Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2021, the company issued 320,000 executive stock options permitting executives to buy 320,000 shares of Pastner stock for $28 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2021 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2021, as follows:

Vesting Date Amount Vesting Fair Value per Option
Dec. 31, 2018 25% $4.00
Dec. 31, 2019 25% $4.40
Dec. 31, 2020 25% $4.80
Dec. 31, 2021 25% $5.60

Required:
a. Determine the compensation expense related to the options to be recorded each year 2018-2021, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately.
b. Determine the compensation expense related to the options to be recorded each year 2018-2021, assuming Pastner uses the straight-line method to allocate the total compensation cost.

Answer:

Pastner Brands

a. Compensation expense related to the options to be recorded each year, allocated with separate tranches:

Vesting Date   Amount Vesting   Fair Value     Compensation

                                                     per Option         Expense

Dec. 31, 2018       25% = 80,000       $4.00            $320,000

Dec. 31, 2019      25% = 80,000        $4.40              352,000

Dec. 31, 2020     25% = 80,000       $4.80               384,000

Dec. 31, 2021      25% = 80,000       $5.60               448,000

Total                 100%   320,000                           $1,504,000

b. Compensation expense related to the options, allocated using the straight-line method:

= $376,000

Explanation:

a) Data and Calculations:

Executive stock options issued = 320,000

Options exercise price = $28 per share

Number of tranches for the options = 4

Number of options exercisable in each tranche = 80,000

Vesting Date   Amount Vesting   Fair Value     Compensation

                                                     per Option         Expense

Dec. 31, 2018       25% = 80,000       $4.00       $320,000 (80,000 * $4.00)

Dec. 31, 2019      25% = 80,000        $4.40         352,000 (80,000 * $4.40)

Dec. 31, 2020     25% = 80,000       $4.80          384,000 (80,000 * $4.80)

Dec. 31, 2021      25% = 80,000       $5.60          448,000 (80,000 * $5.60)

Total                 100%   320,000                      $1,504,000

Compensation expense, using the straight-line method = $376,000 ($1,504,000/4)

An employee earns $6,050 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $204 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $172 and contributes $86 to a retirement plan each month. What is the amount of net pay for the employee for the month of January

Identify the principle of internal control to each of the following cases. 1. Cash is locked in a safe overnight. select principle of internal control 2. Employees who receive shipments of goods do not have access to the accounting records for merchandise. select principle of internal control 3. Shipping documents are pre-numbered. select principle of internal control 4. The bookkeeper does not have physical custody of assets. select principle of internal control 5. Only the treasurer of the company can sign checks.

Oscanda Accessories Corporation manufactured 21,400 travel bags during March. The following fixed overhead data pertain to March: Actual Static Budget Production 21,400 units 22,000 units Machine-hours 3,400 hours 4,400 hours Fixed overhead cost for March $176,300 $184,800 What is the amount of fixed overhead spending variance

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Safari limited acquired 2 new 7-ton buses on 1 January 1990 for £129,150. The cash price of

these units was £90,000. The deal was financed by TPS (financing) ltd and the terms of the

hire purchase contract required a deposit of £30,000 on delivery followed by 3 instalments on

31st December 1990, 1991, and 1992 of £33,000, £33,000 and £33,150 respectively. The true

rate of interest was 30% per annum.

Required

Prepare the appropriate accounts in the books of safari ltd to record the above transactions.

Depreciation is to be charged on vehicles at 20% per annum, using straight line method.​

the retained earnings of a corporation is ________. a. internally generated equity that is received from employee stock purchases b. externally generated equity that is acquired from banks and other creditors c. externally generated equity that is contributed by shareholders d. internally generated equity that is earned by profitable operations that is not distributed to stockholders

On January 1, 2021, Ellison Company granted Sam Wine, an employee, an option to buy 1,000 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $6,000. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Ellison Co. stock in 2021 were:

July 1 $30 per share
October 1 $36 per share
December 1 $40 per share

The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense for 2021 on its books in the amount of:________

a. $6,000 21
b. $2,000
c. $1,500
d. $0

On January 15, 2020, Vern purchased the rights to a mineral interest for $3,500,000. At that time, it was estimated that the recoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Vern incurred expenses during 2020 of $500,000. The percentage depletion rate is 22%. Determine Vern's depletion deduction for 202

