Do you think that taking the (Harvard) MBA Oath positively affects the ability of employees to discharge their ethical duties? Is it useful? If so, in what ways? What would you add to the Oath? Is there anything that concerns you, and why?

Hamburgers are America’s favorite food. Consumers spend more than $100 billion on the beef sandwiches every year. But despite America’s infatuation with burgers, there is considerable dissatisfaction among consumers based on hamburger quality and value. Many customers just aren’t happy with what is served up at market-leading fast-food outlets. They want a better burger, and they won’t hesitate to pay a higher price to get one. Enter Smashburger. Started just a few years ago in Denver, Colorado, Smashburger is now a rapidly expanding chain of more than 100 stores in 17 states. And all this growth happened during a severe economic downturn despiteSmashburger’s average lunch check of $8. Many customers pay as much as $10 or $12 for a burger, fries, and shake. The Smashburgervideo shows how this small startup has pulled off a seemingly impossible challenge.

Discuss the three major pricing strategies in relation to Smashburger. Which of these three do you think is the company’s core strategic strategy?

What effect does Smashburger’s premium price have on consumer perceptions?

Is Smashburger’s success based on novelty alone or will it continue to succeed? Explain.

1. On January 1, 2020, Blossom Ltd. had 498,000 common shares outstanding. During 2020, it had the following transactions that affected the common share account:

The company’s year end is December 31.Determine the weighted average number of shares outstanding as at December 31, 2020. (Round answer to 0 decimal places, e.g. 5,275.)

Assume that Blossom earned net income of $3,000,000 during 2020. In addition, it had 80,000 of 7%, $100 par, non-convertible, non–cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2020.

Calculate earnings per share for 2020, using the weighted average number of shares determined above. (Round answer to 2 decimal places, e.g. 15.25.)

Assume that Blossom earned net income of $3,000,000 during 2020. In addition, it had 80,000 of 7%, $100 par, non-convertible, non–cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2020. Assume that net income included a loss from discontinued operations of $400,000, net of applicable income taxes.

Calculate earnings per share for 2020. (Round answers to 2 decimal places, e.g. 15.25.)

Question 3 (Total 6 marks)

Biogen Pharmaceutical Ltd is a large pharmaceutical company based in Australia. During the year ending 30 June 2020, Biogen Pharmaceutical Ltd purchased two electronic databases containing scientific data related to respiratory drugs. Database A was acquired for $1,000,000 and contains data that is copyright protected. Database B was acquired for $800,000 and contains data that is not copyright protected. Required

(a) Explain whether Database A and Database B satisfy:

(i) The definition of an intangible asset in accordance with AASB 138 Intangible Assets, and

(ii) The recognition criteria for an intangible asset in accordance with AASB 138 Intangible Assets.

(b) If both databases were recognised by Biogen Pharmaceutical Ltd as intangible assets, explain:

(i) How the databases would be measured on initial recognition and subsequent to initial recognition, and

(ii) Whether the useful life of the databases would be assessed as finite or indefinite.

important: The relevant requirements of AASB 138 Intangible Assets have been appropriately applied and particularly explained.

.

The following are several figures reported for Allister and Barone as of December 31, 2021:

Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $80,000 that was unrecorded on its accounting records and had a four-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $142,000 to Allister for $204,000. Of this amount, 10 percent remains unsold in Allister's warehouse at year-end.

Determine balances for the following items that would appear on Allister's consolidated financial statements for 2021:

Inventory

Sales

Cost of Goods Sold

Operating Expenses

Net Income Attributable to Noncontrolling Interest

In 2007, the British bank ________ experienced the first bank run to occur in the United

Kingdom in over 100 years.

A) the First National Bank of Keystone

B) Indymac

C) Northern Rock

D) Barclays Bank, PLC

The largest bank failure rate occurred during the:

A) early 1930s.

B) late 1970s.

C) early 1890s.

D) mid-2000s.

Immediately after being sworn in as president in 1933, ________ declared ________.

A) Herbert Hoover; the end of the Great Depression.

B) Franklin D. Roosevelt; a bank holiday.

C) Alexander Hamilton; the establishment of the First Bank of the United States.

D) Harry S. Truman; higher taxes on bank profits.

The name of the government agency that insures commercial bank deposits is the:

A) Federal Savings and Loan Insurance Corporation.

B) Federal Deposit Insurance Corporation.

C) Federal Reserve System.

D) Office of the Comptroller.

Computation of deferred taxes under IFRS is slightly different from GAAP. For example, in the United Kingdom (which follows IFRS), companies use the crystallisation approach. An equivalent concept in the United states is “realization”. The concept underlying this “crystallisation” approach is that companies recognize deferred income taxes only if the taxes are expected to crystallize. Therefore, if a liability is deferred indefinitely, then the present value of that liability is zero. No deferred tax liability is recognized if the accumulated deferred tax amount is expected to increase each year, thereby delaying indefinitely the ultimate liquidation of this obligation. Compare and contrast the theory behind the “crystallisation” approach with the interperiod allocation approach used in the U.S. How might this same concept be applied to the recognition of liability for accounts payable? That is, if accounts payable are expected to increase each year, should the crystallization concept apply to this liability? Why or why not? How reasonable does this approach seem? Explain.

Illustrate the following with supply or demand curves:

a. In 2017, the Motiva refinery at Port Arthur, Texas, was forced to shut down due to Hurricane Harvey. It was the largest refinery in the United States. Along with Motiva, other refineries in the area were also shut down, accounting for almost 20 percent of the country's capacity. Which way would you expect the price of oil to go?

b. A sudden frost during the spring season leads to a large number of cherry trees to lose their flowers. Which way will the price of cherries go?

c. In 2018, the United Kingdom witnessed one of the hottest summers according to the Met Office. The average temperature was 15.8⁰ C (60.4⁰ F), similar to what is was in 1976, 2003, and 2006. With Britain in a prolonged period of heat, mobile air conditioners gained popularity. Which way will the price conditioners go?

Computation of deferred taxes under IFRS is slightly different from GAAP. For example, in the United Kingdom (which follows IFRS), companies use the crystallisation approach. An equivalent concept in the United states is “realization”.

The concept underlying this “crystallisation” approach is that companies recognize deferred income taxes only if the taxes are expected to crystallize. Therefore, if a liability is deferred indefinitely, then the present value of that liability is zero. No deferred tax liability is recognized if the accumulated deferred tax amount is expected to increase each year, thereby delaying indefinitely the ultimate liquidation of this obligation.

Compare and contrast the theory behind the “crystallisation” approach with the interperiod allocation approach used in the U.S.

How might this same concept be applied to the recognition of liability for accounts payable? That is, if accounts payable are expected to increase each year, should the crystallization concept apply to this liability? Why or why not?

How reasonable does this approach seem? Explain.

1. Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. Also, today’s spot exchange price of the pound is $2.00 while the 6month forward exchange price of the pound is $1.98. If the price of the 6-month forward pound were to _____, U.S. investors would be indifferent between covered U.K. investment and domestic U.S. investment under exact CD.

a. rise to $1.990

b. rise to $2.012

c. fall to $1.960

d. fall to $1.944

e. None of the above.

2. Suppose in Zurich £/$ = 0.5, while in New York SF/$ = 2.5, but in London £/SF = 0.1. If you begin by holding £1 million, your profit from these exchange rates will be:

a. £1 million

b. £4.2 million

c. £2.5 million

d. £1.5 million