- At a local hospital, a decision was made to downsize the nursing staff. The local television station sent a reporter and camera crew to interview the administrator regarding the impact of this action on patient care. After 20 minutes of filming the interview, the reporter left. Later that evening, the CEO received a call from the hospital’s public relations director, who directed her to YouTube. A video had been posted showing several nurses and former patients protesting the hospital’s decision in front of the hospital. The public relations director also directed the CEO to a new community blog called “SaveOurLovingNurses.com.” The CEO called a meeting for the next morning and wondered, “How did things get so out of control?” She asked the public relations director to provide an overview and present a brief plan.

Present the overview and plan.

Preparing a Quantity Schedule – FIFO Method Hielta Oy, a Finnish company, processes wood pulp for various manufacturers of paper products. Data relating to tonnes of pulp processed during June are provided below: Percentage Completed Tonnes of Pulp Materials Labour and Overhead Work in process, June 1 20,000 90% 80% Work in process, June 30 30,000 60% 40% Started into processing during June 190,000 REQUIRED: Prepare a quantity schedule for June assuming that Hielta Oy uses the FIFO method.

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Trivago Ramps Up Finance Team After Material Weakness By Nina Trentmann Feb 8, 2018

Rolf Schroemgens, co-founder and chief executive officer of Trivago, center, cheers with employees during the company's initial public offering (IPO) in New York, U.S., Dec. 16, 2016. Rolf Schroemgens, co-founder and chief executive officer of Trivago, center, cheers with employees during the company's initial public offering (IPO) in New York, U.S., Dec. 16, 2016. PHOTO: BLOOMBERG NEWS Hotel-search company Trivago N.V. has expanded its financial reporting team as it prepares to file its next annual report, said Chief Financial Officer Axel Hefer. The German company, which listed on the Nasdaq in late 2016, disclosed that it found a material weakness in internal controls over financial reporting in the lead up to its initial public offering. At the time, Trivago was heavily reliant on outside consultants and advisors to meet U.S. reporting requirements. “We now have significantly more people that are experts on U.S. Generally Accepted Accounting Principles,” CFO Axel Hefer Wednesday said in an interview with CFO Journal. The expanded staff have helped overhaul Trivago’s reporting process, which is now “completely different,” Mr. Hefer said. The hotel-comparison company is still assessing whether the circumstances that resulted in the material weakness have been mitigated, Mr. Hefer said. Trivago plans on filing its annual report in the next couple of months, he added. The Securities and Exchange Commission requires foreign issuers that have listed equity shares on U.S. exchanges to submit an annual report within six months after the end of the company’s fiscal year. Mr. Hefer did not share how many people have been added to the company’s reporting team or the number of employees in the finance and accounting department. Mr. Hefer last year said the company would phase out reliance on external accounting help. Düsseldorf-based Trivago currently employs over 1,400 people. Trivago Wednesday swung to a wider-than-expected quarterly loss amid reduced spending from advertisers. The company reported a fourth-quarter net loss of €9.6 million ($11.8 million), compared with net income of €0.1 million for the same period last year.

On January 1, 2020, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,316,700 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,580,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $291,000. On January 1, 2021, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $513,125 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.

During the two years following the acquisition, Sellinger reported the following net income and dividends:

a) Show Palka’s journal entry to record its January 1, 2021, acquisition of an additional 25 percent ownership of Sellinger Company shares.

b) Prepare a schedule showing Palka’s December 31, 2021, equity method balance for its Investment in Sellinger account.

On January 1, 2020, Palka, Inc., acquired 70% of the outstanding shares of Sellinger Company for $1,290,800 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,570,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $264,000. On January 1, 2021. Palka acquired an additional 25% common stock equity interest in Sellinger Company for $475,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.

     During the two years following the acquisition, Sellinger reported the following net income and dividends:

1. Show Palka’s journal entry to record its January 1, 2021, acquisition of an additional 25% ownership of Sellinger Company shares

2. Prepare a schedule showing Palka’s December 31, 2021, equity method balance for its Investment in Sellinger account.

Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 34,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 34,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows:

Icebreaker must close its books and prepare financial statements at December 31.

Company purchases materials from a foreign supplier on December 1, 2020, with payment of 34,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Brandlin enters into a forward contract to purchase 34,000 dinars on March 1, 2021.

1. a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars.

2. a-2. What is the impact on 2020 net income?

3. a-3. What is the impact on 2021 net income?

4. a-4. What is the impact on net income over the two accounting periods?

5. b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars.

6. b-2. What is the impact on net income in 2020 and in 2021?

7. b-3. What is the impact on net income over the two accounting periods?

Mikkeli OY acquired a brand name with an indefinite life in 2015 for 40,000 markkas. At December 31, 2017, the brand name could be sold for 35,000 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 42,000 markkas, and the present value of this amount is 34,000 markkas. Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: Prepare journal entries for this brand name for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017 and December 31, 2018 conversion worksheet to convert IFRS balances to U.S. GAAP.