Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid $896,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $224,000 both before and after Miller’s acquisition.

On January 1, 2016, Taylor reported a book value of $406,000 (Common Stock = $203,000; Additional Paid-In Capital = $60,900; Retained Earnings = $142,100). Several of Taylor’s buildings that had a remaining life of 20 years were undervalued by a total of $54,200.

During the next three years, Taylor reports income and declares dividends as follows:

Determine the appropriate answers for each of the following questions:

What amount of excess depreciation expense should be recognized in the consolidated financial statements for the initial years following this acquisition?

If a consolidated balance sheet is prepared as of January 1, 2016, what amount of goodwill should be recognized?

If a consolidation worksheet is prepared as of January 1, 2016, what Entry S and Entry A should be included?

On the separate financial records of the parent company, what amount of investment income would be reported for 2016 under each of the following accounting methods?

The equity method.

The partial equity method.

The initial value method.

On the parent company’s separate financial records, what would be the December 31, 2018, balance for the Investment in Taylor Company account under each of the following accounting methods?

The equity method.

The partial equity method.

The initial value method.

As of December 31, 2017, Miller’s Buildings account on its separate records has a balance of $556,000 and Taylor has a similar account with a $208,500 balance. What is the consolidated balance for the Buildings account?

What is the balance of consolidated goodwill as of December 31, 2018?

Assume that the parent company has been applying the equity method to this investment. On December 31, 2018, the separate financial statements for the two companies present the following information:

What will be the consolidated balance of each of these accounts?

On January 2, 2016, Lovely, Inc. acquired a 15% interest in CPS Corp. by paying P8,000,000 for 100,000 ordinary shares. On this date, the net assets of CPS Corp totaled P40,000,000. The fair values of CPS corp.'s identifiable assets and liabilities were equal to their book values. Lovely did not have the ability to exercise significant influence over the operating and financial policies of CPS. Lovely received dividends of P1.40 per share from CPS on October 1, 2016. CPS reported net income of P5,000,000 for the year ended December 31, 2016. Lovely classified the investment as at fair value through other comprehensive income. Market price for the 100,000 shares was P9,000,000 on December 31, 2016.
Lovely paid P30,000,000 on January 1, 2017 for 300,000 additional CPS ordinary shares, which represents a 25% interest in CPS. The fair value of CPS Corp.'s identifiable assets, net of liabilities, was equal to their book values of P92,000,000. As a result of this additional acquisition, Lovely has the ability to exercise significant influence over the operating and financial policies of CPS. Lovely received a dividend of P2.70 per share on October 5, 2017. CPS reported net income of P6,000,000 for the year ended December 31, 2017. The investment's fair value on December 31, 2017, is P45,000,000.
What is the total amount of investment-related income that should be reported in the 2016 income statement?

Select one:

a. P750,000

b. P1,140,000

c. P1,610,000

d. P140,000

What is the carrying amount of the investment in associate on December 31, 2017?

Select one:

a. P45,000,000

b. P38,120,000

c. P39,000,000

d. P40,320,000

What is the goodwill arising from the acquisition of additional 300,000 shares on January 1, 2017?

Select one:

a. 0

b. P7,000,000

c. P9,000,000

d. P2,200,000

In the December 31, 2016, statement of financial position, what is the carrying amount of the investment in equity securities?

Select one:

a. P8,750,000

b. P9,000,000

c. P8,000,000

d. P8,610,000

What amount of gain on remeasurement to equity should be reported in the 2017 income statement?

Select one:

a. P1,000,000

b. P1,320,000

c. P1,080,000

d. 0

Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid $768,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $192,000 both before and after Miller’s acquisition.

On January 1, 2016, Taylor reported a book value of $616,000 (Common Stock = $308,000; Additional Paid-In Capital = $92,400; Retained Earnings = $215,600). Several of Taylor’s buildings that had a remaining life of 20 years were undervalued by a total of $82,200.

During the next three years, Taylor reports income and declares dividends as follows:

Determine the appropriate answers for each of the following questions:

1. What amount of excess depreciation expense should be recognized in the consolidated financial statements for the initial years following this acquisition?

2. If a consolidated balance sheet is prepared as of January 1, 2016, what amount of goodwill should be recognized?

3. If a consolidation worksheet is prepared as of January 1, 2016, what Entry S and Entry A should be included?

4. On the separate financial records of the parent company, what amount of investment income would be reported for 2016 under each of the following accounting methods?

• The equity method.
• The partial equity method.
• The initial value method.

5. On the parent company’s separate financial records, what would be the December 31, 2018, balance for the Investment in Taylor Company account under each of the following accounting methods?

• The equity method.
• The partial equity method.
• The initial value method.

6. As of December 31, 2017, Miller’s Buildings account on its separate records has a balance of $844,000 and Taylor has a similar account with a $316,500 balance. What is the consolidated balance for the Buildings account?

7. What is the balance of consolidated goodwill as of December 31, 2018?

8. Assume that the parent company has been applying the equity method to this investment. On December 31, 2018, the separate financial statements for the two companies present the following information:

What will be the consolidated balance of each of these accounts?

Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid $744,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $186,000 both before and after Miller’s acquisition. On January 1, 2016, Taylor reported a book value of $464,000 (Common Stock = $232,000; Additional Paid-In Capital = $69,600; Retained Earnings = $162,400). Several of Taylor’s buildings that had a remaining life of 20 years were undervalued by a total of $61,900. During the next three years, Taylor reports income and declares dividends as follows: Year Net Income Dividends 2016 $ 54,400 $ 7,800 2017 70,200 11,700 2018 78,000 15,600 Determine the appropriate answers for each of the following questions: What amount of excess depreciation expense should be recognized in the consolidated financial statements for the initial years following this acquisition? If a consolidated balance sheet is prepared as of January 1, 2016, what amount of goodwill should be recognized? If a consolidation worksheet is prepared as of January 1, 2016, what Entry S and Entry A should be included? On the separate financial records of the parent company, what amount of investment income would be reported for 2016 under each of the following accounting methods? The equity method. The partial equity method. The initial value method. On the parent company’s separate financial records, what would be the December 31, 2018, balance for the Investment in Taylor Company account under each of the following accounting methods? The equity method. The partial equity method. The initial value method. As of December 31, 2017, Miller’s Buildings account on its separate records has a balance of $624,000 and Taylor has a similar account with a $234,000 balance. What is the consolidated balance for the Buildings account? What is the balance of consolidated goodwill as of December 31, 2018? Assume that the parent company has been applying the equity method to this investment. On December 31, 2018, the separate financial statements for the two companies present the following information: Miller Company Taylor Company Common stock $ 390,000 $ 232,000 Additional paid-in capital 218,400 69,600 Retained earnings, 12/31/18 483,600 329,900

Event 1: record entry for issuance of common stock

Event 2: record purchase of equipment for cash

Event 3: record cash received from revenue

Event 4: record cash paid for salaries expenses

Event 5: record depreciation expense

b. Then post them to T-accounts.

c.

explain the follow up steps you would want to take to satisfactorily
clear each of the five comments from customers below. Think about and document whether the comment
indicates a concern or not, what fraudulent activity could be happening or what errors could have occurred,
what additional follow-up information would you want to seek out to gain comfort on the situation, etc.
You have been assigned to the first audit of the Chicago Company for the year ending March 31, 2017.
Accounts receivable were confirmed on December 31, 2016, and at that date the receivables consisted of
approximately 200 accounts with balances totaling $956,750. Seventy-five of these accounts with balances
totaling $650,725 were selected for confirmation. All but 20 of the confirmation requests have been returned;
36 were signed without comments, 14 had minor differences that have been cleared satisfactorily, and 5
confirmations had the following comments:
1. We are sorry, but we can’t answer your request for confirmation of our account as the system we are using
does not provide us the necessary information.

2. The balance of $1,050 was paid on December 23, 2016

3. We never received these goods.

4. The $10,000, representing a deposit under a lease, will be applied against the rent due to us during 2018,
the last year of the lease.

5. We do not owe you anything at December 31, 2016, as the goods, represented by your invoice dated
December 30, 2016, number 25050, in the amount of $11,550 were received on January 5, 2017, on FOB
destination terms.

6. The balance of $7,750 was paid on January 5, 2017.

7. Amount okay, as the goods have been shipped to us on consignment, we will remit the payment upon
selling the goods.

8. Your credit memo dated December 5, 2016, in the amount of $440 cancels the balance above.

9. We are contesting the propriety of this $12,525 charge. We think the charge is excessive.

10. An advance payment of $2,500 made by us in November 2016 should cover the two invoices totaling
$1,350 shown on the statement attached.

REQUIRED: With your group members, explain the follow up steps you would want to take to satisfactorily clear each of the five comments from customers below. Think about and document whether the comment indicates a concern or not, what fraudulent activity could be happening or what errors could have occurred, what additional follow-up information would you want to seek out to gain comfort on the situation, etc.

You have been assigned to the first audit of the Chicago Company for the year ending March 31, 2017. Accounts receivable were confirmed on December 31, 2016, and at that date the receivables consisted of approximately 200 accounts with balances totaling $956,750. Seventy-five of these accounts with balances totaling $650,725 were selected for confirmation. All but 20 of the confirmation requests have been returned; 36 were signed without comments, 14 had minor differences that have been cleared satisfactorily, and 5 confirmations had the following comments:

1. We are sorry, but we can’t answer your request for confirmation of our account as the system we are using does not provide us the necessary information.

2. The balance of $1,050 was paid on December 23, 2016

3. We never received these goods.

4. The $10,000, representing a deposit under a lease, will be applied against the rent due to us during 2018, the last year of the lease.

5. We do not owe you anything at December 31, 2016, as the goods, represented by your invoice dated December 30, 2016, number 25050, in the amount of $11,550 were received on January 5, 2017, on FOB destination terms.

