MODULE 3 EVALUATION July 6, 2012

Transcription

1 MODULE 3 EVALUATION This file includes two cases and their respective evaluation guides.

2 Simulation 1 (90 minutes) It is July 5, 2012, and you, (AC), the assistant controller for Cribs and Carriages Inc. (Cribs), are on your way to the boardroom for a meeting with your boss and Cribs controller, Ty Smith, CA, and with Aubrey Maycock, the accounting clerk of Cribs newly acquired subsidiary, Seat Manufacturing Ltd. (Seat). Cribs is a medium-sized, private company that retails baby products throughout Alberta, including clothes, travel supplies, and furniture. Seat, also located in Alberta, manufactures car seats for infants and children. During the year, Cribs also acquired 19% of Baby Supplies Ltd. (Baby), an Ontario-based wholesaler of baby products. Cribs prepares its financial statements in accordance with IFRS. Ty: We ve had a busy year. The acquisitions of 80% of Seat and 19% of Baby have been big steps in the growth of Cribs, but it s time to get started on financial statements for our year ending June 30, Seat s controller left just after the two acquisitions; until we can get that position filled, Aubrey needs some help. Aubrey: We made some sales to the US during the year, and I m not sure how to record the transactions in Canadian dollars (Exhibit I). Also, we ve had some new competitors enter the market, and had to change suppliers. As a result, our Safety Pro infant car seat doesn t seem to be doing as well as expected, and I m not sure why. Maybe you can take a look at this for us (Exhibit I). Ty: Thanks, Aubrey. AC will help you out by preparing the adjusting entries for the US sales transactions and analyzing the variances on the Safety Pro car seat. We issued preferred shares to help finance the acquisitions of Seat and Baby. AC, I need you to prepare the adjusting entries to account for the preferred shares and the investment in Baby. For our records and our auditors, please document your support for the accounting treatment of these items. I ve prepared some notes on these issues for you, in addition to information you ll need to get started on the consolidation (Exhibit II). At this time, I would like you to calculate consolidated net income attributable to Cribs so I can pass it along to the bank, shareholders, and our auditors. The meeting ends and you head back to your desk to get started. Required: Prepare the information requested by Ty and Aubrey. Ignore GST, PST, and HST. Page 20 of 28

3 Exhibit I Seat Manufacturing Ltd. Financial Information (Compiled by Aubrey Maycock, accounting clerk) USD Sales Throughout the fiscal year, we made regular sales to a small retailer in Billings, Montana, totaling $300,000 US. We also made a one-time sale of $86,000 US on January 25, 2012, to another wholesaler in Boise, Idaho. As we deposited the money into our US bank account throughout the year, we recorded the sales and the receipt of cash in US dollars. We collected $302,000 US on our receivables during the year, and I also exchanged $100,000 US for Canadian dollars during the year. Exchange rates were as follows: Dates in fiscal 2012 July 1, 2011 June 30, 2012 average rate January 25, 2012 spot rate June 30, 2012 spot rate Exchange rates $1 US = $1.03 CDN $1 US = $1.05 CDN $1 US = $1.02 CDN Product Analysis In the past, our Safety Pro infant car seat has been one of our more profitable products. One of our competitors lowered its price on a similar seat, but I read on the Internet that most retail stores were always out of stock of that competitor s car seat. Despite our higher price, we kept production up to make sure our product was always available. Plastic is the main ingredient in our car seats, so we measure raw material by pound of plastic. Our previous supplier of plastic wasn t able to meet our delivery schedule, which forced us to purchase from a more expensive supplier. Our production manager also noted that there had been a lot of wasted materials with our former supplier. I ve assembled the following information from our production records: Budget Actual Price per seat $350 $340 Number of seats sold 11,300 11,600 Material price per pound of plastic $1.55 per pound $1.85 per pound Material used per seat Budgeted cost per labour hour and labour hour per unit was equal to actual. Our management team would like your analysis of what has caused the decreased profitability, as well as an explanation of that analysis. Page 21 of 29

