On January 2, 2017, SPU Corporation acquired 30% of the outstanding voting common stock of Brough Company for $335,000. This investment enabled SPU to exercise significant influence over Brough.

    The book value of the acquired shares was $315,000 (the book value of Brough Co was $1,050,000). The excess of cost over book value was attributed to a building that was undervalued on Brough’s balance sheet and that had a remaining useful life of 10 years.  

    For the year ended December 31, 2017, Brough reported income of $70,000 and paid cash dividends of $15,000 on its common stock.

A) Make all journal entries necessary on SPU’s books to record its investment in Brough Company for the first year.

B) What is the ending balance of SPU’s investment in Brough at December 31, 2017?

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $220 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

Required:
1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion.
2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time.
3. Suppose the estimated costs to complete at the end of 2019 are $80 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method.

Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. (Enter your answers in millions. Loss amounts should be indicated with a minus sign. Use percentages as calculated and rounded in the table below to arrive at your final answer.)

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Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. (Enter your answers in millions. Loss amounts should be indicated with a minus sign.)

Suppose the estimated costs to complete at the end of 2019 are $80 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. (Enter your answers in millions. Use percentages as calculated and rounded in the table below to arrive at your final answer.)

Ubuntu Linux

HW5: text processing; scripting

1. Write a Linux command to rewrite the /var/passwd file to have a tab for each delimiter ':'. Hint: use tr

2. Write a Linux command to extract the user names and sort them. Hint: use cut

3. Write a for loop to to display a time table, e.g., 17 x 1 = 17; 17 x 2 = 34; etc., as follows:

17 x 1 = 17 17 x 2 = 34

17 x 3 = 51 17 x 4 = 68

17 x 5 = 85 17 x 6 = 102

17 x 7 = 119 17 x 8 = 136

17 x 9 = 153 17 x 10 = 170

17 x 11 = 187 17 x 12 = 204

17 x 13 = 221 17 x 14 = 238

17 x 15 = 255 17 x 16 = 272

17 x 17 = 289 4.

Write a Linux command to download the following webpage to the fail called "viral-diseases" Hint: use wget

5. Using a regular expression, write a Linux command to extract URL addresses from the viral-diseases. The URL starts with "www" and ending with "com" or "gov". Hint: use grep -E 6. Write a bash shell to

1) using a for loop to create the directory called "jyoon_0" to "jyoon_9";

2) change directory to each of the directories created,

3) write the sentence "Yoon visited in directory jyoon_0t" in the file jyoon_0.txt",

4) attach the timestamp to the file;

5) writhe the same sentence to the standard output device,

6) the timestamp too;

7) do this to all those 10 directories, and

8) at the end, write "All done" to the standard output device. So, the example standard output:

jyoon@MT-UBUN01:~$ ./hw5create.sh

Yoon visited jyoon_0 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_1 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_2 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_3 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_4 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_5 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_6 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_7 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_8 directory

Thu 09 Jul 2020 11:48:42 AM EDT

Yoon visited jyoon_9 directory

Thu 09 Jul 2020 11:48:42 AM EDT

All Created!

One of the directories has the following:

jyoon@MT-UBUN01:~$ cd jyoon_5

jyoon@MT-UBUN01:~/jyoon_5$ ls

jyoon_5.txt jyoon@MT-UBUN01:~/jyoon_5$ cat jyoon_5.txt

Yoon visited jyoon_5 directory

Thu 09 Jul 2020 11:48:42 AM EDT

jyoon@MT-UBUN01:~/jyoon_5$

Note that the directory name, file name and your name should be formed with your login ID, but not jyoon, which is not yours!

For the hydrogen atom, the transition from the 2p state to the 1s state is accompanied by the emission of a photon with an energy of 16.2×10^-19 J. For a C atom, the same transition (2p to 1s) is accompanied by the emission of x-rays of wavelength 44.7 Å. What is the energy difference between these states in carbon?

J

The energy difference between these states in carbon is _________larger than smaller than about the same as the corresponding energy difference for hydrogen.

The energy difference between these states in oxygen would be expected to be _________larger than smaller than about the same as the corresponding energy difference for carbon.

