An acquisition is a situation whereby one firm (acquiring firm) purchases most or all of another firm's (acquired firm) shares in order to take control.

From real national/international market, select an example of an acquisition between two firms and answer the following questions:

1. Briefly introduce the chosen acquiring and acquired firms (Industry, nationality, size, competitors…).

2. Was this acquisition successful? Why?

3. Evaluate the competitive advantage of the acquiring company (after the acquisition).

4. What is the method used by the acquiring firm to manage the culture of the acquired firm? underline the pros and cons of this method.

On January 1, 2020, Jens Corp. acquired 8%, $ 100,000 (face value) bonds of World Wide Ltd., to yield 9% for $95,517.20. The bonds were dated January 1, 2020, and mature on December 31, 2025, with interest payable each year on January 1. Jen intends to hold the bonds to maturity, and will use the FV–NI model and the effective-interest method of amortization of bond premium or discount. Assume that the fair market value of the bonds was equal to Jens investment’s book value in 2020, but in 2021, the fair market value of the bonds were $101,000 at the end of 2020.

Required:   (Round all answers to the nearest dollar.)

(1) Prepare an amortization schedule ‘proving’ the price that Jen paid for the bonds.

(2) Prepare the following entries in Jen's books:

a)      Acquisition of bonds on January 1, 2020,

b)      Year-end adjusting entry at December 31, 2020, and December 31, 2021.

c)      Receipt of the first interest payment on January 1, 2021.

d)      Any adjusting entry required at the end of 2020 in addition to the any journal entries recorded above.   

Testbank Multiple Choice Question 71

A company issues $25800000, 9.8%, 20-year bonds to yield 10% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $25357304. Using effective-interest amortization, how much interest expense will be recognized in 2020?

Testbank Multiple Choice Question 72

A company issues $24950000, 6.6%, 20-year bonds to yield 7% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $23884381. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2020 balance sheet? (Round answer to 0 decimal place, e.g. 52.)

The widget market is currently monopolized by Widgets R Us (or simply Widgets), but another firm (Wadgets) is deciding whether to enter that market. If Wadgets stays out of the market, Widgets will earn $100 million profit. However, if Wadgets enters, Widgets can either share the market, in which case the two companies enjoy a total $20 million in profit, or wage a ruinous price war, in which case both companies lose big and go bankrupt (call this $0 profit for concreteness). The only sane choice for Widgets is to share the market, but before Wadgets chooses whether to enter, the Widgets Board of Directors has the opportunity to hire a new CEO—and this new CEO might just be crazy enough to wage a price war!

(a) Draw the game table for this game, where the relevant players are Wadgets, which decides whether to enter the market, and the Widgets Board, which decides whether to hire a crazy CEO who will wage a price war if Wadgets enters or hire a sane CEO who will share the market if Wadgets enters. (Assume that Wadgets has no way of knowing if the newly hired Widgets CEO is crazy or sane, making this a simultaneousmove game.)

(b) In this game, the Widgets Board views Hire a Sane CEO as a _______ strategy. Fill in the blank with one of the following answers: “superdominant,” “strictly dominant (but not superdominant),” “weakly dominant (but not strictly dominant),” or “not dominant.” Explain your answer.

(c) Find all pure-strategy Nash equilibria of this game.

(d) Suppose that, in addition to wanting to maximize profits and avoid bankruptcy, the Widgets Board would prefer not to have a crazy CEO. How does this extra consideration change your answer to part (b), and how does it change the set of pure-strategy Nash equilibria relative to part (c)? Explain your answers.

Paired-samples t test and graduate admissions: Is it harder to get into graduate programs in psychology or in history? We randomly selected five institutions from among all U.S. institutions with graduate programs. The first number for each is the minimum grade point average (GPA) for applicants to the psychology doctoral program, and the second is for applicants to the history doctoral program. These GPAs were posted on the Web site of the well-known college guide company Peterson’s. Wayne State University: 3.0, 2.75 University of Iowa: 3.0, 3.0 University of Nevada, Reno: 3.0, 2.75 George Washington University: 3.0, 3.0 University of Wyoming: 3.0, 3.0

The participants are not people; explain why it is appropriate to use a paired-samples t test for this situation.

Conduct all six steps of a paired-samples t test. Be sure to label all six steps.

Calculate the effect size and explain what this adds to your analysis.

Report the statistics as you would in a journal article.

1. The proportion of basketball players who have not had a missed shot in MBA last year is 27 out of a sample of top 60 players.

                     (5 marks)

                        Hint: The standard deviation of population and the standard deviation of the sample are unknown, thus you have to use the square root of p(1-p)/n as a best estimate of the standard deviation.

1. Test the hypothesis that the population proportion of basketball players who have not had a missed shot in MBA last year is greater than 0.42 using the critical value approach and a 0.05 level of significance.

