Assume that on January 1, a Mexican firm wants to finance their Mexican operation and borrows $10 million for 1 year with 8% annualized interest from a US bank. At inception, the spot rate was Peso 3.40/$. The inflation is 2.00% and 12.00% respectively for US and Mexico. According to our class material, PPP between Mexican Peso and USD hold well. Thus, what is the actual cost to the firm of the loan, since the firm has to pay back USD?
In: Finance
T or F
31. FULL EMPLOYMENT = ZERO UNEMPLOYMENT.
32. OPEN SYSTEM, GLOBALIZATION, AND INTERNATIONAL MARKETING ARE DIFFERENT FROM
GLOBAL MANAGEMENT.
33. GDP MEASURES ALL PRODUCTS AND SERVICES MADE IN THE US, PUERTO RICO, GUAM,
BAHAMAS, THE US VIRGIN ISLANDS, AND PARTS OF SOUTHERN CANADA.
34. GDP = C + G + I + NX; THIS IS THE INCOME APPROACH AND THE EXPENDITURE APPROACH.
35. AN EXPENSIVE 2014 MERCEDES BENZ BOUGHT LAST YEAR IS COUNTED IN THE GDP.
In: Economics
On January 2, 2020, Pharoah Corp. issues a $8–million, five–year note at LIBOR, with interest paid annually. To protect against the cash flow uncertainty related to interest payments that are based on LIBOR, Pharoah entered into an interest rate swap to pay 8% fixed and receive LIBOR based on $8 million for the term of the note. The LIBOR rate for the first year is 7.6%. The LIBOR rate is reset to 8.7% on January 2, 2021. Pharoah follows ASPE and uses hedge accounting. On December 31, 2020, the fair value of the swap decreased by $13,500: it increased by $4,000 on December 31, 2021. Assume that the criteria for hedge accounting under ASPE are met.
Prepare the journal entries to recognize the swap, assuming the company follows hedge accounting under IFRS
December 31, 2020( to decrease the value of the contract)
December 31,2020 (To record the fix under hedge accounting)
December 31,2022( To record the value of the contract)
December 31, 2022(k To record the fix under hedge accounting)
In: Finance
At the beginning of its fiscal year 2020, an analyst made the following forecast for ABC, Inc. (in millions of dollars):
|
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
|
|
Earnings |
320 |
350 |
245 |
321 |
220 |
|
|
Dividends |
150 |
120 |
98 |
105 |
86 |
|
|
Book value |
890 |
Suppose these numbers were given to you at the end of 2019, as forecasts, when the book value was 890 million, as indicated and market price of the stock was $10.5 per share. Use a required return of 10 percent for calculations below. Show your working process.
[5 marks]
[2 marks]
[1 mark]
[1 mark]
In: Accounting
On January 1, 2019, Garner issued 10-year, $200,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Garner $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2020. (Ignore all tax effects.)
Requirement 1: Accounting
Prepare the journal entry Garner would have made on January 1, 2019, to record the issuance of the bonds.
Garner’s net income in 2020 was $30,000 and was $27,000 in 2019. Compute basic and diluted earnings per share for Garner for 2020 and 2019.
Assume that 75% of the holders of Garner’s convertible bonds convert their bonds to stock on June 30, 2021, when Garner’s stock is trading at $32 per share. Garner pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion.
In: Accounting
Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.
| Sales. Sales for the year are expected to total 2,000,000 units. Quarterly sales are 18%, 26%, 23%, and 33%, respectively. The sales price is expected to be $38 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 15% higher than the budgeted sales for the first quarter of 2020. |
| Production. Management desires to maintain the ending finished goods inventories at 25% of the next quarter’s budgeted sales volume. |
| Direct materials. Each unit requires 2 pounds of raw materials at a cost of $10 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter’s production requirements. Assume the production requirements for first quarter of 2021 are 504,000 pounds. |
Prepare the sales, production, and direct materials budgets by
quarters for 2020.
In: Accounting
In 2018, the Westgate Construction Company entered into a
contract to construct a road for Santa Clara County for
$10,000,000. The road was completed in 2020. Information related to
the contract is as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,610,000 | $ | 3,162,000 | $ | 2,230,800 | |||
| Estimated costs to complete as of year-end | 6,390,000 | 2,028,000 | 0 | ||||||
| Billings during the year | 2,100,000 | 3,672,000 | 4,228,000 | ||||||
| Cash collections during the year | 1,850,000 | 3,000,000 | 5,150,000 | ||||||
Westgate recognizes revenue over time according to percentage of completion.
4. Calculate the amount of revenue and gross
profit (loss) to be recognized in each of the three years assuming
the following costs incurred and costs to complete information.
(Do not round intermediate calculations and round your
final answers to the nearest whole dollar amount. Loss amounts
should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,610,000 | $ | 3,850,000 | $ | 3,250,000 | |||
| Estimated costs to complete as of year-end | 6,390,000 | 3,150,000 | 0 | ||||||
In: Accounting
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,610,000 | $ | 3,162,000 | $ | 2,230,800 | |||
| Estimated costs to complete as of year-end | 6,390,000 | 2,028,000 | 0 | ||||||
| Billings during the year | 2,100,000 | 3,672,000 | 4,228,000 | ||||||
| Cash collections during the year | 1,850,000 | 3,000,000 | 5,150,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
5. Calculate the amount of revenue and gross
profit (loss) to be recognized in each of the three years assuming
the following costs incurred and costs to complete information.
(Do not round intermediate calculations and round your
final answers to the nearest whole dollar amount. Loss amounts
should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,610,000 | $ | 3,850,000 | $ | 4,050,000 | |||
| Estimated costs to complete as of year-end | 6,390,000 | 4,200,000 | 0 | ||||||
In: Accounting
Required information
In 2018, the Westgate Construction Company entered into a contract
to construct a road for Santa Clara County for $10,000,000. The
road was completed in 2020. Information related to the contract is
as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,156,000 | $ | 3,388,000 | $ | 2,371,600 | |||
| Estimated costs to complete as of year-end | 5,544,000 | 2,156,000 | 0 | ||||||
| Billings during the year | 2,130,000 | 3,414,000 | 4,456,000 | ||||||
| Cash collections during the year | 1,865,000 | 3,300,000 | 4,835,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
5. Calculate the amount of revenue and gross
profit (loss) to be recognized in each of the three years assuming
the following costs incurred and costs to complete information.
(Do not round intermediate calculations and round your
final answers to the nearest whole dollar amount. Loss amounts
should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,156,000 | $ | 3,865,000 | $ | 4,095,000 | |||
| Estimated costs to complete as of year-end | 5,544,000 | 4,230,000 | 0 | ||||||
In: Accounting
Required information
In 2018, the Westgate Construction Company entered into a contract
to construct a road for Santa Clara County for $10,000,000. The
road was completed in 2020. Information related to the contract is
as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,156,000 | $ | 3,388,000 | $ | 2,371,600 | |||
| Estimated costs to complete as of year-end | 5,544,000 | 2,156,000 | 0 | ||||||
| Billings during the year | 2,130,000 | 3,414,000 | 4,456,000 | ||||||
| Cash collections during the year | 1,865,000 | 3,300,000 | 4,835,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,156,000 | $ | 3,865,000 | $ | 3,265,000 | |||
| Estimated costs to complete as of year-end | 5,544,000 | 3,165,000 | 0 | ||||||
In: Accounting