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A factory worker makes $17.50 per hour. Next month, she will receive a 1.5% increase in her hourly rate. What will her new hourly rate be?
​

Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $340,000, and direct labor costs to be $170,000. Actual overhead costs for the year totaled $368,000, and actual direct labor costs totaled $192,000. At year-end, Factory Overhead account is: Multiple Choice Neither overapplied nor underapplied. Overapplied by $16,000. Overapplied by $22,000. Underapplied by $16,000. Overapplied by $192,000.

A.The loss on the cash sale of equipment was $22,125 (details in b).
B. Sold equipment costing $97,875, with accumulated depreciation of $47,125, for $28,625 cash.
C. Purchased equipment costing $113,375 by paying $64,000 cash and signing a long-term note payable for the balance.
D. Borrowed $5,700 cash by signing a short-term note payable.
E. Paid $58,625 cash to reduce the long-term notes payable.
F. Issued 4,200 shares of common stock for $20 cash per share.
G. Declared and paid cash dividends of $53,500.
Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

During May, Salinger Company accumulated 560 hours of direct labor costs on Job 200 and 670 hours on Job 305. The total direct labor was incurred at a rate of $11 per direct labor hour for Job 200 and $15 per direct labor hour for Job 305. Journalize the entry to record the flow of labor costs into production during May. If an amount box does not require an entry, leave it blank.

What are some recommendations for ways that Redbox can maintain its high market
share?

Holtzman Clothiers's stock currently sells for $19.00 a share. It just paid a dividend of $4.00 a share (i.e., D0 = $4.00). The dividend is expected to grow at a constant rate of 3% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent. $ What is the required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. %

18) 20 points Steve's Hardware Store uses the perpetual inventory system. The business incurred the following transactions: A. On November 1, 10 snow blowers were purchased on account at $1,000 each. Credit terms were 2/10, net 30. B. On November 10, the business sold three of the snow blowers on account at $1,500 each. The credit terms were 2/10, net 30. C. OnNovember12,thebusinesspaidforthesnowblowerspurchasedonNovember1. D. On November 20 Steve's received payment for the November 10 sale. E. On November 30, the business paid rent of $1,500 and wages of $2,000.

Refer to the HR Report section of the Inquirer. Digby will continue to keep their current hourly levels of training in order to help reduce turnover and improve productivity next year. How much must be spent per employee on an hourly basis to maintain the current training commitment

New Line Cinema is considering producing a new movie. To evaluate the proposal, the company needs to calculate its cost of capital. The firm has collected the following information:

a. The company wants to maintain is current capital structure, which is 20% equity, 20% preferred stock and 60% debt.
b. The firm has marginal tax rate of 34%.
c. The firm's preferred stock pays an annual dividend of $4.3 forever, and each share is currently worth $135.26.
d. The firm has one bond outstanding with a coupon rate of 6%, paid semiannually, 10 years to maturity, a face value of $1,000, and a current price of $1,163.51.
e. The company's beta is 0.8, the yield on Treasury bonds is is 0.6% and the expected return on the market portfolio is 6%.
f. The current stock price is $39.17. The firm has just paid an annual dividend of $1.13, which is expected to grow by 4% per year.
g. The firm uses a risk premium of 3% for the bond-yield-plus-risk-premium approach.
h. New preferred stock and bonds would be issued by private placement, largely eliminating flotation costs. New equity would come from retained earnings, thus eliminating flotation costs.

Required:
a. What is the cost of equity using the bond yield plus risk premium?
b. What is the midpoint of the range for the cost of equity?
c. What is the company's weighted average cost of capital?

What is an example of goods?
O a hotel room
O a good haircut
O a car wash
O a hard cover book

Robert Parish Corporation purchased a new assembly process on August 1, 2017. The cost of this machine was $117,900. The company have a salvage value of $12,900 at the end of its service life. Its life is estimated 21,000 hours. Year-end is December 31. estimated that the machine would at 5 years, and its working hours are estimated at Instructions Compute the depreciation expense under the following methods. Each of the following should be considered unrelated.
(a) Straight-line depreciation for 201:7.
(b) Activity method for 2017, assuming that machine usage was 800 hours.
(c) Sum-of-the-years-digits for 2018.
(d) Double-declining-balance for 2018.

