Question 1: Part A 1 of 2 The Ghirardelli Chocolate Co. rents several small retail units from Stratford Developments Corp as part of its new concept Sugar-Rush Cakeshop, which it hopes will help revive the company's fortunes in the face of declining sales. Juan Rosas shopping centre has recently had a rent review, and the rent has been agreed at 315,000 per annum. The Ghirardelli Chocolate Co. has proposed that the rent should henceforth be payable monthly in advance rather than quarterly in advance as at present for the remainder of the lease, which is 8 years. The all risks yield for retail properties in this locality is 6.25%. Value the 8 years of the term remaining for Juan Rosas shopping centre on behalf of Stratford Developments Corp on the assumption that the rent is payable: 1. Annually in arrears 2. Quarterly in advance

Question 1: Part A 1 of 2 The Ghirardelli Chocolate Co. rents several small retail units from Stratford Developments Corp as part of its new concept Sugar-Rush Cakeshop, which it hopes will help revive the company's fortunes in the face of declining sales. Juan Rosas shopping centre has recently had a rent review, and the rent has been agreed at 315,000 per annum. The Ghirardelli Chocolate Co. has proposed that the rent should henceforth be payable monthly in advance rather than quarterly in advance as at present for the remainder of the lease, which is 8 years. The all risks yield for retail properties in this locality is 6.25%. Value the 8 years of the term remaining for Juan Rosas shopping centre on behalf of Stratford Developments Corp on the assumption that the rent is payable: 1. Annually in arrears 2. Quarterly in advance