4 Exhibit II Notes on Accounting Adjustments and Acquisitions (Prepared by Ty Smith, CA, controller) Preferred Shares On July 1, 2011, Cribs issued 17,000 Class B preference shares for $200 per share, for a total of $3,400,000. The attributes of the shares are as follows: Non-voting Cumulative fixed dividend at 6% Redeemable, at the option of the holder, 5 years after issuance Convertible, at the option of the holder, into common shares on a 1:1 basis, any time within the first five years of the original issuance Preference shares, with similar risk characteristics but without the conversion option, have a fixed dividend rate of 7%. These shares have been recorded as equity. Acquisition of Baby On January 1, 2012, Cribs acquired 19% of Baby s voting shares. I have already prepared the purchase price analysis, as follows: Purchase price $ 300,000 Share of book value of common stock acquired (190) Share of book value of retained earnings acquired (237,500) Purchase premium 62,310 Fair value differentials: Inventory (6,000) Land (25,000) Deferred taxes at 25% 4,625 Goodwill $ 35,935 Just before June 30, 2012, Baby sold three-fifths of the land. On June 30, 2012, Baby declared and paid dividends of $7,500. Cribs share has been recorded in its Other Income. Baby s net income for the six months ended June 30, 2012, is $120,000. To date, Cribs hasn t purchased any of Baby s products. A few months before the acquisition, one of Cribs controlling shareholders joined Baby s board of directors. We have also been providing management services since acquisition, and anticipate purchasing approximately 45% of Baby s inventory, beginning in fiscal Page 22 of 29

5 Exhibit II (continued) Notes on Accounting Adjustments and Acquisitions (Prepared by Ty Smith, CA, controller) Acquisition of Seat On July 1, 2011, Cribs acquired 80% of Seat s voting shares. I have already prepared the purchase price analysis, as follows: Cribs purchase price $ 3,200,000 NCI purchase price 750,000 Total purchase price 3,950,000 Book value of common stock acquired (100) Book value of retained earnings acquired (3,219,900) Purchase premium 730,000 Fair value differentials: Inventory (134,100) Property and equipment 115,800 Deferred taxes at 25% 4,575 Goodwill $ 716,275 The property and equipment had a remaining useful life of six years. Seat regularly sells merchandise to Cribs at a gross profit of 25%. During the year ended June 30, 2012, Seat s sales to Cribs totaled $1,250,000. One-fifth of these sales remained in Cribs June 30, 2012, ending inventory. Cribs net income is $925,000 before accounting adjustments. Seat s net income is $329,000 before accounting adjustments. Assume an effective tax rate of 25% for all companies. Page 23 of 29

6 EVALUATION GUIDE - Cribs Issue #1 Financial statement adjustments for foreign exchange and preferred shares are prepared and analyzed. Competencies: Performance Measurement and Reporting, Communication Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction Overall, there is a lack of depth or technical accuracy in the preparation of adjusting entries for the foreign currency sales and/or preferred shares. The adjusting entries are attempted for both foreign exchange and the preferred shares OR one adjustment is reasonably prepared. The adjusting entries are reasonably completed for the foreign currency sales and preferred shares, and the accounting treatments are reasonably documented in preparation for the audit. In addition to Basic Competency, the adjusting entries are precisely prepared. Associated elements: 1. The correct rate is used for the translation of cash and accounts receivable. (Performance Measurement and Reporting) 2. The correct rate is used for the translation of the one-time US sale. (Performance Measurement and Reporting) 3. The correct rate is used for the translation of the other US sales. (Performance Measurement and Reporting) 4. The appropriate journal entry is prepared to adjust the US sales. (Performance Measurement and Reporting) 5. The explanation of the adjustment of the US sales is written at an appropriate level for Aubrey. (Communication Audience) 6. The present value of the debt portion of the preferred shares is correctly calculated. (Performance Measurement and Reporting) 7. The appropriate journal entry is prepared to re-classify the debt and equity portions of the preferred shares. (Performance Measurement and Reporting) 8. Interest on the preferred share liability is calculated, using the effective rate of 7%. (Performance Measurement and Reporting) 9. The appropriate journal entry is prepared to re-classify the dividends as interest, with the difference being credited to the liability. (Performance Measurement and Reporting) 10. The response indicates that, because the shares are redeemable at the option of the holder, they are debt-like in substance. (Performance Measurement and Reporting) 11. The response indicates that the fixed and cumulative dividends are debt-like in substance. (Performance Measurement and Reporting) 12. The response identifies that the shares pay dividends and are convertible into another equity instrument (common shares), which indicates equity. (Performance Measurement and Reporting) 13. The response explains the need to accrete the value of the debt, to bring it up to the face value of the shares over time. (Performance Measurement and Reporting) 14. In preparation for the audit, the explanation of the accounting treatment for the preferred shares is written in a professional tone. (Communication Audience) Issue #2 The adjusting entries for the equity investment in Baby are prepared and appropriately analyzed, in the context of completing the 2012 consolidated financial statements. Competencies: Performance Measurement and Reporting, Communication, Critical Thinking Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction Overall, there are excessive errors in the adjusting entries and/or the analysis of the accounting treatment. The adjusting entries are reasonably attempted or the method of accounting is reasonably discussed. The adjusting entries are reasonably prepared and the equity method is recommended, with support. In preparation for the audit, the accounting treatment is explained at an appropriate level. Page 24 of 29 In addition to Basic Competency, the adjusting entries are prepared precisely and the analysis is in very good depth.

