Compute the amount that can be borrowed under each of the following circumstances: 1. A promise to repay $90,000 seven years from now at an interest rate of 6%. 2. An agreement made on February 1, 2015, to make three separate payments of $20,000 on February 1 of 2016, 2017, and 2018. The annual interest rate is 10%.
> Sandestino Company contributes cash of $170,000 and Costa Grande Company contributes net assets of $170,000 to create Grand Sand Company on January 1, Year 1. Sandestino and Costa Grande each receive a 50 percent equity interest in Grand Sand. Grand Sand
> Auroral Company had the following investments in shares of other companies on December 31, Year 1: Required: Determine the appropriate method for including each of these investments in Auroral Company’s consolidated financial statem
> Petrodat Company provides data processing services for companies operating in the petroleum extraction business. On January 1, Year 1, Petrodat established two foreign subsidiaries—one in Mexico and the other in Venezuelaâ€&
> Columbia Corporation, a U.S.-based company, acquired a 100 percent interest in Swoboda Company in Lodz, Poland, on January 1, Year 1, when the exchange rate for the Polish zloty (PLN) was $0.25. The financial statements of Swoboda as of December 31, Year
> Doner Company Inc. begins operations on January 1, Year 1. The company’s unadjusted financial statements for the year ended December 31, Year 1, appear as follows: Revenues and expenses occur evenly throughout the year; revenues and o
> Antalya Company borrows 1,000,000 Turkish lire (TL) on January 1, Year 1, at an annual interest rate of 60 percent by signing a two-year note payable. During Year 1, the Turkish inflation index changed from 250 at January 1 to 387.5 at December 31. Req
> The following geographic segment information is provided in the 2012 annual report by two German automakers, BMW and Volkswagen: Required: Use the 2012 segment information provided by BMW and Volkswagen to answer the following questions: a. Which
> Sorocaba Company is located in a highly inflationary country and in accordance with IAS 29 prepares financial statements on a general purchasing power (inflation-adjusted) basis through reference to changes in the general price index (GPI). The company h
> The Year 1 financial statements of the Brazilian subsidiary of Artemis Corporation (a Canadian company) revealed the following: Brazilian Reals (BRL) Beginning inventory………………………………………………..100,000 Purchases………………………………………………………………500,000 Ending inventor
> Selected balance sheet accounts of a foreign subsidiary of the Pacter Company have been translated into parent currency ( F - ) as follows: Required: a. Assuming that the foreign subsidiary is determined to have the foreign currency as its functional
> To complete the requirements of this exercise, access the most recent Form 10-K for both Exxon Mobil and Chevron. Required: a. Determine whether each company’s foreign operations have a predominant functional currency. Discuss the implication this has f
> Brookhurst Company (a U.S.-based company) established a subsidiary in South Africa on January 1, Year 1, by investing 300,000 South African rand (ZAR) when the exchange rate was US$0.09/ZAR 1. On that date, the foreign subsidiary borrowed ZAR 500,000 fro
> Gramado Company was created as a wholly owned subsidiary of Porto Alegre Corporation on January 1, Year 1. On that date, Porto Alegre invested $42,000 in Gramado’s capital stock. Given the exchange rate on that date of $0.84 per cruzeiro, the initial inv
> Alexander Corporation (a U.S.-based company) acquired 100 percent of a Swiss company for 8.2 million Swiss francs on December 20, Year 1. At the date of acquisition, the exchange rate was $0.70 per franc. The acquisition price is attributable to the foll
> Better Food Corporation (BFC) regularly purchases nutritional supplements from a supplier in Japan with the invoice price denominated in Japanese yen. BFC has experienced several foreign exchange losses in the past year due to increases in the U.S.-dolla
> Zesto Company (a U.S. company) establishes a subsidiary in Mexico on January 1, Year 1. The subsidiary begins the year with 1,000,000 Mexican pesos (MXN) in cash and no other assets or liabilities. It immediately uses MXN600,000 to acquire equipment. Inv
> Alliance Corporation (an Australian company) invests 1,000,000 marks in a foreign subsidiary on January 1, Year 1. The subsidiary commences operations on that date, and generates net income of 200,000 marks during its first year of operations. No dividen
> Simga Company’s Turkish subsidiary reported the following amounts in Turkish lire (TL) on its December 31, Year 4, balance sheet: Equipment…………â€
> What is the net impact on Black Lion Company’s Year 1 net income as a result of this hedge of a forecasted foreign currency purchase? a. $0. b. A $200 increase in net income. c. A $300 decrease in net income. d. An $800 decrease in net income.
