expand to a worldwide supplier was quite apparent. Its reputation was well-known worldwide but it was plagued for years with ultraconservative senior management leadership that prevented growth into the international marketplace.
When the new management team came on board in 2009, the conservatism disappeared. Honicker was cash-rich, had large borrowing power and lines of credit with financial institutions, and received an AA- quality rating on its small amount of corporate debt. Rather than expand by building manufacturing facilities in various countries, Honicker decided to go the fast route by acquiring four companies around the world: Alpha, Beta, Gamma, and Delta Companies.
Each of the four acquired companies serviced mainly its own geographical areas. The senior management team in each of the four companies knew the culture in their geographic areas and had a good reputation with their clients and local stakeholders. The decision was made by Honicker to leave each company’s senior management teams intact provided that the necessary changes, as established by corporate, could be implemented.
Honicker wanted each company to have the manufacturing capability to supply parts to any Honicker client worldwide. But doing this was easier said than done. Honicker had an enterprise project management methodology (EPM) that worked well. Honicker understood project management and so did the majority of Honicker’s clients and stakeholders in the United States. Honicker recognized that the biggest challenge would be to get all of the divisions at the same level of project management maturity and using the same corporatewide EPM system or a modified version of it. It was expected that each of the four acquired companies may want some changes to be made.
The four acquired divisions were all at different levels of project management maturity. Alpha did have an EPM system and believed that its approach to project management was superior to the one that Honicker was using. Beta Company was just beginning to learn project management but did not have any formal EPM system although it did have a few project management templates that were being used for status reporting to its customers. Gamma and Delta Companies were clueless about project management.
To make matters worse, laws in each of the countries where the acquired companies were located created other stakeholders that had to be serviced, and all of these stakeholders were at different levels of project management maturity. In some countries, government stakeholders were actively involved because of employment and procurement laws whereas in other countries government stakeholders were passive participants unless health, safety, or environmental laws were broken.
It would certainly be a formidable task developing an EPM system that would satisfy all of the newly acquired companies, their clients, and their stakeholders.
ESTABLISHING THE TEAM
Honicker knew that there would be significant challenges in getting a project management agreement in a short amount of time. Honicker also knew that there is never an acquisition of equals; there is always a “landlord” and “tenants,” and Honicker is the landlord. But acting as a landlord and exerting influence in the process could alienate some of the acquired companies and do more harm than good. Honicker’s approach was to treat this as a project, and each company, along with its clients and local stakeholders, would be treated as project stakeholders. Using stakeholder relations management practices would be essential to getting an agreement on the project management approach.
Honicker requested that each company assign three people to the project management implementation team that would be headed up by Honicker personnel. The ideal team member, as suggested by Honicker, would have some knowledge and/or experience in project management and be authorized by their senior levels of management to make decisions for their company. The representatives should also
understand the stakeholder needs from their clients and local stakeholders. Honicker wanted an understanding to be reached as early as possible that each company would agree to use the methodology that was finally decided upon by the team.
Senior management in each of the four companies sent a letter of understanding to Honicker promising to assign the most qualified personnel and agree- ing to use the methodology that was agreed upon. Each stated that their company understood the importance of this project.
The first part of the project would be to come to an agreement on the methodology. The second part of the project would be to invite clients and stakeholders to see the methodology and provide feedback. This was essential since the clients and stakeholders would eventually be interfacing with the methodology.
KICKOFF MEETING
Honicker had hoped that the team could come to an agreement on a companywide EPM system within six months. But after the kickoff meeting was over, Honicker realized that it would probably be two years before an agreement would be reached on the EPM system. There were several issues that became apparent at the first meeting:
● Each company had different time requirements for the project.
● Each company saw the importance of the project differently.
● Each company had its own culture and wanted to be sure that the final design was good fit with that culture.
● Each company saw the status and power of the project manager differently.
● Despite the letters of understanding, two of the companies, Gamma and Delta, did not understand their role and relationship with Honicker on this project.
● Alpha wanted to micromanage the project, believing that everyone should use its methodology.
Senior management at Honicker asked the Honicker representatives at the kickoff meeting to prepare a confidential memo on their opinion of the first meeting with the team. The Honicker personnel prepared a memo including the following comments:
● Not all of the representatives at the meeting openly expressed their true feelings about the project.
● It was quite apparent that some of the companies would like to see the project fail.
● Some of the companies were afraid that the implementation of the new EPM system would result in a shift in power and authority.
● Some people were afraid that the new EPM system would show that fewer resources were needed in the functional organization, thus causing a downsizing of personnel and a reduction in bonuses that were currently based upon headcount in functional groups.
● Some seemed apprehensive that the implementation of the new system would cause a change in the company’s culture and working relationships with their clients.
● Some seemed afraid of learning a new system and being pressured into using it.
It was obvious that this would be no easy task. Honicker had to get to know all companies better and understand their needs and expectations. Honicker management had to show them that their opinion was of value and find ways to win their support.
The question is:
What if all four companies agree to the project management methodology and then some of the client stakeholders show a lack of support for use of the methodology?