7 Associated elements: 1. The amortization of fair value differential on Baby s land is appropriately calculated. (Performance Measurement and Reporting) 2. The amortization of fair value differential on Baby s inventory is appropriately calculated. (Performance Measurement and Reporting) 3. Deferred tax is appropriately included in the amortization of fair value differentials. (Performance Measurement and Reporting) 4. The current-year equity pick-up is appropriately calculated. (Performance Measurement and Reporting) 5. The appropriate journal entry is prepared for the current year equity pick-up. (Performance Measurement and Reporting) 6. Dividends received from Baby are appropriately adjusted for. (Performance Measurement and Reporting) 7. The response indicates that, due to less than 20% ownership, other factors must be considered to determine whether the equity method should still be used. (Performance Measurement and Reporting) 8. The response discusses the fact that 19% owned is close to 20% ownership. (Performance Measurement and Reporting) 9. The response discusses the extent of board representation. (Performance Measurement and Reporting) 10. The response discusses the fact that Cribs provides management services. (Performance Measurement and Reporting) 11. The response discusses expected future inventory purchases of 45%, which is significant. (Performance Measurement and Reporting) 12. The response concludes that the equity method of accounting should be used. (Critical Thinking) 13. In preparation for the audit, the explanation is written in a professional tone. (Communication Audience) Issue #3 Crib s consolidated net income is calculated for the June 30, 2012, year-end. Competencies: Performance Measurement and Reporting, Critical Thinking Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction Overall, there are excessive errors in the calculation of consolidated net income. The calculation of consolidated net income is reasonably attempted and may include minor errors and/or some omissions. The calculation of consolidated net income is reasonably prepared. The calculation of consolidated net income is precisely prepared. Associated elements: 1. As a basis for determining the consolidated net income attributable to NCI, Seat s adjusted net income is appropriately calculated. (Critical Thinking) 2. The current-year amortization of the equipment fair value differential is included in the calculation of consolidated net income. (Performance Measurement and Reporting) 3. The current-year amortization of the inventory fair value differential is included in the calculation of consolidated net income. (Performance Measurement and Reporting) 4. The intercompany profit in ending inventory is appropriately calculated. (Performance Measurement and Reporting) 5. The intercompany profit in ending inventory is appropriately included in the calculation of consolidated net income. (Performance Measurement and Reporting) 6. Deferred taxes are considered in the calculation of consolidated net income. (Performance Measurement and Reporting) 7. Consolidated net income attributable to NCI is appropriately calculated. (Performance Measurement and Reporting) 8. Consolidated net income attributable to NCI is removed in the calculation of Crib s consolidated net income. (Performance Measurement and Reporting) 9. Cribs income for the year is included in consolidated net income. (Performance Measurement and Reporting) 10. The impact of the adjustment for preferred shares is included in the calculation of consolidated net income. (Critical Thinking) 11. The equity income from Baby is included in the calculation of consolidated net income. (Critical Thinking) 12. The dividends from Baby are deducted in the calculation of consolidated net income. (Critical Thinking) Page 25 of 29