> What was the net increase or decrease in cash flow from having purchased the foreign currency option to hedge this exposure to foreign exchange risk? a. $0. b. A $1,000 increase in cash flow. c. A $1,700 decrease in cash flow. d. A $2,300 increase in cas
> What was the net impact on Keefer Company’s Year 1 income as a result of this fair value hedge of a firm commitment? a. $0. b. An $860.60 decrease in income. c. An $1,100.00 increase in income. d. A $1,960.60 increase in income.
> Assuming a forward contract to sell 100,000 Israeli shekels was entered into on December 1, Year 1, as a fair value hedge of a foreign currency receivable, what would be the net impact on net income in Year 1 resulting from a fluctuation in the value of
> Given its experience, Garnier Corporation expects that it will sell goods to a foreign customer at a price of 1 million lire on March 15, Year 2. To hedge this forecasted transaction, a three-month put option to sell 1 million lire is acquired on Decembe
> The Zermatt Company ordered parts from a foreign supplier on November 20 at a price of 100,000 francs when the spot rate was $0.80 per peso. Delivery and payment were scheduled for December 20. On November 20, Zermatt acquired a call option on 100,000 fr
> On June 1, Year 1, Tsanumis Corporation (a U.S.-based manufacturing fi rm) received an order to sell goods to a foreign customer at a price of 1 million euros. The goods will be shipped and payment will be received in three months on September 1, Year 1.
> Portofi no Company made purchases on account from three foreign suppliers on December 15, 2012, with payment made on January 15, 2013. Information related to these purchases is as follows: Portofi no Company’s fiscal year ends Decem
> After evaluating the risk of the investment described in Exercise 25-8, B2B Co. concludes that it must earn at least an 8% return on this investment. Compute the net present value of this investment. (Round the net present value to the nearest dollar.)
> Keith Riggins expects an investment of $82,014 to return $10,000 annually for several years. If Riggins earns a return of 10%, how many annual payments will he receive? (Use Table B.3.) Table B.3: ТАBLE B.3t p = | 1 /i (1 + i)". Present Value of an
> Jones expects an immediate investment of $57,466 to return $10,000 annually for eight years, with the first payment to be received one year from now. What rate of interest must Jones earn? (Use Table B.3.) Table B.3: ТАBLE B.3t p = | 1 /i (1 + i)".
> Catten, Inc., invests $163,170 today earning 7% per year for nine years. Use Table B.2 to compute the future value of the investment nine years from now. (Round the amount to the nearest dollar.) Table B.2: ТABLE B.2** f = (1 + i)" Future Value of
> Mark Welsch deposits $7,200 in an account that earns interest at an annual rate of 8%, compounded quarterly. The $7,200 plus earned interest must remain in the account 10 years before it can be withdrawn. How much money will be in the account at the end
> Bill Padley expects to invest $10,000 for 25 years, after which he wants to receive $108,347. What rate of interest must Padley earn? (Use Table B.2.) Table B.2: ТABLE B.2** f = (1 + i)" Future Value of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
> Tom Thompson expects to invest $10,000 at 12% and, at the end of a certain period, receive $96,463. How many years will it be before Thompson receives the payment? (Use Table B.2.) Table B.2: ТABLE B.2** f = (1 + i)" Future Value of 1 Rate Periods
> Render Co. CPA is preparing activity-based budgets for 2015. The partners expect the firm to generate billable hours for the year as follows: The company pays $10 per hour to data-entry clerks, $40 per hour to audit personnel, $50 per hour to tax perso
> Qinto Company sells two types of products, basic and deluxe. The company provides technical support for users of its products, at an expected cost of $250,000 per year. The company expects to process 10,000 customer service calls per year. 1. Determine t
> Chan Company identified the following activities, costs, and activity drivers for 2015. The company manufactures two types of go-karts: fast and standard. 1. Compute a single plantwide overhead rate assuming that the company assigns overhead based on 1
> Claire Fitch is planning to begin an individual retirement program in which she will invest $1,500 at the end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of 10%. What is the value of the program
> Beene Distributing is considering a project that will return $150,000 annually at the end of each year for the next six years. If Beene demands an annual return of 7% and pays for the project immediately, how much is it willing to pay for the project?
> CII, Inc., invests $630,000 in a project expected to earn a 12% annual rate of return. The earnings will be reinvested in the project each year until the entire investment is liquidated 10 years later. What will the cash proceeds be when the project is l
> Flaherty is considering an investment that, if paid for immediately, is expected to return $140,000 five years from now. If Flaherty demands a 9% return, how much is she willing to pay for this investment?
> Megan Brink is offered the possibility of investing $6,651 today at 6% interest per year in a desire to accumulate $10,000. How many years must Brink wait to accumulate $10,000? (Use Table B.1.) Table B.1: ТАBLE B.1* p = 1/(1 + iy" Present Value of
> Ken Francis is offered the possibility of investing $2,745 today and in return to receive $10,000 after 15 years. What is the annual rate of interest for this investment? (Use Table B.1.) Table B.1: ТАBLE B.1* p = 1/(1 + iy" Present Value of 1 Rate
> On January 1, 2015, a company agrees to pay $20,000 in three years. If the annual interest rate is 10%, determine how much cash the company can borrow with this agreement.
