Seashell Corp. was organized to consolidate Sea Company and Shell Company in a business combination. Seashell issued 25,000 shares of its newly authorized $10 par value common stock in exchange for all of the outstanding common stock of Sea and Shell. At the time of the consolidation, the fair value of Sea's and Shell's assets and liabilities are equal to their book values. The shareholders' equity accounts of Sea and Shell on the date of the consolidation were:

Which one of the following is the amount of goodwill Seashell would recognize upon issuing its common stock to effect the consolidation?

You Answered Correctly! (Answer is A, $0)

Explanation:

Since Seashell's stock is newly issued to effect the consolidation, it has no prior market value. In the absence of a market value, the fair value of Seashell's stock is determined by the fair value of the net assets acquired in the consolidation. Therefore, the consideration given (common stock issued) is equal to the fair value of net assets acquired, and no goodwill is recognized

For this problem what would be "the fair value of the net assets acquired in the consolidation" as stated in the answer explanation above? Also, please explain as simple as possible why goodwill is not recognized because I still can't seem to understand why it isn't with the explanation above?

Torres Company accumulates the following summary data for the year ending December 31, 2020, for its Water Division, which it operates as a profit center: sales—$2,000,000 budget, $2,080,000 actual; variable costs—$1,000,000 budget, $1,050,000 actual; and controllable fixed costs—$300,000 budget, $305,000 actual. Prepare a responsibility report for the Water Division for the year ending December 31, 2020. Prepare a responsibility report for a profit center.

Benjamin is an American investor seeking to evaluate an investment opportunity in Motorola Solutions Inc. On the other side of the globe, Desmond from Singapore is also contemplating the same choice. They have access to the following information in US dollar terms:
Table 2.1: Dividend Payout Schedule for Motorola Solutions Inc.
Both enter an investment worth 50 shares each from their respective countries on April 15, 2019 at a per share price of $141.44 and exit the market on March 12, 2020 at a price of $145.24. Benjamin falls in the ordinary income tax-bracket of 28% while Desmond’s foreign investment income is taxed at 15%. For their investment horizon the exchange rate has moved as follows:
Table 2.2: Exchange Rate Movements during Investment Horizon
Date Exchange Rate*
April 15, 2019
SGD1.35291/$
June 13, 2019
SGD1.3669/$
September 12, 2019
SGD1.37774/$
December 12, 2019
SGD1.35719/$
March 12, 2020
$0.71628/SGD
March 12,2020
$0.70514/SGD
* SGD: Singapore Dollar

Question 1
Compute the before-tax HPR and IRR for Benjamin based on USD earnings.

Question 2
Compute the afer-tax HPR and IRR for Benjamin based on USD earnings
page 5

Question 3
Repeat the exercises in Questions 1 and 2 above for Desmond in terms of Singapore Dollars.

Question 4
Do both investors earn the same HPR and IRR? Explain the role of exchange rates and FOREX risk in this context. Who faces this risk? Is the risk worth it in this scenario? If the HPR and IRR are different for both investors, can you deduce the rate at which the USD may have appreciated/depreciated over the investment horizon?

Do It! Review 11-3b Oriole Company has had 4 years of record earnings. Due to this success, the market price of its 435,000 shares of $4 par value common stock has increased from $15 per share to $52. During this period, paid-in capital remained the same at $5,220,000. Retained earnings increased from $3,915,000 to $26,100,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders’ equity, and (c) par value per share. (a) 1. Stock dividend - retained earnings $ 2. 2-for-1 stock split - retained earnings $ (b) Oriole Company Original Balance After Dividend After Split Paid-in capital $ $ $ Retained earnings Total stockholder’s equity $ $ $ Shares outstanding (c) 1. Stock dividend - par value per share $ 2. 2-for-1 stock split - par value per share $ Click if you would like to Show Work for this question: Open Show Work

The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation methods can make it difficult for a financial analyst to compare periodic performance from firm to firm.

