Convertible Bonds: Complex Group issued 1,000 convertible bonds at January 1, 2015. The bonds
have a 5-year term with a stated rate of interest of 7 percent and are issued at par with a face value
of €1,000 per bond (the total proceeds received from issuance of the bonds are €1,000,000 – bonds
with equity). Interest is payable annually at December 31. Each bond is convertible into 350 ordinary
shares with a par value of €1. The market rate of interest on similar non-convertible debt is 10
percent (i.e. the present value of the debt payments is €886,275– bonds without equity).
Convertible Preference Shares: Complex Group issues 500 convertible preference shares on
January 1, 2016. The preference shares have a par value of €100 per share. The shares were issued
at a price of €150 per share. The preference shares can be converted into 80 ordinary shares with a
par value of €1.
Required: Prepare the journal entries for:
1. The issuance of convertible bonds on January 1, 2015.
2. The issuance of convertible preference shares on January 1, 2016.
3. The preference shares were converted to ordinary shares at June 1, 2018.
4. The conversion of bonds, if all bonds were converted into ordinary shares at the maturity date
(January 1, 2020).

DU Journeys enters into an agreement with Traveler Inc. to lease a car on December 31, 2016. The following information relates to this agreement. The term of the non-cancelable lease is 3 years with no renewal or bargain purchase option. The remaining economic life of the car is 3 years, and it is expected to have no residual value at the end of the lease term. The fair value of the car was $15,000 at commencement of the lease. Annual payments are required to be made on December 31 at the end of each year of the lease, beginning December 31, 2017. The first payment is to be of an amount of $5, 552.82, with each payment increasing by a constant rate of 5% from the previous payment (i.e., the second payment will be $5, 830.46 and the third and final payment will be $6, 121.98). DU Journeys' incremental borrowing rate is 8%. The rate implicit in the lease is unknown. DU Journeys uses straight-line depreciation for all similar cars. (a) Prepare DU Journey's journal entries for 2016, 2017, and 2018. (b) Assume, instead of a constant rate of increase, the annual lease payments will increase according to the Consumer Price Index (CPI). At its current level, the CPI stipulates that the first rental payment should be $5, 820. What would be the impact on the journal entries made by DU Journeys at commencement of the lease, as well as for subsequent years?

Prepare a memo answering the clients' concerns:

Our clients purchased 100 Bitcoins for a total of $50,000 in 2013. Bitcoins are now worth $7,500 each, after reaching a peak of over $17,000. The husband thinks they should consider selling now, before the Bitcoin market bottoms out. The wife is concerned with paying capital gains tax on so much money and wonders about making a significant charitable contribution but agrees that they should sell the Bitcoin.

Our client is comfortable gifting $250,000 to charity but cannot agree on where to make the contribution. The husband doesn’t think it will save them that much in taxes and worries about making significant donations in one year. He’s heard good things about setting up a private/non-operating family foundation and wonders if that is a good way to spread out the contributions over several years. The wife wishes to donate it to their high school alma maters, public schools in Ohio.

Please prepare a memo making a recommendation on how our clients should structure their contribution in order to receive the best tax advantage, including a projected tax liability assuming the Bitcoins are sold in 2019. You can find their 2018 tax return in their permanent file, and assume future income, deductions, withholdings – except for the sale of the Bitcoin – will remain the same.

(Note this question is from the Week 10 Tutorial) 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

Which of the following are not engaged in transactions with the corporation and are not essential for its survival?
Employees
Fair labor associations
Governments
Regulation communities

Which of the following describes the standardized product stage in the product life cycle theory?
The demand for the product grows in undeveloped nations.
The ability  to produce the product grows in developed nations.
The production of the product moves to low-cost developing nations.
The production of a product commanding a price premium will be concentrated in the lead innovation nation.

Which of the following is true of "quantitative easing" (another way to say “printing a large amount of money”)?
It depreciates the currency that is being printed.
It appreciates the currency that is being printed.
It increases the inflation rate in the country.
It increases the exchange value of the currency.

According to the Organization for Economic Cooperation and Development, the 2018 gross domestic product of Japan was $5,248B. Japan’s _____ income of $5,442B was calculated by adding the income from non-resident sources abroad.
absolute
gross national
net national
operating

Realizing its call center activity was marginal, common across multiple end-user industries and could also be provided by proven talents abroad, Lenovo PC International decided to outsource it.

If this wasn’t true about the call center activity, Lenovo would have decided ______ would be necessary.
captive sourcing
foreign portfolio investment
licensing
offshoring  

Cocoa Life Ltd is considering expanding its current cocoa plantation portfolio. The company is currently looking at two countries – The Ivory Coast and Ghana. The company's plan to issue bonds and new ordinary shares to raise money for the investment. This gives rise to a 12% weighted average cost of capital.  