8 Issue #4 Variance analysis is performed to determine the reason for the declining profitability of the Safety Pro line. Competencies: Management Decision-Making, Communication, Critical Thinking Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction Overall, there is a lack of depth or technical accuracy in the Safety Pro line variance calculations or explanations. Some variances are reasonably calculated and/or some potential causes of the variances are identified. Most variances are reasonably calculated and some potential causes of the variances are discussed, at an appropriate level for Aubrey. In addition to Basic Competency, the discussion of reasons for the variances is in very good depth. The relationship between the sales volume variances and the materials price variances is explored. Associated elements: 1. The response correctly calculates the sales price variance, and concludes it is unfavourable. (Management Decision- Making 2. The response correctly calculates the sales volume variance, and concludes it is favourable. (Management Decision- Making) 3. The response discusses how the sales price, and/or volume, variances are calculated, and interprets the results. (Management Decision-Making) 4. The response correctly calculates the materials price variance, and concludes it is unfavourable. (Management Decision- Making) 5. The response correctly calculates the materials efficiency variance, and concludes it is favourable. (Management Decision-Making) 6. The response discusses how the materials price, and/or efficiency, variances are calculated, and interprets the results. (Management Decision-Making) 7. The response summarizes the total variance. (Critical Thinking) 8. The response addresses how competitors supply and pricing impacted the sales price variance. (Critical Thinking) 9. The response considers the possible link between the sales price variance and sales volume variance. (Critical Thinking) 10. The response addresses how the change in suppliers impacted the materials price, and/or efficiency, variances. (Critical Thinking) 11. The response considers the possible link between the materials price variance and sales volume variance (product quality). (Critical Thinking) 12. The response includes an overall conclusion, supported by analysis, and provides valid recommendations for how Aubrey can address the profitability issues. (Critical Thinking) 13. The calculations and explanations for the variances are discussed at an appropriate level and tone for Aubrey. (Communication Audience) Issue #5 The response demonstrates basic professional communication skills. Competency: Communication Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction The response is difficult to understand due to errors, poor formatting, and/or lack of organization OR the overall tone is inappropriate or unacceptable. The response is generally easy to understand; however, some sections are confusing or contain errors that interfere with readability OR the tone is too casual or familiar. The response is easy to follow and understand and is logically organized; while some errors are present, they do not interfere with readability. The response conveys confidence. The response is exceptionally clear and concise and very well organized, with formatting that enhances readability. The tone of the response is extremely professional, conveying confidence, objectivity, and integrity. Page 26 of 29

9 Associated elements: 1. The response is sufficiently readable in terms of spelling, grammar, punctuation, and acronyms/abbreviations. (Communication Spelling, Grammar, Punctuation, and Word Usage) 2. The response is logically organized and uses appropriate sentences and paragraphs. (Communication Sentences, Paragraphs, and Organization) 3. The response is formatted well. (Communication Formatting) 4. The calculations are formatted well. (Communication Formatting) 5. The response is generally professional in tone. (Communication Tone) Page 27 of 29

10 Simulation 2 (60 minutes) Westcoast Bicycles (Westcoast) is a Canadian-controlled private corporation located in Vancouver, British Columbia. The company retails a wide range of products and services related to bicycles. It currently has one location, with a service department and a strong customer base in the Vancouver area. The product lines range from economical to professional racing bicycles. Wald Esrauschen is the sole owner of Westcoast. It is now January 10, 2012, and you are the assistant controller of Westcoast. You have been called into a meeting with Wald and Olivia Smith, CA, Westcoast s controller. Olivia: Wald: Assistant Controller, I have completed the draft financial statements for our recent year-end of December 31, The tax return still has to be done. I would like you to complete it and prepare any related adjusting journal entries. To help you get started, I have compiled the income statement (Exhibit I), and other information you will need (Exhibit II). Hello, Assistant Controller. Our current building does not have space to allow us to expand operations. The demand for bicycles continues to grow, due to increasing environmental awareness and the recent addition of bike lanes by the City of Vancouver. My strategic goal is to maximize profits through planned expansion and cost minimization. We have been planning to sell our building in three years' time and to then purchase a newer building. However, a local realtor and fellow biking enthusiast has just approached me, as he has a client who is interested in purchasing our building. The realtor has located a building we can lease for the intervening three years. It is some distance away, but is much more modern and attractive. Here are the details (Exhibit III). Please let me know if this plan will achieve my strategic goals, and whether there are any other factors I need to consider. Required: Prepare the information requested by Wald and Olivia. Ignore GST, PST, and HST. Page 28 of 29