Suppose you were a financial analyst trying to compare the performance of two companies. Company A uses the double-declining-balance depreciation method. Company B uses the straight-line method. You have the following information taken from the 12/31/2021 year-end financial statements for Company B:

You also determine that all of the assets constituting the plant and equipment of Company B were acquired at the same time, and that all of the $145,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero.

Required:

1. In order to compare performance with Company A, estimate what B's depreciation expense would have been for 2021 if the double-declining-balance depreciation method had been used by Company B since acquisition of the depreciable assets.
2. If Company B decided to switch depreciation methods in 2021 from the straight line to the double-declining-balance method, prepare the 2021 journal entry to record depreciation for the year, assuming no journal entry for depreciation in 2021 has yet been recorded.

The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation methods can make it difficult for a financial analyst to compare periodic performance from firm to firm.

Suppose you were a financial analyst trying to compare the performance of two companies. Company A uses the double-declining-balance depreciation method. Company B uses the straight-line method. You have the following information taken from the 12/31/18 year-end financial statements for Company B:

You also determine that all of the assets constituting the plant and equipment of Company B were acquired at the same time, and that all of the $260,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero.

Required:

1. In order to compare performance with Company A, estimate what B's depreciation expense would have been for 2015 through 2018 if the double-declining-balance depreciation method had been used by Company B since acquisition of the depreciable assets.

2. If Company B decided to switch depreciation methods in 2018 from the straight line to the double-declining-balance method, prepare the 2018 journal entry to record depreciation for the year, assuming no journal entry for depreciation in 2018 has yet been recorded.

The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation methods can make it difficult for a financial analyst to compare periodic performance from firm to firm. Suppose you were a financial analyst trying to compare the performance of two companies. Company A uses the double-declining-balance depreciation method. Company B uses the straight-line method. You have the following information taken from the 12/31/18 year-end financial statements for Company B: Income Statement Depreciation expense $ 6,500 Balance Sheet Assets: Plant and equipment, at cost $ 65,000 Less: Accumulated depreciation (26,000 ) Net $ 39,000 You also determine that all of the assets constituting the plant and equipment of Company B were acquired at the same time, and that all of the $65,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero.

Required: 1. In order to compare performance with Company A, estimate what B's depreciation expense would have been for 2015 through 2018 if the double-declining-balance depreciation method had been used by Company B since acquisition of the depreciable assets.

2. If Company B decided to switch depreciation methods in 2018 from the straight line to the double-declining-balance method, prepare the 2018 journal entry to record depreciation for the year, assuming no journal entry for depreciation in 2018 has yet been recorded.

The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation methods can make it difficult for a financial analyst to compare periodic performance from firm to firm.

Suppose you were a financial analyst trying to compare the performance of two companies. Company A uses the double-declining-balance depreciation method. Company B uses the straight-line method. You have the following information taken from the 12/31/18 year-end financial statements for Company B:

You also determine that all of the assets constituting the plant and equipment of Company B were acquired at the same time, and that all of the $200,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero.

Required:

1. In order to compare performance with Company A, estimate what B's depreciation expense would have been for 2015 through 2018 if the double-declining-balance depreciation method had been used by Company B since acquisition of the depreciable assets.
2. If Company B decided to switch depreciation methods in 2018 from the straight line to the double-declining-balance method, prepare the 2018 journal entry to record depreciation for the year, assuming no journal entry for depreciation in 2018 has yet been recorded.

. Managing Employee Benefits: Cutting Benefits at Generals Construction As Generals Construction moves into its tenth year, the company’s future is promising. The company has continued to grow and profit, but the CEO has asked company leaders to examine expenses to ensure that the company is financially stable going forward. As the Director of Human Resources, Jane Smith is examining opportunities to cut employeerelated expenses while maintaining employee satisfaction and morale. However, Director of Finance Ann Lane is pushing some cost-cutting measures that Jane thinks may have a negative effect.

