A trader opened an account with the broker by adding $6,000 cash, $11,000 worth of stocks and
Fantastic news! We've Found the answer you've been seeking!
Question:
A trader opened an account with the broker by adding $6,000 cash, $11,000 worth of stocks and bonds of worth $6,000. The trader wants to enter a futures contract which requires an initial margin of $11,400. Calculate his total deposit that qualifies for futures trading. Do you think that the trader can start the futures trading with the deposit he has in the margin account? Why or why not?
Transcribed Image Text:
Question 5 The Spring Group carries on business as a distributor of building materials into the country. Spring was incorporated in 2011 to distribute building materials. It diversified its activities during 2014 to include the import and distribution of water meter, and expanded its operations by the acquisition of shares in Summer in 2016 and in Autumn in 2018. Accounts for all companies are made up to 31 December. The draft income statements for Spring, Summer, Autumn and Winter for the year ended 31 December 2021 are as follows. Revenue Cost of Sales Gross profit Distribution costs Administrative expenses Finance costs Profit before tax Income tax expense Profit for the year Shares in Summer Shares in Autumn Current assets Total Assets Equity RM1 ordinary shares Retained earnings Spring RM'000 45,600 (18,050) 27,550 (3,325) (3,475) Current liabilities Total Equity and Liabilities (325) 20,425 (8,300) 12,125 35,483 6,650 1,568 43,701 Summer RM'000 8,000 22,638 13,063 43,701 24,700 (5,463) 19,237 (2,137) (950) 16,150 (5,390) 10,760 The draft statements of financial position as at 31 December 2021 are as follows. Non-current assets Property, plant and equipment (NBV) Investments 24,273 3,800 Autumn RM'000 9,025 37,098 22,800 (5,320) 17,480 (1,900) (1,900) 13,680 (4,241) 9,439 13,063 8,883 21,946 2,000 19,898 Winter RM'000 48 610 (310) 300 (70) (10) 21,946 220 (120) 100 3,000 24,075 10,023 37,098 The following information is available relating to Spring, Summer, Autumn and Winter. i. On 1 January 2016 Spring signed the purchase agreement to acquire 2,700,000 of ordinary shares in Summer at cost of RM2.7 million for RM6,650,000 at which date there was a credit balance on the retained earnings of Summer of 270 200 470 100 300 70 470 ii. iii. iv. V. vi. vii. viii. ix. a. RM1,425,000. No shares have been issued by Summer since Spring acquired its interest. b. On 1 January 2018 Summer acquired 1,600,000 of ordinary shares in Autumn at cost of RM1.6 million for RM3,800,000 at which date there was a credit balance on the retained earnings of Autumn of RM950,000. No shares have been issued by Autumn since Summer acquired its interest. On 1 January 2021, Spring acquired 40,000 shares in Winter by way of a share exchange of two shares in Spring for each acquired share in Winter. The share market value of Spring's shares at the date of this share exchange was RM2.50. Spring has not yet recorded the acquisition of the investment in Winter. During 2021, Autumn had made intragroup sales to Summer of RM480,000 making a profit of 25% on cost and RM75,000 of these goods were in inventories at 31 December 2021. During 2021, Summer had made intragroup sales to Spring of RM260,000 making a profit of 20% on cost and RM90,000 of these goods were in inventories at 31 December 2021. On 1 November 2021 Spring sold warehouse equipment to Summer for RM240,000 from inventories. Summer has included this equipment in its property, plant and equipment. The equipment had been purchased on credit by Spring for RM200,000 in October 2021 and this amount is included in its current liabilities as at 31 December 2021. Summer charges depreciation on its warehouse equipment at 20% on cost. It is company policy to charge a full year's depreciation in the year of acquisition to be included in the cost of sales. It is the group's policy to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interests in Summer on 1 January 2016 was RM500,000. The fair value of the 28% non-controlling interest in Autumn on 1 January 2018 was RM900,000. Required: An impairment test conducted at the year-end did not reveal any impairment losses. Prepare the statement of comprehensive income for the Spring Group for the year-ending 31 December 2021. (18 marks) Prepare