11 Exhibit I Westcoast Bicycles Ltd. Income Statement December 31, (Unaudited) Revenue $ 7,600,000 Cost of sales 5,750,000 Gross margin 1,850,000 Expenses Salaries 625,000 Amortization 150,250 Advertising 140,000 Office expense 124,000 Automobile & travel 90,000 Insurance 60,000 Interest & bank charges 40,000 Bad debts 32,000 Legal & accounting 5,000 Other income (13,000) 1,253,250 Net income before taxes 596,750 Income tax provision 90,000 Net income 506,750 Opening retained earnings 1,172,550 Dividends (10,000) Closing retained earnings $ 1,669,300 Page 29 of 29

12 Exhibit II Westcoast Bicycles Ltd. Tax Information (Prepared by Olivia Smith, CA) You will need the following information to complete the corporate tax return. The $90,000 income tax provision consists of installments paid during the year. Of the $10,000 of dividends declared, $7,500 was paid during the year. Included in Other Income is a mark to market increase in the value of temporary investments of $6,100. Two years ago, we incurred debt issue costs of $6,000. The debt issue costs were fully expensed for accounting purposes in the year incurred. UCC balances at the beginning of the year were as follows: Class 1 434,000 (Purchased in 2006) Class 8 176,000 Class ,000 Class Advertising includes: $10,000 spent on meals; $800 spent on Vancouver Giants tickets; and $2,000 spent on golf club membership fees. Wald uses the golf course 60% of the time to entertain clients. All of these expenses were incurred to entertain potential clients. We sold some marketable securities during the year (Robuste Ltd. shares). The accounting gain of $8,000 was included in Other Income. The selling price was $24,000 and the original cost was $20,000. We bought a new car for Wald in 2011, at a cost of $42,000. Wald's old car was sold for $20,000. It had a net book value of $22,000. Other capital asset additions for the year are: $29,120 for new office furniture; $1,480 for applications software; and $9,000 for computer hardware purchased in January All accounting gains and losses on the disposal of capital assets are recorded in Other Income. Dividend income received on temporary investments of $900 from unconnected companies was included in Other Income. Westcoast is not associated with any other companies. Other information: the small business deduction rate is 17%; federal tax rate is 38%; provincial low rate is 2.5% and the high rate is 11%; general rate reduction is 11.5%; additional refundable tax is 6 2/3%; the opening RDTOH balance is $28,000; and the opening CDA balance is nil. Page 30 of 29

13 Exhibit III Westcoast Bicycles Ltd. Sale and Lease Information (Prepared by Wald Esrauschen, owner) The purchaser is willing to pay a total of $1,120,000 for the property. The relative fair values of the land and building are $500,000 and $620,000 respectively. The original costs of the land and building were $320,000 and $690,000 respectively. This is the only Class 1 asset we own. The new building is close to a store that sells winter gear. This will nicely complement our fall and winter bicycle sales. The proposed property is also much larger than our current building, so we will finally be able to install specialized equipment to better service our customers. Our current facilities only allow two bicycles to have a complete drivetrain tuneup at the same time, and customers have been getting frustrated by lengthy wait times for their tune-ups. The realtor will charge a 3% commission on the sale of our current building. The annual lease payments would be $152,000, paid at the beginning of each year. For the purposes of this analysis, use a 25% tax rate and a 13% rate of return. If we keep our existing property, I estimate values of $560,000 and $590,000 for the land and building respectively at the end of three years. I also anticipate that the commission rate will remain unchanged. Page 31 of 29