Submit Answer

1A. The compound zinc iodide is a strong electrolyte. Write the transformation that occurs when solid zinc iodide dissolves in water.

2
Use the pull-down boxes to specify states such as (aq) or (s).      

1B. The compound lead cyanide is a strong electrolyte. Write the transformation that occurs when solid lead cyanide dissolves in water.

Use the pull-down boxes to specify states such as (aq) or (s).     

1C. The compound nickel(II) nitrate is a strong electrolyte. Write the transformation that occurs when solid nickel(II) nitrate dissolves in water.

Use the pull-down boxes to specify states such as (aq) or (s).   

2A. Write a balanced equation for the double-replacement precipitation reaction described, using the smallest possible integer coefficients.

A precipitate forms when aqueous solutions of zinc bromide and silver(I) nitrate are combined.

Use the pull-down boxes to include states such as (s) or (aq).

2B.Write a balanced equation for the double-replacement precipitation reaction described, using the smallest possible integer coefficients.

A precipitate forms when aqueous solutions of manganese(II) sulfate and sodium hydroxide are combined.

Use the pull-down boxes to include states such as (s) or (aq).

2C.Write a balanced equation for the double-replacement precipitation reaction described, using the smallest possible integer coefficients.

A precipitate forms when aqueous solutions of chromium(II) chloride and potassium carbonate are combined.

Use the pull-down boxes to include states such as (s) or (aq).

What view or additional meaningful response do you have on these paragraphs? Please see below.

GASB was established to provide uniformed governmental accounting principles for states and local governments to utilize. If GASB gave in to the rebellion of Texas officials for not complying with Statement 45, it would be similar to parents giving in to their misbehaved children. GASB would lose their authority, power, and trust from the public. If GASB allowed Texas to follow their own accounting rules, other states may follow in their footsteps, and then GASB’s authority would be diminished and no one would be following GAAP. States will recognize that GASB can be easily influenced and choose to do their own specific reporting methods.  

One of the main reasons Texas refused to comply with GASB 45 was due to the fact that they felt that it was “impossible to accurately project health care costs as far into the future as GASB requires” (Cheney 2). I’m sure a couple of states have difficulty estimating health care costs, but they still manage to do so regardless because if states don’t comply with GASB, then this will negatively impact states’ credit worthiness and bond rating.  GASB establishes and implements their standards because they know that it will result in organized and uniform governmental accounting. GASB doesn’t make rules just for the sake of making rules, but the rules always have meaning. GASB 45 requires governments to use the accrual accounting method to report OPEB as its more efficient than using the pay-as-you-go basis. GASB believes Statement 45 is the best course of action for public entities and everyone should comply.  

Multiple Choice

1. Investor is not a parent entity if

1. The investor has power over the investee
2. Investors have the ability to influence investment returns
3. The investor has the right to the investee's variable returns
4. The investor has significant influence over the investee

2. The accounting method applied for business combinations in accordance with PSAK 22 / IFRS 3 is:

1. Acquisition method
2. The pooling of ownership method
3. Proportional consolidation method
4. Equity method

3. A is a newly formed entity to acquire B and C an existing entity prior to the business combination. The acquirer is

1. C
2. B or C
3. B
4. A

4. The requirements for disclosing financial statements in PSAK 67 / IFRS 12 are exempted in the event that the entity has an interest in

1. Unconsolidated structured entities
2. Child entity
3. Joint measurement
4. The association entity held for sale

5. The following are not business combination transactions of entities under common control

1. The parent company exchanges its ownership in a portion of the net assets of its subsidiary for additional shares issued by another subsidiary.
2. The parent company transfers a portion of the net assets of its subsidiary to the assets of the parent
3. The parent company purchases the net assets or part of the ownership rights of non-controlling shareholders
4. The parent company transfers part of its ownership rights in one subsidiary to another subsidiary

6. The following factors are not relevant in determining the entity's functional currency

1. The currency in which funding is generated
2. The currency in which funding is generated
3. The currency in which the proceeds from operating activities are held
4. Currency that affects the entity's costs
5. The most accepted international currency for trading

7. In a joint arrangement, A has 50% of the voting rights, B has 30% and C has 20%. The arrangement provides that at least 75% of the voting rights are paid to make decisions about relevant activities. The following entities have control over the joint arrangement

