Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 10, Problem 10.100EIC
1.
To determine
The ethical issue in the situation given.
2.
To determine
The stakeholders suggested in the transaction.
3(a)
To determine
To analyse: The case from economic standpoint view.
3(b)
To determine
To analyse: The case from legal standpoint view
3(c)
To determine
To analyse: The case from ethical stand point view.
4.
To determine
The reporting of the transaction.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Flyers plc operates public transport services in major cities in the UnitedKingdom (UK). The company uses the accounting rate of return (ARR) andpayback methods to support investment decision-making. You are a SeniorFinance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services ineither Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require thesuccessful bidder to pay a franchise fee to secure the contract and to invest in anew fleet of buses. Sufficient funding is available to finance only one of theseoptions.Edinburgh Newcastle£000 £000Franchise fee (year 0) 8,700 7,950New buses (year 0) 4,120 3,890Scrap value (year 5) 110 95Forecast net cash inflowsYear 1 3,780 3,500Year 2 4,150 3,850Year 3 4,550 4,200Year 4 5,120 5,150Year 5 4,900 4,950Assume that all cash flows occur at the end of the respective year.The company’s approach to investment appraisal was discussed at a recentmeeting of Flyers plc’s senior executive team. Chang…
Flyers plc operates public transport services in major cities in the United Kingdom (UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.
The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options.
Edinburgh
Newcastle
£000 £000
Franchise fee (year 0) 8,700 New buses (year 0) 4,120 Scrap value (year 5) 110
Forecast net cash inflowsYear 1 3,780 Year 2 4,150 Year 3 4,550 Year 4 5,120 Year 5 4,900
Assume that all cash flows occur at the end of the respective year.
7,950 3,890 95
3,500 3,850 4,200 5,150 4,950
The company’s approach to investment appraisal was discussed at a recent meeting of…
William Burris invested $100,000 in an Australian-based franchise, Rent Your Boxes, purchasing three territories in the Washington
area. After finding out the company had gone bankrupt, he rallied 10 other franchisees to join him and created a new company, Rent
Our Boxes. Assume Rent Our Boxes had net income of $38,302 with net sales of $280,585.
What was its profit margin on net sales? (Round your answer to the nearest hundredth percent.)
Profit margin
Prev
14 of 16
Next >
.....
rer
90
Chapter 10 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 10 - The two main categories of stockholders equity are...Ch. 10 - Prob. 2QCCh. 10 - Stockholders of a corporation directly elect the...Ch. 10 - The par value of a share of common stock a. is...Ch. 10 - Prob. 5QCCh. 10 - If a corporation issues 1,000 shares of 1 par...Ch. 10 - Prob. 7QCCh. 10 - Sandusky Corporation purchased 3,000 shares of its...Ch. 10 - Graves Corporation issued 50,000 shares of 1 par...Ch. 10 - Prob. 10QC
Ch. 10 - For cash dividends, the journal entry on the date...Ch. 10 - Prob. 12QCCh. 10 - Prob. 13QCCh. 10 - Prob. 14QCCh. 10 - Prob. 15QCCh. 10 - Prob. 16QCCh. 10 - Prob. 10.1ECCh. 10 - Prob. 10.1SCh. 10 - (Learning Objective 1: Describe characteristics of...Ch. 10 - Prob. 10.3SCh. 10 - Prob. 10.4SCh. 10 - (Learning Objective 2: Record issuance of stock...Ch. 10 - Prob. 10.6SCh. 10 - Prob. 10.7SCh. 10 - Prob. 10.8SCh. 10 - Prob. 10.9SCh. 10 - Prob. 10.10SCh. 10 - (Learning Objective 4: Divide cash dividends...Ch. 10 - Prob. 10.12SCh. 10 - (Learning Objective 6: Prepare the stockholders...Ch. 10 - (Learning Objective 5: Use stockholders equity...Ch. 10 - (Learning Objective 5: Calculate book value per...Ch. 10 - (Learning Objective 5: Calculate and explain...Ch. 10 - (Learning Objective 5: Calculate return on assets...Ch. 10 - Prob. 10.18SCh. 10 - (Learning Objective 2. 