The below transactions concerns Ford Company for the year 2012:

1. On May31^st,2012, Ford company purchased a long-term investment related to Motro Companyfor $12 millionas trading securities, of 8% quoted bonds. On the same date the business acquired $15million of Cora Company shares as available-for sale security and purchased Treasury bonds for $3 million, from Samsuc Company hoping to generate profit in short period of time.

2. On November 15^th, 2012, Ford company sold the Samsuc Treasury bonds for $4 million.

3. On December 31^st, 2012, record the necessary adjusting entry(s) and closing entries related to the investments. The market prices of the investments are:

Motro Company      $11.5 million

Cora Company          $16 million

Samsuc Company     $5 million

Required:

1. Record transaction number (3) presenting the necessary adjusting entries.
2. Indicate any amounts that Ford would report in its 2012 statement of financial position and income statement as result of these investments.

Question 2:

Sunny Ltd., a hand sanitizer manufacturer, has prepared its financial statements for the year ended at December 31, 2019. On February 28, 2020, the board of directors authorized to issue the financial statements to shareholders. The following events have occurred:

1. On December 1, 2019, the board of directors decided to issue $50,000,000, 9% convertible bonds for the purpose of expanding business in other countries. The conversion rate is fixed at 50 shares for bond with face value of $1,000. The convertible bonds are offered to the public on January 15, 2020. The market interest rate for a similar bond without conversion option is at 12%.                                                                                        [3 marks]
2. On October 23, 2019, Sunny signed a contract to sell 10,000 hand sanitizer to a local store at a price of $200 each. However, due to the increase in the cost of materials, the estimated cost of making one hand sanitizer has been increased to $250. Sunny has to deliver the hand sanitizer to its customer on January 30, 2020.                                                      [4 marks]

3. Under the terms of the sales contract, Sunny undertakes to recall its new formulated sanitizer, for its manufacturing defects within six months from the date of sale. The accountants estimated that 5% of the sanitizer will be returned for refund. In January 2020, Sunny discovered a serious problem in the manufacturing process of the new formulated sanitizer. Because of this, Sunny expected that 20% of the sanitizer sold in 2019 will be returned for refund.    [4 marks]

4. On December 15, 2019, a group of customers reported that the hand sanitizer that they bought in 2019 caused them have serious skin infection problems. They filed a lawsuit against Sunny on December 20, 2019. The company’s attorney said that it was probable that Sunny would be liable for the case. However, the amount of damage could not be estimated.        [4 marks]

5. On February 12, 2020, the above lawsuit case was settled for the amount of $2,500,000.                                                                                                     [4 marks]
6. Sunny has retail stores in China doing poorly. On February 15, 2020, Sunny estimated that those stores might report a loss of $1,500,000 in 2020.                                 [4 marks]

7. In May 2019, Sunny had legal disputes with Coco Limited. Unable to reach out-of-court settlement with Coco, Sunny sued Coco for compensation for damages in August 2018.         In November 2019, Sunny heard good news about the lawsuit in which the company sued Coco. Sunny’s lawyer is confident that the company will win the case and will receive about $120,000 in compensation for damages from Coco in early 2020. Sunny recognized the gain and receivable from litigation of $120,000 in year 2019.                                 [4 marks]

8. On March 1, 2020, a customer owing $600,000 to Sunny filed for bankruptcy. The financial statements include an allowance for doubtful debts pertaining to this customer only of $30,000.                                                                                          [3 marks]

Required:

For each of the above event, state the correct accounting treatments in accordance with Hong Kong Accounting Standards for the year ended at December 31, 2019. If it is an event after the reporting period, identify whether it is an adjusting or non-adjusting event. Give reasons for your answer.

Sunny Ltd., a hand sanitizer manufacturer, has prepared its financial statements for the year ended at December 31, 2019. On February 28, 2020, the board of directors authorized to issue the financial statements to shareholders. The following events have occurred:

1. On December 1, 2019, the board of directors decided to issue $50,000,000, 9% convertible bonds for the purpose of expanding business in other countries. The conversion rate is fixed at 50 shares for bond with face value of $1,000. The convertible bonds are offered to the public on January 15, 2020. The market interest rate for a similar bond without conversion option is at 12%.                                                                                       [3 marks]