> Fill in each of the blanks below with the correct term. 1. A ______ arises from a past decision and cannot be avoided or changed; it is irrelevant to future decisions. 2. ______ refer to the incremental revenue generated from taking one particular action
> Apple Inc. reports the following for three of its geographic segments for a recent year. All numbers are in millions of dollars. Compute profit margin for each division. Express answers as percentages, rounded to one decimal place. ($ millions) Ame
> Branson Belts makes hand-crafted belts. The company budgets production of 4,500 belts during the second quarter. Each belt requires 4 direct labor hours, at a cost of $12 per hour. Prepare a direct labor budget for the second quarter.
> Kelly Malone plans to have $50 withheld from her monthly paycheck and deposited in a savings account that earns 12% annually, compounded monthly. If Malone continues with her plan for two and one-half years, how much will be accumulated in the account on
> Steffi Derr expects to invest $10,000 annually that will earn 8%. How many annual investments must Derr make to accumulate $303,243 on the date of the last investment? (Use Table B.4.) Table B.4: TABLE B.4* f = [(1+ iyª – 1]/i Future Value of an An
> Algoe expects to invest $1,000 annually for 40 years to yield an accumulated value of $154,762 on the date of the last investment. For this to occur, what rate of interest must Algoe earn? (Use Table B.4.) Table B.4: TABLE B.4* f = [(1+ iyª – 1]/i
> Refer to the information in Exercise 24-11. Assume that each of the company’s divisions has a required rate of return of 7%. Compute residual income for each division. Information from Exercise 24-11: Kraft Foods Group reports the foll
> Assume that you must make two-year-ahead future value estimates using the future value of 1 table (Table B.2). Which interest rate column and number-of-periods row do you use when working with the following rates? 1. 8% annual rate, compounded quarterly
> A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute this machine’s accou
> Mike Derr Company expects to earn 10% per year on an investment that will pay $606,773 six years from now. Use Table B.1 to compute the present value of this investment. (Round the amount to the nearest dollar.) Table B.1: ТАBLE B.1* p = 1/(1 + iy"
> 1. Which costing method tends to overstate the cost of high-volume products? ______ a. Traditional volume-based costing ______ b. Activity-based costing ______ c. Job order costing ______ d. Differential costing 2. If management wants the most accurate
> In the blank next to the following terms, place the letter A through D corresponding to the best description of that term. ______ 1. Activity ______ 2. Activity driver ______ 3. Cost pool ______ 4. Cost object A. Measurement associated with an activity.
> Presented below are terms preceded by letters a through j and a list of definitions 1 through 10. Enter the letter of the term with the definition, using the space preceding the definition. a. Fixed budget b. Standard costs c. Price variance d. Quantity
> USA Airlines uses the following performance measures. Classify each of the performance measures below into the most likely balanced scorecard perspective it relates to. Label your answers using C (customer), P (internal process), I (innovation and growth
> Match the terms a–e with their correct definition 1–5. a. Standard cost card b. Management by exception c. Standard cost d. Ideal standard e. Practical standard ______ 1. Quantity of input required under normal conditions. ______ 2. Quantity of input req
> Match the definitions 1 through 9 with the term or phrase a through i. A. Budget B. Merchandise purchases budget C. Cash budget D. Safety stock E. Budgeted income statement F. General and administrative expense budget G. Sales budget H. Master budget I.
> Identify at least four typical cost pools for activity-based costing in most organizations.
> What company circumstances especially encourage use of activity-based costing?
> What is an activity cost driver?
> In activity-based costing, costs in a cost pool are allocated to ______ using predetermined overhead rates.
> Assume that you are planning a spring break trip to Europe. Identify three locations where you can find exchange rates for the dollar relative to the euro or other currencies.
> Many service industries link labor rate and time (quantity) standards with their processes. One example is the standard time to board an aircraft. The reason time plays such an important role in the service industry is that it is viewed as a competitive
> Each team member is to become an expert on a specific classification of long-term investments. This expertise will be used to facilitate other teammates’ understanding of the concepts and procedures relevant to the classification chosen. 1. Each team mem
> What is a cost object?
> Participatory budgeting can sometimes lead to negative consequences. From the following list of outcomes that can arise from participatory budgeting, identify those with potentially negative consequences. ______ a. Budgetary slack will not be available t
> What is the difference between operating departments and service departments?
