Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:

Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).

Treasury stock, common, 20,000 shares, acquired on November 30, 2019 …...

$

280,000

Additional paid-in-capital ....................................................................................

760,000

Common stock, $10 stated value, issued January 2, 2019

(current market value, $17 per share) ..................................................................

1,200,000

Preferred stock, 10%, $8 par value, convertible into 146,000 common

shares no earlier than 2020, issued at par value on July 1, 2020

(current market value, $8 per share) ....................................................................

1,660,000

Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the

discretion of the warrant-holders, but not earlier than 2022. A

hypothetical conversion of the warrants at December 31, 2020 would

require a $14,000 cash payment from the warrant-holders, which would

be sufficient for Edwards & Everett to acquire 300 shares of its own

common stock (as treasury stock)........................................................................

20,000

Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.

What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.

FINANCIAL ACCOUNTING II

Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:

Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).

Treasury stock, common, 20,000 shares, acquired on November 30, 2019 ...... $280,000

Additional paid-in-capital........................................................................................760,000

Common stock, $10 stated value, issued January 2, 2019 (current market value, $17 per share) ................................................................ 1,200,000

Preferred stock, 10%, $8 par value, convertible into 146,000 commonshares no earlier than 2020, issued at par value on July 1, 2020 (current market value, $8 per share) ...................................................................1,660,000

Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the discretion of the warrant-holders, but not earlier than 2022. A hypothetical conversion of the warrants at December 31, 2020 would require a $14,000 cash payment from the warrant-holders, which would be sufficient for Edwards & Everett to acquire 300 shares of its own common stock (as treasury stock)........................................................................ 20,000

Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.

What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.

Paragraph 23 of an earlier version of IAS 38 Intangible Assets states that

The Board’s view, consistently reflected in previous proposals for intangible assets, is that there should be no difference between the requirements for:

(a) intangible assets that are acquired externally; and

(b) internally generated intangible assets, whether they arise from development activities or other types of activities.

(Required: Evaluate the above view, identify and explain inconsistencies between this view and the current requirements of AASB 138.)

maximum of 600 words

An intensifying oil price war between Saudi Arabia and Russia has created “very painful” market conditions for the world’s largest crude oil producers. International benchmark Brent crude traded at $32.97 Thursday, down almost 8%, while U.S. West Texas Intermediate (WTI) stood at $30.40, around 7.8% lower. Oil prices have almost halved since the start of the year.
Last week, Saudi Arabia failed to secure Moscow’s support for deeper output cuts at a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC plus. OPEC had proposed to deepen cuts by 1.5 million barrels per day and Russia was asked to cut an extra 300,000 bpd.
“There was no point in cutting until after everyone understood how sharply demand could fall. We cannot fight a falling demand situation when there is no clarity about where the bottom (of demand) is,” Pavel Sorokin, the Russia’s deputy energy minister, said.
“It is very easy to get caught in a circle when, by cutting once, you get into an even worse situation: oil prices would shortly bounce back before falling again as demand continued to fall.”
Cooperation between two (Saudi Arabia and Russia) of the world’s three largest oil producers — the third is the United States — appears to be at an end.
2How a Saudi-Russian Standoff Sent Oil Markets Into a Frenzy. 9th March 2020. New York Times
Russia to OPEC - deeper oil cuts won't work. 12th March 2020. Reuter
The losers — and even bigger losers — of an oil price war between Saudi Arabia and Russia. 12th March 2020. CNBC
a) With aid of diagram, explain how the fall in crude oil demand affect the output of OPEC plus members.
b) Discuss why Russia refuse to follow Saudi Arabia’s proposal to cut crude oil production with aid of diagram.

Bensen Company began operations when it acquired $26,800 cash from the issue of common stock on January 1, 2018. The cash acquired was immediately used to purchase equipment for $26,800 that had a $4,400 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $3,400 cash. Bensen uses straight-line depreciation. 2018 2019 2020 2021 2022 Revenue $7,470 $7,970 $8,170 $6,970 $0

Required

Prepare income statements, statements of changes in stockholders’ equity, balance sheets, and statements of cash flows for each of the five years. Present the statements in the form of a vertical statements model. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

Bensen Company began operations when it acquired $60,000 cash from the issue of common stock on January 1, 2018. The cash acquired was immediately used to purchase equipment for $50,000 that had a $10,000 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $8,800 cash. Bensen uses straight-line depreciation. 2018 2019 2020 2021 2022 Revenue $ 26,100 $ 28,500 $ 32,000 $ 31,300 $ 0 Required Prepare income statements, statements of changes in stockholders’ equity, balance sheets, and statements of cash flows for each of the five years. Present the statements in the form of a vertical statements model. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

Explain whether the grounding of the Boeing 737 max aircraft would affect the financial statements of airlines, such as Southwest, United and American Airline, that have acquired Boeing 737 max aircraft.

Grading rubric:

Your post should be approximately 200 to 250 words and should focus only on the accounting principles relevant to the scenario.