Generals Construction employs over 100 full-time construction workers and about 40 other workers that include construction supervisors, office staff, and management. Right now, all employees receive the same basic employee-benefits package, which includes a health insurance plan fully paid by the company and a generous vacation allowance. After 30 days of employment, all employees can enroll in the health plan and receive coverage for themselves and their families, and the company pays the full premium. New hires receive 5 vacation days, employees with one year of service receive 10 vacation days, and employees with three years of service receive 15 days. Finally, the company also provides a modest retirement plan benefit. The benefit offerings were determined when the company was started, before Jane joined the company. At the time, the CEO needed to hire nearly 50 workers in a short period of time to fulfill a new contract, and the attractiveness of the health insurance and vacation benefits in particular were instrumental in meeting the company’s recruitment goals. Ann suggests that the company make some significant changes to the benefits offerings in order to stabilize company finances for the future. While Jane agrees that the benefits that the company offers are fairly generous compared to those of competitors, she does not think the cuts Ann is suggesting are a good idea for the company. First, Ann wants some dramatic changes to the health insurance plan. Ann thinks the employees should bear more of the cost of the health insurance plan, including asking the employees to pay at least half of the cost of the premiums for individual coverage and the full premiums for family coverage. This shift would result in an increase of several hundred dollars in deductions from the biweekly pay of many employees. Ann also suggests a cut in the number of vacation days, but only for the construction workers. She thinks construction workers should receive 5 vacation days after one year and 10 vacation days after three years of service. However, she states that these cuts are not necessary for other workers, including the supervisors, office workers, and management. She argues that the vacation time for the construction workers is costing the company too much money because they must pay overtime and hire temporary workers to cover the absences. She notes that when others are absent, the same coverage is not required, and thus, it won’t cost the company anything to keep the same vacation allowance. While Jane understands that some reduction in employee benefits expenses is needed, she is concerned that the cuts Ann is recommending are too drastic and may be perceived as unfair. While she knows the employees will understand that they may have to contribute to their health insurance premium eventually, she thinks that the changes Ann is proposing are too much of a change at one time. Further, Jane has serious concerns with offering different vacation allowances for the front-line construction workers and the other employees. As she prepares to meet with the CEO to discuss reducing expenses, she needs to consider her response to Ann’s recommendations.

1. Does Jane have a valid concern?

2. What kind of changes could the company make to benefits to address Jane’s concerns?

Course：Business Law

Frontier Entertainment Pty Ltd is a company that trades under the name “Concert Connections” (CC). In January of 2019, CC negotiated and arranged for three international acts to tour Australia in 2020 and 2021. The three artists, their Australian concert locations and dates were as follows:

1. Taylor Swifty Sydney / Melbourne / Adelaide Brisbane / Perth / Hobart November – December 2020

2. Ed Shearer Brisbane / Perth / Hobart January – February 2021

3. Lady Gaggle Sydney / Canberra / Darwin August – September 2021

In April of 2020, those consumer concert goers who purchased tickets to one or more of the Taylor Swifty concerts received notice from CC that due to the COVID- 19 pandemic, Taylor’s arranged concerts had been cancelled. The notification further stated that CC would be cancelling all ticket purchase contracts and retaining the full $550.00 ticket purchase price previously paid by concert goers in accordance with Clause 10 of the contract entered when the ticket(s) were originally purchased. Clause 11 of the same contract also states that in the event of CC exercising its rights in relation to clause 10, ticket purchasers are prohibited from taking any legal action for recovery of their money previously paid.

Samuel purchased 5 tickets for his family to attend the Taylor Swifty concert in Sydney on 02 November 2020. Samuel comes to see you and says that despite CC’c clearly expressed contractual right to retain his $2,700.00, their refusal not to refund him his money is unfair. Samuel wants to know if the Australian Consumer Law (ACL) can assist his cause.

Advise Samuel