XXX Corporation acquired 80% of the outstanding shares of United Company on June 1, 2020 for P3,517,500. United Company’s stockholders equity components at the end of this year as follows: Ordinary shares, P100 par, P1,500,000, Share premium P675,000 and Retained earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of united were fairly valued, except for inventories, which are overstated by P66,000 and equipment which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of XXX on January 1, 2020 is composed of ordinary shares P4,500,000, Share Premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end. Net income for the first year of parent is P450,000 and the net income of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and P90,000 for XXX and United respectively. During the year, there was no issuance of new ordinary shares .

What is the amount of consolidated shareholder’s equity and the non-controlling interest on December 31, 2020?

Case Study 1 Quick Biotech It is late in September 2010, and Michelle Chang, a doctoral student at the National University of Singapore (NUS), is to meet her colleagues Henry Tan and Mike Hammer from the Institute of Molecular Biology again in a few days to discuss the course of action to be pursued for the establishment of Quick Biotech. Henry Tan and Mike Hammer both hold doctorates in biology and work at NUS as senior assistants. A few months before, they patented a process for the production of multi protein complexes, which they had already put to successful use, and about which they had received favourable feedback. Now, the three colleagues want to set-up a company called Quick Biotech in order to apply the new technology to a wider field. Background The human body is exposed to numerous external influences and internal genetic defects, which cause the proteins in our cells to malfunction. Proteins constitute the basis of all biological processes. If proteins no longer fulfill their function adequately owing to defects, this often results in life-threatening illnesses, such as cancer. This is why almost all drugs have effect on proteins. Consequently, most research and development work for drugs and therapies need protein, which is why both academic research institutions and the pharmaceutical companies use proteins as a basis to their research activities. Recently, progress in fundamental research revealed the total of the proteins in a cell, which in the case of human being amounts to more than 40,000 proteins. It became obvious that the proteins in a cell do not work individually; rather, they combine to act as protein complexes that are made up of numerous protein components. In addition, virtually all biological processes in cells are executed by such protein complexes. This has crucial consequences for research; in order to understand how proteins work, protein machines must be explored as a whole, and not only their individual protein components. Nonetheless, academic institutes and the pharmaceutical industry have almost exclusively focused on individual, isolated proteins. The primary reason for this was that human protein machines are very difficult to produce in a pure form. Although the development of modern, recombinant methods now enables the production of individual protein components, there is still a demand for a technology that is able to provide sufficient volumes of entire protein machine, which form the basis of biological functions. This is also Michelle’s, Henry’s and Mike’s experience in their research at NUS. They realize that no suitable technology for the production of protein machines exists. This is why they developed their own technology: the MultiBac technology. The technology The MultiBac technology uses a modified, yet greatly improved version of the so called “baculovirus gene transfer vector” to produce any combination of proteins in great volumes and of high quality. The genes of a great number of proteins, such as human ones, can be placed on this gene transfer vector. This process can be carried out in an ordinary molecular biology laboratory. The MultiBca gene transfer vector multiplies in cell cultures and constitutes no danger to human beings. Therefore, no special health and safety regulations are required to work with this system. The gene transfer vector of the MultiBac system was developed to provide it with a unique feature namely, that is particularly careful in the production of the desired protein machines. For customers, this is a guarantee of the unsurpassed quality of the protein complex produced with the MultiBac technology. In comparison with conventional processes, the simplified MultiBac technology additionally saves a substantial amount of time for the production of the desired protein product: it only takes weeks rather than months. Also, the technology offers the possibility to build numerous different protein complexes from the same protein components on a modular basis and, thus, of supplying individual solution to customers’ problems. Laboratories of renowned research institutes already use MultiBac, which NUS has made available as trial specimens. This shows that the technology works, is mature and has a selling potential. The process was patented last year by NUS, and since then it was developed in the context of employment at the university. However, the rights can be assigned to a start up, for instance, in the form of an exclusive license. The next steps to launch the venture In autumn 2010, Michelle is in the final stages of her doctoral thesis, which she wants to complete by the year. After that, she needs to work full time for the new company. In contrast, Henry and Mike want to retain their jobs at NUS and spend less time on the company. As such, they would not be involved in the company’s operative daily business but will assume an advisory function. They will receive shares in the start-up but will not be on the company payroll. One of the key roles of Henry and Mike will be to guarantee long term access to the latest findings in scientific research. This model, whereby some of the founders remain at the university, has already proved successful in a number of other biotechnology start ups. Research in the field of biotechnology is very costly; both in terms of time and money, so only by retaining close links with a research institution will the company ensure that it will always work with the latest technologies and, thus, remain competitive. One of the greatest challenges currently perceived by the team is to secure funding for the new company. Although the founders are able to invest S$200, 000 of their personal savings into the enterprise and, thus, realize a small scale start up, present plans are based on the assumption that at least S$500 000 of external capital will be needed for the first two years. These funds will primarily serve to finance Michelle’s position and a small team of lab assistants in charge of producing the protein complex for the clients. The product will be sold via a network of sales agents, and other functions, such as accounting and finance, will be outsourced to a professional accountant.

