Question: IFRS. Using the data from BE11-9,

> In your role as a consultant at a wealth management firm, you have been assigned a very powerful client who holds one million shares of Cisco Systems, Inc. purchased on February 28, 2003. In researching Cisco, you discovered that they are holding a large

> Use EDGAR to find Qualcomm’s 10-K filing for 2017. From the balance sheet, answer the following questions: a. How much did Qualcomm have in cash, cash equivalents, and marketable securities (short-and long-term)? b. What were Qualcomm’s total accounts re

> What was the change in Global Conglomerate’s book value of equity from 2017 to 2018 according to Table 2.1 ? Does this imply that the market price of Global’s shares increased in 2018? Explain. Data from Table 2.1:

> Consider the following potential events that might have taken place at Global Conglomerate on December 30, 2018. For each one, indicate which line items in Global’s balance sheet would be affected and by how much. Also indicate the change to Global’s boo

> Suppose the corporate tax rate is 25%. Consider a firm that earns $1000 before interest and taxes each year with no risk. The firm’s capital expenditures equal its depreciation expenses each year, and it will have no changes to its net working capital. T

> Grommit Engineering expects to have net income next year of $20.75 million and free cash flow of $22.15 million. Grommit’s marginal corporate tax rate is 20%. a. If Grommit increases leverage so that its interest expense rises by $1 million, how will its

> Your boss was impressed with your presentation regarding the irrelevance of capital structure but, as expected, has realized that market imperfections like taxes must be accounted for. You have now been asked to include taxes in your analysis. Your boss

> Colt Systems will have EBIT this coming year of $15 million. It will also spend $6 million on total capital expenditures and increases in net working capital, and have $3 million in depreciation expenses. Colt is currently an all-equity firm with a corpo

> With its current leverage, Impi Corporation will have net income next year of $4.5 million. If Impi’s corporate tax rate is 21% and it pays 8% interest on its debt, how much additional debt can Impi issue this year and still receive the benefit of the in

> Markum Enterprises is considering permanently adding $100 million of debt to its capital structure. Markum’s corporate tax rate is 25%. a. Absent personal taxes, what is the value of the interest tax shield from the new debt? b. If investors pay a tax ra

> Suppose the corporate tax rate is 25%, and investors pay a tax rate of 20% on income from dividends or capital gains and a tax rate of 33% on interest income. Your firm decides to add debt so it will pay an additional $15 million in interest each year. I

> Rally, Inc., is an all-equity firm with assets worth $25 billion and 10 billion shares outstanding. Rally plans to borrow $10 billion and use these funds to repurchase shares. The firm’s corporate tax rate is 21%, and Rally plans to keep its outstanding

> Kurz Manufacturing is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. Although investors currently expect Kurz to remain an all-equity firm, Kurz plans to announce that it will borrow $50 million and

> Suppose Microsoft has 8.75 billion shares outstanding and pays a marginal corporate tax rate of 21%. If Microsoft announces that it will pay out $50 billion in cash to investors through a combination of a special dividend and a share repurchase, and if i

> Milton Industries expects free cash flow of $5 million each year. Milton’s corporate tax rate is 21%, and its unlevered cost of capital is 15%. The firm also has outstanding debt of $19.05 million, and it expects to maintain this level of debt permanentl

> Acme Storage has a market capitalization of $100 million and debt outstanding of $40 million. Acme plans to maintain this same debt-equity ratio in the future. The firm pays an interest rate of 7.5% on its debt and has a corporate tax rate of 21%. a. If

> NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 15%. Suppose NatNah decides to increase its leverage and maintain a market debt-to-value ratio of 0.5. Suppose its debt cost of capital is 9% and its corporate tax ra

> You work in the corporate finance division of The Home Depot and your boss has asked you to review the firm’s capital structure. Specifically, your boss is considering changing the firm’s debt level. Your boss remembers something from his MBA program abo

> Summit Builders has a market debt-equity ratio of 0.65 and a corporate tax rate of 25%, and it pays 7% interest on its debt. The interest tax shield from its debt lowers Summit’s WACC by what amount?

