On January 1, 2019, Seek Company purchased a copy machine. The machine costs $960,000, its estimated useful life is 8 years, and its expected salvage value is $60,000.

What is the depreciation expense for 2020 using double-declining-balance method?

Select one:

A. $157,500

B. $ 105,000

C. $180,000

D. $240,000

Abbotsford Tile Ltd. (ATL) is a wholesaler of high quality glass, ceramic and marble tiles. In November 2019 the owner of ATL agreed to sell the company to Barrie Tile Inc. (BTI) another tile wholesaler. Each company is owned and operated by a single individual who originally founded his company. The owner of ATL decided to sell his business because he was beginning to get too old to run the store. The owner of BTI wants to purchase ATL to expand the size of his business. The two men agreed over lunch that BTI would buy ATL for an amount equal to five times ATL’s net income before tax for the year ended December 31, 2019. The deal is to be finalized on March 1, 2020. Closure of the deal requires that BTI approve of the financial statements prepared by ATL. The two men agreed that any disputes regarding the financial statements would be settled by negotiations and, if necessary, by arbitration by an independent third party. It is now January 15, 2020. You have been called by BTI’s owner to help him understand and assess a number of transactions that are reported in ATL’s December 31, 2019 financial statements. The owner of BTI explained that he does not have much experience working with financial statements but based on his examination, along with information obtained from other sources, he is concerned about a number of transactions reported in ATL’s statements. The owner has asked you for a detailed report explaining the impact of each event on the purchase price of ATL and your assessment of each of the issues. BTI’s owner said that he would like a full explanation of the implications of each event, your evaluation of the accounting used by ATL, and your supported recommendation of the appropriate treatment for each event. Your explanations are important because they will be used in negotiations with the owner of ATL and, if necessary, presented to the arbitrator.

The owner of BTI provided you with the following information about the events that are of concern to him:

a) GTL paid a $60,000 non-refundable fee on October 15, 2019 to their delivery company as a prepayment for services from November 1 2019 – November 1, 2020. The contract between the delivery company and GTL is for 2 years. The delivery company charges GTL $20,000 each month, less $5,000 which has been paid up front as the deposit. The $60,000 has been recorded as a prepaid asset. The delivery expense for the year ended December 31, 2019 totaled $30,000.

b) In August 2019, ATL entered into a long term contract with another tile retailer, Great Tile Ltd (GTL). As part of the agreement, GTL agreed to order products from ATL on a monthly basis. In November 2019 GTL placed a large tile order that will be delivered evenly over a 5- month period. The order totaled $350,000, and GTL paid an upfront non-refundable deposit of $150,000. The fee was recorded as revenue. The first order, with $70,000 worth of goods was shipped to GTL on November 20, 2019. The second order was scheduled to ship on December 20, however, due to the busy holiday season and staffing issues, GTL requested that the order be held at ATL’s facility until after the winter break. Since the shipment was ready to go, ATL placed the tiles in a separate part of their facility. ATL recognized revenue for both the November and December orders in 2019, totaling $140,000.

Vita Water purchased a used machine for $117,800 on January 2, 2020. It was repaired the next day at a cost of $5,663 and installed on a new platform that cost $1,537. The company predicted that the machine would be used for six years and would then have a $21,320 residual value. Depreciation was to be charged on a straight-line basis to the nearest whole month. A full year’s depreciation was recorded on December 31, 2020. On September 30, 2025, it was retired.

Required:
1. Prepare journal entries to record the purchase of the machine, the cost of repairing it, and the installation. Assume that cash was paid.

2. Prepare entries to record depreciation on the machine on December 31 of its first year and on September 30 in the year of its disposal. (Round intermediate calculations to the nearest whole dollar.)

3. Prepare entries to record the retirement of the machine under each of the following unrelated assumptions:

a. It was sold for $24,000.

b. It was sold for $27,000.

c. It was destroyed in a fire and the insurance company paid $27,000 in full settlement of the loss claim.

