ABC Co.'s balance sheet includes the following asset, at December 31, 2019 after annual depreciation has been recorded:

       Equipment....................................................... $120000

       Less: accumulated depreciation....................... (40000)

       Net Book value ................................................. $80000

After performing its annual review for impairment, ABC Co. obtains the following data:

       Equipment’s value in use.................................. $78000

       Equipment’s fair value less disposal costs.......... 76000

The remaining useful life of the asset at January 1, 2020 is 8 years. ABC Co. applies straight-line depreciation to its equipment assets and the equipment has a $6000 residual value. ABC Co. uses IFRS.

Required:

1. Determine the amount of impairment loss (using the rational entity impairment model).
2. Prepare the entry to record the impairment loss.
3. Prepare the journal entry to record the 2020 depreciation.
4. Assume the carrying value of the equipment, after recording 2020 depreciation, at December 31, 2020 is $69000 and that the carrying value of the equipment would have been $70750 if no impairment had been taken in 2019. The recoverable amount of the equipment at December 31, 2020 is $70000. Prepare the journal entry to record the impairment recovery for 2020.

Megan works for a Williams and Co, a smaller CPA firm that has a total of 11 professional staff members, including two partners.

A financial statement attest client has requested the audit firm to prepare tis depreciation schedule. Megan is a new staff member
and will be responsible for this work. The client will have someone with sutiable skills, knowledge and experince to oversee the prepartion
of the depreciation schedule. The audit firm has ducumented its understanding with the client including that the client will take responsiblity for the
depreciation schedule.
Question:
Identify the section in the AICPA Codification that addresses the independence issues associated with the case dacts outline above.
-- I understand this part.
What are the threats to the independence of Williams and Co?
-- The client has more experince with depreciation schedule, so it may be threat to Megan who has less responsible for the work.
Also, there is a documention that the client will take responsilbity for the deprecaiton schedule, so if there is mistakes, the auditor can't say anything.  
But I have no idea what has to do with indendence of William and Co.
What safegurards can Williams and Co put in place so that the firm's independence is not impaired?
--Megan can work with depreciaton schedule supported by CPA at the company.

Pepper Company acquired 80 percent of Salt Company's stock at underlying book value on January 1, 2018. Pepper Company acquired 80 percent of Salt Company's stock at underlying book value on January 1, 2018. At that date, Salt reported common stock outstanding of $1,050,000 and retained earnings of $840,000; the fair value of the noncontrolling interest was equal to 20 percent of the book value of Salt Company. Salt Co. sold equipment to Pepper Co. for a $720,000 on December 31, 2018. Salt Co. had originally purchased the equipment for $800,000 on January 1, 2015, with a useful life of 10 years and no salvage value. At the time of the purchase, Pepper Co. estimated that the equipment still had the same remaining useful life. Both companies use straight-line depreciation. Pepper sold land costing $132,000 to Salt Company on June 28, 2019, for $178,000.

Textbook: Custom edition of Advanced Financial Accounting,12th Edition, Christensen, Cottrell and Budd; Mc-Graw Hill.

Required:

a.) Prepare Pepper's journal entries related to intercompany sale of land and equipment for 2019.

6. Mill Co. is considering to change its current capital structure (30% debt vs. 70% equity) to new capital structure (50% debt vs. 50% equity). The 10-year T-Note is 2%and MRP is 6%. Its current cost of equity is 11%.

What would Mill Co.'s NEW cost of equity be if Mill Co. decides to adapt new capital structure? Assume tax rate to be 25%.

1) 9.87%
2) 13.94%
3)10.65%
4) 11%

15. Mill Co. wants to estimate its WACC Based on the information below, what is its WACC?

26-year, 7.5% annual coupon bonds and sells for $920. (semi-annually compounding)

The risk-free market rate is 6%
The market risk premium is 5%
The stock's beta is 2.
The company's tax rate is 25%

The company's target capital structure consists of 70% equity and 30% debt.

The company uses the CAPM to estimate the cost of equity and does not include flotation costs as part of its cost of capital.