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.1.2P

See similar textbooks

Similar questions

Ethical Dilemma: Recognition Point and Ethical Considerations C7. Business Application ▶ Robert Shah, a sales representative for Quality Office Supplies Corporation, will receive a substantial bonus if he meets his annual sales goal. The company’s recognition point for sales is the day of shipment. On December 31, Shah realizes he needs sales of $2,000 to reach his sales goal and receive the bonus. He calls a purchaser for a local insurance company, whom he knows well, and asks him to buy $2,000 worth of copier paper today. The purchaser says, “But Robert, that’s more than a year’s supply for us.” Shah says, “Buy it today. If you decide it’s too much, you can return however much you want for full credit next month.” The purchaser says, “Okay, ship it.” The paper is shipped on December 31 and recorded as a sale. On January 15, the purchaser returns $1,750 worth of paper for full credit (approved by Shah) against the bill. Should the shipment on December 31 be recorded as a…
Problem 2-21 (IFRS) Arianne Company, a grocery retailer, operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on groceries. Program members can redeem the points for further groceries. The points have no expirty date. During 2020, the sales amounted to P7,000,000 based on stand-alone selling price. During the year, the entity granted 10,000 points. But management expected that only 80% or 8,000 points will be redeemed. The stand alone selling price of each loyalty point is P100. On December 31,2020,4,800 points have been redeemed In 2021,management revised its expectations and now expected that 90% or 9,000 points will be redeemed altogether. During 2021, the entity redeemed 2,400 points. 1. What amount should be rêported as sales revenue including the revenue earned from points for 2020? a. 7,000,000 b. 8,000,000 c. 6,125,000 d. 6,650,000 2. What is the revenue earned from loyalty points for 2021? a. 700,000 b.…
QUESTION 2 On 1 September 2017, Seven Food Bhd purchased a packaging machine under hire purchase agreement with Tujuh Todak Bhd. The cash price of the machine was RM104,800 and the interest charged was 7% per annum. Seven Food Bhd paid 30% of the cash price as a deposit. The hire purchase period was 24 months and the instalments are paid at the end of each month starting 30 September 2017. The economic life of the machine was 7 years and Seven Food Bhd used straight line method to depreciate the machine. Seven Food Bhd and Tujuh Todak Bhd close their accounts on 31 December every year. Seven Food Bhd used gross method to account for the hire purchase and employed sum-of-the-years digits method to recognise the interest expense on the instalment payment date. In April 2018, Seven Food Bhd faced financial difficulties in settling their debts. The company was unable to pay the hire purchase instalments for April and May 2018. After serving “the notice of intention to repossess” to Seven…
34. Unearned rent: Balance beginning of the year P11,000 Balance end of year 15,000Warehouse quarterly rent received in advance is P18,000. During the year, equipment was rented to another company at an annual rent of P9,000. The quarterly rent payments were credited to Rent Income; the annual equipment rental was credited to Unearned Rent. What is the appropriate adjusting entry? a. Debit Rent Income and credit Unearned Rent, P4,000 b. Debit Unearned Rent and credit Rent Income P4,000 c. Debit Rent Income and credit Unearned Rent, P5,000 d. Debit Unearned Rent and credit Rent Income P5,000
Ay 4. Mcq A business is required to relocate to new commercial premises. A prospective landlord offers the following lease incentive and no other options: Cash $10,000 Free fitout with carpet, furniture, etc $25,000 Three months rent-free occupancy $12,000 How much will treated as ordinary income? a. $10,000 cash b. Nil, it is all capital c. $35,000 cash & property d. $47,000 cash, property & occupancy
Problem 1 – Comprehensive Ratio Analysis You have just been hired as a loan officer at Luzon Bank. Your supervisor has given you a file containing a request from Helix Company, a manufacturer of auto components, for a P1,000,000 five-year loan. Financial statement data on the company for the last two years are given below: (picture below) Meri Ramos, who just two years ago was appointed president of Helix Company, admits that the company has been "inconsistent" in its performance over the past several years. But Ramos argues that the company has its costs under control and is now experiencing strong sales growth, as evidenced by the more than 25% increase in sales over the last year. Ramos also argues that investors have recognized the improving situation at Helix Company, as shown by the jump in the price of its ordinary shares from P20 per share last year to P36 per share this year. Ramos believes that with strong leadership and with the modernized equipment that the P 1,000,000…
Problem 1 – Comprehensive Ratio Analysis You have just been hired as a loan officer at Luzon Bank. Your supervisor has given you a file containing a request from Helix Company, a manufacturer of auto components, for a P1,000,000 five-year loan. Financial statement data on the company for the last two years are given below: (picture below) Meri Ramos, who just two years ago was appointed president of Helix Company, admits that the company has been "inconsistent" in its performance over the past several years. But Ramos argues that the company has its costs under control and is now experiencing strong sales growth, as evidenced by the more than 25% increase in sales over the last year. Ramos also argues that investors have recognized the improving situation at Helix Company, as shown by the jump in the price of its ordinary shares from P20 per share last year to P36 per share this year. Ramos believes that with strong leadership and with the modernized equipment that the P 1,000,000…
Q2. An entity has a contract to sell 100 bikes to a customer for $500 each and the customer has the right to return the bikes within 30 days for a full refund. On the basis of past experience, the entity places the following probabilities on the number of bikes the customer is expected to return:Number of bikes returned0 1 2 3 4Probability of outcome15% 20% 28% 22% 15%Using the ‘expected value’ method, calculate the amount of revenue from the customer to be recognised?If, by contrast, the ‘most likely amount’ approach is applied, and if it is assumed that the most likely outcome is that two bikes will be returned, then the revenue to be recognised would be calculated as?
Question 1 Epsilon is an entity which prepares financial statements, in accordance with International Financial Reporting Standards (IFRS), to 30 September each year. On 1 April 2018, Epsilon accepted delivery of a large and complex machine from a supplier. The agreed purchase price for the machine was £2 million. Epsilon received 10% trade discount. On 1 April 2018, Epsilon incurred direct costs of £50,000 in handling the machine and £25,000 in installing the machine at its premises. Although the machine was ready for use from 1 April 2018, Epsilon did not bring the machine into use until 30 April 2018. During April 2018 Epsilon incurred costs of £200,000 in training relevant staff to use the machine. The directors of Epsilon estimate that the machine is capable of being usefully employed in the business until 31 March 2023, and that it will have no residual value at that date. Epsilon uses the straight-line method for calculating the depreciation. On 31 March 2023, Epsilon…
Problem 2-20 (IFRS) William Company operates a customer loyalty program.The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020,the entity issued 100,000 award credits and expects that 80% of these award credits shall be redeemed. The total stand-alone selling price of the award credits granted is reliably measured at P2,000,000. In 2020, the entity sold goods to customers for a total consideration of P8,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be redeemed 2020 30,000 80% 2021 15,000 1. What is the revenue from points for 2020? a. 1,600,000 b 1,500,000 C. 600,000 d 480,000 2. What is the revenue from points for 2021? a.240,000 B.200,000 C. 120,000 d 0
QUESTION 1 Excillibur Limited (Excillibur) is a supplier of software. They can install the software if required by customers and also have the capability of providing maintenance services to their customers. Their two year maintenance programme is highly in demand by all their customers. Excillibur signed a sale contract with Raindrops Limited (Raindrops) on 15 January 2015 for an amount of N$2 800 000. The sale agreement involves Excillibur providing software, successfully installing the software at Raindrops and providing maintenance services for two years to Raindrops. The software was physically delivered to Raindrops on 31 January 2015.The installation of the software was successfully completed over the weekend of 31 January and 1 February 2015. The stand-alone prices of the components of the contract are as follows: Software N$ 650 000 Installation of software…
Case Study 3Just-for-Choux Patisserie SARL (JCPS) is a small French company, specialising in bakeryproducts. It is based in the Loire Valley. The Board of Directors are all family members andbetween them, they own 100% of the equity.JCPS is profitable and is now seeking finance for a planned expansion. A local bank,ArgentInc has indicated that it may be prepared to offer a loan of €250,000 at a fixed annualrate of 10%. JCPS would repay €62,500 of the capital each year for the next four years.Annual interest would be calculated on the opening balance at the start of each year.Current financial information on JCPS is as follows:Current revenue: €525,000Operating profit margin: 20%Annual taxation rate: 20%Average overdraft: €40,000Average interest on overdraft: 5% per yearDividend payout ratio: 50%Shareholders’ funds: €300,000Market value of non-current assets €180,000As a result of the expansion, revenue would increase by €70,000 per year for each of thenext four years, while the…