On January 1, 2018, Edward Corporation had 29,000 shares of $5 par value common stock and 29,000 shares of 7%, $100 par value convertible preferred stock outstanding. The preferred shares carried a 2-for-1 conversion privilege. On October 1, 2018, all of the preferred shares were converted to common. What number of shares must Edward use in computing basic earnings per share at December 31, 2018?

In 2018, Bogart paid $20,000 of interest on a mortgage on his home (Bogart borrowed $600,000 in 2015 to buy this primary residence and it is currently worth $1,000,000). In 2018 Bogart also paid $12,000 of interest on a $150,000 home equity loan on his home, and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000 in 2016). How much interest expense can Bogart deduct as an itemized deduction in 2018?

Thunderbolt plc raised finance through the issue of shares on 1 April 2018. The company issued convertible bonds at their nominal value of K20 million. Interest is payable annually in arrears at the rate of 5%. The conversion would be done on the following terms: Each K 4000 bond is convertible at any time up to maturity into 800 ordinary shares. Alternatively the bonds would be redeemed at par after 4 years in 2022. The market rate applicable to non convertible bonds is 9%. (The present value of $1 payable at the end of the year, based on rates of 5% and 9% are given in the table of the Appendix at the end of the question paper.) Required: a) Explain why recognition of convertible bonds should be split into the liability component and the equity component, and calculate the two amounts Thunderbolt recognised. b) Prepare an amortisation schedule showing amounts outstanding at the end of each of the four years to 31 March 2022 (Work to the nearest $000) c) State what amounts would be reported in the statement of profit or loss and other comprehensive income for the year to 31 March 2020 in respect of the bonds, and Page 8 of 8 d) State what amounts would be reported in the statement of financial position as at 31 March 2020 in respect of the bonds.

TREATMENT OF CONVERTIBLE DEBENTURES
LS Limited issued 1 million six-year debentures on 1 January 2018 at par value of £ 100 each at a fixed rate of 6% per annum. Interest payable at the end of each year whereas the principal is to be repaid in two equal installments at the end of 2022 and 2023.



Debentures were issued with an option to convert 10 debentures into 4 ordinary shares of LS Limited till the date of first principal redemption. The liability was not designated as measured at fair value through profit or loss on initial recognition.



The market interest rate for non-convertible debentures issued by entities having similar credit risk and loan tenor is 1-Year LIBOR + 2% per annum.


On 1 January 2019 LS Limited repurchased 100,000 debentures at a premium of £ 5 per debenture. Transaction cost of £ 2 per debenture was incurred on this redemption.


The market interest rates and market values of LS Limited's shares are given below:

Date 1-YEAR LIBOR Market value per share
1 January 2019 5% 200
1 January 2020 6% 250

Required:

Prepare Journal Entries in the books of LS Limited for the year ended 31 2019

On 1st July, 2018 Nile Ltd acquired 70% of the share capital of Amazon Ltd for $80,000,000. The equity of Amazon Ltd as at the acquisition date was: Share Capital $ 52,000,000 General Reserve $ 20,000,000 Retained Earnings $ 10,000,000 All assets of Amazon Ltd were recorded at fair value on acquisition, except for one property which had a fair value which was $2,000,000 lower than its’ carrying amount. The cost of the property was $20,000,000 with accumulated depreciation of $12,000,000. Ignore Taxes. Required: (a) Complete the worksheet below using the NET method. (4.5 marks) (b) Prepare the consolidation adjustments and eliminations entries and recognise the NCI in the pre-acquisition equity of Amazon Ltd, assuming that the NCI was measured at the proportionate share of the acquiree’s identifiable net assets. (6.5 marks) Elimination of Investment in Amazon Ltd Amazon Ltd (S) $,000 Nile Ltd (70% of Amazon) (P) $,000 30% NCI $,000 Fair Value of consideration transferred Less: FV of identifiable assets acquired & liabilities assumed Share capital on acquisition date 52,000 General reserve-acquisition date 20,000 Retained earnings-acquisition date 10,000 Fair value adjustment Goodwill on acquisition Non-controlling interest

Amber Industries (a sole proprietorship) sold three § 1231 assets during 2018. Data on these property dispositions are as follows:

a. Determine the amount and the character of the recognized gain or loss from the disposition of each asset. If an amount is zero, enter 0.

Amber has $ of ordinary income  due to § 1245 recapture. Additionally, she has $ of net § 1231 gain .

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Section 1245 applies primarily to non-real-estate property such as machinery, trucks, and office furniture.

b. Assuming that Amber has $5,000 nonrecaptured net § 1231 losses from the five prior years, analyze these transactions and determine the amount (if any) that will be treated as a long-term capital gain.
$

Assume that the following facts pertain to a non-cancelable lease agreement between Fifth-Third Leasing Company and Bob Evans Farms, a Lessee. Inception date January 1, 2017 Residual value of equipment at end of lease term, guaranteed by the lessee $50,000 Lease term 6 years Economic life of leased equipment 8 years Fair value of asset at January 1, 2017 $400,000 Lessor’s implicit rate 10% Lessee’s incremental borrowing rate 12% The lessee assumes responsibility for all executory costs, which are expected to amount to $4,000 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $50,000. The lessee uses the straight-line depreciation method for all equipment. Using the spreadsheet Lease Amort Schedule, found in the link below, prepare an amortization schedule that would be suitable for the lessee for the lease term.m. Using the spreadsheet Journal Entries, prepare the journal entries for the lessee for 2017 and 2018 to record the lease agreement and all expenses related to the lease. Assume the Lessee’s annual accounting period ends on December 31 and that reversing entries are used when appropriate.

In your initial post, provide your calculation for one year of ROE using the DuPont Identity. In your initial post you should also critically analyze the advantages and/or disadvantages to using the DuPont Identity as a tool for calculating ROE.   When responding to your peers, perform a calculation from one of the other years and identify what has changed over the years, and identify what may be influencing changes to the DuPont Identity ROE.

Problem 21A-1 a-c

The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Windsor Company, a lessee.

.he asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

Gabriela and Johnny are married and filed a joint tax return. They had the following items for 2018:

Gabriela's car was completely destroyed in a hurricane, which had been declared a federal disaster area. At the time of the hurricane, the car had a fair market value of $30,000 and an adjusted basis of $40,000. She used the car 100% of the time for personal use. She received an insurance recovery of $25,000.

1. Provide a detailed calculation of the couple's AGI.

Your Answer must:

(a) explain the rule for § 1244 small business stock and how it applies to the facts;

(b) show a detailed netting capital item;

(c) explains the rule for worthless stock;

(d) explains the rule for the tax treatment of nonbusiness bad debts.

2.(a) What is the rule for calculating the amount of the casualty loss?

(b) Apply the rule to the facts and show a detailed calculation of the loss.

(c) Which schedule does the casualty loss total appear on?