1. B
2. A
3. C
4. A and B

8. An entity imports 4 million Euros worth of merchandise from a European country. The entity's functional currency is US Dollars. Goods ordered on 31 March 2020, shipped on 7 April 2020, and received on 8 April 2020. Entity receives invoice on 28 May 2020. Terms of sale are FOB destination. The exchange rate used to record the transaction is the rate on the date

1. March 31, 2020
2. 7 April 2020
3. 28 May 2020
4. 8 April 2020

9. Goodwill arising in the acquisition of associates

1. Tested for impairment separately from other assets
2. Charged in profit or loss in each reporting period
3. Not recognized separately from the carrying amount of the investment
4. Amortized in each reporting period including the interim period

10. In separate financial statements, investments in subsidiaries that are not classified as held for sale are recorded in

1. Using the equity method or PSAK 71 / IFRS 9
2. Cost or equity method
3. In accordance with PSAK 71 / IFRS 9 or PSAK 58 / IFRS 5
4. Cost or in accordance with PSAK 71 / IFRS 9

11. An investment entity is an entity that is

1. Aim to develop a product together with the investee
2. Have a plan to invest in unlimited
3. Can have a strategy for investing in more than one investee
4. Transact with investees

12. The following statements are true

1. Separate financial statements are the financial statements of a business group presented as a single economic entity
2. Separate financial statements can only be presented as additional information in the consolidated statements
3. Separate financial statements must be presented to record the investment in the subsidiary at cost
4. Separate financial reports can be presented as general purpose financial reports

13. The building was purchased on December 31, 2017 for MU 20 million. On that date, the consumer price index in the country was 60.1. As of December 31, 2019, the consumer price index ballooned to 240.4. What was the carrying value of the building as of December 31, 2019?

1. MU 4,808 million
2. MU 1,202 million
3. MU 80 million
4. MU 20 million

14. A trading entity in Indonesia. After a while, the entity expanded and exported its products to Singapore. Business is conducted through a subsidiary in Singapore. The subsidiary is an extension of the entity's business and the entity's directors are also directors of the subsidiary. The functional currency of the subsidiary is.

1. Rupiah
2. Rupiah or Singapore Dollar
3. Singapore Dollar
4. Rupiah and Singapore Dollar

15. A structured entity is an entity

1. With broad and well-defined goals
2. Who receive funding from third parties
3. Which has various activities
4. With the determination of controllers not dominated by voting rights

16. PSAK 15 / IAS 28 does not require the application of the equity method if the associate acquired will be held for sale within a specified period of time. This time period is

1. Six months
2. Twelve months
3. In the near future
4. Two years

17. The following assets or liabilities are non-monetary assets or liabilities

1. Accruals and other payables
2. Tax debt
3. Accounts receivable
4. Prepaid expense

18. Joint ventures recognize its interest in joint ventures as

1. Net assets, which include their share of any assets that are jointly owned
2. Net assets that include all assets that are jointly owned
3. Investments are accounted for using the equity method
4. Investments are accounted for using the proportional consolidation method

19. An Indonesian entity generates and receives cash from sales denominated in Singapore Dollars. The main expenses consist of raw materials which are also obtained in Singapore Dollars, however salary expenses are paid in Indonesian Rupiah. Which of the following statements is true?

1. The entity's functional currency is Indonesian Rupiah
2. The entity's functional currency may be selected Singapore Dollar or Rupiah
3. The entity's functional currency is the Singapore dollar
4. The entity's functional currency is US Dollars

20. The difference between the consideration transferred and the carrying amount of the business combination transactions of entities under common control is recognized in

1. Liabilities
2. Asset
3. Profit and loss
4. Equity

Nealon Energy Corporation engages in the​ acquisition, exploration,​ development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 years as it has expanded into horizontal drilling techniques for the development of the massive deposits of both gas and oil in shale formations. The​ company's operations in the Haynesville shale​ (located in northwest​ Louisiana) have been so significant that it needs to construct a natural gas gathering and processing center near Bossier​ City, Louisiana, at an estimated cost of ​$70 million.

