Duchamp plc is a company that publishes regional newspapers. Each newspaper contains news relevant to a specific town or city.

On 1^st July 2019 Duchamp plc purchased the ‘Winchester Weekly Bulletin’ title from a competitor. This title was launched in 1934 and is still popular. The title cost Duchamp £350,000.

The CEO of Duchamp plc felt it was inconsistent to have one title recognised on the Statement of financial position when other titles that were created ‘in-house’ by Duchamp were not capitalised. He has requested the Finance Director work out the expenditure on these in-house titles and capitalise it along with the Winchester Weekly Bulletin.

The only other title purchased by Duchamp plc is the ‘Cambridge Evening Mercury’ for which it paid £100,000 five years ago. Since then circulation has doubled and the CEO feels the magazine must consequently be worth at least twice as much. He has suggested the title is revalued to reflect this.

On 1^st October 2019 the company began developing some new software that, if successful, would reduce the cost of producing the newspapers. The initial design work proceeded quickly but building the new software has proved difficult due to lack of compatibility between the different systems. Development costs at 30^th June 2020 had reached £65,000 and the board are questioning whether it is worth investing further in what might be a failing project when similar packages could be bought ‘off the shelf’.

Requirement

1. Discuss how the purchase of the Winchester Weekly Bulletin should be treated in the financial statements including how it should be measured subsequently.  (3 marks)

2. Explain whether the CEO’s ideas with respect to the in-house titles and the Cambridge Evening Mercury are acceptable.  (3 marks)

3. Explain whether the costs incurred in the process of developing the new software can be capitalised as at 30^th June 2020. (You are not required to repeat all the PIRATE criteria).  (4 marks)

3. A firm announced that it will pay a $0.10 dividend per share to holders of record as of Wednesday, July 29, 2020. Holding all else constant, the stock price will be lower by $0.10 per share at the opening of trading on

1. A) Monday, July 27, 2020

2. B) Tuesday, July 28, 2020.

3. C) Wednesday, July 29, 2020.

4. D) Thursday, July 20, 2020

5. E) The stock price will not be lower on any of the above days.

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4. XYZ Inc. plans to sell an asset for $21,000. The asset was acquired 5 years ago for $50,000 and was depreciated using the straight-line method with an expected life of 5 years. If XYZ’s tax rate is 21%, then the taxes owed on the sale will be:
:

A B C D E

5.

A B C D E

$2,000
$3,00
$4,100
$4,410
None of the above

1. Speedy Taxi Service purchased a new cab for $33,500. It is expected to have a salvage value of $1000 and a life of 3 years. The cab is expected to be driven 150,000 miles over those three years. It has been driven 30,000 miles in year 1 and 20,000 miles in year 2.
   1. Compute the annual depreciation for the first two years under each of the following methods:
      1. Straight Line
      2. Units-of-Activity
      3. Double-Declining

If you were the owner of the Taxi Service, which method and why would you deem most appropriate?Summit Company sells equipment on June 30, 2020. The equipment originally cost $45,000 and as of December 31, 2019 had accumulated depreciation of $24,000. Depreciation expense for the first six months of 2020 is $4,000.

Prepare the journal entries to record the depreciation expenses up to the date of sale and to record the sale of the equipment in these two independent situations. (Sales price – Book value = gain or loss)

1. Sold for $25,000 on June 30, 2020
2. Sold for $10,000 on June 30, 2020

EXTRA CREDIT: Match the statement with the term most directly associated with it.

Goodwill

Intangible Assets

Research and development costs

Amortization

Franchises

1. Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.___________________________________
2. The excess of cost of a company over the fair value of the net assets acquired.___________________________________
3. A right to sell certain products or services, or use certain trademarks or trade names within a designated geographic area._______________________________________
4. Costs incurred by a company that often lead to patents or new products. These costs must be expensed as incurred.________________________________________________
5. The allocation of the cost of an intangible asset to expense in a rational and systematic manner._________________________________________________

Describe the role of managerial accounting in your current or former place of business. If you have not been employed by a company that uses managerial accounting, choose a well-known company and describe how managers of that company might use managerial accounting information. Be specific. Do not choose a company that one of your classmates has already written about.

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.)

Metlock Company has not yet prepared a statement of cash flows for the 2020 fiscal year. Comparative balance sheets as of December 31, 2019 and 2020, and a statement of income and retained earnings for the year ended December 31, 2020, are presented as follows.

At the beginning of 2015, Mazzaro Company acquired equipment costing $170,800. It was estimated that this equipment would have a useful life of 6 years and a salvage value of $17,080 at that time. The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year. During 2017 (the third year of the equipment’s life), the company’s engineers reconsidered their expectations, and estimated that the equipment’s useful life would probably be 7 years (in total) instead of 6 years. The estimated salvage value was not changed at that time. However, during 2020 the estimated salvage value was reduced to $5,000. Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table. Year Depreciation Expense Accumulated Depreciation 2015 $ $ 2016 2017 2018 2019 2020 2021 Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT

Which one of the following best fits the description of a private placement?

A. 3-year commercial bank loan B. 10-year loan from an insurance company C. 2-year direct business loan D. 3-year loan to a firm by its original founder E. 20-year bonds sold in the public markets

Which one of the following best fits the description of private placement? 

a) 3- year commercial bank loan

b) 3-year loan to a firm by its original founder

c) 10-year loan from an insurance company

d) 20-year bonds sold in the public markets

e) 2-year direct business loan