> Rumolt Motors has 30 million shares outstanding with a price of $15 per share. In addition, Rumolt has issued bonds with a total current market value of $150 million. Suppose Rumolt’s equity cost of capital is 10%, and its debt cost of capital is 5%. a.

> Find online the annual 10-K report for Costco Wholesale Corporation (COST) for fiscal year 2017 (filed in October 2017). a. Which auditing firm certified these financial statements? b. Which officers of Costco certified the financial statements?

> In early 2018 Qualcomm Inc. had $21 billion in debt, total equity capitalization of $78 billion, and an equity beta of 1.49 (as reported on Yahoo! Finance). Included in Qualcomm’s assets was $37 billion in cash and risk-free securities. Assume that the r

> In Problem 20, assume the risk-free rate is 3% and the market risk premium is 7%. a. What does the CAPM predict the expected return for each stock should be? b. Clearly, the CAPM predictions are not equal to the actual expected returns, so the CAPM does

> In Problem 20, assume the risk-free rate is 3% and the market risk premium is 7%. a. What does the CAPM predict the expected return for each stock should be? b. Clearly, the CAPM predictions are not equal to the actual expected returns, so the CAPM does

> In Problem 20, assume the risk-free rate is 3% and the market risk premium is 7%. a. What does the CAPM predict the expected return for each stock should be? b. Clearly, the CAPM predictions are not equal to the actual expected returns, so the CAPM does

> See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. Compute Mydeco’s ROE each year from 2015 to 2019. b. Compute Mydeco’s ROA each year from 2015 to 2019. c. Which return is more vol

> In early 2018, United Airlines (UAL) had a market capitalization of $20.2 billion, debt of $14.4 billion, and cash of $3.8 billion. United also had annual revenues of $37.7 billion. Southwest Airlines (LUV) had a market capitalization of $35.8 billion, d

> See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. Compute Mydeco’s PE ratio each year from 2015 to 2019. In which year was it the highest? b. What was Mydeco’s Enterprise Value to

> You work in Walt Disney Company’s corporate finance and treasury department and have just been assigned to the team estimating Disney’s WACC. You must estimate this WACC in preparation for a team meeting later today. You quickly realize that the informat

> This is your second interview with a prestigious brokerage firm for a job as an equity analyst. You survived the morning interviews with the department manager and the Vice President of Equity. Everything has gone so well that they want to test your abil

> Although U.S. GAAP allows LIFO inventory costing, IFRS does not. Read paragraphs BC9 through BC21 of IASC, International Accounting Standard 2, “Inventories.” a. Why did the IASB decide not to allow the use of LIFO? b. Explain why you agree or disagree

> Hermit Associates acquired a machine on January 1 at a cost of $250,000. Hermit estimates that the machine has a useful life of 10 years and a $50,000 residual value. Compute the depreciation expense for the first 2 years and determine the net book value

> Flowers Corp. owns a delivery truck it acquired for $57,000 last year. During the current year, it added shelving, costing $2,800, to the truck to expand its delivery capacity. It also purchased a new set of tires costing $1,200 and seat covers (replaced

> Circle City Transportation made the following expenditures for its fleet during the current year: oil changes, $2,000; filter changes, $5,000; tire rotations, $3,000; engine overhauls, $15,000; and retrofitting vehicles to function as party buses, $40,00

> IFRS. Repeat BE11-5 assuming that Mariah Corporation reports under IFRS. Data from BE11-5:

> Mariah Corporation is constructing a new wind power-generating facility. Construction began on January 2 and was completed on December 31 of the current year. Mariah made the following expenditures during the year: To specifically finance the project, M

> Assume that Springfield Foods, Inc. acquired a custom-made refrigeration system by issuing a $1,500,000, 10-year, noninterest-bearing note payable at a time when the market interest rate for similar debt instruments was 5%. The asset and the note do not