Richard and Rachel operate a coffee shop, Richell Coffee Roaster Pty Ltd, with a financial year ending 30 June. On 1 July 2017, they purchased a new espresso machine for $23,000 (ignore GST). They then paid a further $500 (ignore GST) for delivery of the machine and $900 (ignore GST) to have it installed. All amounts were paid in cash. The company estimates that the machine has a 4 years useful life, and a residual value of $4,400 (ignore GST). They intend to depreciate the machine using the straight-line method.

On 30 June 2020, the company sold the espresso machine for $10,000 cash (ignore GST).

REQUIRED:

1. Calculate the cost of the espresso machine.
2. Prepare a depreciation worksheet covering the entire useful life of the machine.
3. Show the required journal entries to record:

1. 1. the acquisition of the machine (combine as 1 entry)
2. 2. the annual depreciation charge (note: only 1 entry required, as the journal entry will be the same each year, only with different dates)
3. 3. the disposal of the machine on 30 June 2020.

Narrations are not required.

Diaz Company incurred the following costs during the year 2020.

Determine the amount of research and development costs that would be disclosed in the financial statements of Diaz company for the year 2020.

Note: Round your answer to the nearest whole dollar.

Diaz Company incurred the following costs during the year 2020.

Determine the amount of research and development costs that would be disclosed in the financial statements of Diaz company for the year 2020.

Note: Round your answer to the nearest whole dollar.

Please answer the following using the information given, Thanks!

Introduction:

The Nimble Storage is a hybrid growing data storage System Company situated in Silicon Valley. The CEO of the company is Suresh Vasudevan, and the Vice President of the HR department is Paul Whitney. The company's purpose of developing the hybrid system, which is used in flash memory (It is a storage memory that leads to rapid access to random data) and hard disk to increase the performance of the company at the competitive prices offered to the customers in order to give the efficient and the flash storage platform.

The case analyzes the past performance of the company and the talented hiring of the personnel by Whitney, where the founder and CEO of the company plan to transfer the storage world into the hybrid storage system and wanted to achieve the goal to make a billion dollar company within three years. For this purpose, Suresh Vasudevan aimed to focus on both short term and long term key people initiative to measure the results. The company decided to launch the new leadership program named "LEAD" for the sustainable future growth of the company and also effects on the people initiatives to go forward in future.

The objective of the case is to make quantitative and qualitative analysis by identifying the issues, providing solutions to the problems, and providing an alternative for the growth and evaluating and choosing the best alternative and provide an implementation plan.

Define the issues/Problem statement:

The company has finished its second full fiscal year of storage on January 31, 2013, which provided the great opportunity for reproducing its core values, reviewed the success over the last years and also the strong personnel who made it possible. The company always aims to deliver the world’s most efficient way of data storage by target the broad range of enterprise applications with the goal of optimizing in many factors such as performance efficiency, capacity efficiency, data protection and dramatic simplicity.

Problems/Issues and its solutions:

In order to stabilize the performance, the company faced many potential problems and issues in producing the product and also HR-related issues faced by Whitney.

The first problem was related to the health of the customers' network that led to the unusual high temperature in the data center. The company is now organizing the data center in order to convince the customers to the belief that will help to solve the range of problems in one single platform.

The second problem was the business team was not effective due to lack of motivation and employee turnover, it as one of the biggest challenge that company was facing in last nine months. So, the business wanted to improve its values by making the business by conducting two ways process with the two-sided as the same coin. It would result in the powerful feedback and result oriented of employees, which will result in employee retention and run the business with the order of framework and program perspective.

The company was facing the hiring issue as they wanted to maintain its culture and status quo, the company needed to change the paid time off/personal time off PTO policy in fifteen days, the company wanted to increase the length of services, and they tested the idea but not preferred by the company. Therefore, the employees wanted a favor, and the company made the PTO flexible and unlimited sick leaves and holidays for employee retention.

Suresh Vasudevan had talked about the cultural openness and transparency in sharing the information to the tons of people via any social website, such as Facebook and Google. The company estimates that the openness will be challenging to measure as the hidden information would be exposed publicly.