2. On October 23, 2019, Sunny signed a contract to sell 10,000 hand sanitizer to a local store at a price of $200 each. However, due to the increase in the cost of materials, the estimated cost of making one hand sanitizer has been increased to $250. Sunny has to deliver the hand sanitizer to its customer on January 30, 2020.                                                      [4 marks]

3. Under the terms of the sales contract, Sunny undertakes to recall its new formulated sanitizer, for its manufacturing defects within six months from the date of sale. The accountants estimated that 5% of the sanitizer will be returned for refund. In January 2020, Sunny discovered a serious problem in the manufacturing process of the new formulated sanitizer. Because of this, Sunny expected that 20% of the sanitizer sold in 2019 will be returned for refund.        [4 marks]

4. On December 15, 2019, a group of customers reported that the hand sanitizer that they bought in 2019 caused them have serious skin infection problems. They filed a lawsuit against Sunny on December 20, 2019. The company’s attorney said that it was probable that Sunny would be liable for the case. However, the amount of damage could not be estimated. [4 marks]

5. On February 12, 2020, the above lawsuit case was settled for the amount of $2,500,000.                                                                                                    [4 marks]
6. Sunny has retail stores in China doing poorly. On February 15, 2020, Sunny estimated that those stores might report a loss of $1,500,000 in 2020.                                       [4 marks]

7. In May 2019, Sunny had legal disputes with Coco Limited. Unable to reach out-of-court settlement with Coco, Sunny sued Coco for compensation for damages in August 2018. In November 2019, Sunny heard good news about the lawsuit in which the company sued Coco. Sunny’s lawyer is confident that the company will win the case and will receive about $120,000 in compensation for damages from Coco in early 2020. Sunny recognized the gain and receivable from litigation of $120,000 in year 2019.                                       [4 marks]

8. On March 1, 2020, a customer owing $600,000 to Sunny filed for bankruptcy. The financial statements include an allowance for doubtful debts pertaining to this customer only of $30,000. [3 marks]

Required:

For each of the above event, state the correct accounting treatments in accordance with Hong Kong Accounting Standards for the year ended at December 31, 2019. If it is an event after the reporting period, identify whether it is an adjusting or non-adjusting event. Give reasons for your answer.

What does it mean biologically to be human? How can evolution explain both the unity and diversity of human phenotypes? Use specific examples of evidence and some version of the following terms in your answer: neutral genetic variation, evolution, natural selection, drift/bottleneck/founder effect, migration, mutation, and species/population/lineage.

Thorp Inc. maintains a defined benefit pension plan for its employees. Pension plan balances as at January 1, 2020 include:    

¹ These prior service costs are from 2019 and already included in PBO on January 1,2020.

Required:

1. Determine the pension expenses recognized in 2020.
2. Prepare the journal entries to reflect the accounting for the pension plan for 2020.
3. Prepare the ending balances (31 December 2020) for plan assets, PBO, and calculate net pension liability.
4. What will be the expected impact of the current pandemic (Covid-19) on PBO?  

Week 6 Assignment: Case Study: Stephenson Real Estate Recapitalization

Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. The company has shown a profit every year for the past 18 years, and the shareholders are satisfied with the company’s management. Prior to founding Stephenson Real Estate, Robert was the founder and CEO of a failed alpaca farming operation. The resulting bankruptcy made him extremely averse to debt financing. As a result, the company is entirely equity financed, with 11 million shares of common stock outstanding. The stock currently trades at $48.50 per share. Stephenson is evaluating a plan to purchase a huge tract of land in the southeastern United States for $45 million. The land will subsequently be leased to tenant farmers. This purchase is expected to increase Stephenson’s annual pretax earnings by $10 million in perpetuity. Kim Weyand, the company’s new CFO, has been put in charge of the project. Kim has determined that the company’s current cost of capital is 10.5 percent. She feels that the company would be more valuable if it included debt in its capital structure, so she is evaluating whether the company should issue debt to entirely finance the project. Based on some conversations with investment banks, she thinks that the company can issue bonds at par value with a coupon rate of 7 percent. Based on her analysis, she also believes that a capital structure in the range of 70 percent equity⁄30 percent debt would be optimal. If the company goes beyond 30 percent debt, its bonds would carry a lower rating and a much higher coupon because the possibility of financial distress and the associated costs would rise sharply. Stephenson has a 40 percent corporate tax rate (state and federal). If Stephenson wishes to maximize its total market value, would you recommend that it issue debt or equity to finance the land purchase? Explain. Review Stephenson's market value balance sheet before it announces the purchase. Suppose Stephenson decides to issue equity to finance the purchase. What is the net present value of the project? Review Stephenson's market value balance sheet after it announces that the firm will finance the purchase using equity. What would be the new price per share of the firm's stock? How many shares will Stephenson need to issue to finance the purchase? Review Stephenson's market value balance sheet after the equity issue but before the purchase has been made. How many shares of common stock does Stephenson have outstanding? What is the price per share of the firm's stock? Review Stephenson's market value balance sheet after the purchase has been made. Suppose Stephenson decides to issue debt to finance the purchase. What will the market value of the Stephenson company be if the purchase is financed with debt? Review Stephenson's market value balance sheet after both the debt issue and the land purchase. What is the price per share of the firm's stock? Which method of financing maximizes the per-share stock price of Stephenson's equity? In a 2-3 page analysis, answer the questions provided at the end of the case study. Be sure to support your analysis with appropriate calculations and critical thought.