> Holman Enterprises acquired three different pieces of furniture and equipment for its newly renovated office. The bulk purchase from Wonder Technologies, Inc. included the following assets and corresponding retail prices: office furniture, $1,800; an int

> At the beginning of its fiscal year, Beau Co. leased office space for a 20-year period. Prior to occupying the office, Beau needed to make renovations costing $750,000 with an expected useful life of 15 years. The renovations are to be recorded as leaseh

> Use the same information in BE11-19 and assume that Dimension Pharmaceuticals is an IFRS reporter. Prepare the journal entry required to record Dimension’s research expenditures for the year. Assume that projects developed by planning and design consulta

> Determine the amount and type of financing component in the following contracts. a. Payment of $1,500,000 occurs two years after delivery when the interest rate is 8%. b. Payment of $1,500,000 occurs two years before delivery when the interest rate is 8%

> Tarpley, Inc. acquired land for $400,000. The closing costs amounted to $11,000, and the firm paid $7,250 for the current period’s property taxes at the end of the year. Tarpley plans to build a new storage facility on the land costing $2,350,000. To pre

> Dimension Pharmaceuticals paid cash for the following to fund its research activities: testing materials and supplies, $600,000; research consultants, $100,000; planning and design consultants, $135,000; and general-purpose laboratory equipment, $950,000

> Repeat the requirements of BE11-17 assuming that the acquisition cost was $7,000,000. Data from BE11-17: On January 1, Buckingham Brothers acquired 100% of Julian Systems for $12,000,000. The book value of Julian’s net assets on the date of acquisition

> On January 1, Buckingham Brothers acquired 100% of Julian Systems for $12,000,000. The book value of Julian’s net assets on the date of acquisition was $7,000,000. However, a detailed appraisal of Julian’s net assets revealed that its net assets were und

> Chalko Candy Corporation purchased the trademark for the popular Yummm Candy Bar from the YumYum Company. At the same time, Chalko also purchased YumYum’s customer list. Chalko paid the total purchase price of $750,000 in cash. Chalko’s valuation consult

> For each intangible asset listed below, identify whether it is typically a finite-life intangible asset, an indefinite-life intangible asset, or other

> Greene Corp. updated its fleet of trucks, scrapping old gas-guzzling trucks for new hybrid vehicles. It took its old trucks to the scrap yard and received $0. The fleet of trucks scrapped originally cost $190,000 and their current carrying value is $24,0

> Kobas Kookies, Inc. acquired an oven for its baking operations on June 10 of the current year at a total cost of $384,000. It estimates that the oven has a 16-year useful life with no scrap value. Assume that Kobas uses the half-month convention by which

> Using the data from BE11-9, compute the depreciation expense for the first 2 years and determine the net book value at the end of the second year assuming that Hermit Associates uses the double-declining balance method. Data from BE11-9: Hermit Associa

> Sellet Billboard Company entered into an agreement to display billboard advertising for Wynne Incorporated for 10 months for a $60,000 fixed fee. The agreement also includes a potential bonus based on certain goals. Sellet believes the following probabil

> Using the data from BE11-9, compute the depreciation expense for the first 2 years and determine the net book value at the end of the second year (assume that Hermit Associates uses the units-of-output depreciation method). The machine’s total output is

> Haply, Inc. incurred the following expenditures when acquiring a new assembly machine: Additionally, Haply sold its old assembly machine for $500. What is the acquisition cost of the new assembly machine?

> Source Enterprises reports the following inventory information for the current year. Compute the ending inventory and the cost of goods sold under the LIFO perpetual basis.

