Presented below is information related to Blossom Company.

1. On July 6, Blossom Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is:

Land $372,000

Buildings 1,116,000

Equipment 744,000

Total $2,232,000

Blossom Company gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market price of $171 per share on the date of the purchase of the property.

2. Blossom Company expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building. (Prepare consolidated entry for all transactions below.)

Repairs to building $107,860

Construction of bases for equipment to be installed later 135,500

Driveways and parking lots 131,060

Remodeling of office space in building, including new partitions and walls 162,550

Special assessment by city on land 19,750

3. On December 20, the company paid cash for equipment, $274,800, subject to a 2% cash discount, and freight on equipment of $11,540.

Prepare entries on the books of Blossom Company for these transactions

Vander Company acquired the net assets of Howe Company for $190,000. Vander issued 5000 shares of its $1 par common stock to complete the transaction. Vander's stock was selling for $38 a share on the date of acquisition. On the date of acquisition Howe reported the following:

Prepare the journal entry that Vander Company recorded on the date of the acquisition of Howe’s net assets

On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $772,275 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $330,975 both before and after Truman’s acquisition.

In reviewing its acquisition, Truman assigned a $132,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years.

The following financial information is available for these two companies for 2018. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

1. How did Truman allocate Atlanta’s acquisition-date fair value to the various assets acquired and liabilities assumed in the combination?

2. How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests?

3. How did Truman derive the Investment in Atlanta account balance at the end of 2018?

4. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2018. At year-end, there were no intra-entity receivables or payables.

Company A acquired 100% of Company B's voting stock on January 1, 2018 by issuing 10,000 shares of its $10 par value common stock. Company A's common stock had a fair value of $14 per share at that time. Company B's stockholder's equity was $105,000 at date of acquisition. The trademark was undervalued by $10,000. It has an indefinite life. Equipment (with a 5 year life) was undervalued by $5,000. A customer list that had been created internally had an estimated useful life of 20 years was valued at $20,000.

Below are the financial statements for the two companies for the year ending December 31, 2018. Credit balances are indicated by (parentheses). Complete the trial balance of A Company (calculate income of sub and investment in sub) by using the three different investing accounting methods; Equity, Intial Value, and Partial Equity. Then, continue by preparing a consolidated worksheet for year ended Dec. 31, 2018. Include your consolidation and elimination entries in journal form.

Prepare the journal entry recording pension expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

The DeVille Company reported pretax accounting income on its income statement as follows: 2019 2020 2021 2022 Pretax accounting income $350,000 270,000 340,000 380,000 Included in the income of 2019 was an installment sale of property in the amount of $50,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $20,000 in 2020, $25,000 in 2021, and $5,000 in 2022. Included in the income of 2020 was $20,000 fine paid for violation of federal law. The enacted tax rate for 2019 and 2020 was 30%, but during 2020, new tax legislation was passed reducing the tax rate to 20% beginning in 2021.

1. Prepare the year-end journal entries to record income taxes for 2019.

2. Prepare the year-end journal entries to record income taxes for 2020.

Provide Explanation for each part

What are the main business environment factors in HVAC - variable frequency drives market in US.

1. Political/Legislative factors

2. Distribution factors - from EU to US

3. Technological factors - difference between US and EU

Nike

Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the company focused on providing high quality running shoes designed for athletes by athletes. Founder Philip Knight believed high-tech shoes could be sourced from overseas at competitive prices. Nike’s commitment to designing innovative footwear for serious athletes, helped it build a cult following among US consumers. Nike believed in a ‘pyramid of influence’ in which the preferences and testimonial of top athletes influenced the product and brand choices of others. From the start its marketing and advertising campaigns featured accomplished athletes: in 1985 basketballer Michael Jordan was signed up, albeit then as a rookie.

In 1988 the ‘Just Do It’ campaign was launched. The campaign subtly challenged a generation of athletic enthusiasts to chase their goals. It was a natural manifestation of Nike’s attitude to self-empowerment through sports.

Nike began expanding overseas. In Europe it found that its US-style ads were seen as too aggressive. To authenticate its brand in Europe it focused on soccer and became active as a sponsor of youth leagues, local clubs and national teams. Further pursuing its strategy of professional endorsements, Nike decided to sponsor the Brazilian soccer team, which turned in to a big break when they won the World Cup in 1994. In 2007, Nike acquired Umbro a British maker of soccer-related footwear, apparel and equipment. This acquisition helped to boost Nike’s presence in soccer.

Continuing overseas expansion, China became a focus during the 2008 Olympics in Beijing. Although Adidas was the official sponsor, Nike received special permission from the International Olympic Committee to run Nike ads featuring Olympic athletes during the games and sponsored most of the Chinese teams. Some believed Nike’s marketing strategy during the Olympics was more effective than Adidas’s Olympic sponsorship.

