Premium Essay

Week 4 Hw

In: Business and Management

Submitted By kaberni
Words 346
Pages 2
Week 2 Case Study

1) Firm Fixed-Price Contract: A contract in which the price is not subject to any adjustment by reason of the cost experience of the contractor or his performance under the contract (FASB 2012).

References to Firm Fixed-Price Contract are under the Revenue Codification. Revenue/Topic 605 Revenue Recognition/35 Construction-Type and Production-Type Contracts

I did not locate any SEC documents relating directly to Firm Fixed-Price Contract but Topic 605 Revenue Recognition does house some SEC publications. 605 Revenue Recognition/10 Overall/S99 SEC Materials. The SEC requires public companies to recognize revenue when it is realized, such as at delivery or shipment of goods depending on the appropriate incoterm. Alternatively the performance of services would be considered revenue-earning. A firm fixed-price contract would indicate that the revenue amount is pre-determined by the contract price, which cannot be altered.

2) Amortized Cost: The sum of the initial investment less cash collected less write-downs plus yield accreted to date (FASB 2012).

There are no links to Amortized Cost within the Codification. Amortized Cost is referred to in some subtopics relating to Subsequent Measure General, such as: Topic 954/Health Care Entities/325 Investments/35 Subsequent Measurement General and Topic 944 Financial Services-Insurance/310 Receivables/35Subsequent Measurement General.

I did not locate any SEC docs as part of this Codification.

3) Impairment: Impairment is the condition that exists when the carrying amount of a long-lived asset (asset group) exceeds its fair value (FASB 2012). Impairment refers specifically to Topic 360: Plant, Property and Equipment. There are are SEC docs located under 360 Property, Plant and Equipment/10 Overall/S99 SEC Materials.
Within the SEC materials S99-2 discusses impairments. The goal of the…...

Similar Documents

Premium Essay

Finance Hw Ps2-4

...Problem Set #2 4. (a) Assuming that all the bonds make only annual payments, what spot rates are imbedded in these prices? First, we need to find the Discount Factors: Bond A: 〖DF〗_1*$100=$93.46 Bond B: 〖DF〗_1*$4+〖DF〗_2*$104=$94.92 Bond C: 〖DF〗_1*$8+〖DF〗_2*$8+〖DF〗_3*$108=$103.64 〖DF〗_1=93.46/100=0.9346 〖DF〗_2=((94.92-(0.9346*4)))/104=0.8767 〖DF〗_3=((103.64-(0.9346*8)-(0.8767*8)))/108=0.8255 Since 〖 DF〗_t=1/〖(1+r_t)〗^t , we have r_t=(1/〖DF〗_t )^(1⁄t)-1. Then solving for r1, r2 and r3 we get: r_1=0.069976≅0.070 r_2=0.068008≅0.068 r_3=0.066009≅0.066 So the spot rates are: Bond A = 7%, Bond B = 6.8% and Bond C = 6.6%. (b) What forward rates are embedded in these prices? The formula for forward rates is: f_t=〖(1+r_t)〗^t/〖(1+r_(t-1))〗^(t-1) -1=〖DF〗_(t-1)/〖DF〗_t -1 Plugging in the discount factors from (a) we get the forward rates: f_1=1/〖DF〗_1 -1=1/0.9346-1=0.069976≅7.00% f_2=〖DF〗_1/〖DF〗_2 -1=0.9346/0.8767-1=0.066043≅6.60% f_3=〖DF〗_2/〖DF〗_3 -1=0.8767/0.8255-1=0.062023≅6.20% (c) What should the price of a 3-year bond with a face value of $100 and a 6% annual coupon be? We calculate the bond price by discounting the annual cash flows by the discount factors from (a): P=〖DF〗_1*〖CF〗_1+〖DF〗_2*〖CF〗_2+〖DF〗_3*〖CF〗_3 P=0.9346*$6+0.8767*$6+0.8255*106 P=$98.37 (d) A 3-year bond with a face value of $100 and a 4% annual coupon is trading at $95.00. Show that this bond is mispriced by showing how you would take advantage of its price.......