Market balance sheet info: Before the land purchase: Assets=$533,500,000 Total Assets: $533,500,000 Equity=$533,500,000 Debt & Equity=$533,500,000

Market balance sheet after purchase of land: Old Assets=$533,500,000

Will need calculations for new balance sheet including NPV and Equity. Will also need calculations for the change in stock value and how much stock would need to be issued to purchase land. The remaining questions will follow a similar format in which you create Market Value Balance Sheets and calculations.

the beginning of 2020, Browne Corporation had the following stockholders’ equity balances in its general ledger:

Common Stock, $10 Par Value $500,000

Paid-In Capital in Excess of Par 1,500,000

In Capital, Treasury Stock 100,000

Paid-In Capital, Stock Options 80,000

Retained Earnings 100,000

Treasury Stock (15,000 shares) (270000)

Total Stockholders’ Equity 2,010,000

The paid-in capital from stock options relates to options granted on 1/1/16 to the CEO as incentive compensation. As of 1/1/20, the remaining expected benefit period is three years; expense has been and will be recorded evenly over the benefit period.

January 2: Purchased 10,000 shares of its common stock for $16 per share. Browne uses the cost method of accounting for treasury stock transactions.

February 1: Declared and distributed a 30% stock dividend on common stock outstanding when the market price of the stock was $24 per share.

April 1: Issued 20,000 shares of $50 par, noncumulative, convertible 6% preferred stock for $60 per share, where one share of preferred stock is convertible into two shares of common stock.

July 1: 2,000 shares of treasury stock that had been purchased in a prior year for $22 per share were re-issued for $20 per share.

August 1: Holders of 8,000 shares of the preferred stock converted their shares into common stock when the market value of the common stock was $22 per share. Taylor uses the book value method of accounting for conversions.

October 1: Declared and paid a cash dividend of $2 per share on the outstanding common stock.

November 1: investors used ten percent of the outstanding stock option to purchase 1,000 common share. Brown received $25,000 from investors

December 1: Declared and distributed a property dividend of land to preferred shareholders. The land had a fair value of $75,000 and a carrying value of $60,000.

December 31: Recorded 2020 compensation expense related to the stock options.

The 2020 Final Net Income, including the effects of any net income items listed above (and the 2020 tax effects on net income items), was $1,000,000. There were 500,000 shares authorized for both preferred and common stock. Required All journal entries for the item above 12/30/20 stockholders equity section

Required All journal entries for the item above

12/30/20 stockholders equity section

(a) A sample of 12 of bags of Calbie Chips were weighed (to the nearest gram), and listed here as follows. [9 marks]

219, 226, 217, 224, 223, 216, 221, 228, 215, 229, 225, 229

Find a 95% confidence interval for the mean mass of bags of Calbie Chips.

(b) Professor GeniusAtCalculus has two lecture sections (A and B) of the same 4th year Advanced Calculus (AMA 4301) course in Semester 2. She wants to investigate whether section A students maybe ”smarter” than section B students by comparing their performances in the midterm test. A random sample of 12 students were taken from section A, with mean midterm test score of 78.8 and standard deviation 8.5; and a random sample of 9 students were taken from section B, with mean midterm test score of 86 and standard deviation 9.3. Assume the population standard deviations of midterm test scores for both sections are the same. Construct the 90% confidence interval for the difference in midterm test scores of the two sections. Based on the sample midterm test scores from the two sections, can Professor GeniusAtCalculus conclude that there is any evidence that one section of students are ”smarter” than the other section? Justify your conclusions. [8 marks]

