In January 1, 2015, Springfield Company acquired an 80% interest in Lincoln Company for a purchase price that was $350,000 over the book value of Lincoln’s Stockholders’ Equity on the acquisition date. Spring uses the equity method to account for its investment in Lincoln. Springfield assigned the acquisition-date AAP as follows:

Lincoln sells inventory to Springfield (upstream) which includes that inventory in products that it (Springfield), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2020 and 2021:

The inventory not remaining at the end of the year has been sold outside of the controlled group.

Springfield and Lincoln report the following financial statements at December 31, 2021:

Required:

a.   Compute the EOY non-controlling interest equity balance.

b.   Prepare the consolidation spreadsheet on the acquisition date.

Jean and Jude own a townhome that was purchased for $165,000 on 6/30/2007. Current property values in the area have not substantially recovered to their pre-2008 values. They believe that their current mortgage balance exceeds the townhome's current market value by $30,000.

Their family has grown from 2 to 4 (twins, boy and girl) and as a result they need more living space. The children will be starting school within the next 6 months. They are not pleased with the quality of the current school system. They need more living space and want their children to attend school in a better school district. Jean and Jude have decided to look for a different home. They would like a detached single-family home with at least 3 bedrooms, 2 full baths, a 2-car garage and a ¼ acre back yard.

After interviewing several Realtors, Jean and Jude have selected you to find them a new home and discuss the options of either selling or renting their current home.

Jean and Jude have asked for you to provide the following. How would you respond?

1. Explain the three methods used to appraise the value of our townhouse and recommend the most appropriate method to use.
2. Explain and describe the information included on the TRID form and how it benefits the home buyer?
3. If we decide to rent out our home, we would like to exclude tenants that have a pet of any kind or for any purpose. What, if any, government regulations will impact this decision?
4. List the steps in the loan process used to qualify us for a mortgage and explain how our current mortgage balance may impact the qualification decision?
5. Explain the advantages and disadvantages of selling or renting our townhouse. Assume that we would have to take an early distribution from our individual 401Ks to make the down payment on a new home.
6. If we stopped making the monthly mortgage and escrow payments, what action(s) would the bank take?
7. Regarding our townhouse, which course of action would you recommend: selling the townhouse, renting the townhouse, or stopping the mortgage and escrow payments?

C3.       On January 1, 2020, Wondersome Company acquired a 70% interest in Philmore Company for a purchase price that was $240,000 over the book value of the Philmore’s Stockholders’ Equity on the acquisition date. Wondersome uses the cost method to account for its investment in Philmore. On the date of acquisition, Philmore’s retained earnings balance was $350,000. Wondersome assigned the acquisition-date AAP as follows:

Philmore sells inventory to Wondersome (upstream) which includes that inventory in products that it, ultimately, sells to customers outside of the controlled group. You have compiled the following data for the years ending 2022 and 2023:

The inventory not remaining at the end of the year has been sold outside of the controlled group.

The parent and the subsidiary report the following financial statements at December 31, 2023:

Required

1. Compute the EOY noncontrolling interest equity balance
2. Prepare the consolidation journal entries.

In January 1, 2015, Springfield Company acquired an 80% interest in Lincoln Company for a purchase price that was $350,000 over the book value of Lincoln’s Stockholders’ Equity on the acquisition date. Spring uses the equity method to account for its investment in Lincoln. Springfield assigned the acquisition-date AAP as follows:

Lincoln sells inventory to Springfield (upstream) which includes that inventory in products that it (Springfield), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2020 and 2021:

The inventory not remaining at the end of the year has been sold outside of the controlled group.

Springfield and Lincoln report the following financial statements at December 31, 2021:

Required:

a.   Compute the EOY non-controlling interest equity balance.

b.   Prepare the consolidation spreadsheet on the acquisition date.

Janet Johnson, an African American woman, has been working at the Tennessee Hydroelectric plant for 15 years. During that time, his performance reviews have been exemplary. She decided to apply for the new plant foreman position. Although she felt that she was eminently qualified for the position, she also was growing tired of a certain good old boy culture at the plant. For years, the plant has had a culture of highly lewd “jokes,” and many of the employees had also engaged in inappropriate touching of female employees. The plant had an anti-harassment policy on record, but Janet’s boss shrugged and said “boys will be boys” when she reported the harassment to him.

Competition for the position was fierce. But ultimately, Jose Martinez, a Chilean man, received the position. Jose had 7 years of experience. Unbeknownst to the applicants the promotion board secretly ran a credit check on the applicants. Janet credit score came in as lower as average, and this factored into the board’s decision. Although he met the qualifications of the position, one of the hiring managers told Janet in confidence that Janet was the most qualified person for the job. And the other managers had applied a racial preference on Jose’s behalf due to there never having been a Latino manager at the plant even though Latino’s represented 35% of employees at the plant. Janet sues the plant for disparate treatment, disparate impact, and sexual harassment under Title VII.


Questions

1. List the elements of disparate treatment and apply them to this case. Can Janet prove a prima facie case? How would the plant rebuff these charges? Who would ultimately prevail?
2. List the elements of a disparate impact case and apply them to this case? Will Janet prevail on this charge?
3. List the elements of the sexual harassment case and apply them to this case? Can the plant establish an affirmative defense?
4. If the plant argues that it applied a racial preference to Jose to correct a manifest imbalance at the plant of underutilization of certain minorities, will the plant prevail? Why or why not?
5. Was it legal to use the credit check as a factor in the promotion decision the way that it was done here? Why or why not?