5: Define and use various...Ch. 10 - Prob. 10.20SCh. 10 - Prob. 10.21SCh. 10 - Prob. 10.22SCh. 10 - (Learning Objective 1: Identify key terms...Ch. 10 - (Learning Objectives 2, 6: Account for issuance of...Ch. 10 - Prob. 10.25AECh. 10 - Prob. 10.26AECh. 10 - Prob. 10.27AECh. 10 - (Learning Objective 3: Account for the purchase...Ch. 10 - (Learning Objectives 2, 3, 4: Account for issuance...Ch. 10 - (Learning Objective 6: Report stockholders equity...Ch. 10 - Prob. 10.31AECh. 10 - LO 4 (Learning Objective 4: Calculate dividends on...Ch. 10 - Prob. 10.33AECh. 10 - Prob. 10.34AECh. 10 - LO 5 (Learning Objective 5: Calculate and...Ch. 10 - LO 4,6 (Learning Objective 4, 6: Analyze...Ch. 10 - (Learning Objective 5: Evaluate profitability)...Ch. 10 - Prob. 10.38AECh. 10 - LO 6 (Learning Objective 6: Use a companys...Ch. 10 - (Learning Objective 1: Identify key terms...Ch. 10 - (Learning Objectives 2, 6: Account for issuance of...Ch. 10 - Prob. 10.42BECh. 10 - Prob. 10.43BECh. 10 - (Learning Objectives 3, 6: Show how treasury stock...Ch. 10 - (Learning Objective 3: Account for the purchase...Ch. 10 - (Learning Objectives 2, 3, 4: Account for issuance...Ch. 10 - Prob. 10.47BECh. 10 - Prob. 10.48BECh. 10 - Prob. 10.49BECh. 10 - Prob. 10.50BECh. 10 - (Learning Objectives 2, 3, 4: Measure the effect s...Ch. 10 - Prob. 10.52BECh. 10 - (Learning Objective 5: Analyze alternative plans...Ch. 10 - (Learning Objective 5: Evaluate profitability)...Ch. 10 - Prob. 10.55BECh. 10 - Prob. 10.56BECh. 10 - Prob. 10.57QCh. 10 - Prob. 10.58QCh. 10 - Prob. 10.59QCh. 10 - Prob. 10.60QCh. 10 - Prob. 10.61QCh. 10 - Prob. 10.62QCh. 10 - Prob. 10.63QCh. 10 - Prob. 10.64QCh. 10 - Quill Corporation paid 28 per share to purchase...Ch. 10 - Prob. 10.66QCh. 10 - Prob. 10.67QCh. 10 - Prob. 10.68QCh. 10 - Prob. 10.69QCh. 10 - Prob. 10.70QCh. 10 - Prob. 10.71QCh. 10 - Prob. 10.72QCh. 10 - Prob. 10.73QCh. 10 - Prob. 10.74QCh. 10 - Prob. 10.75QCh. 10 - Prob. 10.76APCh. 10 - (Learning Objective 6: Report stockholders equity)...Ch. 10 - (Learning Objectives 2, 4: Analyze stockholders...Ch. 10 - (Learning Objectives 2, 3, 4: Account for stock...Ch. 10 - Prob. 10.80APCh. 10 - Prob. 10.81APCh. 10 - Prob. 10.82APCh. 10 - Prob. 10.83APCh. 10 - Prob. 10.84BPCh. 10 - Prob. 10.85BPCh. 10 - (Learning Objectives 2, 4: Analyze stockholders...Ch. 10 - (Learning Objectives 2, 3, 4: Account for stock...Ch. 10 - Prob. 10.88BPCh. 10 - Prob. 10.89BPCh. 10 - (Learning Objective 5: Differentiate financing...Ch. 10 - Prob. 10.91BPCh. 10 - Prob. 10.92CEPCh. 10 - Prob. 10.93CEPCh. 10 - Prob. 10.94CEPCh. 10 - Prob. 10.95CEPCh. 10 - (Learning Objectives 2, 3, 4, 6: Analyze...Ch. 10 - (Learning Objectives 2, 3, 4: Calculate impact of...Ch. 10 - Prob. 10.98DCCh. 10 - Prob. 10.99DCCh. 10 - Prob. 10.100EICCh. 10 - Prob. 10.101EICCh. 10 - (Learning Objectives 2, 3, 4, 5: Analyze common...Ch. 10 - (Learning Objectives 2, 3, 4: Analyze treasury...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Flyers plc operates public transport services in major cities in the United Kingdom(UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options. Edinburgh Newcastle £000 £000 Franchise fee (year 0 ) 8,700 7,950 New buses (year 0) 4,120 3,890 Scrap Value (year 5) 110 95 Forecast net cash inflows Year 1 3,780 3,500 Year 2 4,150 3,850 Year 3 4,550 4,200 Year 4 5,120 5,150 Year 5 4,900 4,950 Assume that all cash flows occur at the end of the respective year.The company’s approach to investment appraisal was discussed at a…arrow_forwardFlyers plc operates public transport services in major cities in the United Kingdom (UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options. Edinburgh Newcastle £000 £000Franchise fee (year 0) 8,700 7,950New buses (year 0) 4,120 3,890Scrap value (year 5)…arrow_forwardFlyers plc operates public transport services in major cities in the United Kingdom (UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options. Edinburgh Newcastle £000 £000Franchise fee (year 0) 8,700 7,950New buses (year 0) 4,120 3,890Scrap value (year 5) 110 95Forecast net cash inflowsYear 1 3,780 3,500Year 2 4,150 3,850Year 3 4,550 4,200Year 4 5,120 5,150Year 5 4,900 4,950Page 12 of 14[2044]Assume that all cash flows occur at the end of the respective year.The company’s approach to investment appraisal was discussed at a recent meeting of Flyers plc’s…arrow_forward