Hepatitis C is a chronic liver infection that can be either silent (with no noticeable symptoms) or debilitating. Either way, 80% of infected persons experience continuing liver destruction. Chronic hepatitis C infection is the leading cause of liver transplants in the United States. The virus that causes it is blood borne, and therefore patients who undergo frequent procedures involving transfer of blood are particularly susceptible to infection. Kidney dialysis patients belong to this group. In 2008, a for-profit hemodialysis facility in New York was shut down after nine of its patients were confirmed as having become infected with hepatitis C while undergoing hemodialysis treatments there between 2001 and 2008.

When the investigation was conducted in 2008, investigators found that 20 of the facility’s 162 patients had been documented with hepatitis C infection at the time they began their association with the clinic. All the current patients were then offered hepatitis C testing, to determine how many had acquired hepatitis C during the time they were receiving treatment at the clinic. They were considered positive if enzyme-linked immunosorbent assay (ELISA) tests showed the presence of antibodies to the hepatitis C virus.

Health officials did not test the workers at the hemodialysis facility for hepatitis C because they did not view them as likely sources of the nine new infections. Why not?

Why do you think patients were tested for antibody to the virus instead of for the presence of the virus itself

There are both advantages and disadvantages in doing business internationally. Read Case # 2, Missed Call, on page 210 of your text. Also, review the list of potential advantages and drawbacks in Table 7.1 on page 198. What international strategy advantages and drawbacks can you see in this case.

Do you remember your first or even second mobile phone? Chances are it might have been one made by Finnish company, Nokia Corporation. Mine was. It was a beautiful steel blue color and was, I thought, pretty slick. Nokia phones back then were quite popular with consumers and positioned the company as one of the leading mobile phone makers. In 1998, Nokia sold more than 40 million mobile phones to surpass Motorola as the world’s #1 mobile phone company. During this time period, Nokia was light years ahead of its rivals with digital phones. However, “Nokia was caught sleeping in 2007 when Apple Inc.’s iPhone redefined the cellphone as a PC-like device with a touch screen and sleek software.” Since that crucial time, Nokia has lost 75 percent of its market value and is struggling to catch up to Apple and Google Inc.’s Android.

Despite its failure to recognize the market-changing characteristics of Apple’s iPhone, Nokia is still the world’s largest handset manufacturer by volume. Europe is the company’s largest combined market, with about a third of sales. Somewhat surprisingly, China is Nokia’s largest single-country market, accounting for nearly 20 percent of sales. And the United States accounts for only 4 percent of sales, and India (another important target) accounts for only 7 percent of sales. The company has been crafting strategies it hopes will help position it as a dominant force once again in this industry. New CEO Stephen Elop, the first non-Finnish leader and a former top Microsoft executive, pledged to turn around the struggling company.

CEO Elop’s initial plans were aimed at streamlining its smartphone operations costs and speeding delivery of new products. He said, “Nokia has been characterized as an organization where it is too hard to get things done.” More than anything else, the changing market dynamics demand that we must improve our ability to aggressively lead through changes in our environment.” Getting its products to market faster would be a key failing that would have to be improved. In addition to the first round of 1,800 jobs cut, Elom eliminated several senior officials on the company’s group executive board. He also sent a memo to Nokia employees that compared the company’s predicament in catching up to Apple and Google in smartphones to “that of a man who was standing on a burning oil rig at sea. Standing there, he needed to make a choice and he decided to jump.” He went on to say that “Nokia, too, had to jump metaphorically—to take bold action to make up for lost ground.” And bold actions it has taken.

In February 2011, Jo Harlow, the head of smart devices at Nokia, “stood before a packed convention hall at the Mobile World Congress, the cellphone industry’s most important trade show, to explain the Finnish company’s new software alliance with Microsoft.” That agreement had been announced in London only a few days earlier. But, “the need for the deal had been so urgent that Nokia and Microsoft, grasping for a foothold in a mobile computing industry that was quickly slipping away from them, had gone public without a definitive legal agreement, just a handshake and a promise to work together, somehow.” She told the audience that Nokia and Microsoft would produce their first phone using the Windows operating system by the end of the year—a pace two to three times faster than Nokia’s past product introductions. Getting that done would “require an accelerated, effective collaboration with a completely different corporate culture in a creative endeavor so intimate that both would have to discard mutual distrust to make it work.”

By mid-2011, Nokia had unveiled a new smartphone and three lower-priced handsets as initial steps in its transition to Microsoft software. Although analysts described the products as well-designed with an intuitive user interface, they also said the products would be unlikely to help improve the company’s difficulties as there was no carrier support or apps developers. In early fall 2011, the company sold 2,000 wireless patents and patent applications to Ottawa, Canada-based Mosaid Technologies. Many technology companies are using this strategy to “essentially outsource the sometimes expensive process of squeezing revenue out of their patent holdings.” In addition, the company announced another 3,500 job cuts by closing a factory in Romania and transferring production to more efficient plants in Asia. Elop said, “We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger.”

Now, it’s do-or-die for Nokia. One year after the announcement of the Microsoft alliance, the company’s Nokia Lumia 900 smartphone was introduced at the Consumer Electronics Show in Las Vegas in February 2012. “The high-end device marks perhaps the company’s last chance to re-establish itself as a serious player in the U.S.” Will the market once again hang up on Nokia or will it take the call?