Words: 1673 - Pages: 7

Premium Essay

Acct 553, Week 4 Hw

...Introduction to Federal Taxation Week 4 Assignment November 24 2012 4. What is the purpose of Code Sec. 351 in regard to transfers to corporations? The purpose of Code Sec. 351 is to allow shareholders of a corporation to defer recognition of a gain or loss on the transfer of assets to a corporation. The transfer of property can be made when a new corporation is formed, or when additional capital is put into existing corporations. Without Code Sec. 351, sole proprietors and partnerships would have a difficult time adopting the corporate form of organization for legal and tax purposes because the transfer of appreciated property would create a taxable transaction. The deferral of gain or loss under this section is justified because the assets have simply been transferred to a corporation that is controlled by the transferors. Section 351 also prevents the recognition of losses on transfers of property that has declined in value. 20. What tax years are available to corporations? How do the options differ from other forms of business organizations? Upon establishing a new corporation, the corporation may choose either a calendar year or a fiscal year. They may choose either of the two regardless of the tax years of its owners which creates tax savings. This differs from other forms of business organization as the S corporation, the Partnership, and Limited Liability Companies are all required to use the calendar year unless they can establish a business purpose to...

Words: 674 - Pages: 3

Premium Essay

Acct553 Week 4 Hw

...14-4 Section 351 allows certain transfers of property to a corporation to escape taxation, thus allowing the business to incorporated tax free. This allows taxpayers to postpone any gain or loss until there is a substantive change in the taxpayer's investment, which encourages investment in start-up enterprises. 14-20 C corporations may select any fiscal or calendar tax year. Other forms of organization are required to adopt the tax year of their owners unless a business purpose can be established. 14-22 Corporate taxpayers can claim capital losses only against capital gains. Individuals may claim up to $3,000 in capital losses against other forms of income. Corporate capital loss carryovers become short-term losses regardless of their original status, and they are carried back three years and carried forward five years. 14-55 a. Susan has no gain or loss and her stock basis does not increase. Code Sec. 358. b. The corporation has no income from the capital contribution. Code Sec. 118. Its basis is zero since basis carries over. Code Sec. 362. c. If Susan receives 10 percent more stock, she will have to recognize her $2,000 of realized gain since she does not meet the 80 percent control requirement. Her basis in the stock equals $2,000, her cost basis. Code Sec. 1012. 14-62 The taxable income for the year is $62,000. Capital losses are deductible only against capital gains. The $5,000 long-term capital loss is carried back three years and forward......

Words: 256 - Pages: 2

Premium Essay

Federal Income Taxes Hw Week 4

...date the stock was issued until the time of the loss). 2. If the stock was issued before November 7, 1978, it was issued under a written plan that met the requirements of Regulations section 1.1244(c)-1(f), and when that plan was adopted, the corporation was treated as a small business corporation under Regulations section 1.1244(c)-2(c). 3. If the stock was issued after November 6, 1978, the corporation was treated as a small business corporation at the time the stock was issued under Regulations section 1.1244(c)-2(b). To be treated as a small business corporation, the total amount of money and other property received by the corporation for its stock as a contribution to capital and paid-in surplus generally may not exceed $1 million. 4. The stock was issued for money or other property (excluding stock or securities). 5. The corporation, for its 5 most recent tax years ending before the date of the loss, derived more than 50% of its gross receipts from sources other than royalties, rents, dividends, interest, annuities, and gains from sales and exchanges of stocks or securities. If the corporation was in existence for at least 1 tax year but fewer than 5 tax years ending before the date of the loss, the 50% test applies for the tax years ending before that date. If the corporation was not in existence for at least 1 tax year ending before the date of the loss, the 50% test applies for the entire period ending before that date. The 50% test does not apply if the......

Words: 950 - Pages: 4

Premium Essay

Auditing Week 2 Hw

...Shelley Stiles Week 2-HW P4-18 a. (1) The auditor must be without bias with respect to the client under audit. b. (3) involves the objective examination of and reporting on management- prepared statements. c. (1) maintain public confidence in the profession 4-19 a. (1) Contingent on approval of a bank loan b. (3) c. (3) 4-20 a. Violation of AICPA and SEC based on rules of independence, if pre-approved it is okay. b. Based on SOX and SEC rules internal auditing of a public company is prohibited. c. Prohibited under SOX and SEC d. AICPA rules of professional conduct, if pre-approved it is okay. e. With pre-approval it is allowed. Normally prohibited under SOX and SEC. f. According to the AICPA, this is allowed as long as the three requirements are met. 4-21 a. Violation of independence. It is not acceptable to provide management advisory services to a client you also perform bookkeeping and auditing services for. b. He does not take part in the audit. There is no violation. c. Violation of general standards d. Violation of integrity and objectivity e. Violation of Form of organization and name. f. no violation g. violation of confidentiality h. violation of acts discreditable. 4-22 a. indirect financial interest violation b. integrity and objectivity violation c. not a violation d. violation of independence e. unpaid fees violation of Rule 101 f. violation of independence g. not a violation h. violation......