Analyses Nimble Storage’s mission statement

The HR practice of Nimble cannot be called as a best global practice because, It lacked in various scale on the HR operation and management. In global HR practice, employees concern and issues are solved on the earliest date. Most of the companies have pro-active HR policy due to which new people wants to be associated with the company. The policy consists of standard leave policy, motivating employees and changing the organization culture according to the need of the time. All these are lacks in the company.

From the case we cannot inferred the facilities provided to the global employees by the company. In geocentric perspective the gaps are in HR operation of the company which believes in status quo. In rapidly changing world order it won't work, and organization should be dynamic to deal with the challenges. The company also changed the leave policy and make favorable for employees because it had more attrition rate and wanted to retain the employees.

Global companies are using HRIS (Human Resources Information System) and this company should also use this. From the text of the case nowhere it is mentioned about the technological tools for HR so we can assume that it is not present in that scale in the company. HRIS promote transparency and openness in the system and employee will have access to the relevant data they should know.

Nimble is a leader in predictive flash storage solutions; they take advantage of flash, cloud and big data analytics to deliver data velocity to their customers. Their employees are committed to their vision and are passionate about the work they do (Bahrami, 2015). The annual goal is to become a billion dollar company in three years by selling hybrid storage platform to efficiently store and use data, hire and retain right manpower without disturbing the culture of the organization.

The three major problems are:

Health of customers network

Employee retention

Employee motivation

Employee Retention and motivation are taken care of by multiple measures by launching a LEAD leadership program to achieve a sustainable future growth of the company and encourages people to move forward in the future. They have also made PTO flexible and have allowed unlimited sick leaves and holidays for employee retention and motivation.

Customer network and storage issues are resolved by predictive flash hybrid platform. The hybrid storage system makes organizations more competitive by using flash memory which gives rapid access to random data and hard disk to increase the performance of the company by giving efficient and flash storage.

The company is trying present itself as a global organization by introducing openness and transparency but is still limited by its conservative culture in hiring and fear of their information being exposed.

“Geocentric focus is when the company focuses on global advantages, global communication, and global hiring off manpower based on their skill sets rather than country of origin. management looks at opportunities on a global scale. Instead of focusing on the way that business gets done in a given country, it looks at how to conduct business anywhere in the world, based on common ways of communicating (Lander, n.d)”. Nimble wants to transfer the world storage to the hybrid storage system and wanted to achieve the goal to become a billion-dollar company within 3 years. The hybrid storage system makes organizations more competitive by using flash memory which gives rapid access to random data and hard disk to increase the performance of the company by giving efficient and flash storage platforms. The target is to focus on a broad range of enterprise applications with the goal to optimize in many areas as follows:

Performance efficiency

Capacity efficiency

Data protection

Dramatic simplicity

The geocentric approach to business will give the following advantages:

Putting the best people with best skills suited for the profile irrespective if they are based out of Taiwan or California

Improve the global image of the organization

Give access to more qualified and suitable manpower

Flexibility to manage customers across different time zones as if we have clients in Asia we can have customer service employees based out of remote locations in Asia.

The geocentric approach means a global approach and a global advantage to the business. The company can have the following advantages:

Best skilled and suitable resources across the globe

The benefit of cross cultural thinking and exposure and can target customers across the globe

Address customer requirement in their time zone

Customers might feel more comfortable with customer service executives from the same region

The ideas generated will be global and can address many regional problems.

To summarize everything, a global or geocentric approach will be useful to get a flexible, multicultural and multi dimension vision to your business. We can see examples of giants like Google and Facebook who have used geocentric approach to make success of their business.

In order tackle the global business proposition, there are two important staffing approaches i.e. ethnocentric and geocentric approach. Since Nimble storage is aspiring to provide solutions to organizations all across the world, the company has to move from ethnocentric staffing to geocentric staffing. But there are challenges in the transition.