> Best Stores is considering a change in its inventory valuation method. The company currently uses the FIFO method and may want to change to the LIFO method. Inventory information for the current year follows. Cost of goods sold under the LIFO basis is $

> Perry Manufacturing Company provided the following information regarding its inventory transactions for the current year. Determine the ending inventory and cost of goods sold that Perry should report assuming that the firm uses the moving-average cost

> Using the information provided in BE10-5, assume that Spider uses the LIFO method. Determine Spider’s ending inventory and cost of goods sold under the LIFO perpetual basis. Data from BE10-5:

> Spider Incorporated provided the following information regarding its inventory for the current year. Determine Spider’s ending inventory and cost of goods sold under the FIFO perpetual basis.

> Use the same information for BE10-3 but assume that Sueco Retailers uses the net method to account for its inventory purchases. What is its cash payment and reduction of inventory on October 25? What is the amount of accounts payable after the October 25

> On October 16, Sueco Retailers bought 80 parkas on account at $75 each. Terms of the purchase were 2/10, n/30. It paid for 60 parkas on October 25 and paid for the remaining 20 parkas on November 15. If Sueco uses the gross method to account for its inve

> Complete the following table to find the ending inventory under the Dollar Value LIFO retail inventory method. Round percentages to two decimal places.

> Sellet Billboard Company entered into an agreement to display bill board advertising for Highlife Incorporated for 10 months for a $60,000 fixed fee. The agreement also includes a potential $6,000 bonus based on certain goals. Sellet estimates that it is

> Complete the following table to find the ending inventory under the Dollar Value LIFO Retail Inventory Method. Round percentages to two decimal places.

> A tornado severely damaged one of Down Town Dig’s retail clothing stores, destroying all the inventory in the store. Down Town Dig’s ending store inventory last year was $109,500. Its net purchases were $672,600, and net sales were $1,279,800 during the

> Sammi Company needs to determine the amount of inventory in its warehouse at the time that an earthquake destroyed it. Sammi’s gross profit percentage averaged 28% over the last three years. Sammi began the current year with inventory of $657,400. Its ne

> Big B Stores uses the conventional retail method to value its ending inventory. The following information relates to Big B’s inventory at both cost and retail for the current year. Compute Big B’s ending inventory for

> BE10-18, now assume that Sarat Boot is an IFRS. reporter. Determine the ending inventory value per unit using the lower-of-cost-or-market rule assuming that Sarat Boot uses the group-by-group approach to LCM. Assume the company uses FIFO. Data From Be10

> Emmy Company uses a periodic inventory system. On December 31, 2018, Emmy counts its inventory and determines that it has $72,000 of inventory on hand. On December 31, 2017, inventory was $106,000. Emmy made inventory purchases totaling $78,000 during th

> Using the information in BE10-18, now assume that Sarat Boot uses FIFO for inventory costing purposes. Determine the ending inventory value per unit using the lower-of-cost-or-market rule assuming that Sarat Boot uses the group-by-group approach to LCM.

> Sarat Boot Company manufactures two types of boots—rain boots and snow boots. Information related to both products is presented in the following table. Determine the ending inventory value per unit using the lower-of-cost-or-market rul

> IFRS. Using the facts in BE10-15, assume that Count Clothing has 2,000 units of its Stain Resistant model in stock a year later when the net realizable value has increased to $230. What is the reversal of the inventory write-down, if any? Assume the comp

> IFRS. Using the information in BE10-15, prepare the journal entry to record the write-down to market for the Stain Resistant model under both the direct and indirect methods. Assume that Count Clothing has 3,500 units of the Stain Resistant model in stoc

> Using the information provided in BE8-5, determine the bonus using the most-likely-amount approach. Ignore any constraints on variable consideration. Data from BE8-5:

> IFRS. Using the information in BE10-13, now assume that Count Clothing is an IFRS reporter. Determine the ending inventory value per unit and the amount of any write-downs per unit using the lower-of-cost-or-market rule assuming that Count Clothing uses

> sing the information in BE10-13, prepare the journal entry to record the writedown to market for the Stain Resistant model under both the direct and indirect methods. Assume that Count Clothing has 3,500 units of the Stain Resistant model in stock. Data

