An entrepreneur founded a company (ABC) in 2001. Recently, the stock was trading at $41per share. With 850k shares outstanding, EPS were $1.41. The entrepreneur and the members of the board of directors were initially pleased when another firm purchased 50k shares of ABC stock. However, when the purchasing firm bought another 50k shares, the entrepreneur and members of the board became concerned that the purchasing firm might be trying to take over ABC.

The entrepreneur was reminded by the legal staff that ABC had a poison pill provision that took effect when any outside investor accumulated 24% or more of the shares outstanding. Current stockholders, excluding the potential takeover company, were given the privilege of buying up to 500k shares of ABC at 83.49% of current market value. Thus, new shares would be restricted to friendly interests. The legal staff also found that the entrepreneur and “friendly” members of the board currently owned 175k shares of ABC.

In view of the above information, ABC company is in the process of determining the costs described by the following scenarios:

Scenario #1: Takeover firm makes a move

Gets 50% (plus 1 share) of ABC stock at the current market price level, in addition to shares previously accumulated.

Scenario #2: “Friendly” shareholders come to the rescue

Takeover firm exceeds the number of shares determined in the previous scenario, and gets all the way up to 625,000 shares of ABC. Under the poison pill provision, friendly shareholders purchase to prevent a takeover attempt by the acquiring firm, next to what they already own.

Required: In percentage terms, by how much would the poison pill strategy make the purchase more expensive for the takeover firm?

Answer% Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%).

The Fleming Foundation is a charitable organization founded by Gaylord Fleming and Sandy Fleming. The Flemings intended for the charity to provide programs in health care for the elderly, particularly those in poverty. The two main program divisions of the foundation are mental health for the elderly and housing for the elderly. In addition to these programs, the Foundation also provides health care educational programs and has a significant fund-raising effort to help the Foundation grow and accomplish the goals of the founders. The Foundation is organized into two operating departments—education and program management. These departments are supported by two service departments—information technology (IT) and administration. To summarize, there are four departments (two service departments and two operating departments) and two programs (mental health and housing for the elderly). The service department costs are allocated to the operating departments, and then the operating department costs are allocated to the programs.

There are $420,000 of costs directly traceable to each of the four departments. An additional $42,000 of indirect costs is shared among the four departments—$22,500 of which is allocated to the departments based on labor hours and $19,500 of which is allocated to the departments based on the number of personnel (head count) in the departments.

The cost, labor hours, and head count in these departments in the most recent year are as follows:

IT serves education, administration, and program management 20%, 20%, and 60% of its time, respectively. Administration serves education, IT, and program management 40%, 10%, and 50% of its time, respectively.

The costs of the two operating departments (education and program management) are allocated to the two programs (mental health and housing) as follows: the costs in Education are allocated on the basis of labor hours in the programs, while the costs in program management are allocated using the head count used in the two programs. The following table shows the labor hours and head count consumption by the two programs.

Required:

Determine the costs allocated to the mental health and housing programs using the (a) direct method, (b) the step method (assuming that IT goes first), and (c) the reciprocal method.

An entrepreneur founded a company (ABC) in 2001. Recently, the stock was trading at $42per share. With 850k shares outstanding, EPS were $1.41. The entrepreneur and the members of the board of directors were initially pleased when another firm purchased 50k shares of ABC stock. However, when the purchasing firm bought another 50k shares, the entrepreneur and members of the board became concerned that the purchasing firm might be trying to take over ABC.

The entrepreneur was reminded by the legal staff that ABC had a poison pill provision that took effect when any outside investor accumulated 30% or more of the shares outstanding. Current stockholders, excluding the potential takeover company, were given the privilege of buying up to 500k shares of ABC at 81.81% of current market value. Thus, new shares would be restricted to friendly interests. The legal staff also found that the entrepreneur and “friendly” members of the board currently owned 175k shares of ABC.

In view of the above information, ABC company is in the process of determining the costs described by the following scenarios:

Scenario #1: Takeover firm makes a move

Gets 50% (plus 1 share) of ABC stock at the current market price level, in addition to shares previously accumulated.

Scenario #2: “Friendly” shareholders come to the rescue

Takeover firm exceeds the number of shares determined in the previous scenario, and gets all the way up to 625,000 shares of ABC. Under the poison pill provision, friendly shareholders purchase to prevent a takeover attempt by the acquiring firm, next to what they already own.

Required: In percentage terms, by how much would the poison pill strategy make the purchase more expensive for the takeover firm?

An entrepreneur founded a company (ABC) in 2001. Recently, the stock was trading at $43per share. With 850k shares outstanding, EPS was $1.41. The entrepreneur and the members of the board of directors were initially pleased when another firm purchased 50kshares of ABC stock. However, when the purchasing firm bought another 50k share, the entrepreneur and members of the board became concerned that the purchasing firm might be trying to take over ABC.