Through the 1990s Nike moved into baseball, football, cycling, volleyball, hiking, soccer and then golf. During this time it developed a repeatable growth strategy[1]. Athletic shoes continued to be the core starting point but Nike then quickly moved into adjacent segments: into apparel and then equipment.

Internally Nike marketers adopted the three-word brand mantra: authentic athletic performance, to guide their marketing efforts. Its entire marketing program must reflect these brand values. Nike has expanded its brand meaning form ‘running shoes’ to ‘athletic shoes’ to ‘athletic shoes and apparel’ to ‘all things associated with athletics including equipment’. However it is always guided by the brand mantra. For example, as Nike rolled out its successful apparel line, the product had to be innovative enough through material, cut and/or design, to truly benefit top athletes.

Expanding into new categories and then new segments required the company to forge new distribution channels and lock in suppliers. Nike has pursued a selective distribution strategy. It pulled its product from the retail chain Sears when they acquired discount chain Kmart, to make sure Kmart did not carry the brand.

Expanding into new product categories meant new endorsements including Tiger Woods for golf. In tennis, John McEnroe was its first brand star in 1986. More recently Nike has aligned with Maria Sharapova, Roger Federer and Rafael Nadal. Some called the 2008 Wimbledon final between Federer and Nadal – both dressed in swooshes from head to toe – a 5-hour commercial valued at $10.6 million.

Nike has an unfortunate history of associating with some athletes who attract adverse publicity. In the 6 months following Tiger Woods highly publicised personal scandal, Nike lost over 100,000 customers[2] and although several sponsors cut ties with Woods, Nike did not. Nike did however terminate is contract with disgraced cyclist Lance Armstrong once the doping evidence became ‘seemingly insurmountable’. Oscar Pistorius is the latest example of a Nike endorsement that could turn sour.

Nike has also attracted adverse publicity regarding its offshore facilities; centring on working conditions and low wages, with media accusations of exploitation. Whilst Nike has assumed a policy of reformation for its abuses, the issue became, and continues to be, a recurring public relations nightmare for Nike.

NikeiD (rebranded as Nike by You) is a service provided by Nike allowing customers to customise and design their own Nike merchandise. This was launched in 1999 through the Nike website. Delivery is offered too many countries but not currently to Australia and New Zealand; here on-line local companies may act as local distributors for customised Nike products.

Basketball superstars have continued to feature in Nike’s promotions. In addition it formed a partnership with Foot Locker to create a new chain of stores in the US, House of Hoops by Footlocker, which offers only basketball products by Nike sub-brands such as Converse and Jordan.

Recently, Nike’s lead in the running category has grown to 60% market share, thanks in part to its exclusive partnership with Apple. Nike+ technology includes a sensor that runners put into their running shoes and a receiver, which fits into an iPod, iTouch, or iPhone. Then the athlete goes for a run or hits the gym, the receiver captures his or her mileage, calories burned, and pace, and stores it until the information is downloaded. Nike+ is now considered the world’s largest running club.

In 2008 and 2009, Nike+ hosted the Human Race 10K, the largest and only global virtual race in the world. The event, designed to celebrate running, drew 780,000 participants in 2008 and surpassed that number in 2009. To participate, runners register online, gear up with Nike+ technology, and hit the road on race day, running any 10K route they choose at any time during the day. Once the data is downloaded from the Nike+ receiver, each runner’s official time is posted and can be compared to the times of runners from around the world.

Like many companies, Nike is trying to make its companies and products more eco-friendly. However Nike does not focus on promoting this. As one brand consultant explained: ‘Nike has always been about winning. How is sustainability relevant to its brand?’ Nike executives agree that promoting an eco-friendly message would distract from its high-tech image, so efforts like recycling old shoes into new shoes are kept quiet.

As of 2020 Nike continues to dominate the athletic footwear market with a 50% world market share. Swooshes abound on everything from wristwatches to skateboards to swimming caps. The company’s long term strategy focuses on basketball, running, soccer/football, women’s fitness, men’s training and sports culture. As a result of its successful expansion across geographical markets and product categories, Nike is the top athletic apparel and footwear manufacturer in the world, with annual corporate revenues exceeding $39 billion.

These questions are compulsory and relate to the Nike case (on pages 3 and 4 of exam). Read the case and answer the following questions.

1. Evaluate all aspects of Nike’s marketing strategy. Within your evaluation, explain fully the reasons for success – or failure. Conclude your evaluation with a summary bullet point list of i) strengths, and ii) weaknesses.
2. You are contemplating accepting a consultancy with Nike’s rival Adidas to help them hone their marketing strategy to compete with Nike
3. 1. You have a meeting scheduled with two of Adidas’s senior accountants who are suspicious of the value of marketing. You have been asked to present to them: Your ‘Top 5’ - that is 5 key marketing points that should contribute to marketing success with a brief explanation of each. (5 marks)
4. 2. In light of your evaluation of Nike’s marketing strategy, outline some marketing strategy recommendations, with rationale, that Adidas may consider.