(c) The COVID-19 (coronavirus) mortality rate of a country is defined as the ratio of the number of deaths due to COVID-19 divided by the number of (confirmed) cases of COVID-19 in that country. Suppose we want to investigate if there is any difference between the COVID-19 mortality rate in the US and the UK. On April 18, 2020, out of a sample of 671,493 cases of COVID-19 in the US, there was 33,288 deaths; and out of a sample of 109,754 cases of COVID-19 in the UK, there was 14,606 deaths. What is the 92% confidence interval in the true difference in the mortality rates between the two countries? What can you conclude about the difference in the mortality rates between the US and the UK? Justify your conclusions. [8 marks]

Problem 3: A linear regression by using famous data set found in Freedman et al. (1991) in Table 1: ‘Statistics’ refers to the percapita consumption of cigarettes in various countries in 1930 and the death rates (number of deaths per million people) from lung cancer for 1950.

1. Order the data by cigarette using into 5 groups by (2, 2, 2, 2, 3), calculate the standard deviation, and make the graph of standard deviation against cigarettes.
2. Check the graph in 1, what kind of transformation should be used to stabilize the variance?

1. ShopSmart’s International Growth Strategy

ShopSmart, founded by in 1919 by Nick Smart, is a British multinational grocery and merchandise retailer. It is the largest grocery retailer in the United Kingdom, with a 28% share of the local market and the second largest after Walmart measured in revenue. In 2017, ShopSmart had sales of more than £62 billion ($70 billion US dollars), more than 480,000 employees and 6,553 stores in 13 countries.

In its home market of the United Kingdom, the company’s strengths are reputed to come from strong competencies in marketing and store site selection, logistics and inventory management and its own label product offerings. By the early 1990s, these competencies had already given the company a leading position in the United Kingdom. ShopSmart was generating strong cash flows and senior managers had to decide how to use that cash. One strategy they settled n was international expansion.

As managers looked at international markets, they soon concluded that the best opportunities were not in established markets in North America and Western Europe where strong competitors already existed but in emerging markets of Eastern Europe and Asia, where there were strong underlying growth trends. ShopSmart’s first international foray was into Hungary in 1995 where it acquired Globals Stores, a state-owned grocery chain. By 2017, ShopSmart was the market leader in Hungary accounting for 1% of the whole economy of Hungary.

Next, ShopSmart acquired 31 stores in Poland from Stavia Limited. The following year, in 1996, ShopSmart added 13 stores that it purchased from Kmart in the Czech Republic and Slovakia. The next year, ShopSmart moved to purchase stores in the Republic of Ireland.

ShopSmart’s Asian expansion begun in 1998 when it moved into Thailand. In 1999, the company entered South Korea when it partnered with Samsung to develop a chain of hypermarkets. This was followed by entry into Taiwan in 2000, Malaysia in 2002, Japan in 2003 and China in 2004.

The move into China came after three years of careful research and discussions with potential partners. Like many other western companies, ShopSmart was attracted to the Chinese market by its large size and rapid growth. In the end, ShopSmart settled on a 50-50 joint venture with Hymall, a hypermarket chain that is controlled by Ting Hsin, which has been operating in China for six years. In 2014, ShopSmaart combined its 131 stores in China in a joint venture with the state-run China Resources Enterprise and its nearly 3,000 stores. ShopSmart owned 20% of the joint venture. As a result of these moves, by 2017, ShopSmart generated sales of about $21 billion outside the United Kingdom. The addition of international stores has helped make ShopSmart the second largest company in the global grocery market behind only Walmart. By 2017, all its foreign ventures were making money.  

(Source: Adapted from Hill, C.W.L. & Hult, G.T.M., (2019), International Business: Competing in the Global Marketplace, 12th Edition, McGraw Hill Education)

1. Examine two reasons why ShopSmart’s initial international expansion focused on emerging markets rather than competing with established companies in the more advanced markets of North America and Western Europe.

2. Discuss two disadvantages that ShopSmart encountered as a first mover into these emerging markets.

3. ShopSmart’s entry strategy into the Eastern European countries was through acquisition. Discuss three disadvantages that the company is likely to encounter as a result of this entry strategy

4. Identify ShopSmart’s strategic entry into the Asian market and discuss two benefits that the company sought to achieve with this strategy