The entrepreneur was reminded by the legal staff that ABC had a poison pill provision that took effect when any outside investor accumulated 30% or more of the shares outstanding. Current stockholders, excluding the potential takeover company, were given the privilege of buying up to 500k shares of ABC at 82.17% of current market value. Thus, new shares would be restricted to friendly interests. The legal staff also found that the entrepreneur and “friendly” members of the board currently owned 175k shares of ABC.

In view of the above information, ABC company is in the process of determining the costs described by the following scenarios:

Scenario #1: Takeover firm makes a move

Gets 50% (plus 1 share) of ABC stock at the current market price level, in addition to shares previously accumulated.

Scenario #2: “Friendly” shareholders come to the rescue

Takeover firm exceeds the number of shares determined in the previous scenario and gets all the way up to 625,000 shares of ABC. Under the poison pill provision, friendly shareholders purchase to prevent a takeover attempt by the acquiring firm, next to what they already own.

Required: In percentage terms, by how much would the poison pill strategy make the purchase more expensive for the takeover firm?

The Porsche Shop, founded in 1985 by Dale Jensen, specializes in the restoration of vintage Porsche automobiles. One of Jensen's regular customers asked him to prepare an estimate for the restoration of a 1964 model 356SC Porsche. To estimate the time and cost to perform such a restoration, Jensen broke the restoration process into four separate activities: disassembly and initial preparation work (A), body restoration (B), engine restoration (C), and final assembly (D). Once activity A has been completed, activities B and C can be performed independently of each other; however, activity D can be started only if both activities B and C have been completed. Based on his inspection of the car, Jensen believes that the following time estimates (in days) are applicable:

Jensen estimates that the parts needed to restore the body will cost $3000 and that the parts needed to restore the engine will cost $5000. His current labor costs are $400 a day.

1. What is the expected project completion time?
   
   Critical Path: A-B-D
   
   If required, round your answer to one decimal place.
   
   Expected time = _______ days
   
2. Jensen's business philosophy is based on making decisions using a best- and worst-case scenario. Develop cost estimates for completing the restoration based on both a best- and worst-case analysis. Assume that the total restoration cost is the sum of the labor cost plus the material cost.
   
   If required, round non-monetary answers to the nearest whole number. If required, round monetary answers to the nearest dollar.
   
   Best Cost (Optimistic Times) = _______days
   
   Total Cost = $  _______
   
   Worst Cost (Pessimistic Times) =  _______days
   
   Total Cost = $_______  
3. If Jensen obtains the job with a bid that is based on the costs associated with an expected completion time, what is the probability that he will lose money on the job?
   
   If required, round non-monetary answer to two decimal places. If required, round monetary answer to the nearest dollar.
   
   Bid Cost = $  _______
   
   _______ probability time and cost will exceed the expected time and cost (If required, round your answer to two decimal places).
4. If Jensen obtains the job based on a bid of $16,800, what is the probability that he will lose money on the job?
   
   Note: Use Appendix B to identify the areas for the standard normal distribution. If required, round your answer to four decimal places.
   
   The probability of a loss is _______

Please fill out all of the blanks! Thank you!!!

An entrepreneur founded a company (ABC) in 2001. Recently, the stock was trading at $42per share. With 850k shares outstanding, EPS were $1.41. The entrepreneur and the members of the board of directors were initially pleased when another firm purchased 50k shares of ABC stock. However, when the purchasing firm bought another 50k shares, the entrepreneur and members of the board became concerned that the purchasing firm might be trying to take over ABC.

The entrepreneur was reminded by the legal staff that ABC had a poison pill provision that took effect when any outside investor accumulated 23% or more of the shares outstanding. Current stockholders, excluding the potential takeover company, were given the privilege of buying up to 500k shares of ABC at 84.04% of current market value. Thus, new shares would be restricted to friendly interests. The legal staff also found that the entrepreneur and “friendly” members of the board currently owned 175k shares of ABC.

In view of the above information, ABC company is in the process of determining the costs described by the following scenarios:

Scenario #1: Takeover firm makes a move

Gets 50% (plus 1 share) of ABC stock at the current market price level, in addition to shares previously accumulated.

Scenario #2: “Friendly” shareholders come to the rescue

Takeover firm exceeds the number of shares determined in the previous scenario, and gets all the way up to 625,000 shares of ABC. Under the poison pill provision, friendly shareholders purchase to prevent a takeover attempt by the acquiring firm, next to what they already own.

Required: In percentage terms, by how much would the poison pill strategy make the purchase more expensive for the takeover firm?

Answer% Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%).

Adam (A), Betsy (B) and Cathy (C) decided to form a partnership, which was founded on 01/01/2015. Adam contributed cash $20,000 and inventory with market value of $30,000. B contributed a piece of land with market value of $80,000 with unpaid mortgage in the amount of $30,000. C contributed PPE with market value of $50,000 and C’s expertise is deemed to be worth of $50,000 by all the 3 partners.

A: If ABC decided to use goodwill method to document the creation of the partnership, what are the journal entries and what are the values of capital under respective partners’ names?

B: If ABC decided to use bonus method to document the foundation of the partnership, what are the journal entries and what are the values of capital under respective partners’ names?

