21. Demand which is not affected by price ranges is classified as A.inelastic demand B.elastic demand C.inelastic price D.elastic price 22. New task buying process passes through stages such as A.awareness B.evaluation C.trial and adoption D.all of the above 23. Technical personnel of Company is classified as A.initiators B.users C.influencers D.providers 24. Group or individuals who decide supplier?s and product requirements are classified as A.deciders B.selectors C.evaluators D.providers 25. Markets in which participants directly exchange goods or services are classified as A.public markets B.barter markets C.buying markets D.private alliances

 

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2103AFE Company Accounting Group Assignment T1 2018 This assignment requires students to prepare the consolidated financial statements in accordance with AASB 10 Consolidated Financial Statements. DUE DATES: Assignment: 18 May, 2018 SPARK ratings: 25 May, 2018 TOTAL WEIGHTING: 20% This piece of assessment task will consist of Part A- Group work (10%) and Part B- Self & Peer assessment (10%). Part A (10%). The aim of Part A is to apply the knowledge and understanding of Consolidation from lectures and workshops in a practical and detailed manner. The assignment is to be completed in groups of three or four. Students will sign up in a group on Learning@Griffith from Week 4. Part B (10%). This assignment involves the completion of Self and Peer Assessment Ratings and feedbacks using SPARKplus. All information pertaining to SPARKplus is located in the Learning@Griffith course site under Assessment>>SPARKplus Student Resources. Please see the attached rubric for Part B that shows you how the ratings Document Preview:

2103AFE Company Accounting Group Assignment T1 2018 Solutions: Acquisition analysis at 1st July 2012. At 1st July 2012: Net Fair Value of identifiable assets, liabilities and contingent liabilities of River Ltd (80%) NFVINA Share Capital$210,000 General Reserve$6,100 Retained Earnings$75,000 Total$291,100 Land ($79,500-$61,500) x (1-30%) = $12,600 Machinery ($120,000-$105,000) x (1- 30%) = $10,500 Receivable ($34,000 – $40,000) x (1 – 30%) = -$4,200 Total Fair Value Adjustments$18,900 Total NFVINA$310,000 Consideration Transferred $270,000 NCI in Subsidiary$66,000 Aggregate of (i) & (ii)$336,000 Total Goodwill on acquisition $336,000 – $310,000 = $26,000 Goodwill of River Ltd FV of River Ltd $66,000.00/20%=$330,000 NFVINA of River Ltd$310,000 Goodwill of River Ltd$20,000 Goodwill of Sky Ltd Total Goodwill Acquired$26,000 Goodwill of River Ltd$20,000 Goodwill of Sky Ltd – Control Premium$6,000 B. Prepare the consolidation journal entries, including: The Business combination valuation entries: DescriptionDRCRAccumulated Depreciation – Machinery (135,000 – 105,000) $30,000 Machinery (135,000 – 120,000) $15,000 Differed Tax Liability ($120,000 – $105,000) x 30% $4,500 BCVR$10,500Depreciation expense ($15,000/10years)$1,500Retained Earnings $12,000 Accumulated Depreciation – Machinery $13,500Deferred Tax Liability (13,500 x 30%)$4,050 Income Tax Expense ($1,500 x 30%)$450 Retained Earnings$3,600Goodwill$20,000 BCVR$20,000Land$18,000 Deferred Tax Liability $5,400 BCVR$12,600Receivable$6,000Deferred Tax Assets$1,800BCVR$4,200 Pre-Acquisition Journal…

Attachments:

Group9.docxConsolidation….xlsxASSisgement-N….pdf

 

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22. Kneelson and Botes Inc. (K&B) is a construction company that does road and bridge work for the state highway authority. The state government solicits bids on construction projects from private contractors. The winning contractor is chosen based on its bid price as well as its perceived ability to do the work.

Sophisticated contractors develop bids using capital budgeting techniques because most projects require cash outlays for hiring, equipment, and materials before getting started (C0). After that the state makes progress payments to cover costs and profits until the job is finished (C1 . . . . . Cn).

Contractors know that even after they’ve won a bid, realizing the planned prof-

its and cash flows isn’t assured in part because government budgets can change while construction progresses. If funding is up, officials tend to add to the work

originally ordered leading to increased profits and cash flows. But if funding is down, officials start to nit pick the contract looking for cost savings, which gener- ally leads to lower cash inflows. State budget projections are fairly good for a year or two, but tend to be inaccurate over longer periods.

K&B has been offered two, four-year contracts, but doesn’t have enough cash or management depth to take on both (mutually exclusive because of resource limitations). One project involves road repair, most of which will be done and paid quickly. The other requires working on a new bridge. The bulk of the cash inflows on bridge projects generally occur near completion.

K&B’s estimating department has put together the following projections of the two projects’ cash flows:

($000)

Road Repair Bridge Work

C0

($3,000)

($4,500)

C1

3,000

100

C2

2,000

2,000

C3

1,000

3,000

C4

100

4,500

K&B doesn’t know its exact cost of capital, but feels it’s between 10 and 15%.

This is not uncommon in smaller companies. (In Chapter 13 we’ll learn that estimating the cost of capital can be difficult and less than precise for firms of any size.)

The company has hired you as a financial consultant to make a recommendation as to which project to accept.

a. Calculate the payback period for both projects. Which does payback choose?

b. Calculate the IRR for both projects. Which does the IRR method choose? Is the choice clear or is it a close decision? Is the choice consistent with the result of the payback method?

c. Calculate NPVs for both projects for costs of capital from 10 to 15% in 1% increments. Then plot both projects’ NPV profiles on a graph similar to that shown in Figure 10.2 on page 435. Does the NPV method give a meaningful result? If so is it consistent with the results of the payback and IRR methods? Which method is theoretically the best? Does that help in this situation?

d. You must make a recommendation to K&B’s management regardless of any technical difficulties you’ve encountered. Provide another, less quantitative argument that tends to support one project over the other. (Hint: See question 6 on page 446 and Business Analysis 4 on page 447.)

e. What is your recommendation and why?

 

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23) A Treasury bond is quoted as 99.6325 asked and 99.1250 bid. What is the bid-ask spread in dollars on a $5,000 face value bond?

A) $17.500

B) $.675

C) $16.250

D) $.508

E) $25.375

 

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