- Flyers plc operates public transport services in major cities in the United Kingdom (UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options. Assume that all cash flows occur at the end of the respective year.7,950 3,890 953,500 3,850 4,200 5,150 4,950 The company’s approach to investment appraisal was discussed at a recent meeting of Flyers plc’s senior executive team. Chang Ying Simmonds, Director of Marketing at Flyers plc, is keen to understand the nature of investment decisions. Chang Ying has commented:These decisions…arrow_forwardFlyers plc operates public transport services in major cities in the United Kingdom(UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options. Edinburgh Newcastle £000 £000 Franchise fee (year 0 ) 8,700 7,950 New buses (year 0) 4,120 3,890 Scrap Value (year 5) 110 95 Forecast net cash inflows Year 1 3,780 3,500 Year 2 4,150 3,850 Year 3 4,550 4,200 Year 4 5,120 5,150 Year 5 4,900 4,950 Assume that all cash flows occur at the end of the respective year.The company’s approach to investment appraisal was discussed at a…arrow_forwardWilliam Burris invested $100,000 in an Australian-based franchise, Rent Your Boxes, purchasing three territories in the Washington area. After finding out the company had gone bankrupt, he rallied 10 other franchisees to join him and created a new company, Rent Our Boxes. Assume Rent Our Boxes had net income of $40,002 with net sales of $297,585. What was its profit margin on net sales? Round your answer to the nearest hundredth percent.arrow_forward
- Lucian Pty Ltd (Lucian) is a company hosting expensive scenic cruises around Europe. Ernest Jones-Armstrong and his wife, Isla are its directors. A few months ago, Lucian borrowed $1.7 million from the ABC Bank. The security for that loan was a mortgage over the company's most valuable asset, a mansion in inner-Melbourne worth $2.5 million. Under that loan agreement, the ABC Bank has the right to take possession of the building and sell it if Lucian stops paying the loan repayments. Lucian also has other secured creditors and numerous unsecured creditors. Please answer the following questions: 3a) -- Mag SENA -- If the ABC Bank placed Lucian into a Receivership, could the receiver sell the mansion for any price which a potential buyer offered? Explain. Marks Marksarrow_forwardThree recent computer-science graduates are forming a company to write and distribute software for various personal computers. Initially, the company will operate in Eastern Australia. Twelve serious prospects for retail outlets have already been identified and committed to the firm. The firm’s software products have been tested and displayed at several trade shows and computer fairs in the perceived operating region. All that is lacking is adequate financing to continue with the project . A small group of private investors is interested in financing the company. Two financing proposals are being evaluated. (A 34% tax rate is appropriate for this analysis.) 