1. 13.06%
2. 10.56%
3. 12.37%
4. 9.89%
5. 8.98%

a) Candy Co has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and the weighted average contribution margin is $100. How many units of a product A must be sold to break even?

b) Knotty Co sells desks at $480 per desk. The variable costs are $380 per desk. Total fixed costs for the period are $456,800. The break even sales in units are _____?

c) Nick's shows sales of $200,000, manufacturing costs of $100,000 (30% variable), and selling and administrative costs of $100,000 (40% fixed). If sales equal to production, total contribution margin would be $____?

d) Candy Co expects to sell 19,000 units. Total fixed costs are $84,000 and the contribution margin per unit is $6.00. The margin of the safety in ratio is ___?

e) Walnuts Co wishes to earn after tax net income of $18,000. Total fixed costs are $84,000 and the contribution margin is $6.00 per unit. Walnuts Co's tax rate is 40%. The number of units that must be sold to earn the targeted net income is _____ units.

SCENARIO 4

Ready and Co, a firm of accountants and auditors, were engaged to prepare the accounts and balance sheet for Products for People plc, knowing the accounts were to be sent to Hind, a private investor, who was thinking of buying shares in Products for People plc. The accounts were negligently prepared and showed the company as financially stable, even though the opposite was true and the company had large unpaid debts. Hind showed the accounts to her friend Imran. Hind bought AED1 million worth of shares and Imran bought AED 500,000 worth of shares. Within 6 months, Products for People plc went into liquidation and both Hind and Imran lost their investments.

Advise (1) Hind, and (2) Imran whether they are likely to be successful in their claims in negligence against Ready and Co and what defences the company may have.

1. What are the 3 points to be proved in any claim based on negligence?

2. What must be proved in a claim for ‘negligent misstatement?

3. Would Imran be successful in a claim for ‘negligent misstatement’ against Ready and Co?

4. Would Ready and Co have any defences?

As loan analyst for Stellar Bank, you have been presented the following information.

Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. Because your bank has reached its quota for loans of this type, only one of these requests is to be granted.

Compute the various ratios for each company. (Round answer to 2 decimal places, e.g. 2.25.)

On January 1, 2017, Wayne Co. purchased 80,000 shares (40%) of the common stock of Grayson Corp., paying $1,000,000. At that time Grayson Corp. book value was $2,250,000. Grayson had a equipment undervalued by $100,000 and a useful life of 5 years. Any other excess fair value from this transaction was attributable to good will. During 2015, Grayson reported income of $400,000 and paid dividends of $160,000. At the close of business on 12/31/2017, Wayne Co. sold 10,000 shares (or 12 ½%) of Grayson Corp. for $150,000. What is the balance in Wayne Co's. Investment in Grayson Corp account after Wayne Co. had sold the 10,000 shares of Grayson Corp on 12/31/2017. Prepare an analysis of the investment account from 1/1/2017 up to and including the sale of 10,000 shares of Grayson Corp on 12/31/2017 to prove your answer. BE SURE TO SHOW ALL WORK IN SUPPORT OF YOUR INVESTMENT IN GRAYSON CORP. INVESTMENT ANALYSIS. Prepare the Journal Entry Wayne Co. would make to record the sale of 10,000 shares of Grayson Corp at 12/31/2017.

I have a question about Case.
Megan works for a Williams and Co, a smaller CPA firm that has a total of 11 professional staff members, including two partners.
A financial statement attest client has requested the audit firm to prepare tis depreciation schedule. Megan is a new staff member
and will be responsible for this work. The client will have someone with sutiable skills, knowledge and experince to oversee the prepartion
of the depreciation schedule. The audit firm has ducumented its understanding with the client including that the client will take responsiblity for the
depreciation schedule.
Question:
Identify the section in the AICPA Codification that addresses the independence issues associated with the case dacts outline above.
-- Topic 1.200 of the AICPA Code of Professional Conduct requires independence of all engagement conducted by CPA. Is this right answer?
What are the threats to the independence of Williams and Co?
-- I don't understand this question.
What safegurards can Williams and Co put in place so that the firm's independence is not impaired?
--I have hard time understading this question. Williams and Co should be independet from clinet?

I don't understand this Case. Please help me. Thanks.

Bank Reconciliation and Entries

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $14,880. The bank statement indicated a balance of $17,060 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

Checks outstanding totaled $6,140.

A deposit of $6,400, representing receipts of June 30, had been made too late to appear on the bank statement.

The bank collected $3,330 on a $3,160 note, including interest of $170.

A check for $550 returned with the statement had been incorrectly recorded by Pala Medical Co. as $500. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.

A check drawn for $90 had been erroneously charged by the bank as $900.

Bank service charges for June amounted to $30.

Required:

1. Prepare a bank reconciliation.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.

3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
$