Words: 882 - Pages: 4

Premium Essay

Actg 350 Hw #4

...Accounting 350 – Homework #4 Name: Question 1: Purchase Commitments On September 5, 2011, Maloney Corporation signed a purchase commitment to purchase inventory for $180,000 on or before March 31, 2012. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2012 and the inventory was purchased for cash at the contract price. On the purchase date of March 4, the market price of the inventory was $182,000. The market price of the inventory on December 31, 2011, was $168,000. a. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2011. b. Prepare the journal to record the purchase on March 4, 2012. Question 2: Contingencies Nice Company files a lawsuit against Cheater Corp. for $4,000,000 in December 2010 alleging patent infringement. Cheater Corp.'s manager thinks it is probable that Cheater Corp. will eventually have to pay something to settle the suit, and the best estimate of the expected amount ranges from $1,200,000 to $2,400,000. In your answers below, you may ignore income taxes a. Show any related journal entries Cheater Corp. will record in 2010. b. Assume that the managers of Nice Company have information indicating that it is highly probable that Nice will win the lawsuit and they expect to collect the entire $4,000,000. Show any related journal entries Nice Company will record in 2010. c. Assume that the...

Words: 893 - Pages: 4

Free Essay

Accounting 350, Hw 4

...Accounting 350 – Homework #4 Name: Question 1: Purchase Commitments On September 5, 2011, Maloney Corporation signed a purchase commitment to purchase inventory for $180,000 on or before March 31, 2012. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2012 and the inventory was purchased for cash at the contract price. On the purchase date of March 4, the market price of the inventory was $182,000. The market price of the inventory on December 31, 2011, was $168,000. a. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2011. b. Prepare the journal to record the purchase on March 4, 2012. 1 Question 2: Contingencies Nice Company files a lawsuit against Cheater Corp. for $4,000,000 in December 2010 alleging patent infringement. Cheater Corp.'s manager thinks it is probable that Cheater Corp. will eventually have to pay something to settle the suit, and the best estimate of the expected amount ranges from $1,200,000 to $2,400,000. In your answers below, you may ignore income taxes a. Show any related journal entries Cheater Corp. will record in 2010. b. Assume that the managers of Nice Company have information indicating that it is highly probable that Nice will win the lawsuit and they expect to collect the entire $4,000,000. Show any related journal entries Nice Company will record in 2010. c. Assume that the lawsuit is settled in 2011 and Cheater Corp. pays Nice Company $2,300,000 in......

Words: 1357 - Pages: 6

Free Essay

Wk 4 Hw Problems

...WEEK FOUR HW PROBLEMS There are four problems, each of which is worth one point. 1. Five Proteen Bars and 7 Superdrinks total 1915 calories. Four Proteen Bars and 3 Superdrinks total 1155 calories. How many calories does one Proteen Bar have? One Superdrink? One Proteen Bar has 180 calories and one Superdrink has 145 calories. 2. A plane goes from A to B against the wind in 4 hrs and 30 minutes. It goes back again (WITH the wind) in 3 hrs and 40 minutes. It is 400 miles from A to B. How fast does the plane fly in still air, and how fast is the wind? (Round to nearest hundredth.) The plane flies at 99.09 mph in still air and the wind is 10.2 mph. 3. You want 40 liters of 60% solution. How much 80% solution and how much 28% solution must you mix to produce that result? (Round to nearest hundredth.) In order to produce 40 liters of 60% solution I will need 24.62 liters of 80% solution and 15.38 liters of 28% solution. 4. Seven curly fries and four plain fries cost $16.83. Five curlies and 12 plains cost $23.45. How much does one order of curlies cost? One order of plains? One order of curlies costs $1.69 and one order of plains costs $1.25. 5. Solve the following system of equations: 2X + 3Y = 29 X + 1.5Y = 8 The system of equations is inconsistent and has no solution....

