wo equal partners pitch Kevin O'Leary a $100,000 investment for 10%. Kevin counters with an offer of $250,000 for 30%. Jim Treliving jumps in and offers $200,000 for 15% Which deal is likely to happen? Why? How much will each co-founder own if a deal gets done. (Show all calculations and pizza pie diagrams you use) A year after that deal, they accept an additional offer of $2,000,000 for 50%. What % does each founder own after this deal. How much is that equity now worth? (Show all calculations and pizza pie diagrams you use)
In: Finance
Two equal partners pitch Kevin O'Leary a $100,000 investment for 10%. Kevin counters with an offer of $250,000 for 30%. Jim Treliving jumps in and offers $200,000 for 15% Which deal is likely to happen? Why? How much will each co founder own if a deal gets done. (Show all calculations and pizza pie diagrams you use)
A year after that deal, they accept an additional offer of $2,000,000 for 50%. What % does each founder own after this deal. How much is that equity now worth? (Show all calculations and pizza pie diagrams you use)
In: Accounting
Suppose you are a manager of an activist hedge fund named “The Lone Wolf Financials”. On 1 June 2020, you want to assess the corporate governance of Woolworths Group (ASX ticker: WOW) and whether it is an attractive shareholder activism target. Specifically, your analysis should address the followings
Analyse WOW’s (Woolworths) corporate governance by answering the following questions:
How does WOW’s accounting and stock performance over the past 5 years compared to its peers
Does WOW’s CEO have sufficient performance-based pay?
How easy it is to replace WOW’s current board members?
In: Accounting
Brooke, a single taxpayer, works for Company A for all of 2020, earning a salary of $50,000.
b. Assume Brooke works for Company A for half of 2020, earning $50,000 in salary, and she works for Company B for the second half of 2020, earning $90,000 in salary. What is Brooke’s FICA tax obligation for the year? (Round your intermediate calculations to the nearest whole dollar amount.)
FICA Tax Obligation ______________________
In: Accounting
Brooke, a single taxpayer, works for Company A for all of 2020, earning a salary of $50,000.
b. Assume Brooke works for Company A for half of 2020, earning $50,000 in salary, and she works for Company B for the second half of 2020, earning $90,000 in salary. What is Brooke’s FICA tax obligation for the year? (Round your intermediate calculations to the nearest whole dollar amount.)
FICA Tax Obligation ______________________
In: Accounting
| SHOW ALL WORK ON HOW ANSWER WAS ACQUIRED | |
On July 1, 2020, Crane Inc. made two sales.
| 1. | It sold land having a fair value of $915,830 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,441,072. The land is carried on Crane's books at a cost of $597,600. | |
| 2. | It rendered services in exchange for a 3%, 8-year promissory note having a face value of $402,550 (interest payable annually). |
Crane Inc. recently had to pay 8% interest for money that it
borrowed from British National Bank. The customers in these two
transactions have credit ratings that require them to borrow money
at 12% interest.
Record the two journal entries that should be recorded by Crane
Inc. for the sales transactions above that took place on July 1,
2020. (Round present value factor calculations to 5
decimal places, e.g. 1.25124 and final answers to 0 decimal places,
e.g. 5,275. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Credit account titles
are automatically indented when the amount is entered. Do not
indent manually.)
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
1. |
July 1, 2020 |
enter an account title | enter a debit amount | enter a credit amount |
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount | enter a credit amount | ||
|
2. |
July 1, 2020 |
enter an account title | enter a debit amount | enter a credit amount |
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount |
enter a credit amount |
In: Accounting
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In: Accounting
Equity Method and Eliminating Entries, First Year
On January 1, 2020, Playtel Inc. acquired all of the stock of San Jose Cable for $250 million in cash. At the date of acquisition, Playtel’s shareholders’ equity accounts were as follows (in thousands):
| Common stock, $1 par | $5,000 |
| Additional paid-in capital | 25,000 |
| Retained deficit | (1,000) |
| Treasury stock | (800) |
| Total | $28,200 |
Both companies have a December 31 year-end. At the date of acquisition, San Jose’s reported net assets had book values approximating fair value. However, it had previously unreported indefinite-life identifiable intangibles valued at $50 million, meeting ASC Topic 805 requirements for capitalization. Impairment losses in 2020 for identifiable intangibles were $1 million. Goodwill from this acquisition was not impaired in 2020. San Jose reported net income of $4 million in 2020, and paid no dividends. Playtel uses the complete equity method to report its investment in San Jose on its own books.
