Tanner-UNF Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management is holding the bonds in its trading portfolio. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $215 million.

Required:
1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.
3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.
4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $180 million. Prepare the journal entries to record the sale.

Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 39,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:

1. Assume that Benjamin acquired the widgets on December 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?
2. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on December 1, 2017. What is the effect of the exchange rate fluctuations on reported income in 2017?
3. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $195,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $610,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,000,000 in total. Seida's January 1, 2018 book value equaled $1,850,000, although land was undervalued by $130,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $332,000 and declared and paid dividends of $101,000. Prepare the 2018 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record acquisition of Seida stock.

Record income for the year: 40% of the $332,000 reported income.

Record 2018 amortization for trademark excess fair value.

Record dividend declaration from Seida.

Record collection of dividend from investee.

On December 31, 2017, Berclair Inc. had 280 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 56 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $350 million.

Also outstanding at December 31 were 30 million incentive stock options granted to key executives on September 13, 2013. The options were exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.

Required:

Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Hendry Corp. reported net incomes for the last three years as follows: 2018 2017 2016 $180,000 $240,000 $225,000 During the 2018 year-end audit, Hendry's newly appointed auditors discover that Hendry bought a machine on January 1, 2015 for $125,000 cash, with a $25,000 estimated residual value and a five-year life. The company debited an expense account for the entire cost of the asset. Hendry uses straight-line depreciation for all machinery. Instructions (Ignore all income tax effects) a) Prepare the general journal entry required to correct the books for this situation, assuming that the books have not been closed for 2018. b) Prepare a schedule showing, for each of the years 2016 to 2018, income before the effect of any accounting changes, the effect of the accounting changes, and the income after the effect of any accounting changes. c) Assume that the retained earnings balance at January 1, 2018 is $720,000 (before any adjustment). At what adjusted amount should this beginning retained earnings balance be shown on the financial statements?

Hendry Corp. reported net incomes for the last three years as follows:

2018: $180,000

2017: $240,000

2016: $225,000

During the 2018 year-end audit, Hendry's newly appointed auditors discover that Hendry bought a machine on January 1, 2015 for $125,000 cash, with a $25,000 estimated residual value and a five-year life. The company debited an expense account for the entire cost of the asset. Hendry uses straight-line depreciation for all machinery.

Instructions (Ignore all income tax effects)

a) Prepare the general journal entry required to correct the books for this situation, assuming that the books have not been closed for 2018.

b) Prepare a schedule showing, for each of the years 2016 to 2018, income before the effect of any accounting changes, the effect of the accounting changes, and the income after the effect of any accounting changes.

c) Assume that the retained earnings balance at January 1, 2018 is $720,000 (before any adjustment). At what adjusted amount should this beginning retained earnings balance be shown on the financial statements?

Janes Company provided the following information on intangible assets:

A patent was purchased from the Lou Company for $1,250,000 on January 1, 2016. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $460,000 when Lou sold it to Janes.

During 2018, a franchise was purchased from the Rink Company for $610,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase.

Janes incurred research and development costs in 2018 as follows:

Effective January 1, 2018, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years.

Required:
1. Prepare the entries necessary for years 2016 through 2018 to reflect the above information.
2. Prepare a schedule showing the intangible asset section of Janes’s December 31, 2018, balance sheet.

Janes Company provided the following information on intangible assets:

a. A patent was purchased from the Lou Company for $1,000,000 on January 1, 2016. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $410,000 when Lou sold it to Janes.

b. During 2018, a franchise was purchased from the Rink Company for $560,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase.

c. Janes incurred research and development costs in 2018 as follows:

Materials and supplies $ 146,000

Personnel 186,000

Indirect costs 66,000

Total $ 398,000

d. Effective January 1, 2018, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years.

Required:

1. Prepare the entries necessary for years 2016 through 2018 to reflect the above information.

2. Prepare a schedule showing the intangible asset section of Janes’s December 31, 2018, balance sheet.

On January 2, 2018, Johnson Company paid $310 million to acquire 14,000,000 shares of Pets Corp. The investment represented 30% of the total shares outstanding of Pets Corp. and gave Johnson Company the ability to exert significant influence upon the operations of Pets Corp.

During the year ended December 31, 2018, Pets Corp. paid dividends of $1.10 per share (declared and paid on November 12, 2018) and reported income of $245 million. The market value of Pets Corp. stock at December 31, 2018, was $24.50 per share. On the date of the acquisition the book value of Pets Corp. was $950 million and the fair value of the assets at that time were consistent with the book value except for Equipment which was undervalued by $40.0 million, with a remaining life of 10 years. Any excess fair value attributable to the acquisition (over cost of acquisition) was applied to goodwill.

​Prepare all journal entries related to the investment for 2018, assuming Johnson uses the equity method to account for acquisition.

Show your work representing the development and allocation of the consideration paid.

Prat Corp. started the 2018 accounting period with $34,000 of assets (all cash), $14,000 of liabilities, and $19,000 of common stock. During the year, the Retained Earnings account increased by $18,050. The bookkeeper reported that Prat paid cash expenses of $33,000 and paid a $3,400 cash dividend to the stockholders, but she could not find a record of the amount of cash that Prat received for performing services. Prat also paid $8,500 cash to reduce the liability owed to the bank, and the business acquired $7,700 of additional cash from the issue of common stock. Required (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)

a-1. Prepare an income statement for the 2018 accounting period.

a-2. Prepare a statement of changes in stockholders’ equity for the 2018 accounting period.

a-3. Prepare a period-end balance sheet for the 2018 accounting period.

a-4. Prepare a statement of cash flows for the 2018 accounting period.