Words: 254 - Pages: 2

Free Essay

Tax 660 Hw 4

...HW 4 CH. 7. 3: a. Amount realized: $35,000 Realized loss: $10,000 Recognized loss: $0 b. Recognized gain: $0 Realized loss: -$10,000 c. Recognized gain: $0 Realized loss: -$10,000 d. Recognized gain: $0 Realized gain: $3,000 7: a. $3,000 b.$15,000 c. $5,000 d. $12,000 13: a. The valuation date cannot be altered. The valuation of the property cannot be adjusted after the date Dazie received the property. If she were to try and convert the asset from personal to business the lower valuation would be used. b. Dazie’s basis for the property Is its fair market value. c. If the valuation were to change it would not affect the outcome. 21: a. -$5,000 b. $5,000 c. $48,000 d. The 2015 sale of the property will not have an effect on Tonya because she sold it and has not claim to it. e. Ms. Tonya Fletcher The Corral El Paso, TX 79968 Ms. Fletcher, After reviewing your case I have come to the following conclusion. Since your loss on the property is $5,000 it is not recognized. It is lost cash. The boot of $3,000 cash paid to you is recognized as a capital gain and is recognized and will be taxed. 29: Realized Recognized Postponed a. $5,000 $7,000 $2,000 b. 1,000 12,000 11,000 c. 5,000 12,000 7,000 d. 14,000 1,000 -13,000 e. 1,000 9,000 -8,000 f. -3,000 14,000 -11...

Words: 699 - Pages: 3

Free Essay

Hw 4(2)

...HW 4 International Economics, ECON 630 Due on Tuesday, August 11 @ 11:00pm PT (Total 50 points) 1. You notice in The Wall Street Journal that the interest rate in the U.S. money markets is 7.5 percent and the interest rate in London is 9 percent. Would you expect the pound to be at premium or discount? Why? (15 points) The pound would be at discount. Because there is difference between US interest rate and UK interest rate. And UK interest rate is higher than US interest rate. This difference will be minimized by the difference between the current spot rate and the forward exchange rate. 2. Why is relative purchasing power parity (PPP) more likely to hold in a hyperinflationary period than in a more “normal” period of price behavior? (15 points) In a hyperinflationary period, money supplies is excess and price rises rapidly. Home currency will depreciate obviously due to rapid changes of price level. In normal period, the price level and exchange rate change slowly. In a hyperinflationary period these two change relatively in coincidence which means PPP more likely to hold of price behavior. 3. In the portfolio balance model, what effect, other things equal, will a foreign government’s budget deficit financed by issuing bonds have on the home country’s currency value and why? (Assume a flexible exchange rate.) (10 points) If a foreign government issues bond, the risk premium will increase. And the rate of return abroad will......

Words: 414 - Pages: 2

Premium Essay

Chapter 4-5 Hw

...instructions provided in this handout very carefully. Failure to follow instructions may result in loss of points. Chapter 4 Problems 4.1 Assume the spot rate of the British pound is $1.6610. The expected spot rate one year from now is assumed to be $1.5500. What percentage change does this reflect? Does the pound appreciate or depreciate? 4.2 ANSWER: ($1.5500 – $1.6610)/$1.6610 = –6.683% Depreciation Gigantic Bank expects that the Singapore dollar will depreciate against the dollar from its spot rate of $.46 to $.44 in 90 days. The following interbank lending and borrowing rates exist: (Note: these are annual rates, not 90 day rates.) Lending Rate U.S. dollar 8.0% Singapore dollar 23.0% Borrowing Rate 8.3% 25.5% Gigantic Bank considers borrowing 10 million Singapore dollars in the interbank market and investing the funds in dollars for 90 days. Estimate the profits (or losses) that could be earned from this strategy. Should Gigantic Bank pursue this strategy? ANSWER: Borrow S$10,000,000 and convert to U.S. $: S$10,000,000 × $.46 = $4,600,000 Invest funds for 90 days. The rate earned in the U.S. for 90 days is: 8% × (90/360) = 2.00% Total amount accumulated in 90 days: $4,600,000 × (1 + .0200) = $4,692,000 Convert U.S. $ back to S$ in 90 days: $4,692,000/$.44 = S$10,663,636 The rate to be paid on loan is: .255 × (90/360) = .06375 Page 1 of 4 9/6/2015 Amount owed on S$ loan is: S$10,000,000 × (1 + .06375) = S$10,637,500 This strategy......

Words: 1282 - Pages: 6

Premium Essay

Week 6 Hw

...Week 6 HW Journal Entry Date Debit Credit A. 12/31/2015 Bond Interest Expense 156,000 Premium on Bonds Payable 4,000 ($80,000 X 1/20) Cash ($4,000,000 X 8% X 6/12) 160,000 B. 1/1/2016 Bonds Payable 400,000 Premium on Bonds Payable 6,400 Common Stock 320,000 [8 X $100 X ($400,000/$1,000)] Paid-in Capital in Excess of Par 86,400 Total premium ($4,000,000 X .02) $80,000 Premium amortized ($80,000 X 2/10) 16,000 Balance $64,000 Bonds converted ($400,000 ÷ $4,000,000) 10% Related premium ($64,000 X 10%) 6,400 C. 3/31/2016 Bond Interest Expense 7,800 Premium on Bonds Payable 200 ($6,400 ÷ 8 years) X 3/12 Bond Interest Payable 8,000   ($400,000 X 8% X 3/12) 3/31/2016 Bonds Payable 400,000 Premium on Bonds Payable 6,200 Common Stock 320,000 ...