To finance the new​ facility, Nealon has ​$20 million in profits that it will use to finance a portion of the expansion and plans to sell a bond issue to raise the remaining ​$50 million. The decision to use so much debt financing for the project was largely due to the argument by company CEO Douglas Nealon Sr. that debt financing is relatively cheap relative to common stock​ (which the firm has used in the​ past). Company CFO Doug Nealon Jr.​ (son of the company​ founder) did not object to the decision to use all debt but pondered the issue of what cost of capital to use for the expansion project. There was no doubt that the​ out-of-pocket cost of financing was equal to the new interest that must be paid on the debt.​ However, the CFO also knew that by using debt for this project the firm would eventually have to use equity in the future if it wanted to maintain the balance of debt and equity it had in its capital structure and not become overly dependent on borrowed funds.

The following balance​ sheet reflects the mix of capital sources that Nealon has used in the past. Although the percentages would vary over​ time, the firm tended to manage its capital structure back toward these proportions. The firm currently has one issue of bonds outstanding. The bonds have a par value of ​$

1,000 per​ bond, carry a coupon rate of 8 ​percent, have 16 years to​ maturity, and are selling for ​$1,035. ​Nealon's common stock has a current market price of $32​, and the firm paid a ​$2.00 dividend last year that is expected to increase at an annual rate of 7 percent for the foreseeable future.

Balance Sheet:

Source of Fincancing Target Capital Strucure Weights

Bonds 40%               

Common Stock 60%

a. What is the yield to maturity for​ Nealon's bonds under current market​ conditions?

b. What is the cost of new debt financing to Nealon based on current market prices after both taxes​ (you may use a marginal tax rate of 24 percent for your​ estimate) and flotation costs of ​$35 per bond have been​ considered?

Note​: Use N=16 for the number of years until the new bond matures.

c. What is the​ investor's required rate of return for​ Nealon's common​ stock? If Nealon were to sell new shares of common​ stock, it would incur a cost of ​$2.50 per share. What is your estimate of the cost of new equity financing raised from the sale of common​ stock?

d. Compute the weighted average cost of capital for​ Nealon's investment using the weights reflected in the actual financing mix​ (that is, ​$20 million in retained earnings and ​$50 million in​ bonds).

e. Compute the weighted average cost of capital for Nealon where the firm maintains its target capital structure by reducing its debt offering to

40 percent of the ​$70 million in new​ capital, or ​$28 ​million, using ​$20 million in retained earnings and raising ​$22 million through a new equity offering.

f. If you were the CFO for the​ company, would you prefer to use the calculation of the cost of capital in part d or e to evaluate the new​ project? Why?

Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. The company has shown a profit every year for the past 18 years, and the shareholders are satisfied with the company’s management. Prior to founding Stephenson Real Estate, Robert was the founder and CEO of a failed alpaca farming operation. The resulting bankruptcy made him extremely averse to debt financing. As a result, the company is entirely equity financed, with 9 million shares of common stock outstanding. The stock currently trades at $37.80 per share. Stephenson is evaluating a plan to purchase a huge tract of land in the southeastern United States for $95 million. The land will subsequently be leased to tenant farmers. This purchase is expected to increase Stephenson’s annual pretax earnings by $18.75 million in perpetuity. Jennifer Weyand, the company’s new CFO, has been put in charge of the project. Jennifer has determined that the company’s current cost of capital is 10.2 percent. She feels that the company would be more valuable if it included debt in its capital structure, so she is evaluating whether the company should issue debt to entirely finance the project. Based on some conversations with investment banks, she thinks that the company can issue bonds at par value with a 6 percent coupon rate. From her analysis, she also believes that a capital structure in the range of 70 percent equityy30 percent debt would be optimal. If the company goes beyond 30 percent debt, its bonds would carry a lower rating and a much higher coupon because the possibility of financial distress and the associated costs would rise sharply. Stephenson has a 40 percent corporate tax rate (state and federal). Please answer the questions below with separate papers.

