Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:

Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).

Treasury stock, common, 20,000 shares, acquired on November 30, 2019 …...

$

280,000

Additional paid-in-capital ....................................................................................

760,000

Common stock, $10 stated value, issued January 2, 2019

(current market value, $17 per share) ..................................................................

1,200,000

Preferred stock, 10%, $8 par value, convertible into 146,000 common

shares no earlier than 2020, issued at par value on July 1, 2020

(current market value, $8 per share) ....................................................................

1,660,000

Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the

discretion of the warrant-holders, but not earlier than 2022. A

hypothetical conversion of the warrants at December 31, 2020 would

require a $14,000 cash payment from the warrant-holders, which would

be sufficient for Edwards & Everett to acquire 300 shares of its own

common stock (as treasury stock)........................................................................

20,000

Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.

What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.

FINANCIAL ACCOUNTING II

Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:

Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).

Treasury stock, common, 20,000 shares, acquired on November 30, 2019 ...... $280,000

Additional paid-in-capital........................................................................................760,000

Common stock, $10 stated value, issued January 2, 2019 (current market value, $17 per share) ................................................................ 1,200,000

Preferred stock, 10%, $8 par value, convertible into 146,000 commonshares no earlier than 2020, issued at par value on July 1, 2020 (current market value, $8 per share) ...................................................................1,660,000

Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the discretion of the warrant-holders, but not earlier than 2022. A hypothetical conversion of the warrants at December 31, 2020 would require a $14,000 cash payment from the warrant-holders, which would be sufficient for Edwards & Everett to acquire 300 shares of its own common stock (as treasury stock)........................................................................ 20,000

Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.

What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.

The Concord Company counted physically their beginning balance on January 02, 2020 and subsequent inventory purchases made by the company during the month of January 2020 are given below:

Date Description Units   Rate

Jan. 02 Beginning Inventory 300 $10

Jan. 11 Purchased 600 12   

Jan 23 Purchased 700 11

The company sold 1,300 units during the month of January 2020.

Instructions: The company uses periodic inventory system. Compute the cost of goods sold and ending inventory on January 31, 2020 using the following inventory costing methods:

a)    First in, first out (FIFO) method.

b) Weighted Average cost method.

It’s not unusual for one company to buy another company in order to obtain technology that the acquired company has developed or is in the process of developing.

Required:

Explain the accounting treatment of purchased technology.

Imagine that you are the CEO of a wind power company, and you operate under the theory of sustainability. You have been asked to give a presentation to your management team about the advantages of environmental leadership. How will you explain these motivations in the context of your company and your philosophy?

The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2021, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2020, in exchange for various considerations totaling $330,000. At the acquisition date, the fair value of the noncontrolling interest was $220,000 and Keller’s book value was $430,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $120,000. This intangible asset is being amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller.

Gibson sold Keller land with a book value of $55,000 on January 2, 2020, for $110,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $110,500 to Gibson at a price of $170,000. During 2021, intra-entity shipments totaled $220,000, although the original cost to Keller was only $132,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Gibson owes Keller $40,000 at the end of 2021.

(Note: Parentheses indicate a credit balance.)

1. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller.

2. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a $70,000 book value (cost of $160,000) to Keller for $120,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.

I need a annual shareholder letter 800-1000 words as a CEO in response to the COVID-19 crisis and how my company (a made up business) will handle business in this new reality.

On 1 July 2018, Parent Ltd acquired all the shares of Son Ltd, on a cum-div. basis, for $2,057,000. At this date, the equity of Son Ltd consisted of:

Share capital – 500 000 shares: $ 1,000,000

Retained earnings: 500,000

Son Ltd also reported a dividend payable of $100,000 and a recorded goodwill of $50, 000 at the acquisition date. The dividend payable was subsequently paid in September 2018.

At the acquisition date, all the identifiable assets and liabilities of Son Ltd were recorded at amounts equal to fair value except for the following:

Of the inventory on hand in Son Ltd at 1 July 2018, 60 percent was sold in August 2018 and the remainder was sold in June 2019. It was estimated that the plant has a further 5-year life with zero residual value.

Son Ltd was involved in a court case that could potentially result in the company paying damages to customers. At the acquisition date, Parent Ltd calculated the fair value of this liability to be $50,000, even though Son Ltd had not recorded any provision for damages (liability). On 29 June 2020 Son Ltd reassessed the liability in relation to the court case as the chance of winning the case had improved. The fair value on 29 June 2020 was considered to be $30,000.

The company applies the partial goodwill method. The income tax rate is 30%.

During the period 1 July 2018 to 30 June 2020, the following intragroup transactions have occurred between Parent Ltd and Son Ltd:

(T1) On 1 January 2019, Parent Ltd acquired furniture for $100,000 from Son Ltd. The furniture had originally cost Son Ltd $150,000 and had a carrying amount at the time of sale of $80,000. The sale was made on credit. At 30 June 2019, $60,000 was outstanding. At 30 June 2020, $20,000 was still not paid and outstanding. Both entities apply depreciation on a straight-line basis. At 1 January 2019, the furniture had a further five years of useful life, with zero residual value.

(T2) On 1 March 2019, Son Ltd sold inventory costing $12,000 to Parent Ltd for $16,000. On 1 October 2019, Parent Ltd sold half of these inventory items back to Son Ltd for $6,000. Of the remaining inventory kept by Parent Ltd, half was sold in March 2020 to Dingo Ltd at a profit of $400.

The adjusting consolidation entries at 30 June 2019 for the last intragroup transaction (T2) is provided below.

Explain why the above entries are made for the intragroup transaction (T2) as at 30 June 2019, noting the adjustments to each account separately.

Sarah Allen Company was formed on December 1, 2019. The following information is available from Allen’s inventory records for Product BAP.

A physical inventory on March 31, 2020, shows 4,320 units on hand.

a. Prepare schedule to compute the ending inventory at March 31, 2020, under FIFO inventory method.

b. Prepare schedule to compute the ending inventory at March 31, 2020, under LIFO inventory method.

Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.)   

Weighted Average-Cost per Units     $________

Compute the ending inventory at March 31, 2020, under Weighted-average inventory method. (Round answer to 0 decimal places, e.g. 2,760.)

                  Weighted Average                                                   

Ending Inventory at March 31, 2020     $______________