On July 1, 2016, Killearn Company acquired 84,000 of the outstanding shares of Shaun Company for $20 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions.

As of July 1, 2016, the investee had assets with a book value of $5 million and liabilities of $266,400. At the time, Shaun held equipment appraised at $476,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $1,212,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.

Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $645,000 in 2016, $679,800 in 2017, and $723,000 in 2018.

In addition, Killearn sold inventory costing $139,200 to Shaun for $232,000 during 2017. Shaun resold $101,500 of this inventory during 2017 and the remaining $130,500 during 2018.

1.Determine the equity income to be recognized by Killearn during each of these years.

2.Compute Killearn's investment in Shaun Company's balance as of December 31, 2018.

The Nathan Company acquired all of the outstanding stock of Caleb Company on January 1, 2014 for P267,800 cash. Caleb had a book value of only P182,000 on that date. However, equipment (having an eight-year life) is undervalued by P52,000 on Caleb’s financial records. A building with a 20-year life was overvalued by P13,000. Subsequent to the acquisition, Caleb reported the following:

In accounting for this investment, Nathan has used the cost method. Selected accounts taken from the financial records of these two companies as of December 31, 2016, are as follows:

Required:

Determine the following account balances as of December 31, 2016.

1. Net Income Attributable to Equity Holders of the Parent
2. Non-controlling Interest in Net Income of Subsidiary
3. Consolidated Net Income
4. Consolidated Equipment (net)
5. Consolidated Buildings (net)
6. Consolidated Goodwill (net)
7. Consolidated Ordinary Shares
8. Consolidated Accumulated Profits

On July 1, 2016, Killearn Company acquired 120,000 of the outstanding shares of Shaun Company for $15 per share. This acquisition gave Killearn a 20 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions.

As of July 1, 2016, the investee had assets with a book value of $7 million and liabilities of $148,000. At the time, Shaun held equipment appraised at $581,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $1,235,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.

Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $566,000 in 2016, $593,400 in 2017, and $643,600 in 2018.

In addition, Killearn sold inventory costing $114,600 to Shaun for $191,000 during 2017. Shaun resold $123,500 of this inventory during 2017 and the remaining $67,500 during 2018.

Determine the equity income to be recognized by Killearn during each of these years.

Compute Killearn's investment in Shaun Company's balance as of December 31, 2018.

A. Equity Income 2016 __________

B. Equity Income 2017 __________

C. Equity Income 2018 __________

D. Investment in Sahun __________

14. The Anderson Company acquired 100,000 shares of the Beck Company on January 1, 2016, at $25 per share. Beck’s stock price on December 31, 2016, was $35 per share. During 2016, Beck declared and paid dividends of $1.50 per share and had earnings of $2.50 per share. Anderson Company accounted for its investment in Beck Company shares as subsequently measured at fair value through OCI. What was the net effect of investment in Beck Company shares on Anderson’s income statement for 2016?

1. $250,000.
2. $100,000.
3. $150,000.

Answer is c, why

K Company acquired 80 percent of the outstanding shares of Duo Company by paying $420,000 in cash. The fair value of Duo’s identifiable assets is $630,000, and the liabilities assumed by K Co. in this business combination are $205,000.

a. Please calculate the total amount of goodwill on the B/S this year. Also indicate the amount of goodwill that belongs to the noncontrolling interest account on B/S.

b. K Co. must conduct an impairment test of the goodwill related to the acquisition of Duo. The assets of Duo are the smallest group of assets that generate cash inflows, and it is a separate cash generating unit. K. Co estimated the following items:

Fair value less costs to sell is $ 370,000

Present value of future cash flows is $350,000

Please calculate the impairment loss that should be recorded on I/S.

On July 1, 2016, Killearn Company acquired 136,000 of the outstanding shares of Shaun Company for $15 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions.

As of July 1, 2016, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Shaun held equipment appraised at $319,200 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.

Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $579,000 in 2016, $619,400 in 2017, and $675,200 in 2018.

In addition, Killearn sold inventory costing $111,000 to Shaun for $185,000 during 2017. Shaun resold $82,500 of this inventory during 2017 and the remaining $102,500 during 2018.

Determine the equity income to be recognized by Killearn during each of these years.

Compute Killearn's investment in Shaun Company's balance as of December 31, 2018

On July 1, 2016, Killearn Company acquired 142,000 of the outstanding shares of Shaun Company for $15 per share. This acquisition gave Killearn a 40 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions.

As of July 1, 2016, the investee had assets with a book value of $5 million and liabilities of $890,000. At the time, Shaun held equipment appraised at $245,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $800,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.

Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $614,000 in 2016, $654,600 in 2017, and $704,200 in 2018.

In addition, Killearn sold inventory costing $145,800 to Shaun for $243,000 during 2017. Shaun resold $102,000 of this inventory during 2017 and the remaining $141,000 during 2018.

1. Determine the equity income to be recognized by Killearn during each of these years.

2. Compute Killearn's investment in Shaun Company's balance as of December 31, 2018.

(For all requirements, enter your answers in whole dollars and not in millions.)