1. If Stephenson wishes to maximize its total market value, would you recommend that it issue debt or equity to finance the land purchase? Explain. 2. Construct Stephenson’s market value balance sheet before it announces the purchase. Market value balance sheet Assets    Equity      Total assets    Debt and equity  

3. Suppose Stephenson decides to issue equity to finance the purchase.

a. What is the net present value of the project?

b. Construct Stephenson’s market value balance sheet after it announces that the firm will finance the purchase using equity. What would be the new price per share of the firm’s stock? How many shares will Stephenson need to issue to finance the purchase? Market value balance sheet Old assets       NPV of project   Equity      Total assets Debt and equity  

c. Construct Stephenson’s market value balance sheet after the equity issue but before the purchase has been made. How many shares of common stock does Stephenson have outstanding? What is the price per share of the firm’s stock? Market Value Balance Sheet Cash       Old assets          NPV of project   Equity      Total assets Debt and equity   d. Construct Stephenson’s market value balance sheet after the purchase has been made. Market Value Balance Sheet Old assets       PV of project      Equity      Total assets    Debt and equity  

4. Suppose Stephenson decides to issue debt to finance the purchase. a. What will the market value of the Stephenson company be if the purchase is financed with debt? b. Construct Stephenson’s market value balance sheet after both the debt issue and the land purchase. What is the price per share of the firm’s stock? Market Value Balance Sheet Value unlevered    Debt    Tax shield      Equity      Total assets    Debt and equity  

5. Which method of financing maximizes the per-share stock price of Stephenson’s equity?

NOTE: PLAGIRISM IS PROHIBITED

BUSINESS ETHICS

CASE STUDY:

Starbucks’ Mission: Social Responsibility and Brand Strength

Before Starbucks came onto the scene, coffee was considered a stodgy product largely consumed by older people in the United States. It did not have the cool-factor or the cache that it does today. Starbucks’ entry in the market largely changed how Americans consumed coffee and what they thought about coffee shops. It all started in the cold, gray climate of Seattle—the perfect setting for launching a warm beverage with international appeal. The target market was upper-income, middle-class, white-collar, single or newly married men and women with no children. Many of Starbucks’ early target market had likely experienced the coffee shop cultures of Europe, and found U.S. equivalent appealing. Quality and service were excellent and location became a critical issue. Starbucks’ flagship store is in Pike Place Market—a destination for the worldly, young and hip in Seattle. With its small space requirements, low inventory, and fast turnover, Starbucks was able to leverage its local success to rapidly expand into new markets before competitors were able to catch up. Due to its ubiquity, many people have strong opinions on Starbucks. Some worry that the chain pushes out local competition and that they have led to the homogenization of the coffee market. However, the most recent economic recession and the closing of hundreds of Starbucks stores has, for the time being, quieted these complaints.

No matter what one thinks of Starbucks, it is more involved in social causes and the care of its workers than many comparable chains. Starbucks is committed to employee well-being, as one can see in their employee health care system. Founder Howard Schulz made employee healthcare a priority after watching his father struggle with injuries because he had no access to employee healthcare or worker’s compensation. In large part because of its commitment to providing good wages and healthcare, Starbucks ranked 24th on Fortune’s Best Companies to Work For list in 2009.

The company also has a history of giving to charities that affect its primary stakeholders. As part of its commitment to ethics and sustainability, the company launched its Shared Planet website, which communicates to interested stakeholders all of the company’s ethics and sustainability initiatives. The company is also a large buyer of Fair Trade Certified coffee (although no longer the largest by far) and has partnered with Project Red to raise money for HIV/AIDs research.

In spite of its professed commitment to caring for workers and for social causes, such a large company will always be subject to criticisms. From complaints that Starbucks pushes smaller competitors out of markets, to those that its coffee drinks are excessively fatty and caloric, Starbucks is seemingly always in the news for something. It has even become a target for several lawsuits regarding compensation and dispensation of tips. Also, Starbucks Corp. has agreed to settle allegations from the National Labor Relations Board that it improperly fired a Michigan employee for participating in union activities. Instructors may ask students whether large companies attract such litigation or if Starbucks is changing its values as it has grown larger.

.

Discussion

1. Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy? ( 150 words)

2. Is Starbucks unique in being able to provide a high level of benefits to its employees?              

3. Do you think that Starbucks has grown rapidly because of its ethical and socially responsible activities or because it provides products and an environment that customers want? (150 words)