the statement of financial position for the Spring Group for the year- ending 31 December 2021. (22 marks) END OF QUESTION PAPER Question 5 The Spring Group carries on business as a distributor of building materials into the country. Spring was incorporated in 2011 to distribute building materials. It diversified its activities during 2014 to include the import and distribution of water meter, and expanded its operations by the acquisition of shares in Summer in 2016 and in Autumn in 2018. Accounts for all companies are made up to 31 December. The draft income statements for Spring, Summer, Autumn and Winter for the year ended 31 December 2021 are as follows. Revenue Cost of Sales Gross profit Distribution costs Administrative expenses Finance costs Profit before tax Income tax expense Profit for the year Shares in Summer Shares in Autumn Current assets Total Assets Equity RM1 ordinary shares Retained earnings Spring RM'000 45,600 (18,050) 27,550 (3,325) (3,475) Current liabilities Total Equity and Liabilities (325) 20,425 (8,300) 12,125 35,483 6,650 1,568 43,701 Summer RM'000 8,000 22,638 13,063 43,701 24,700 (5,463) 19,237 (2,137) (950) 16,150 (5,390) 10,760 The draft statements of financial position as at 31 December 2021 are as follows. Non-current assets Property, plant and equipment (NBV) Investments 24,273 3,800 Autumn RM'000 9,025 37,098 22,800 (5,320) 17,480 (1,900) (1,900) 13,680 (4,241) 9,439 13,063 8,883 21,946 2,000 19,898 Winter RM'000 48 610 (310) 300 (70) (10) 21,946 220 (120) 100 3,000 24,075 10,023 37,098 The following information is available relating to Spring, Summer, Autumn and Winter. i. On 1 January 2016 Spring signed the purchase agreement to acquire 2,700,000 of ordinary shares in Summer at cost of RM2.7 million for RM6,650,000 at which date there was a credit balance on the retained earnings of Summer of 270 200 470 100 300 70 470 ii. iii. iv. V. vi. vii. viii. ix. a. RM1,425,000. No shares have been issued by Summer since Spring acquired its interest. b. On 1 January 2018 Summer acquired 1,600,000 of ordinary shares in Autumn at cost of RM1.6 million for RM3,800,000 at which date there was a credit balance on the retained earnings of Autumn of RM950,000. No shares have been issued by Autumn since Summer acquired its interest. On 1 January 2021, Spring acquired 40,000 shares in Winter by way of a share exchange of two shares in Spring for each acquired share in Winter. The share market value of Spring's shares at the date of this share exchange was RM2.50. Spring has not yet recorded the acquisition of the investment in Winter. During 2021, Autumn had made intragroup sales to Summer of RM480,000 making a profit of 25% on cost and RM75,000 of these goods were in inventories at 31 December 2021. During 2021, Summer had made intragroup sales to Spring of RM260,000 making a profit of 20% on cost and RM90,000 of these goods were in inventories at 31 December 2021. On 1 November 2021 Spring sold warehouse equipment to Summer for RM240,000 from inventories. Summer has included this equipment in its property, plant and equipment. The equipment had been purchased on credit by Spring for RM200,000 in October 2021 and this amount is included in its current liabilities as at 31 December 2021. Summer charges depreciation on its warehouse equipment at 20% on cost. It is company policy to charge a full year's depreciation in the year of acquisition to be included in the cost of sales. It is the group's policy to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interests in Summer on 1 January 2016 was RM500,000. The fair value of the 28% non-controlling interest in Autumn on 1 January 2018 was RM900,000. Required: An impairment test conducted at the year-end did not reveal any impairment losses. Prepare the statement of comprehensive income for the Spring Group for the year-ending 31 December 2021. (18 marks) Prepare the statement of financial position for the Spring Group for the year- ending 31 December 2021. (22 marks) END OF QUESTION PAPER
Expert Answer:
Related Book For
Federal Taxation 2018 Comprehensive
ISBN: 9780134532387
31st Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
Students also viewed these accounting questions
-
Do you think that ethics training can really be effective in changing the behavior of employees? Why or why not?