The following data are estimates for the project in these countries.

The Ivory Coast is the world’s largest cocoa producer. Major companies such as Nestle source its cocoa from this country. However, reports on unfavourable working conditions including child labour raises some concerns (see Nestle, n.d.).

Cocoa plantation in Ghana contributes to 15% to the nation’s GDP. Ghana is the second largest cocoa producer in the world after The Ivory Coast. Ghanaian cocoa is known for its high quality (Cadbury, n.d.), thus attracting major chocolate producers. However, between 2014 to 2018 cocoa farmers in the country were reported to smuggle the cocoa beans to and from neighbouring countries including The Ivory Coast, depending on the prices in those countries.

Required

Evaluate the proposals. Your answer should include the financial and non-financial factors.

On January 1, 2017 Baggins Co. leases gardening equipment to Gamgee Inc. The details are as follows:

• The lease has a non-cancelable term of 6 years.
• Ownership is not transferred, there is no purchase option, and the asset is not specialized in nature. Collectability of payments is probable.
• The core has a fair value of $245,000, a book value of $200,000, a useful life of 9 years, and a salvage value of $4,000.
• At the end of the lease term, Baggins expects the core to be worth $24,335. None of the equipment’s residual value has been guaranteed by Gamgee.
• Based on assessed risk Baggins has priced an 8% rate of return into the lease. Gamgee’s incremental borrowing rate is 9%.
• Equal payments are due at the beginning of each year. Both firms have December 31^st fiscal year ends.

1. Determine the payments Baggins will set for the lease.

2. Classify this lease for Baggins.

3. Prepare Baggins’ amortization table.

4. Prepare the 2017 and 2018 journal entries for Baggins.

5. Make the final entries Baggins will make for the lease (the December 31, 2022 entries). Assume that the equipment’s value at the conclusion of the lease is $23,000. Also make the entries Baggins would make if the equipment’s value at the end of the lease is $26,000.

6. Assuming the equipment came back worth $23,000 at the end of the lease, what is the total profit Baggins records over the entire life of the lease?

Consider the list of animals and their attributes given below cell (CELL_Q3_INPUT). The objective is to obtain the print outs in the subsequent cell (CELL_Q3_OUTPUT). Note that the attributes of each animal are 'name', 'species', 'color', and 'age'. You must use collections.namedtuple to add readable attribute references, which then will be used to generate the desired output in CELL_Q3_OUTPUT.

# CELL_Q3_INPUT

lassie = ('Lassie', 'dog', 'black', 12)

buddy = ('Buddy', 'pupper', 'red', 0.5)  

astro = ('Astro', 'doggo', 'grey', 15)

mrpb = ('Mr. Peanutbutter', 'dog', 'golden', 35)

bojack = ('BoJack Horseman', 'horse', 'brown', 52)

pc = ('Princess Carolyn', 'cat', 'pink', 34)

tinkles = ('Mr. Tinkles', 'cat', 'white', 7)

pupper = ('Bella', 'pupper', 'brown', 0.5)

doggo = ('Max', 'doggo', 'brown', 5)

seuss = ('The Cat in the Hat', 'cat', 'stripey', 27)

pluto = ('Pluto (Disney)', 'dog', 'orange', 3)

plu2o = ('Pluto (space)', 'planet', 'brownish', 4500000000)

yertle = ('Yertle', 'turtle', 'green', 130)

horton = ('Horton', 'elephant', 'blue', 79)

# CELL_Q3_OUTPUT

# Lassie is an old black dog who is 12 years old.

# Buddy is a young red pupper who is 0.5 years old.

# Astro is an old grey doggo who is 15 years old.

# Mr. Peanutbutter is an old golden dog who is 35 years old.

# BoJack Horseman is a 52-year-old non-canine brown horse.

# Princess Carolyn is a 34-year-old non-canine pink cat.

# Mr. Tinkles is a 7-year-old non-canine white cat.

# Bella is a young brown pupper who is 0.5 years old.

# Max is a young brown doggo who is 5 years old.

# The Cat in the Hat is a 27-year-old non-canine stripey cat.

# Pluto (Disney) is a young orange dog who is 3 years old.

# Pluto (space) is a 4500000000-year-old non-canine brownish planet.

# Yertle is a 130-year-old non-canine green turtle.

# Horton is a 79-year-old non-canine blue elephant.

The following information was available for Waterway Company at December 31, 2018: beginning inventory $107000; ending inventory $61000; cost of goods sold $6132000; and sales $1440000. Waterway’s days in inventory in 2018 was 3.6 days. 21.3 days. 6.4 days. 5.0 days.