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?

For the second discussion this week, pick one of the two items below as well as a debate side (pro or con) and using the book as well as good research, present your point.

1) Nonprofits should not be restrained and as a result of the 1st amendment and the Citizens United decision, they have rights to free speech, even preachers from pulpits.

2) Anyone who makes profits (excess revenue over cost), no matter the source, from expected donations (tithing) or fees should pay taxes on that excess.

Q1: Consider the following scenario.

A company operating in the airline sector has been experiencing a brand crisis following a video posted in social media showing rude behavior of staff. A brand crisis has significant impact on customers’ intention to buy from the brand, or to recommend it to family/friends.

Propose a qualitative research strategy to assess the impact of this brand crisis on the company’s revenue. Ensure to detail and motivate your recommended strategy including potential limitations of qualitative research in this case.

A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is projected that the acquisition of this equipment will increase revenue by $10,000 per year. Operating costs for the machine will average $2,600 per year. The machine will be depreciated using the MACRS method, with a recovery period of 7 years. The company uses an after-tax MARR rate of 10% and has an effective tax rate of 30%.

What conclusion can be drawn by comparing the results of the before- and after-tax analyses?

On January 1, 2012, the organizers of the Parsons Corporation obtained their charter and issued 10,000 shares of $1 par common stock for $4 per share. During 2012, the corporation earned $30,000 in cash revenue and paid $20,000 in cash expenses, not including income tax. The income tax rate was 30%, and the company's income tax expense was $3,000. The company declared and paid cash dividends totaling $2,000. Using the above information, prepare an income statement and a balance sheet for the Parsons Corporation.

  Following a heated debate in microeconomics class about taxes, one student suggested that taxing food will be a good way to raise revenues because demand for food is inelastic.

a) In what sense taxing food a “good” way to raise revenues?

• Taxing food is “good” because to some extent food purchases are inelastic as it is a necessary good needed for survival.

b) In what sense is it not a “good” way to raise revenue?

c) Will you support the idea of taxing food? Why or why not

Sue's Gallery only purchases finished paintings (it never commissions artists). It pays each artist 50% of the agreed price at the time of purchase, and the remainder after the painting is sold. All purchases are paid by check from Sue's main checking account.

REQUIRED: Draw an Integrated REA Model (Revenue and Expenditure cycles) and prepare a table listing the relational database based on your integrated REA. The table should include the table names, primary keys, foreign keys and non-key attributes.

Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing.

From the following list, calculate total current liabilities (amounts in millions):

Accumulated depreciation                 $ 28

Sales tax payable                   7

Accrued warranties payable          2

Bonds payable                    35

Current portion of long-term debt       10

Long-term debt                                    100

Accounts receivable                             15

Accounts payable                                 13

Interest payable                                      3

Interest expense                                    14

Unearned revenue                                   6

Accrued liabilities payable             5   

a. $123

b. $238

c. $95

d. $46

Question 2. Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer with diagram.