> Complete the following for a traditional two-stage allocation system: In the first stage, service department costs are assigned to ______ departments. In the second stage, a predetermined overhead rate is computed for each operating department and used t
> Why are overhead costs allocated to products and not traced to products as direct materials and direct labor are?
> Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $300,000 and to have a six-year life and no salvage value. It
> Santana Rey’s two departments, computer consulting services and computer workstation furniture manufacturing, have each been profitable. Santana has heard of the balanced scorecard and wants you to provide details on how it could be used to measure perfo
> Santana Rey expects second-quarter 2016 sales of her new line of computer furniture to be the same as the first quarter’s sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,25
> After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection
> The following is taken from Mortan Co.’s internal records of its factory with two operating departments. The cost driver for indirect labor and supplies is direct labor costs, and the cost driver for the remaining overhead items is numb
> A company has two products: standard and deluxe. The company expects to produce 34,300 standard units and 69,550 deluxe units. It uses activity-based costing and has prepared the following analysis showing budgeted cost and cost driver activity for each
> Refer to the information in QS C-2. Compute the overhead activity rate for each activity, assuming the company uses activity-based costing. Information from QS C-2: Chan Company identified the following activities, costs, and activity drivers for 2015.
> Esme Company’s management is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The company’s 2015 departmental income statements show the following. In an
> Sung Company is able to produce two products, R and T, with the same machine in its factory. The following information is available. The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is
> Windmire Company manufactures and sells to local wholesalers approximately 300,000 units per month at a sales price of $4 per unit. Monthly costs for the production and sale of this quantity follow. A new out-of-state distributor has offered to buy 50,0
> Grossman Corporation is considering a new project requiring a $30,000 investment in an asset having no salvage value. The project would produce $12,000 of pretax income before depreciation at the end of each of the next six years. The companyâ€
> Aikman Company has an opportunity to invest in one of two projects. Project A requires a $240,000 investment for new machinery with a four-year life and no salvage value. Project B also requires a $240,000 investment for new machinery with a three-year l
> Cortino Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $300,000 cost with an expected four-year life and a $20,000 salvage value. All sales are for cash and all costs are out
> Rita and Rick Redding own and operate a tomato grove. After preparing the following income statement, Rita believes they should have offered the No. 3 tomatoes to the public for free and saved themselves time and money. In preparing this statement, Rit
> Sadar Company operates a store with two departments: videos and music. Information about those departments follows. The company also incurred the following indirect costs. Indirect costs are allocated as follows: advertising on the basis of sales; sa
> Bonanza Entertainment began operations in January 2015 with two operating (selling) departments and one service (office) department. Its departmental income statements follow. The company plans to open a third department in January 2016 that will sell
> Harmon’s has several departments that occupy all floors of a two-story building that includes a basement floor. Harmon rented this building under a long-term lease negotiated when rental rates were low. The departmental accounting syste
> Britney Brown, the plant manager of LMN Co.’s Chicago plant, is responsible for all of that plant’s costs other than her own salary. The plant has two operating departments and one service department. The refrigerator
> Kenya Company’s standard cost accounting system recorded this information from its June operations. Required 1. Prepare journal entries dated June 30 to record the company’s costs and variances for the month. (Do not
> Refer to information in Problem 23-4B. Required Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable. Information from Problem 23-4B: Kryll Company set the f
> Kryll Company set the following standard unit costs for its single product. The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information
> Suncoast Company set the following standard costs for one unit of its product. The predetermined overhead rate ($16.00 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. F
> Refer to the information in Problem 23-1B. Tohono Company’s actual income statement for 2015 follows. Required 1. Prepare a flexible budget performance report for 2015. Analysis Component 2. Analyze and interpret both the (a) sales v
> Tohono Company’s 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units. Required 1. Classify all items listed in the fixed budget as variable or fixed. Al
> Near the end of 2015, the management of Isle Corp., a merchandising company, prepared the following estimated balance sheet for December 31, 2015. To prepare a master budget for January, February, and March of 2016, management gathers the following inf
> Connick Company sells its product for $22 per unit. Its actual and budgeted sales follow. All sales are on credit. Recent experience shows that 40% of credit sales is collected in the month of the sale, 35% in the month after the sale, 23% in the secon
> During the last week of March, Sony Stereo’s owner approaches the bank for an $80,000 loan to be made on April 1 and repaid on June 30 with annual interest of 12%, for an interest cost of $2,400. The owner plans to increase the store&ac
> H20 Sports Company is a merchandiser of three different products. The company’s March 31 inventories are water skis, 40,000 units; tow ropes, 90,000 units; and life jackets, 150,000 units. Management believes that excessive inventories
> The management of Nabar Manufacturing prepared the following estimated balance sheet for June, 2015: To prepare a master budget for July, August, and September of 2015, management gathers the following information: a. Sales were 20,000 units in June. F
