The following data from Lyre Ltd's accounts relates to two assets at 30 June 2018:

At 30 June 2018 Lyre Ltd decides to adopt the revaluation model for both these assets. On this date land has a fair value of $2,018,000 and plant and equipment has a fair value of $294,000. On 30 June 2019 Lyre Ltd reviews the value of its assets. The fair value of land is reassessed as $2,080,000. Plant and equipment has no change in value on that date.

Prepare the journal entries required to revalue the assets for the year ended 30 June 2018 and the 30 June 2019.

1. [7 marks]

   1. (a) Public health authorities want to estimate the proportion of Australians aged 18-65 who caught the flu during winter 2018. If the true proportion is thought to be about 24%, how large a sample will be needed if we want to be 95% sure that our estimate will be within 0.02 of the true value? [3]

   2. (b) Due to a change in the available funding, the sample actually used for estimating the prevalence of flu included 1,712 randomly-selected Australians aged 18-65. Of these, 367 reported having a “flu-like illness” during winter 2018. Use these data to calculate a 90% confidence interval for the proportion of Australians aged 18-65 who had a flu-like illness during winter 2018. [4]

FinanceCo lent $8 million to Corbin Construction on January 1, 2018, to construct a playground. Corbin signed a three-year, 6% installment note to be paid in three equal payments at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for FinanceCo’s lending the funds on January 1, 2018. 2. Prepare an amortization schedule for the three-year term of the installment note. 3. Prepare the journal entry for the first installment payment on December 31, 2018. 4. Prepare the journal entry for the third installment payment on December 31, 2020.

Consider the following account balances (in thousands) for the Canseco companies:

1. Prepare a schedule for the cost of goods manufactured for 2018.
2. Revenues (in thousands) for 2018 were $7,500,000. Prepare the income statement for 2018

On March 1, 2017, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below.

Instructions  

(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.)  

Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2017, for $530,000. The equity method of accounting is to be used. Steinbart's net assets on that date were $1.2 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows:

Inventory held at the end of one year by Alex is sold at the beginning of the next.

Steinbart reports net income of $80,000 in 2017 and $110,000 in 2018 and declares $30,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2018?

You are the new controller for Banana, Inc.. The company CFO has asked you to develop the appropriate worksheets and then journal entries to support several lease contracts as applied based on the new lease regulations. Your accounting group provided you the following information regarding the lease:

On January 2, 2018, Banana leased equipment, with a fair value of $675,000, under a capital lease calling for seven annual lease payments of $110,000 beginning January 2, 2018, and continuing each December 31st. Banana's incremental borrowing rate on the date of the lease was 8%. However, the lessor's implicit rate, which was known by Banana, was 6%. Provide the amortization table for the lease and the journal entries required for December 31, 2018 and December 31, 2020.

Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2018 is available: Aug.1 Inventory on hand—5,000 units; cost $7.90 each. 8 Purchased 22,000 units for $6.70 each. 14 Sold 16,000 units for $13.20 each. 18 Purchased 12,000 units for $6.20 each. 25 Sold 15,000 units for $12.20 each. 31 Inventory on hand—8,000 units. Required: Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using each of the following cost flow methods:

Dobbs Company issues 9%, two-year bonds, on December 31, 2018, with a par value of $104,000 and semiannual interest payments.

Use the above straight-line bond amortization table and prepare journal entries for the following.

Required:
(a) The issuance of bonds on December 31, 2018.
(b) The first through fourth interest payments on each June 30 and December 31.
(c) The maturity of the bonds on December 31, 2020.

Dumbledore Corporation was formed on January 1, 2018. Mr. Smith owns 25% of the corporation's stock. The corporation made an S election immediately, and it is a calendar-year corporation. Mr. Smith contributed $15,000 cash to Dumbledore in exchange for his stock. On August 8, 2018, Dumbledore Corporation borrowed $22,000 from Mr. Smith, and $10,000 from First National Bank under a recourse financing arrangement. Dumbledore had losses from its operations of $104,000 in 2018 and $82,000 in 2019. At the end of 2019, Dumbledore Corporation had not repaid any of the loans from Mr. Smith or the bank. What part of Dumbledore Corporation's 2019 loss may Mr. Smith report on his 2019 individual tax return?