Words: 737 - Pages: 3

Premium Essay

Hw Week 4

... Based on Strasburg: P0= (1.50(1.077))/(0.125-0.077)= $33.66 l. The potential range, based on these data, is between $21.54 and $33.66 a share. The data suggest that the price would be set toward the low end of the range: (1) Edelman has a high debt ratio, (2) Edelman is relatively small, and (3) Edelman is new and will not be traded on an exchange. The actual price would be based on negotiations between the underwriter and Edelman; we cannot say what the exact price would be, but the price would probably be set below $21.54, with $2,0 being a reasonable guess. 20-4 on page 821-822 a. Since the call premium is 11 percent, the total premium is 0.11($40,000,000) = $4,400,000. However, this is a tax deductible expense, so the relevant aftertax cost is $4,400,000(1 - T) = $4,400,000(0.60) = $2,640,000. b. The dollar flotation cost on the new issue is 0.04($40,000,000) = $1,600,000. This cost is not immediately tax deductible, and hence the aftertax cost is also $1,600,000. c. The flotation costs on the old issue were 0.06($40,000,000) = $2,400,000. These costs were deferred and are being amortized over the 25-year life of the issue, and hence $2,400,000/25 = $96,000 are being expensed...

Words: 1488 - Pages: 6

Premium Essay

Econ Hw 4

...HW 4 Solutions 2. a. Percentage change of exchange rate from 2009-2010: Canada=(0.9643-0.9225)/0.9225=4.53% Mexico=(0.0788-0.0756)/0.0756=4.23% China=(0.1473-0.1454)/0.1454=1.31% Japan=(0.0112-0.0105)/0.0105=6.67% b. Percentage change in the nominal effective exchange rate for the United States between 2009 and 2010: =(4.53%*36%)+(4.23%*28%)+(1.31%*20%)+(6.67%*16%)=(+)4.14% United States' effective exchange rate has depreciated by 4.14%. c. The value of U.S. dollar has depreciated by 4.14% against the basket. Compared with the change in the value of the U.S. dollar relative to the Mexican Peso, where U.S. dollar depreciated 4.23% against Peso, the 4.14% depreciation of the U.S. dollar against FX basket is smaller. The reason is that Mexico only take 28% of trade share of United States, there are also other trade partners whose currency also could affect the nominal exchange rate for U.S. For this question, U.S. dollar only depreciated 1.31% against Chinese yuan, which bring down the number of overall depreciation of U.S. dollar against foreign currency basket. 6. a. The investor's return on euro-denominated Dutch deposits is €1,000*(1+4.04%)=€1,040.4 b. Using forward cover, the euro-denominated return on British deposits is €1,000*(1.575/1.5)*(1+2%)=€1,071 c. Yes, there is an arbitrage opportunity because the euro-dominated return on British deposits is higher than that on Dutch deposits. The net......

Words: 1355 - Pages: 6

Premium Essay

Hw Week 4

...Ch.7 Question 2, 4, 7 2.) In order for a derivatives market to function most efficiently, two types of economic agents are needed: hedgers and speculators. Explain. A speculator attempts to profit from a change in futures price. To do this, the speculator will take a long or short position in a futures contract depending upon his expectations of future price movement. A hedger, on the other hand, wants to avoid price variation by locking in a purchase price of the underlying asset through a long position in the futures contract or a sales price through a short position. In effect, the hedger passes off the risk of price variation to the speculator, who is better able, or at least more willing, to bear this risk. 4.) How can FX futures market be used for price discovery? The futures market is useful for price discovery by obtaining the markets forecast of the spot exchange rate at different future times. FX forward prices are an unbiased predictor of future spot exchange rates, the market anticipates if a currency will appreciate or depreciate. Since the futures contracts have an expiration cycle, there are different contracts that expire at different periodic date in the future. Futures contract displays a chronological pattern from settlement prices from past CD future contracts. The pattern provides information about the relative future value of a currency against another because there are steady appreciating and depreciating pattern, although it may be mixed...

Words: 415 - Pages: 2