14 EVALUATION GUIDE - WESTCOAST Issue #1 The corporate tax return is prepared, including the determination of corporate taxes payable, dividend refund, and RDTOH. Competencies: Taxation, Performance Measurement and Reporting Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction The calculation of corporate taxes payable is omitted or contains several errors and omissions. A calculation of corporate taxes payable is attempted, but contains some errors and/or omissions. Corporate taxes payable, including the dividend refund or RDTOH, are reasonably calculated; a reasonable entry is prepared to record the current tax provision. In addition to Basic Competency, the calculations are precise, including the dividend refund and RDTOH. Associated elements: 1. The increase in temporary securities on mark to market is appropriately adjusted for. (Taxation) 2. The golf club dues and non-deductible meals and entertainment expenses are appropriately adjusted for. (Taxation) 3. The accounting gain and taxable gain on Robuste shares are appropriately adjusted for. (Taxation) 4. The loss on the sale of Wald's car OR the debt issue costs are appropriately adjusted for. (Taxation) 5. CCA is reasonably calculated, using correct classes and rates. (Taxation) 6. CCA is precisely calculated, using correct classes and rates. (Taxation) 7. Dividends from taxable Canadian corporations are deducted from net income for tax purposes, to determine taxable income. (Taxation) 8. Active business income (ABI) is determined as taxable income, less the taxable capital gain. (Taxation) 9. ABI is appropriately taxed, including incorporation of the small business deduction. (Taxation) 10. Aggregate investment income (AII) is appropriately determined and taxed. (Taxation) 11. Part IV tax payable is determined as one-third of the dividends on the public company shares. (Taxation) 12. Additional Part I tax is determined as 26 2/3% of aggregate investment income included in taxable income. (Taxation) 13. The balance in the RDTOH account before the dividend refund is determined as opening RDTOH, plus additional Part I tax, plus Part IV tax. (Taxation) 14. In determining tax payable, the dividend refund is determined and deducted. (Taxation) 15. Provincial taxes are calculated using the high and low rates. (Taxation) 16. Calculated tax payable is compared to income tax provision from the draft income statement, to determine the adjustment required to income tax payable. (Performance Measurement and Reporting) 17. A journal entry to adjust taxes payable is prepared, and includes adjustments to each of income tax expense, retained earnings, and income taxes payable. (Performance Measurement and Reporting) Issue #2 The sale and lease of a building is evaluated both quantitatively and qualitatively. Competencies: Finance, Critical Thinking, Communication, Governance, Strategy and Risk Management Competency Not Achieved Marginal Competency Basic Competency Competency With Distinction The calculations are omitted or contain significant errors and/or omissions. Either a reasonable calculation is prepared OR a calculation and qualitative analysis are both attempted in some depth. The recommendation provided is based on a reasonable quantitative and qualitative analysis, and is communicated at an appropriate level for Wald, the owner. In addition to Basic Competency, the calculation is precise and the qualitative discussion is in very good depth. Associated elements: 1. The sale proceeds of the current building and land are included in the correct year. (Finance) 2. Commission on the sale is deducted in the current year. (Finance) Page 32 of 29

15 3. Lease payments for land and building are included at the beginning of each year. (Finance) 4. Tax paid on the capital gain on the land is calculated and included in the correct year. (Finance) 5. Recapture of the building is calculated and included in the correct year. (Finance) 6. Tax savings on lease payments are calculated and included in the correct years. (Finance) 7. Tax savings lost on CCA are calculated and included in the correct years. (Finance) 8. The amount not received for sale of land and building after three years is included in the correct year. (Finance) 9. Tax saved on recapture at the end of Year 3 is calculated. (Finance) 10. Tax saved on capital gain on the land at the end of three years is calculated and included in the correct year. (Finance) 11. The calculation is present-valued. (Finance) 12. A conclusion is provided as to whether the transaction has a positive net present value. (Critical Thinking) 13. At least one qualitative factor supporting the transaction is discussed. (Governance, Strategy and Risk Management) 14. At least one qualitative factor against the transaction is discussed. (Governance, Strategy and Risk Management) 15. The discussion of qualitative factors is in reasonable depth. (Critical Thinking) 16. A supported conclusion is provided. (Critical Thinking) 17. The student communicates the results at a level appropriate for Wald, the owner. (Communication Audience) Page 33 of 29

16 Table 1 PRESENT VALUE OF $1 RECEIVED AT THE END OF THE YEAR Years Hence 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% Table 2 PRESENT VALUE OF AN ANNUITY OF $1 RECEIVED AT THE END OF EACH YEAR No. of Years Rec'd 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% Page 34 of 29

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