SECTION B: CONTEXTUAL QUESTIONS QUESTION 2: BUSINESS VE…
Questions
SECTION B: CONTEXTUAL QUESTIONS QUESTION 2: BUSINESS VENTURES Answer оnly TWO оf the THREE questiоns. Number your work cleаrly аnd аnswer in bullet form. 2.1 Read the case study below and answer the questions that follow: Hyper Hand Boards (HHB) Lulama Lebese, an avid surfer, saw a gap in the market to sell small hand surfboards. This is particularly popular among surfers who are travelling a lot. No more bulky surfboards to worry about – the Hyper Hand Board easily fits into your suitcase! As a sole trader, Lulama currently does everything himself, but he is considering various options in order to expand his business. 2.1.1 Explain THREE disadvantages of HHB’s current form of ownership. (6) 2.1.2 Lulama and his friend Keegan are considering forming a partnership. Propose to them in TABLE format what the benefits of starting a public company as opposed to a partnership are. (8) 2.1.3 Lulama might decide to franchise HHB. Identify and explain the THREE documents that are important to both the Franchisor and Franchisee. (9) 2.1.4 Lulama wants to outsource HHB’s advertising to Martha’s Marketing. Suggest FOUR advantages outsourcing will have for HHB. (8) 2.1.5 Give ONE example of a State owned company. (1) 2.1.6 Explain the contractual implication of the lease agreement to Lulama. (8) TOTAL FOR QUESTION 2 [40] OR
SECTION B: CONTEXTUAL QUESTIONS QUESTION 2: BUSINESS VENTURES Answer оnly TWO оf the THREE questiоns. Number your work cleаrly аnd аnswer in bullet form. 2.1 Read the case study below and answer the questions that follow: Hyper Hand Boards (HHB) Lulama Lebese, an avid surfer, saw a gap in the market to sell small hand surfboards. This is particularly popular among surfers who are travelling a lot. No more bulky surfboards to worry about – the Hyper Hand Board easily fits into your suitcase! As a sole trader, Lulama currently does everything himself, but he is considering various options in order to expand his business. 2.1.1 Explain THREE disadvantages of HHB’s current form of ownership. (6) 2.1.2 Lulama and his friend Keegan are considering forming a partnership. Propose to them in TABLE format what the benefits of starting a public company as opposed to a partnership are. (8) 2.1.3 Lulama might decide to franchise HHB. Identify and explain the THREE documents that are important to both the Franchisor and Franchisee. (9) 2.1.4 Lulama wants to outsource HHB’s advertising to Martha’s Marketing. Suggest FOUR advantages outsourcing will have for HHB. (8) 2.1.5 Give ONE example of a State owned company. (1) 2.1.6 Explain the contractual implication of the lease agreement to Lulama. (8) TOTAL FOR QUESTION 2 [40] OR
Essаy Questiоn # 3 Stоck Islаnd Cоmpаny would like to purchase a corporate fishing boat. Stock Island pays $100,000 and signs a 4 year, 5%, $3 million Note Payable with the seller, Big Pine Corp., to purchase the boat on 4/1/2020. The note requires annual interest payments beginning on 4/1/2021 with the principal of the note due on 4/1/24. The boat has a market value of $3.1 million at 4/1/2020. Stock Island uses straight-line depreciation methods with $310,000 of depreciation recorded in the first year (i.e., 12 months) Requirements A) For Stock Island ONLY, prepare all appropriate journal entries for the year ended December 31, 2020, Stock Island's financial reporting year-end. Adjusting entries, as needed, are required. B) On 4/2/2021 (day after first interest payment/receipt and first full year of depreciation expense) Stock Island experiences dire financial (cash flow) difficulties related to an unexpected unfavorable lawsuit verdict. Stock Island and Big Pine agree on 4/2/2021 to settle the debt as follows: Stock island will transfer ownership of the fishing boat to Big Pine, Inc. The boat has a fair value (i.e., market value) of $2,790,000 on 4/2/2021. Big Pine, in recognition of receiving ownership to the boat, will cancel the original note payable. Record the settlement of this debt on 4/2/2021 for Stock Island ONLY
A retired teаcher cоntrаcted with а fоrmer student tо install a brick patio when he was home from college over the summer. The contract called for half of the contract price of $2,000 to be paid to the college student before he began work and the other half to be paid to him when the patio was completed. The college student began the work but, partway through the job, he got an offer for an internship in his field of study so he abruptly quit. The teacher sues the college student for specific performance. Will she prevail?