Any assistance on this assignment would be greatly appreciated. Thank You.

Sixteen Tons Sixteen Tons Company is located in St. Petersburg, Florida and mines fossilized panther scat for use as plant food. The Company's president, Johnny Cash, has asked for your assistance in accounting for certain transactions. Sixteen Tons had total assets o f$598 million at the end o f the current year and reported Income before taxes o f $25 million. 1. Insurance Settlement Proceeds The Company reached a settlement with its insurance carrier related to a claim from a hurricane that destroyed one o f the Company's manufacturing facilities. The facility had an original cost o f $1 0 million, and accumulated depreciation o f $5 million at the date o f destruction. During the year, the Company received proceeds o f $20 million from its insurance carrier in connection with its claim for reimbursement for the destroyed building and inventory. The inventory was valued at FIFO cost o f$2 million. The Company plans to use $2 million o fthe proceeds to purchase new inventory. However, it plans to use the remaining insurance proceeds to fund its defined-benefit pension plan, rather than to rebuild the destroyed facility. 2. Sale o f Accounts Receivable The Company sells its accounts receivable to finance company and receives proceeds that consist o f cash and a beneficial interest in the transferred receivables (which is classified as an availablefor-sale security). The Company uses these "securitizations" as an alternative to borrowing money from more expensive sources. The Company services, administers, and collects the receivables on behalf o f the purchaser. The factoring agreement also requires that proceeds from securitization be used to pay down other Company debt. During the current year, $11 million o f receivables generated from sales o f the Company's inventory were securitized under the agreement. Assume that the sale o f receivables qualified for derecognition under FASB Statement No. 140, A ccounting f or Transfers a nd Servicing o f Financial Assets a nd Extinguishments o f Liabilities, as amended by Statement 166); therefore, the sold receivables are not reflected in the accounts receivable balance in the Company's balance sheet. 3. Acquisition o f Property, Plant, and Equipment on Account In December, the Company incurred $12 million o f capital expenditures related to the acquisition o f manufacturing equipment and machinery. The terms o fthe invoice are 2%/15, net 45. The amounts were unpaid as o f year-end (i.e., included in the trade accounts payable balance). The Company intends to pay the entire invoice in early January, in accordance with the terms o f the invoice (this is not an instal~ment purchase). For trade payables, the Company uses the gross method in accounting for discounts. 4. T ax Benefit o f S tock Options. The Company granted stock options in past years to certain employees. The compensation expense was based on measurement o f the value o f the stock options at the grant date and the resulting $2 million o f compensation expense was fully recognized in prior years. In the current year the options were exercised. The difference between the strike price and the market value o f the stock was $3 million, leading to a $3 million deduction on the Company's tax return in the current year. The Company's tax rate is 40%. ..., 6. Acquisition o f Subsidiary. During the year, Sixteen Tons acquired 80% o f the outstanding stock o fPoop Deck Shipping Company for $4.5 million. The purchase price consisted o f$1 million o f cash plus 50,000 shares o f $1 par value common stock. The fair value o f assets and liabilities, (except long-term debt) o fPoop Deck at the time o f purchase were as follows: Cash Accounts Receivable Other Current Assets Property Plant and Equipment Accounts Payable Unearned Revenue Long-term debt $ 500,000 2,000,000 4,000,000 20,000,000 8,000,000 3,000,000 12,000,000 Book Value The long term debt has a face value o f $12 million and requires annual interest-only payments at 8% interest. The current market rate o f interest for debt with similar features is 9%. In order to induce the holder o f the debt to allow Sixteen tons to assume the debt, detachable warrants were issued to the holder that allow the holder o f the debt to purchase 1,000 shares o f Sixteen Tons stock at $70 per share. The warrants have a term o f 5 years. The annual volatility o f Sixteen Tons' stock price is 50%. Sixteen Tons pays no dividends. In connection with the merger, Sixteen Tons also issued 5,000 at the money stock options to former employees o f Poop Deck to induce them to continue in key positions o f the combined enterprise. The options vest in 2 years and have a term o f 3 years. Reguired Describe the appropriate accounting and reporting o f each o f these transactions. Include examples and pro-forma financial statements. Base your conclusions on authoritative guidance