-
Do you think a service operation can be successful by developing a system that combines characteristics from the three contrasting service designs presented in the chapter? Why or why not? Please...
-
Do you think a business plan can make sense for a business after it starts? Why or why not?
-
First United Bank Inc. is evaluating three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows: Instructions 1. Assuming...
-
Why does biometrics offer significant promises as a way to authenticate e-business transactions?
-
What goals for the OE/S process (both operations process and information process goals) would be more difficult to achieve with an enterprise system?
-
The accountant of Hook, Line and Sinker, a partnership of seven people, has asked your advice in dealing with the following items in the partnership accounts for the year to 31 May 2007. (a) (i)...
-
Computing Bad Debts and Preparing Journal Entries the trial balance before adjustment of Estefan Inc. shows the following balances. Give the entry for estimated bad debts assuming that the allowance...
-
May 5 Cash 3,010 Service Revenue 3,010 (Performed service for cash) 16 Accounts Payable 455 Cash 455 (Payment of accounts payable) Utilities Expense 195 Cash 195 (Paid utilities) Post these entries...
-
On October 1, 20Y8, Jacinto Suarez and Tricia Fritz form a partnership. Suarez agrees to invest $25,000 in cash and inventory valued at $60,000. Fritz invests certain business assets at valuations...
-
Suppose Lisa initially has income of $80, the price of pizza (pz) is $2.00 per slice, and the price of burritos (Pg) is $4.00 per burrito. Her budget line (L') is illustrated in the figure to the...
-
The controller of Oriole Production has collected the following monthly cost data for analyzing the behavior of electricity costs. Total Electricity Costs Total Machine Hours January $2,580 240...
-
Choose three companies to compare in terms of their codes of conduct from this website: https://i-sight.com/resources/18-of-the-best-code-of-conduct-examples/. Provide a summary of the main...
-
Contrast the Universal and Contingency Models of strategy development. Explain the key differences between these two approaches, highlighting their respective strengths and weaknesses. Additionally,...
-
Mario and Peach are racing along Rainbow Road each with an initial velocity of 19 m/s.The two of them are level until Peach hits a speed boost and experiences an acceleration of 2 m/s 2 for 2 s....
-
QUESTION TWO [35] Open dialogue and communication channels, like in the case of Coca-Cola, can be useful in preventing conflict. Discuss the various sources of conflict in business, as well as...
-
Question 5 :Assume the current U.S. dollar-yen spot rate is 109.00/$. Further, the current nominal 180-day rate of return in Japan is 0% per year and 2% per year in the United States. What is the...
-
In the operation of an automated production line with storage buffers, what does it mean if a buffer is nearly always empty or nearly always full?
-
Kim leased an office building to USA Corporation under a ten-year lease specifying that at the end of the lease USA had to return the building to its original condition if any modifications were...
-
Andrew and Beth are equal partners in the AB Partnership. On December 30 of the current year, the AB Partnership agrees to liquidate Andrews partnership interest for a cash payment on December 30 of...
-
On December 20 of the current year, Winneld has decided to sell all of the stock that she owns and reinvest the proceeds in state of Minnesota bonds. Without considering the sales, her taxable income...
-
Which of the below assertions is inaccurate concerning analytical procedures? (a) Analytical procedures involve evaluations of financial information through analysis of plausible relationships among...
-
Audit procedures can be classified into the following categories, except: (a) Risk assessment procedures (b) Tests of controls (c) Substantive procedures (d) Substantive analytical procedures (e)...
-
The main assertions in the financial statements relating to inventory, for which audit procedures should be designed and performed are: (a) Existence (b) Ownership (c) Completeness (d) Valuation
Study smarter with the SolutionInn App