I have always been a firm believer in the saying "it's all about who you know." In the business world especially, this statement is proved true more times than not. An argument for why CEOs get paid too much is the inconsistency of compensation. "...it is reasonable to assume that the people who become CEOs because corporations offer $8 million per year, on average, more talented than the people who would become CEOs if corporations offered $1 million per year. But there are two reasons to think that they are not that much more talented, and so not worth the extra pay." I do agree with the argument that the CEO making $8 million a year isn't always more talented than a CEO making $1 million a year, but the CEO that is making $8 million had to go through the work to get that job. Whether they knew someone that got them into a very good position in order to acquire the job or not doesn't matter. There a lot of very bright people who are not making as much money as someone who is not as bright as them, even in the same line of work. People get much different opportunities to succeed than others. There is a stat that states a CEO on average makes 301 times the amount of a factory worker for that same company; I do believe that the CEO is not doing 301 times the amount of work as the factory worker nor that the CEO is actually working for all of that money; however, they still worked hard enough to get themselves into that position. So with me stating that I would say that no, CEOs are not making too much money. Their job is very important, and I would assume that along with that large compensation comes with much stress and timely work. Have any of you ever had a job where you were doing the same amount and kind of work as someone but making a significant less amount of money? Are you doing things now that will set you up for success or failure in the future?

Would like a detailed response to this

Question 1

Retail operations

‘Cycling Deal’ started its operation in bicycle retail industry on 1 June 2019. The business is

owned by Alex Richardson. Cycling Deal purchase bicycles from suppliers and sell those cycles

at the local markets. The business is registered for GST. The following transactions occurred

during June 2019:

Date Details

1-Jun Alex Richardson deposited $35,000 into the business bank account.

3-Jun

Purchase of bicycles (100 small bicycles, and 100 large bicycles) from Rocky

Hills Ltd on account for $10,000 ($50 per bicycle) plus GST on terms of 2/10,

n/30.

4-Jun

Cycling Deal received an invoice from Finland Delivery Ltd relating to delivery

costs for the bicycles purchased on 3 June. The amount due is $300

(including GST), and is due on 18 June.

5-Jun Sent a cheque in the mail to Green Ltd for $200 (including GST), for stall fees

at the local markets for the month of June.

6-Jun

Sale of 30 bicycles (15 small bicycles, and 15 large bicycles) at the local

markets, at $100 each (including GST). All of the customers paid by

cash. The money was banked at the end of the day.

9-Jun Paid Rocky Hills Ltd for purchases made on 3 June (net of the early payment

discount), by electronic funds transfer.

13-Jun Sale of 10 small bicycles to a local childcare centre, at $100 each (including

GST), on 30 day credit terms.

15-Jun Sent a cheque in the mail to Finland Delivery Ltd, in relation to the invoice

received on 4 June.

20-Jun Purchase of bicycles (40 small, and 15 large) from Rocky Hills Ltd on account

for $3,190 ($58 per bicycle) plus GST on terms of 2/10, n/30.ACCT6002_Assessment Brief 2_Individual Case Study

Page 4 of 11

23-Jun

Cycling Deal received an invoice from Finland Delivery Ltd relating to delivery

costs for the bicycles purchased on 20 June 2019. The amount due is $180

(including GST), and is due on 6 July 2019.

24-Jun Returned 20 of the small bicycles purchased on 20 June as they were

damaged.

28-Jun

Sale of 28 bicycles (18 small, and 10 large) at the local markets, at $100 each

(including GST). All of the customers paid by cash. The money was banked at

the end of the day.

30-Jun A stocktake was completed, and the number of bicycles on hand was 139 (54

small bicycles, and 85 large bicycles).

Mr Richardson has come to you for assistance, as he would like to use the perpetual inventory

system and the First-in-first-out (FIFO) costing method, but are not sure how to set this up.

equired

i) Prepare an Excel worksheet for each of the bicycle lines for June (one for the small bicycles,

and one for the large bicycles) using the FIFO costing method to keep track of the number of

bicycles purchased, bicycles sold, bicycles on hand, cost of goods sold and gross profit made.

ii) Prepare journal entries (including any adjusting entries) for all of the business’s transactions

for June (using the perpetual inventory system and FIFO costing method). Include dates,

references and narrations.

iii) Prepare T-accounts in an Excel spreadsheet, and post all of the above journal entries to

the T-accounts. Include dates and references for each entry. Total all of the T-accounts to

determine their balances at the end of the June 2019.

iv) Prepare the ‘Adjusted Trial Balance’ in an Excel spreadsheet as at 30th June 2019. Use

formulas to generate all of the figures in the ‘Adjusted Trial Balance’ from the balances in the

T-Accounts.

v) The business has a year-end of 30th June. Prepare the closing entries as at 30th June 2019.

vi) Prepare the income statement, balance sheet and statement of changes in equity in Excel.

Please comment on what how you think, if at all, CSR changes when the company is not the US or when US companies deal with foreign companies. Does CSR have any impact on marketing? How so?