1) Plan A is an all-ordinary share capital structure. ‒ $2m dollars would be raised by selling shares at $10 each. 2) Plan B would involve the use of financial leverage. ‒ $1m dollars would be raised selling bonds with an effective interest rate of 11% per annum. ‒ The remaining $1m would be raised by selling shares at the $10 price…arrow_forwardSituation Golf-Travel Inc. is a U.S. company that provides travel packages for individual golfers and corporate golf outings. The company has mainly focused on U.S. customers but has decided to expand its business globally. Ben Watson, the company’s CEO, has decided that the best location for the company’s European operations is Ireland. While Mark obviously appreciated all of the golf related history in Ireland, he was also attracted by Ireland’s low 12.5% corporate tax rate. In January 2019, Golf-Travel formally opened its European operations, called Europe-Golf, in Portmarnock, Ireland, as a wholly owned subsidiary of Golf-Travel. During 2019, the subsidiary’s performance exceeded expectations by hosting almost 400 individual golf trips and 200 corporate outings. At the end of the year, the subsidiary reported pretax income of €324,260 and the subsidiary paid Irish taxes of €40,533, leaving a net income of €283,727. Directions Ben Watson has asked you, Golf-Travel’s Chief Financial…arrow_forward
- Travel Ltd provides tourism services to both local and foreign tourists in New Zealand. On 1 January 2019, it purchased a piece of land in Mt Eden, Auckland for constructing its permanent office building. The cost of the land was $2,500,000. Because land price was increasing in Auckland, Travel Ltd management believed that the revalued amount of land would provide more useful information to its investors and banks than cost; therefore, they adopted the revaluation model of NZ IAS 16 for land. On 30 June 2019, the company revalued the land to $3,000,000. Land price experienced only a moderate increase in the year ended 30 June 2020. On this date, the company revalued the land upward to $3,100,000. The company’s balance date is 30 June. There was no land revaluation surplus at the beginning of the year ended 30 June 2019. Required 1.Prepare the journal entries required to record the revaluation adjustment for the years ended 30 June 2019 and 30 June 2020. 2.Briefly explain how the…arrow_forwardYour manager has asked you to advise your client Kofi Gyato, owner and director of Kofi Gyato Limited, on the implications of the proposed transaction.Your client has identified an opportunity to develop his business by manufacturing the products which he sells. To do this he would need to buy a machine which will have an expected life of ten years. He has received this quotation for the machine.GHȼPrice of machine70,000Delivery and installation3,500Commissioning costs1,500Annual maintenance costs3,500Required:Prepare a report to your client. Your report should:(a) Explain the difference between capital and revenue expenditure, and how each type of expenditure affects the accounts of a business.(b) Indicate which of the costs of the machine should be considered as capital cost and which should be considered as revenue cost.(c) Define depreciation and explain how the accounting entries for depreciation affect each element of the accounting equation.(d) Indicate:(i) What the annual…arrow_forwardHandy Ltd is a glove manufacturer in Melbourne. The managers decide to obtain an automated machine worth $1,000,000. As a result of obtaining such a machine, there will be a $100,000 reduction in total expense. The managers are considering the following options: Option 1: Purchase the machine with existing cash at the business bank account, assuming Handy Ltd has sufficient cash at bank. Option 2: The owner contributes the machine to the business. The managers have provided you with following information prior to obtaining the machine: Sales revenue $500,000 $100,000 $400,000 $900,000 $1,500,000 $1,900,000 Net profit Total current liabilities Total liabilities Total current assets Total assets Required: Calculate the Debt (to assets) Ratio, Current Ratio and Net Profit Margin after obtaining the machine if either Option 1 or Option 2 is taken. Option 1 Option 2 Debt (to assets) Ratio Current Ratio Net Profit Margin Handy Ltd has an existing loan agreement with Hilltop Bank, which…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Ethical Decision Making in Management; Author: GreggU;https://www.youtube.com/watch?v=6UrBO-cL27Q;License: Standard Youtube License