Answer all questions. 1. Should Michelle consider debt or equity to finance QuickBiotech? Explain your answer.

2. Would you consider any alternative sources or finance? Which one? Why?

3. Analyse other issues to be addressed before QuickBiotech is launched.

Little Deer Industries gathered the following year-end data (in thousands) for 2010 and 2009:

The gross margin percentage for 2010 was:

A) 35.0%

B) 45.1%

C) 49.7%

D) 52.3%

Assume that a typical consumer's basket consists of 10 lbs of beef and 20 lbs of chicken. also assume that 2011 is used as the base year in the CPI calculation. Use the data below to answer the following two questions.

       a. Calculate the CPI in years 2010, 2011, and 2012

       b. Calculate the inflation rate between 2010 and 2011 and between 2011 and 2012.

From the December 31, 2019 balance sheet:

Convertible Preferred Stock, 6% cumulative, $100 par value, 100,000 shares authorized, 50,000 shares issued and outstanding. Dividends to preferred shareholders have been declared on schedule. Each preferred share is convertible to 4 shares of common stock (already adjusted for the 5% stock dividend).

Common Stock, $1 par, 10,000,000 shares authorized, 2,400,000 shares issued and outstanding.

Convertible bonds payable, 6% interest rate, $7,000,000 balance at December 31, 2018, issued at a discount on March 15, 2014. Each of the $1,000 bonds is convertible into 10 shares of common stock (already adjusted for the 5% stock dividend).

compute the Weighted Average Number of Common Shares for WDW Enterprises’ 2020 BASIC EARNINGS PER share

Compute Earnings Available to Common Shareholders for WDW Enterprises’ 2020 BASIC EARNINGS PER SHARE

Compute basic EPS

Determine WDW Enterprises’ 2020 DILUTED EARNINGS PER SHARE. Show computations that determine if any potentially dilutive security is dilutive or antidilutive.  

Computations for Convertible Preferred Stock (Incremental)

Computations for Convertible Bonds Payable (Incremental)

Computations for Stock Options (Incremental)

Weighted Average Number of Common Shares for WDW Enterprises’ 2020 DILUTED EARNINGS PER SHARE?

Earnings Available to Common Shareholders for WDW Enterprises’ 2020 DILUTED EARNINGS PER SHARE?

Compute diluted EPS

The working assumption in the company is that customers spend on average $300 on the company's services. Recently, you started to suspect that things maybe not going to well and that your customers are not spending as much as they did. Set the null and alternative hypotheses that would reflect your concern and then test them at the 5% level of significance using the data in the After_Class_Assignment_Data Excel file.

You are provided with the following information on four stocks. Assume that the base year is Dec 2010 and all splits take place on this date. That is after close of trading on December 31, 2010. Stock A and B have a 2 for 1 split at the end of trading on December 31, 2010. Use this information to answer the questions listed below.

1. Calculate the rate of return on a price weighted average of the four stocks for the period December 31, 2010 to December 31, 2011. Remember to adjust for changes in the divisor.
2. Calculate the rate of return on a market value weighted index of the four stocks for the period December 31, 2010 to December 31, 2011.
3. Calculate the rate of return on an equally weighted index of the four stocks for the period December 31, 2010 to December 31,2011.

AIM Inc. showed the following equity account balances on the December 31, 2019, balance sheet:

During 2020, the following selected transactions occurred:

Required:
a. Journalize the transactions above (assuming the retirements were the first ever recorded by AIM Inc.). The company does not use a share dividends account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare the equity section on the December 31, 2020, balance sheet.

AIM Inc. showed the following equity account balances on the December 31, 2019, balance sheet:

During 2020, the following selected transactions occurred:

Required:
a. Journalize the transactions above (assuming the retirements were the first ever recorded by AIM Inc.). The company does not use a share dividends account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare the equity section on the December 31, 2020, balance sheet.

What is the relationship between national saving and investment in a closed economy? Start by explaining what is a closed economy.