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1.Imperial Devices (ID) has offered to supply the state government with one model of its security screening device at "cost plus 20 percent" ID operates a manufacturing plant that can produce 22,000 devices per year, but it normally produces 20,000. The costs to produce 20.000 devices follow Total Cost Cost per Device Production costs: Materials Labor Supplies and other costs that will vary with production Indirect cost that will not vary with production Variable marketing costs Administrative costs (will not vary with production) Totals $ 1,020,000 1,880,000 700,000 520, ese 1,700,000 1,080.000 $5.900,000 $ 51.00 94.00 35.00 26.00 54.00 $345.00 Based on these data, company management expects to receive $414.00 (+$345.00 x 120 percent) per monitor for those sold on this contract. After completing 2,000 monitors, the company sent a bill invoice) to the government for $828,000 (= 2,000 monitors $414.00 per monitor) The president of the company received a call from a state auditor, who stated that the per monitor cost should be Materials Labor Supplies and other costs that will vary with production $ 51.00 94.00 $ 180.00
Therefore, the price per monitor should be $216.00 = $180.00 x 120 percent). The state government ignored marketing costs be the contract bypassed the usual selling channels Required: For each of the four situations, calculate the cost basis per device based on the information shown above. (Round intermediate calculations and final answers to 2 decimal places.) Options A Only the differential production costs could be considered as the cost basis. B. The total cost per device for normal production of 20,000 devices could be used as the cost basis. C. The total cost per device for production of 22,000 devices, excluding marketing costs, could be used as the cost basis. D. The total cost per device for production of 22,000 devices, including marketing costs, could be used as the cost basis. Per device cost basis Recommended price per device Option A Option B Option Option D.
2.On January 1, 2020, Spalding Company sold 12% bonds having a maturity value of $1,000,000 for $1,075,815, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020 and they mature on January 1, 2025, with semiannual interest payable on July 1 and January 1 each year. The company uses the effective-interest method. Instructions:
a) Prepare a complete amortization schedule for these bonds in good form.
b) Prepare the journal entry needed to record the issuance of bonds on January 1, 2020.
c) Prepare the journal entry needed to record the payment accrual of interest on July 1, 2020. Show all calculations.
d) Determine how much interest expense will be on the income statement for the year ended December 31, 2020.
e) Show what will be on the balance sheet related to these transactions as of December 31, 2020. Indicate clearly if any assets or liabilities are current or noncurrent.
3.When preparing consolidated financial statements, examples of intragroup transactions include all of the following, except for:
a. The parent company rents an office building that it owns to one of its subsidiaries
b. A subsidiary sells some of its equipment to its parent company
c. A subsidiary provides consultation services to its parent company
d. A parent company pays dividends to its shareholders.
4.The Marigold, Inc. sold 9,310 season tickets at $1,940 each. By December 31, 2017, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2017?
| Current liability |
5.Blossom Corporation ended its previous fiscal year with a defined benefit obligation of $132,372 and plan assets of $134,400. On January 1, 2020, the company amended its one-person defined benefit pension plan, resulting in a revised defined benefit obligation at that date of $149,989. As a result of this past service award, Blossom’s required contributions into the plan assets increase by $1,248 each year.
Determine the effect that the plan amendment has on Blossom’s 2020 pension expense reported in net income, assuming the company follows ASPE.
| Pension expense will ( increase or decrese) and net income will (increasedecrease ) by $enter a dollar amount in 2020 under ASPE. |
What if Blossom applies IFRS?
| Pension expense will (decreaseincrease ) and net income will (decreaseincrease) by $enter a dollar amount in 2020 under IFRS. |
1.please see the attached file.
2.First of all understand complete amortization schedule both effective and straight-line methods..Preparing a Bond Amortization Schedule.
A.
Effective of bond amortization
Straight-line method of bond amortization
B.
If investors buy the bonds at a premium, the difference between the face value of the bonds and the amount of cash received is recorded in a premium on bonds payable account. This happens when investors are willing to accept a lower return on their investment, because the stated interest rate is higher than the market interest rate. The entry would be:
Cash / Bank A/C DR..1075815
To premium on bond a/c 75815
To bond payable a/c 1000000
C.
The recorded amount of interest expense is based on the interest rate stated on the face of the bond. Any further impact on interest rates is handled separately through the amortization of any discounts or premiums on bonds payable, as discussed below. The entry for interest payments is a debit to interest expense and a credit to cash.
July 1
Bond Interest Expense – $42418.5
Bond Premium – $7582.5
Cash – $50000
Jan1
Bond Interest Expense – $42418.5
Bond Premium – $7582.5
Cash – $50000
Calculation
1000000*10%*6/12= 50000
50000 - 75815/10 = 42418.5
75815/ 10 (5*2 ) because Primium 5 half yearly interest =7581.5
D.
?????For the year ended 31 Dec 2020
Total bond interest
42418.5*2= 84837
total interest on premium
7581.5*2= 15163
E.
Still non current liabilities because redemption after 4 year date is Jan 1 2025
Note :- in this question I assume that 10% is market value of bond
This question have alternate 12% of bond rate full answer is different
Bond Interest Expense – $52418.5
Bond Premium – $7581.5
Cash – $60000
Calculation
1000000*12%*6/12= 60000
50000 - 75815/10 = 52418.5
75815/ 10 because Primium 5 half yearly interest= 7581.5
D.
?????For the year ended 31 Dec 2020
Total bond interest
52418.5*2= 104835
total interest on premium
7581.5*2= 15163
3.Although the dividend paid by the parent company is reported in the consolidated financial statements but the amount paid by the parent company to its shareholders is not a part of intra group transaction because the same doesn't related to the transactions held by companies between the same group rather it is a payment of the company to its shareholders as a part of their share in profits of the company.
The option a,b & c are the examples of intra group transactions because they held between the companies within the same group.
4.Marigold Inc.Number of ticket sold=(A)9310Selling Price per ticket=(B)$ 1,940.00Total Selling Price=(C )=(A)*(B)$ 1,80,61,400.00Revene Earnied during the year=(16/40)*(C )$ 72,24,560.00Unearned Revenue=((40-16)/40)*(C )$ 1,08,36,840.00Unearned Revenue should be reported in the balance sheet on 31st December,2017 as a current liability.Unearned revenue is the revenue received in advance for services.It should be reported as current liability in the balance sheet.Balance Sheet(Partial)Current LiabilityUnearned Revenue$ 1,08,36,840.00
5.a. Determine the effect that the plan amendment has on Blossom’s 2020 pension expense reported in net income, assuming the company follows ASPE.
Effect on 2020 net income of plan amendment for past service cost under ASPE:
Post-plan amendment benefit obligation $149,989
Pre-plan amendment benefit obligation 132,372
Past service cost to recognize in expense in 2020 $ 17,617
Pension expense will increase and net income will decrease by $17,617 in 2020 under ASPE. (The net interest/finance cost also increases as the weighted average balance of the DBO during the year increases by $17,617 for the whole year.)
b. What if Blossom applies IFRS?
If Blossom applies IFRS instead of ASPE, the effect would be identical. Past service cost is one of the components of pension expense that is included in net income.