In: Operations Management
Question 1
a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework.
b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain.
c) AASB 101 stipulates a number of disclosures that many reporting entities are required to make. What specific disclosures are required by AASB 101 in relation to assets?
d) Is depreciation an allocation process or a valuation process? Provide reasons for your answer
e) In an article that appeared in The Australian Financial Review on 26 August 2011 ('Apple could easily flounder without its founder' by Mark Ritson), it was reported: The news that Steve Jobs has resigned from Apple and will be replaced as CEO by Tim Cook made global headlines yesterday What has followed since has been a frenzied discussion of what the loss of Jobs will mean for new product development timelines, share price issues and corporate culture. Apple's share price fell 5 per cent on the news of the resignation as questions were raised about Apple's prospects without its creative guru at the helm. But the real question for Apple as it enters its post-Jobs period is how well the brand will survive without the founder. Required The fact that the share prices fell following the departure of Steve Jobs is consistent with the view that Jobs was an 'asset' to the company. How do you think this 'asset' would have been disclosed in the financial statements of Apple?
f) What is a contingent asset? When should a contingent asset be disclosed within the notes to the financial statements? If something is initially disclosed as a contingent asset, when can it subsequently be recognised as an asset within the financial statements? Briefly explain.
Please don't copy other CHEGG ANSWERS because they are not answered according to the question. please answer according to question and marks
In: Accounting
Question 1
a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework.
b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain.
c) AASB 101 stipulates a number of disclosures that many reporting entities are required to make. What specific disclosures are required by AASB 101 in relation to assets?
d) Is depreciation an allocation process or a valuation process? Provide reasons for your answer
e) In an article that appeared in The Australian Financial Review on 26 August 2011 ('Apple could easily flounder without its founder' by Mark Ritson), it was reported: The news that Steve Jobs has resigned from Apple and will be replaced as CEO by Tim Cook made global headlines yesterday What has followed since has been a frenzied discussion of what the loss of Jobs will mean for new product development timelines, share price issues and corporate culture. Apple's share price fell 5 per cent on the news of the resignation as questions were raised about Apple's prospects without its creative guru at the helm. But the real question for Apple as it enters its post-Jobs period is how well the brand will survive without the founder. Required The fact that the share prices fell following the departure of Steve Jobs is consistent with the view that Jobs was an 'asset' to the company. How do you think this 'asset' would have been disclosed in the financial statements of Apple?
f) What is a contingent asset? When should a contingent asset be disclosed within the notes to the financial statements? If something is initially disclosed as a contingent asset, when can it subsequently be recognised as an asset within the financial statements? Briefly explain.
Please don't copy other CHEGG ANSWERS because they are not answered according to the question. please answer according to question and marks
In: Accounting
The following information was taken from the accounting records of CJTR Company as of December 31, 2020: Accounts Payable .......... ? Accounts Receivable ....... $43,000 Building .................. $68,000 Cash ...................... $17,000 Common Stock .............. $62,000 Cost of Goods Sold ........ $41,000 Dividends ................. ? Equipment ................. $79,000 Interest Revenue .......... $46,000 Inventory ................. $63,000 Land ...................... $82,000 Notes Payable ............. $65,000 Rent Expense .............. $17,000 Retained Earnings ......... ? Salaries Expense .......... $52,000 Salaries Payable .......... $29,000 Sales Revenue ............. $94,000 Supplies .................. $28,000 Trademark ................. $18,000Additional information: 1) At January 1, 2020, CJTR Company reported total assets of $223,000; total liabilities of $121,000; and common stock of $40,000. 2) 20% of CJTR’s 2020 net income was paid to stockholders as dividends. Calculate the balance in the accounts payable account at December 31, 2020.
In: Accounting
On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date.
The exchange rates at the relevant dates are: 1 March 2011 A$1.00 = NZ$1.20 1 June 2011 A$1.00 = NZ$1.30 30 June 2011 A$1.00 = NZ$1.25 Required: a) Determine the amount in AUD, as at: • 1 March 2020; and • 30 June 2020. b) Prepare the journal entries for the above dates showing the amount of exchange gain or loss .
In: Accounting
On January 1, 2020, Empress Bank granted a loan to a borrower. The interest on the loan is 10% payable annually starting on December 31, 2019. The loan matures in three years on December 31, 2022. Principal amount 5,000,000 Direct origination cost incurred 457,500 Origination fee charged against the borrower 200,000 After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 8%.
Determine the carrying amount of the loan on January 1, 2020.
Prepare journal entries for January 1, 2020.
Prepare journal entry for receipt of interest on December 31, 2020.
Prepare journal entry for amortization of direct origination cost in 2021.
Prepare journal entry for receipt of payment of loan in 2022.
In: Accounting
Back in May 2020, an ethanol plant’s risk manager looked at futures prices and considered a hedge to lock in a price on part of her new-crop corn acquisition planned for mid-to-late October 2020. She saw that the December 2020 futures contract was trading at $3.20/bushel and she knew that the basis in mid-October—when she expected to take delivery of the corn in question and to lift the hedge (i.e., to offset her futures position)—has typically (most years) been about 25 cents under December. What net price did she, back in May, expect to pay in October 2020 if she placed this hedge? d. $2.80/bu b. $2.95/bu c. $3.20/bu a. $3.45/bu e. None of the above
In: Finance