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BUSI 2002 - Final Exam Review0.docx

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BUSI 2002
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BUSI 2002Final Exam ReviewShortAnswer QuestionsaThe Jones Company awarded 200000 stock options to its executives on January 2 20x5 The value of the options at the time they were awarded was 320000 The options can be exercised any time after January 1 20x7 and expire on December 31 20x7 During 20x6 30000 options were forfeited because one of the executives resigned her position At the end of 20x5 the company estimated that 20000 options would be forfeited What is the total amount of compensation expense relative to the stock options for the year ended December 31 20x6bYou are a publicly accountable entity and provide an incentive program to your customers for the first time in 20x6 For each dollar of sales each customer earns one point Once a customer obtains 10000 points they receive a 70 off coupon for purchases of up to 100 ie if they purchase 100 of goods they only pay 30assume that when customers redeem 10000 points that they will spend exactly 100 It is estimated that 60 of points will be redeemed In 20x6 total sales were 16000000 these do not include any sales made through the incentive program and a total of 4600000 points were redeemedWhat total sales revenues will you report for the year ended December 31 20x6 What will the deferred revenue balance be at December 31 20x6cOn January 2 20x2 an entity grants 200 cash share appreciation rights SARS to each of its 400 employees on condition that the employees remain in its employ for the next two yearsDuring 20x2 30 employees leave The entity estimates that a further 20 will leave during years 20x3 During 20x3 25 employees leave At the end of 20x3 175 employees exercise their SARs The remaining employees exercise in 20x4 and 20x5The entity estimates the fair value of the SARs at the end of each year in which a liability exists as shown below At the end of 20x3 all SARs held by the remaining employees vest The intrinsic values of the SARs at the date of exercise which equal cash paid out at the end of year 20x3 are shown belowFair Intrinsic Yearvalue value 20x23250 20x33890 3500Prepare a TAccount for the SAR Liability and show how the balance at December 31 20x3 is calculated dA publicly accountable entity issues convertible bonds on December 31 20x0 for total proceeds of 9800000 The bonds have a face value of 10000000 have a coupon rate of 56 payable every six months and mature in 15 years Similar bonds were trading to yield 6 on December 31 20x0 On January 2 20x6 40 of the bond issue is converted into common shares What would be the increasethe common stock account on the date of the bond conversioneRedbird Ltd offers its customers a 3year warranty on all products soldRedbird estimates warranty costs to be 450 of sales for each yearSelected sales and warranty return information for the most recent 3year period follow the yearend date for Redbird Ltd is December st31YearSalesActual Warranty Returns20x69500002895020x78750003637520x824110The balance in the Warranty Liability account on January 1 20x6 was 22175 cr and the balance on December 31 20x8 after posting the Warranty Expense and Warranty Returns for 20x8 was 51990 cr Based on this information what were the sales for 20x8fAn entity in the oil industry causes contamination but cleans up only when required to do so under the laws of the particular country in which it operates One country in which it operates has had no legislation requiring cleaning up and the entity has been contaminating land in that country for several years At December 31 20x0 it is virtually certain that a draft law requiring a cleanup of land already contaminated will be enacted shortly after the yearend Does this give rise to a provision at December 31 Explain
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