C: Assuming that every year the profit among different partners will be shared in the ration of 10%, 30% and 60%, and partners have to retain 75% of their share profits in the partnership in the case of profit. What are the balances of each partner’s capital by the end of each year using both goodwill and bonus method (2015 and 2016)?

c.1. The partnership made $10,000 in 2015 and had a loss of $20,000 in 2016 (Goodwill method).

c.2:The partnership made $15,000 in 2015 and had a loss of $25,000 in 2016 (bonus method).

An entrepreneur founded a company (ABC) in 2001. Recently, the stock was trading at $42per share. With 850k shares outstanding, EPS were $1.41. The entrepreneur and the members of the board of directors were initially pleased when another firm purchased 50k shares of ABC stock. However, when the purchasing firm bought another 50k shares, the entrepreneur and members of the board became concerned that the purchasing firm might be trying to take over ABC.

The entrepreneur was reminded by the legal staff that ABC had a poison pill provision that took effect when any outside investor accumulated 23% or more of the shares outstanding. Current stockholders, excluding the potential takeover company, were given the privilege of buying up to 500k shares of ABC at 84.04% of current market value. Thus, new shares would be restricted to friendly interests. The legal staff also found that the entrepreneur and “friendly” members of the board currently owned 175k shares of ABC.

In view of the above information, ABC company is in the process of determining the costs described by the following scenarios:

Scenario #1: Takeover firm makes a move

Gets 50% (plus 1 share) of ABC stock at the current market price level, in addition to shares previously accumulated.

Scenario #2: “Friendly” shareholders come to the rescue

Takeover firm exceeds the number of shares determined in the previous scenario, and gets all the way up to 625,000 shares of ABC. Under the poison pill provision, friendly shareholders purchase to prevent a takeover attempt by the acquiring firm, next to what they already own.

Required: In percentage terms, by how much would the poison pill strategy make the purchase more expensive for the takeover firm?

Answer% Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.

McDonald's Corporation is an American fast food company, founded in 1940 as a
restaurant operated by Richard and Maurice McDonald , in San Bernardino, California ,
United States. They rechristened their business as a hamburger stand, and later
turned the company into a franchise , with the Golden Arches logo being introduced in
1953 at a location in Phoenix, Arizona . Although McDonald's is best known for its
hamburgers, cheeseburgers and french-fries , they feature chicken products,
breakfast items, soft drinks , milkshakes , wraps , and desserts . In response to changing
consumer tastes and a negative backlash because of the unhealthiness of their food,
the company has added to its menu salads , fish , smoothies , and fruit .
In March 2010, McDonald’s Corp. announced a policy to increase summer sales by
selling all soft drinks, no matter the size, for $ 1.00. The policy would run for 150 days
starting after Memorial Day. The $ 1.00 drink prices were a discount from the
suggested price of $ 1.39 for a large soda. Some franchises worried that discounting
drinks, whose sales compensate for discounts on other products, could hurt overall
profits, especially if customers bought other items from the Dollar Menu. McDonald’s
managers expected this promotion would draw customers from other fast-food
chains and from convenience stores such as 7-Eleven. Additional customers would
also help McDonald’s push its new beverage lineup that included smoothies and
frappes. Discounted drinks did cut into McDonald’s coffee sales in previous years as
some customers chose the drinks rather than pricier espresso beverages. Other chain
with new drink offerings, such as Burger King and Taco Bell, could face pressure from
the $ 1.00 drinks at McDonalds.
Questions
a. Given the change in price for a large soda from $ 1.39 to $ 1, how much would
quantity demanded have to increase for McDonald’s revenues to increase?
b. What is the sign of the implied cross-price elasticity with drinks from McDonald’s
competitors?
c. What are the other benefits and costs to McDonald’s of this discount drink policy?
……….

Cupid's Kiss Limited (“CK”) was founded in early 1980s focusing on the manufacturing and trading of baby food and snacks in Hong Kong. After years of development, CK is now one of the well-known baby food producers in Asia. You are the audit manager-in-charge of the audit of CK’s financial statements for the year ended 30 September 2020. The audit is substantially completed. After reviewing the audit documentation, you and your audit partner are satisfied with the audit. There are no significant issues or difficulties encountered in the audit. It has been agreed with CK that the auditor’s report for the year ended 30 September 2020 will be authorised and approved in mid-November 2020. Just a week before the planned approval date of the auditor’s report, you read a news headline: “A popular product of Cupid's Kiss is proven to contain toxic ingredients with a high risk of causing health problems as the raw materials were contaminated. Cupid’s Kiss announced an immediate product recall.”

Required:
(a) Determine and explain whether Cupid’s Kiss toxic ingredients problem is an adjusting event or a non-adjusting event. Discuss its implications to its financial statements for the year ended 30 September 2020.

(b) Suggest relevant audit procedures in response to Cupid’s Kiss toxic ingredients problem.

(c) Determine and explain the auditor’s obligation to follow up on the toxic ingredients problem if the news is only known by the auditor after the issuance of the auditor’s report and the financial statements.