Ethnocentric staffing is a practice of appointing staff from the company’s home country with a belief that native employees would be more aligned to the interests of the company headquarters. “Ethnocentric staffing means you hire management that is the same nationality as the parent company (Johnston, n.d)”. The advantages of this practice are that there will be alignment in the interests and viewpoints of the head office. Communication with a same culture employee is easier than with an employee from different culture. There are disadvantages to the practice, that the company may not be able to understand the local market and culture. Second disadvantage is that employee from the parent company can be costlier than an employee from the host country. Finally, high ration of expatriates from the parent company can give wrong messages to the local employees and customers.

Geocentric staffing is more suitable to companies aiming to serve global customers. The Nimble storage must move to geocentric staffing. In geocentric staffing practice, the performance of the job candidate is considered rather than the cultural orientation. For multinational operation, geocentric staffing is preferred. There are many benefits to Nimble Storage by adopting geocentric staffing, i.e. the company can integrate global operations at lesser cost, can derive benefits from the diversity of employees, improved management of the local issues, better market penetration in each region of operations, etc.

There are risks in managing geocentric staff. For example, from a political angle when one nation dominates the other in economic and political dimension, the staffing pattern can have tremendous influence on the organization. Some staff may feel they are treated in discriminate manner and compensation is disproportionate to others in international locations. The perception of disparity of employee treatment can lead to distrust and negative consequences of employee hostility.

Questions:

a. Determine gaps in the organization’s current practices within the global market that are relevant to the human resources team of the organization.

b. Illustrate the potential gains for the organization regarding their business practices if they adopt a more geocentric focus. Be sure to support your response with examples. What will be the benefit for the business of the organization should they adopt a more global approach?

Jane Jones organized Kinney Enterprise, Inc., in January 2018. The corporation immediately issued at $15 per share on half of its 260,000 authorized shares of $1 par value common stock. On January 2, 2019, the corporation sold at par value the entire 10,000 authorized shares of 10 percent, $100 par value cumulative preferred stock. On January 2, 2020, the company again needed capital and issued 5,000 shares of an authorized 8,000 shares of no-par cumulative preferred stock for a total of $320,000. The no-par shares have a stated dividend of $6 per share.

The company declared no dividends in 2018 and 2019. At the end of 2019, its retained earnings were 530,000. During 2020 and 2021 combined, the company earned a total net income of $1,400,000. Dividends of 90 cents per share in 2020 and $2 per share in 2021 were paid on common stock.

Required:

1.   Prepare the stockholders’ equity section of the balance sheet at December 31, 2021. Include a supporting schedule showing your computation of retained earnings at the balance sheet date. Ensure that your partial balance sheet is labeled correctly and uses the correct format for the stockholders’ equity section of the balance sheet.

2. Assume that on January 2, 2019, the corporation could have borrowed $1,000,000 at 10 percent interest on a long-term basis instead of issuing the 10,000 shares of the $100 par value cumulative preferred stock. Identify two reasons a corporation may choose to issue cumulative preferred stock rather than finance operations with long-term debt.

The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Commencement date May 1, 2020 Annual lease payment due at the beginning of each year, beginning with May 1, 2020 $20,471.94 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $65,000 Fair value of asset at May 1, 2020 $91,000 Lessor’s implicit rate 8 % Lessee’s incremental borrowing rate 8 % The collectibility of the lease payments by Mooney is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Correct answer iconYour answer is correct. Discuss the nature of this lease to Rode. The nature of this lease to Rode is a lease. eTextbook and Media List of Accounts Attempts: 1 of 5 used (b) Correct answer iconYour answer is correct. Discuss the nature of this lease to Mooney. The nature of this lease to Mooney is a lease. eTextbook and Media List of Accounts Attempts: 3 of 5 used (c) Prepare a lease amortization schedule for Rode for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) RODE COMPANY (Lessee) Lease Amortization Schedule Date Annual Lease Payment Plus BPO Interest on Liability Reduction of Lease Liability Lease Liability 5/1/20 $ $ $ $ 5/1/20 5/1/21 5/1/22 5/1/23 5/1/24 4/30/25 $ $ $ eTextbook and Media List of Accounts Attempts: 0 of 5 used?