West Ltd has always marketed itself as operating in an environmentally responsible manner, and is an advocate of sustainable fishing. The public regards it as a dolphin-friendly company as a result of its previous campaigns to ensure dolphins are not affected by tuna fishing. The marketing manager of West Ltd has noted the efforts of the ship, the Steve Irwin, to disrupt and hopefully stop the efforts of whalers in the southern oceans and the publicity that this has received. He has recommended to the board of directors that West Ltd strengthen its environmentally responsible image by guaranteeing to repair any damage caused to the Steve Irwin as a result of attempts to disrupt the whalers. He believes that this action will increase West Ltd.'s environmental reputation, adding to the company's goodwill. He has told the board that such a guarantee will have no effect on West Ltd.'s reported profitability. He has explained that, if any damage to the Steve Irwin occurs, West Ltd can capitalise the resulting repair costs to the carrying amounts of its brands, as such costs will have been incurred basically for marketing purposes. Accordingly, as the company's net asset position will increase, and there will be no effect on the statement of profit or loss and other comprehensive income, this will be a win-win situation for everyone.

Required:
The chairman of the board knows that the marketing manager is very effective at selling ideas but knows very little about accounting. The chairman has, therefore, asked me to provide him with a summary advising the board on how the proposal should be accounted for under the Financial Reporting Standards and how such a proposal would affect Dixon Ltd.’s financial statements

Answer:

According to IFRS any cost that is associated with bringing the asset into use is capitalized. If the management intend is to use the island and then restore it to the current state and repair any damages costs it can be capitalized. This is only possible if the expense can be reliably measured before the asset use and it is only for the purpose of asset usage. If the company intends to consider it as a social responsibility activity then it must expense it out instead of capitalizing it. In IAS 16 of IFRS it only gives options to capitalize the dismantling cost when the cost is associated with the use of asset. For marketing and social responsibility purposes if the repair is undertaken then the cost cannot be capitalized.

Explanation:

West Ltd has planned to increase its business by fishing of tuna near the Steve Irwin which is an island in the Australia. The extended fishing could cause damage to the island as it will disrupt whalers but the company plans to repair any damages caused by its activities. The cost cannot be capitalized as it is for marketing purposes.

Exercise 7-9 (Static) Second-Stage Allocation to an Order [LO7-4] Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Activity Measure Activity Rate Order size Number of direct labor-hours $ 16.85 per direct labor-hour Customer orders Number of customer orders $ 320.00 per customer order Product testing Number of testing hours $ 89.00 per testing hour Selling Number of sales calls $ 1,090.00 per sales call The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 200 direct labor-hours, 4 hours of product testing, and 2 sales calls. Required: What is the total overhead cost assigned to the order for heavy-duty trailer axles?

Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $70,200 cash to start the business and received 5,400 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $69,350; December 31, current year, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $73,000; December 31, current year, amounts owed to publishers for books purchased, $13,300; one-year note payable to a local bank for $3,400. No dividends were declared or paid to the stockholders during the year.

Required:
What was the amount of net income for the year?

Big Time University has a football stadium that seats up to 80,000 fans. Details include: Six home games each year. Season passes are sold for $400 each. All 60,000 season passes are sold over the period January through August (prior to the season). Cash is received at the time of the sale. The six home games consist of two in September, three in October, and one in November.

As the new Assistant Athletic Director, you are preparing the football budget for the upcoming season. To assist in that preparation you have assembled data regarding the past season. The bar graphs show the total cash received from season pass sales and sales revenue recognized by the university each month. The line graph plots the balance of the Deferred Revenue account over the year.

Required:
a. In which month were the most season passes sold?
b. In which month was the most sales revenue recognized?
c. Based on the graph, which statement best summarizes when revenue is recognized?
d. What happens to the balance of Deferred Revenue when cash is received for a season pass prior to the season?
e. What is the total amount of Deferred Revenue by the end of August once all 60,000 season passes are sold for $400 each?
f. What happens to the balance of Deferred Revenue when games are played?
g. What will be the balance of Deferred Revenue after the final home game is played in November?

According to an article in the Wall Street Journal in early 2016, "U.S. government bonds maturing in more than 25 years returned a negative 1.2% in the month through Thursday after chalking up a 8.7% gain between January and March.The reversal reflects a shift in financial markets' preoccupation from the prospect of a recession to the risk of higher inflation." Source: Min Zeng, "It Didn't Pay to Bet Against Inflation in April," Wall Street Journal, April 29, 2016
An increase in expected inflation will shift the demand curve _______ leftward rightward and the supply curve _______ rightward leftward ​, resulting in a new equilibrium with a _____________ lower higher price. An increase in expected inflation will ____________ decrease increase the nominal interest rate on both​ short-term and​ long-term bonds. The longer the maturity of a​ bond, the ___________ greater less the change in price as a result of a change in market interest rates. As a​ result, capital losses on​ long-term bonds will be ______ less greater than capital losses on​ short-term bonds.

Consider the following items:

(a) Decrease in accounts receivable (f) Gain on the sale of equipment
(b) Issuance of common stock (g) Depreciation expense
(c) Increase in interest receivable (h) Payment of dividends
(d) Purchase of land (i) Decrease in utilities payable
(e) Decrease in accounts payable (j) Increase in inventory
How many of these items would be subtracted from net income when using the indirect method to prepare the operating activities section of the statement of cash flows?

The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(a) Pass the necessary journal entry to record the acquisition (2 marks)(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (2 marks)(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (2 marks)(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 (1 marks)

Which of the following statements about the accounting cycle is NOT correct:_______.
A. Transactions are journalized before they are posted
B. Financial statements are prepared based on the balances in the adjusted trial balance
C. The unadjusted trial balance is prepared before the adjusted trial balance
D. Closing entries are recorded and posted throughout each accounting period

Match the descriptions to the letter type they explain.
focuses on how you
would fit with
the company
addresses the job
description and
your qualifications
follows the résumé's
format
not intended for a
specific job
Cover Letter
Letter of Interest

Which option best completes the diagram showing the effects of economic
growth on businesses?
Economic growth
increases
?
A. Opportunity cost increases
B. Capital investment decreases
C. Productivity increases
O D. Productivity decreases

On November 28, 2021, Shocker receives a $2,250 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. On December 1, 2021, the company pays a local radio station $2,250 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited. Employee salaries for the month of December totaling $6,500 will be paid on January 7, 2022. On August 31, 2021, Shocker borrows $55,000 from a local bank. A note is signed with principal and 9% interest to be paid on August 31, 2022.

Required:
Record the necessary adjusting entries for Shocker at December 31, 2018. No adjusting entries were made during the year.

What are the common sources for startup capital for an Entrepreneur?

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by
a. 25 blankets and 40 meals.
b. 50 blankets and 80 meals.
c. 15 blankets and 35 meals.
d. 35 blankets and 45 meals.