2. Test the hypothesis that the population proportion of customers who are completely satisfied is different from 0.5 using the p-value approach and a 0.05 level of significance

The CEO of Fullbrix Dana Alcar (a 20-year veteran of Supply chain business frameworks) has given all powers to the running of the company to five Senior Vice-Presidents. Fullbrix is a Satellite spare parts provider that has four key clients. The company employs 200 employees and has a management team of 27. With five Senior Vice-Presidents running the company and running it well, the Board of Directors have begun an investigation on what the CEO is doing with her time. Initial investigations found that the CEO was building a broader base to support an alternative structure than the four key clients the company serves. The alternative would be 14 other companies that provide the same revenue as the present 4 companies. The 10-member Board of Directors are 50/50 split on their decision. One group wants to fire the present CEO and replace her with one of the Senior Vice Presidents and the other wants to keep things as they are.

20. Using terms discussed in class, can Dana Alcar’s leadership qualities help her to succeed in the long run?

21. Using terms discussed in class, how do you think it would be possible to convince the 5 Board Members to stop their petition to remove the CEO?

22. What can Dana Alcar do to create a convincing case to the Board of Directors to keep her on?

Compucat is a Canadian manufacturing company that produces inexpensive personal and laptop computers. The company has been generating progressively more of its sales from foreign markets. During 2016, the company started purchasing most of its components from a supplier in Germany.

To deal with the uncertainty associated with foreign exchange fluctuations, all of Compucat's foreign currency denominated receivables and payables are hedged with contracts with the company's bank. Compucat's year-end is on December 31. The following transactions took place in 2016:

On September 1, 2016, Compucat purchased components from its German supplier for 100,000 Euros. On that date Compucat entered into a forward contract for 100,000 Euros at the 60 day forward rate of 1 Euro = CDN$1.50. The forward contract was designated as a fair value hedge of the amount payable to the German supplier. Compucat settled with the bank and paid its supplier in full on December 1, 2016.

On December 1, 2016 Compucat also shipped a batch of laptop computers to an American client for US$250,000. The invoice required that Compucat receive its payment in full by January 31, 2017. On the date of the sale, the company entered into a forward contract for US$250,000 at the two-month forward rate of US$1 = CDN$1.25. This forward contract was designated to be a fair value hedge of the amount due from the American customer.

The dates and exchange rates relevant to these transactions are shown below:

1) Prepare the 2017 Journal Entries if the company invoked fair value hedge accounting

2) What would the balance in the asset and liability accounts as at December 31, 2016?

tudents taking the Graduate Management Admissions Test (GMAT) were asked about their undergraduate major and intent to pursue their MBA as a full-time or part-time student. A summary of their responses follows. Undergraduate Major Business Engineering Other Totals Intended Enrollment Full Time 420 394 75 889 Status Part Time 400 591 44 1,035 Totals 820 985 119 1,924 Develop a joint probability table for these data (to 3 decimals). Undergraduate Major Business Engineering Other Totals Intended Enrollment Full-Time Status Part-Time Totals Use the marginal probabilities of undergraduate major (Business, Engineering, or Other) to comment on which undergraduate major produces the most potential MBA students. If a student intends to attend classes full-time in pursuit of an MBA degree, what is the probability that the student was an undergraduate Engineering major (to 3 decimals)? If a student was an undergraduate Business major, what is the probability that the student intends to attend classes full-time in pursuit of an MBA degree (to 3 decimals)? Let A denote the event that student intends to attend classes full-time in pursuit of an MBA degree, and let B denote the event that the student was an undergraduate Business major. Are events A and B independent?

XYZ Company recorded the following information related to their inventory
accounts for 2020:

                          January 1, 2020        December 31, 2020
Direct materials               31,000                   50,000
Work in process                38,000                   41,000
Finished goods                 22,000                   34,000

The following information was taken from XYZ Company's accounting records
for 2020:

Sales revenue ...........................................   $630,000
Direct materials purchased ..............................       ?
Depreciation, factory equipment .........................     34,000
Prime costs .............................................    250,000
Utilities (60% for factory; 40% for office building) ....     20,000
Sales commissions .......................................     71,000
Indirect materials ......................................       ?
Depreciation, office equipment ..........................     30,000
Rent, factory building ..................................     56,000
Net income ..............................................     10,000
Direct labor ............................................       ?
Advertising .............................................     68,000
Production supervisor's salary ..........................     74,000

Additional information:

1.  Direct labor comprised 35% of the conversion costs for 2020.

2.  The actual overhead cost for 2020 was equal to the overhead applied
    to production. Thus there was no overhead variance for 2020.

Calculate the direct materials purchased by XYZ Company in 2020.