One year after the historical famine, Mr. Mint was awarded the Star of Contribution for his wise
Question:
One year after the historical famine, Mr. Mint was awarded the Star of Contribution for his wise decision to help the country overcome difficulties. The president of the United States thought the recognition with fame only is not worth enough, thus he decided to award Mr. Mint one of three rewards, which will be put under the name of GBA company to be legal. These 3 rewards are:
Reward Estimated
price (in
USD)
Condition Annual depreciation
Other fees
Car – a Bentley version 2101 500,000 Lifetime free gas fee.
20% Maintenance fee:
20,000 USD/ year
Private jet– a Boeing 7700
5,000,000 No 5% Hangar fee: 200,000
USD / year
Maintenance fee:
100,000 USD / year
100 m2 of private land in the most luxury square of
Manhattan town –
New York.
20,000,000 Not allowed reselling in the first 5 years.
Down payment:
10,000,000 – pay back after 5 years. Not allowed to work with the government anymore if breaking the agreement
0 Land tax: 2,000,000
USD / year in the first
5 years. After that, the land will be taxed 4,000,000 / year.
3 As a future bright financial specialist who Mr. Mint spent a lot of expectations on, you have to give him your advice that which reward he should choose.
Students’ tasks:
a) Explain in your own words why you think Mr. Mint should choose that reward? Out of the box, ideas are encouraged and might be given extra points
b) Words alone are not convinced enough. You need to prepare a draft balance sheet to provide satisfying advice for Mr. Mint. You have gathered the information that the government permitted GBA company to keep the remaining budget after buying the rice as 50% in cash, and 50% in inventory. Except for the remaining budget, GBA company does not have any other assets, except for the reward you might choose for them that listed above. They don’t have any liabilities either.
c) Fortunately, your employee just sent you a report of GBA company, in which it said GBA did buy an insurance bundle worth 1 million Dollars for the rice shipment last year, but they did not pay it and the fine fee for late payment is 20% interest, compounded semi – annually.
This fee will be recorded as account payables, and this is the only liability of the company. You decide to let Mr. Mint know about this situation immediately as well as update this punishment fee in your balance sheet. Prepare the completed balance sheet for the company.
Intellectual Property- The Law of Trademarks, Copyrights, Patents, and Trade Secrets
ISBN: 978-1428318366
3rd Edition
Authors: Deborah E. Bouchoux