Required
a. Calculate the original amount of goodwill for this acquisiton.
$Answer (in thousands)
b. Calculate equity in net income of San Jose, reported on Playtel’s books in 2020.
$Answer (in thousands)
c. Prepare eliminating entries (C), (E), (R) and (O), required to consolidate Playtel’s trial balance accounts with those of San Jose on December 31, 2020.
Enter numerical answers in thousands.
| Ref. | Description | Debit | Credit | |
|---|---|---|---|---|
| (C) | AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit | Answer | Answer | |
| AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit | Answer | Answer | ||
| (E) | Common stock, $1 par | Answer | Answer | |
| AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit | Answer | Answer | ||
|
AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit |
Answer | Answer | ||
|
Treasury stock |
Answer | Answer | ||
|
Investment in San Jose |
Answer | Answer | ||
| (R) | Identifiable intangibles | Answer | Answer | |
| AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit | Answer | Answer | ||
|
AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit |
Answer | Answer | ||
| (O) | AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit | Answer | Answer | |
|
AnswerAdditional paid-in capitalEquity in net income of San JoseGoodwillIdentifiable intangiblesImpairment lossesInvestment in San JoseRetained deficit |
Answer | Answer | ||
In: Accounting
During the year ended 30 June 2020, Starhub Ltd acquired the following investments in shares issued by other companies:
|
M3 Ltd |
$480 000 (42% of issued capital) |
|
Republic Ltd |
$680 000 (35% of issued capital) |
Starhub Ltd is unsure how to account for these investments and asked you for some professional advice.
Specifically, Starhub Ltd is concerned that it may need to prepare consolidated financial statements under AASB 10. The company provided the following information about the two investee companies:
M3 Ltd
The remaining shares in M3 Ltd are owned by:
o two sisters who hold 10% of shares respectively and
o a diverse group of investors who each hold a small parcel of
shares.
Historically, only a small number of the shareholders attend the general meetings or question the actions of the directors.
Starhub Ltd has nominated three new directors and expects that they will be appointed at the next annual general meeting. The current board of directors has five members, out of which three are retiring at the next annual general meeting.
Republic Ltd
The remaining shares in Republic Ltd are owned by:
o M3 Ltd which owns 20% of the shares,
o Pontes Ltd which owns 20% of the shares and
o a diverse group of investors who each own a small parcel of
shares.
The shareholders take a keen interest in the running of the company and attend all meetings.
Two of the other shareholders, including M3 Ltd, already have representatives on the board of directors who have indicated their intention of nominating for re-election.
QUESTION:
Advise Starhub Ltd as to whether, under AASB 10, it controls M3 Ltd and/or Republic Ltd. Support your conclusion.
In: Accounting
The MBA decision: Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an inves\tment banker. He feels that an MBA degree would allow him to achieve his goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its student to work while enrolled in its MBA program. Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $70,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 37 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 28 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $65,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expected that after graduation from Wilton, he will receive a job offer for about $100,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4% per year. Because of the higher salary, his average income tax rate will increase to 32 percent. The Bradley School of Business at Mount Perry College began its MBA 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated, oneyear program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $3,000. Ben thinks that he will receive an offer of $85,000 per year upon graduation, with a $10,000 signing bonus. The salary at this job will increase at 3.5 percent. His average tax rate at this level of income will be 30 percent. Both schools offer a health insurance plan that will cost $2,500 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $15,000 per year at either school. The appropriate discount rate is 6 percent.
Assuming all salaries are paid at the end of each year, what is the best option for Ben – from a strictly financial standpoint?
In: Finance