6. The balance of $7,750 was paid on January 5, 2017.

7. Amount okay, as the goods have been shipped to us on consignment, we will remit the payment upon selling the goods.

8. Your credit memo dated December 5, 2016, in the amount of $440 cancels the balance above.

9. We are contesting the propriety of this $12,525 charge. We think the charge is excessive.

10. An advance payment of $2,500 made by us in November 2016 should cover the two invoices totaling $1,350 shown on the statement attached.

Departmental Income Statement
Perkins Appliance & Furniture Company has two departments, appliances and furniture. Operating information for 2016 appears below.

Common operating expenses of the firm were $180,000.

a. Prepare a departmental income statement showing departmental contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 40%. Perkins uses a periodic inventory system.

Do not use negative signs with any of your answers below.

b. Calculate the gross profit percentage for each department.

Round to the nearest whole percentage.

Appliance department

Answer

%

Furniture department

Answer

%

c. If the common expenses were allocated 70% to the appliance department and 30% to the furniture department, what would the net income be for each department?

Do not use negative signs with any of your answers below.

Company Information:

MERMED Inc. is a medical device manufacturer.

The company’s headquarters is located in Houston, Texas. It is a global leader in developing, manufacturing, selling and servicing diagnostic imaging and therapeutic medical devices used to diagnose and treat cardiovascular and other diseases. MERMED earned $300 million of revenue in 2015, while employing more than 10,000 people worldwide. One of it’s manufacturing plants is located in Dingle, Co. Kerry, Ireland. Tom Jones is the plant manager at the Dingle facility.

The Dingle site runs 12 hour shifts, 7 days a week. It has 1000 employees. It manufactures a variety of of medical devices (including Class III devices). A number of it's products are sold in the US and European markets. The facility has a Quality Management System in place. Their Quality Management System is in compliance with ISO 13485:2016 and 21 CFR 820. Their facility is frequently audited by Notified Bodies and the FDA.

The site was recently audited by corporate. The corporate auditing team were checking the site's compliance with ISO 13485:2016 and 21 CFR 820. The auditors found a number of potential non-conformances to  ISO 13485:2016 and 21 CFR 820.

You must complete 4 tasks (for each of the 5 incidents/questions):

1.   Review each of these potential non-conformances (5 incidents in total)

2. Determine if they are non-conformances against the requirements of the ISO13485:2016 AND 21 CFR 820.

3. If they are non-compliances, write down the specific clause numbers in ISO 13485:2016 AND specific section number of 21 CFR 820 which is applicable (write down the main clause/section in each regulation that the non-compliance is against).

Note:  ISO 13485:2016 and 21 CFR 820 are available in the "Additional Resources" section, under the section heading "Quality Systems Regulations (EU and US)" (contained within Section A Medical Device Regulatory Affairs).

4. Briefly EXPLAIN your decision in 100-170 words.

QUESTION 1

In the warehouse area the inspectors noticed that there were unlabelled boxes lying outside of the caged storage area. They asked Gerry Smyth, the Warehouse Manager, what they were. Gerry said “they are boxes of product that were water damaged and therefore could not be sent to the customer”

Company Information:

MERMED Inc. is a medical device manufacturer.

The company’s headquarters is located in Houston, Texas. It is a global leader in developing, manufacturing, selling and servicing diagnostic imaging and therapeutic medical devices used to diagnose and treat cardiovascular and other diseases. MERMED earned $300 million of revenue in 2015, while employing more than 10,000 people worldwide. One of it’s manufacturing plants is located in Dingle, Co. Kerry, Ireland. Tom Jones is the plant manager at the Dingle facility.

The Dingle site runs 12 hour shifts, 7 days a week. It has 1000 employees. It manufactures a variety of of medical devices (including Class III devices). A number of it's products are sold in the US and European markets. The facility has a Quality Management System in place. Their Quality Management System is in compliance with ISO 13485:2016 and 21 CFR 820. Their facility is frequently audited by Notified Bodies and the FDA.

The site was recently audited by corporate. The corporate auditing team were checking the site's compliance with ISO 13485:2016 and 21 CFR 820. The auditors found a number of potential non-conformances to  ISO 13485:2016 and 21 CFR 820.

You must complete 4 tasks (for each of the 5 incidents/questions):

1.   Review each of these potential non-conformances (5 incidents in total)

2. Determine if they are non-conformances against the requirements of the ISO13485:2016 AND 21 CFR 820.

3. If they are non-compliances, write down the specific clause numbers in ISO 13485:2016 AND specific section number of 21 CFR 820 which is applicable (write down the main clause/section in each regulation that the non-compliance is against).

Note:  ISO 13485:2016 and 21 CFR 820 are available in the "Additional Resources" section, under the section heading "Quality Systems Regulations (EU and US)" (contained within Section A Medical Device Regulatory Affairs).

4. Briefly EXPLAIN your decision in 100-170 words.

QUESTION 3

The following processes have not been adequately validated: the passivation process; which is performed using the BEV 2001 ( equipment ID  129868) machine and the cutting processes which are performed by TANGER 100 ( equipment ID 870969).