> Count Clothing Company manufactures two types of raincoats—Regular and Stain Resistant. Information related to both products is presented in the following table. Determine the ending inventory value per unit and the amount of any write

> Using the information provided in BE10-11, prepare the journal entry required to adjust Todgren’s ending inventory from a FIFO to a dollar-value LIFO basis. Data from BE10-11: Todgren Incorporated adopted the dollar-value LIFO method last year. Last yea

> Todgren Incorporated adopted the dollar-value LIFO method last year. Last year’s ending inventory was $56,400 with a price index of 1.0. The ending inventory for the current year at year-end (FIFO) costs is $96,000 and the price index is 1.2. Based on th

> Using the information provided in BE10-9, determine whether there is a LIFO liquidation. Data from BE10-9:

> Complete the following inventory disclosure: At the end of 2019 and 2018, inventories were composed of:

> Ciano Landscaping Company uses the allowance method to account for its uncollectible accounts. Three years ago, it wrote off a $40,000 account due from Haber Incorporated. Haber paid this account in full on June 30 of the current year. Prepare the journa

> Vince Ventures Company reported an opening balance of $925,000 in its allowance for uncollectible accounts. Vince Ventures determined that a $57,500 account due from Ric Associates was uncollectible. Prepare the journal entry to write off the Ric account

> Grotto Products, Inc. reported an opening balance in the allowance for doubtful accounts of $560,000. During the year, the company determined that a $23,000 receivable due from Zeer Company was uncollectible. Prepare the journal entry to write off the Ze

> Gear Garage Inc. enters into a contract to provide services totaling $80,000. The contract includes a potential performance bonus based on when Gear Garage completes the services. Gear Garage estimates the following scenarios for completion. Determine th

> On July 1, Oura Corp. made a sale of $450,000 to Stratus, Inc. on account. Terms of the sale were 2/10, n/30. Stratus makes payment on July 29. Oura uses the most-likely-amount method and assumes that the customer will take the discount when accounting f

> On July 1, Oura Corp. made a sale of $450,000 to Stratus, Inc. on account. Terms of the sale were 2/10, n/30. Stratus makes payment on July 9. Oura uses the most-likely-amount method and assumes that the customer will take the discount when accounting fo

> On July 1, Gillette Corp. made a sale of $650,000 to Huck, Inc. on account. Terms of the sale were 2/5, n/30. Huck makes payment on July 29. Gillette uses the expected value method assuming that there is an 80% chance that the customer will not take the

> On July 1, Willette Corp. made a sale of $650,000 to Luc, Inc. on account. Terms of the sale were 2/10, n/30. Luc makes payment on July 29. Willette uses the most likely-amount method and assumes that the customer will not take the discount when accounti

> Identify and discuss at least four features of an effective system of internal controls over cash receipts and disbursements.

> Identify whether the following internal control procedures relate to cash receipts or cash disbursements

> Complete the following lettered items representing the disclosures of trade accounts receivables from Cheris Corp.’s notes to the financial statements. Note 7. Trade Receivables

> Foster Technologies, Inc., provides specialized network solutions for companies in the financial services industry. During the current year, Foster completed a network project for Hextel Communications. The fair value of the project is not determinable.

> What is the fundamental principle underlying the measurement of revenue?

> What is the fundamental principle underlying the timing of revenue recognition?

> Using the information provided in BE9-19, prepare the journal entries to record the sale, the accrued interest revenue, and the full collection at maturity assuming that the sale date was September 1, 2016, and the note was due on March 31, 2017. Data f

> What are the primary issues involved in revenue recognition?

> Does a firm acquiring a long-lived operating asset by issuing a note payable record the finance charges and asset value separately? Explain.

> For a long-lived operating asset acquired by issuing a note payable, do firms measure the initial carrying value of the asset by the face value of the note? Explain.

> Should firms value multiple assets acquired in a lump-sum purchase separately? Explain

> Can firms combine the cost of acquiring land and land improvements in a single “land” account on the balance sheet? Explain.