Phyllis, Inc., earns book net income before tax of $600,000. Phyllis puts into service a depreciable asset this year, and its first-year tax depreciation exceeds book depreciation by $120,000. Phyllis has recorded no other temporary or permanent book-tax differences. Assuming that the U.S. tax rate is 21%, what is Phyllis's total income tax expense reported on its GAAP financial statements

Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup Project Nuts
Initial investment $400,000 $600,000
Annual net income 30,000 46,000
Net annual cash inflow 110,000 146,000
Estimated useful life 5 years 6 years
Salvage value -0- -0-
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1
Periods 9% 10% 11% 12%
5 3.890 3.791 3.696 3.605
6 4.486 4.355 4.231 4.111
The net present value for Project Nuts is
QUESTION 2:
Benet Division of United Refinery Company's operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000. The Benet Division's ROI is 25%. Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000. Should management accept this new project?
A) Yes, since ROI will increase.
B) No, since ROI will be lowered.
C) Yes, since additional sales always mean more customers.
D) No, since loss will be incurred.
QUESTION 3:
The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?
QUESTION 4:
A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:
Variable
Fixed
Indirect materials $120,000 Depreciation $50,000
Indirect labor 160,000 Taxes 10,000
Factory supplies 20,000 Supervision 40,000
A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of:__________
QUESTION 5:
Cleaners, Inc. is considering purchasing equipment costing $60,000 with a 6-year useful life. The equipment will provide cost savings of $14,600 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return.
Present Value of an Annuity of 1
Period 8% 9% 10% 11% 12% 15%
6 4.623 4.486 4.355 4.231 4.111 3.784
What is the approximate profitability index associated with this equipment?

Corporation M has $40,000 of current earnings and profits and $10,000 of accumulated earnings and profit. During the year Corporation M distributes $60,000 to is only shareholder – N. Before the distribution, N has basis in their stock of $100,000. What amount of capital gain income will N recognize related to this distribution?

An early frost destroys 20% of the coffee bean crop. If the supply and demand for coffee beans are both relatively inelastic, and the frost does not impact the quality of the coffee beans that make it to market.

Required:
What will most likely occur to the equilibrium price and quantity of coffee beans?

If we consider the effect of taxes, then the degree of operating leverage can be written as:

DOL = 1 + [FC × (1 – TC) – TC × D]/OCF

Consider a project to supply Detroit with 28,000 tons of machine screws annually for automobile production. You will need an initial $4,800,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,150,000 and that variable costs should be $215 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $525,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $320 per ton. The engineering department estimates you will need an initial net working capital investment of $460,000. You require a return of 14 percent and face a tax rate of 25.

Required:
a. What is the percentage change in OCF if the units sold changes to 28,000?
b. What is the DOL at the base-case level of output?

In August 2005, Hurricane Katrina damaged or destroyed oil platforms in the Gulf of Mexico, refineries along the Gulf coast, and the pipeline infrastructure that transports oil and gas to customers across the eastern United States. The winter of 2006 was unusually cold in many parts of the country. How did these events affect the market (equilibrium) price and quantity for natural gas

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A company reported annual sales revenue of $2,200,000 in 2019. During the year, accounts receivable decreased from a $56,000 beginning balance to a $48,000 ending balance. Accounts payable decreased from a $44,000 beginning balance to a $32,000 ending balance. How much is cash received from customers for the year

A company currently sells products in the United States and is considering expanding to China or Vietnam. Expanding won't impact the company's sales, revenue or profit in the United States. If the company expands to China there is a 20% chance profit over the next 5 years will be $2,000,000, a 30% chance profit will be $1,000,000 and a 50% chance the company will lose $2,000,000. If the company expands to Vietnam, there is a 70% chance profit over the next 5 years will be $1,000,000 and a 30% chance the company will lose $2,500,000. Using a decision tree, what decision should the company make