Atlantic Imports, a U.S. company, acquired a wholly-owned subsidiary, located in Portugal, on January 1, 2018 for €200,000,000. The subsidiary’s functional currency is the euro. The balance sheet of the subsidiary at the date of acquisition was as follows: Assets Current assets € 30,000,000 Noncurrent assets, net 150,000,000 Total assets €180,000,000 Liabilities and Stockholders' Equity Liabilities € 60,000,000 Capital stock 80,000,000 Retained earnings 40,000,000 Total liabilities and stockholders' equity €180,000,000 Appropriate revaluations of the subsidiary’s assets at the date of acquisition are as follows: Inventories are undervalued by €500,000. The subsidiary uses FIFO. Noncurrent assets are undervalued by €10,000,000. The noncurrent assets have a 10-year remaining life, straight-line. Identifiable indefinite life intangible assets, previously unreported, have a fair value of €5,000,000. During 2018 there was no impairment of either identifiable intangible assets or goodwill. The exchange rate on January 1, 2018 was $1.10/€. The average rate for 2018 was $1.12/€, and the rate at the end of 2018 was $1.15/€. The excess of acquisition cost over book value for this acquisition, in U.S. dollars, is: The entries required to consolidate the balance sheets of Atlantic Imports and its subsidiary at the date of acquisition include recognition of goodwill of: The entries required to consolidate the balance sheets of Atlantic Imports and its subsidiary at the date of acquisition include an increase in the subsidiary's noncurrent assets in the amount of: At the end of 2018, consolidation eliminating entry (R) includes a debit to current assets in the amount of: At the end of 2018, consolidation eliminating entry (O) includes a debit to depreciation expense in the amount of: At the end of 2018, consolidation eliminating entries (R) and (O) together will have what effect on consolidated other comprehensive income (increase or decrease)?

On January 1, 2016, Aspen Company acquired 80 percent of Birch Company's voting stock for $332,000. Birch reported a $370,000 book value and the fair value of the noncontrolling interest was $83,000 on that date. Then, on January 1, 2017, Birch acquired 80 percent of Cedar Company for $184,000 when Cedar had a $197,000 book value and the 20 percent noncontrolling interest was valued at $46,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life.

These companies report the following financial information. Investment income figures are not included.   

Assume that each of the following questions is independent:

1. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account?

2. What is the consolidated net income for this business combination for 2018?

3. What is the net income attributable to the noncontrolling interest in 2018?

4. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:

What is the accrual-based net income of Birch in 2017 and 2018, respectively?

a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account?
b. What is the consolidated net income for this business combination for 2018?
c. What is the net income attributable to the noncontrolling interest in 2018?

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Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:

What is the accrual-based net income of Birch in 2017 and 2018, respectively?

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In a study of academic procrastination, the authors of a paper reported that for a sample of 411 undergraduate students at a midsize public university preparing for a final exam in an introductory psychology course, the mean time spent studying for the exam was 7.64 hours and the standard deviation of study times was 3.60 hours. For purposes of this exercise, assume that it is reasonable to regard this sample as representative of students taking introductory psychology at this university.

(a) Construct a 95% confidence interval to estimate μ, the mean time spent studying for the final exam for students taking introductory psychology at this university. (Round your answers to three decimal places.)
(   ,   )

(b) The paper also gave the following sample statistics for the percentage of study time that occurred in the 24 hours prior to the exam.

n = 411      x = 43.28      s = 21.66

Construct a 90% confidence interval for the mean percentage of study time that occurs in the 24 hours prior to the exam. (Round your answers to three decimal places.)
(   ,   )

Interpret the interval.

*We are confident that 90% of the mean percent of study time that occurs in the 24 hours prior to the exam for all students taking introductory psychology at this university is within this interval.

*We are 90% confident that the mean percent of study time for all students taking introductory psychology is within this interval.

*We are confident that the mean percent of study time that occurs in the 24 hours prior to the exam for all students taking introductory psychology at this university is within this interval at least 90% of the time.

*We are 90% confident that the mean percent of study time that occurs in the 24 hours prior to the exam for all students taking introductory psychology at this university is within this interval.

Suppose that the US produces two goods, X and Y, with capital and labor. The US is relatively abundant in capital, and X is relatively capital-intensive. In the short-run, neither capital nor labor can move between the X and Y industries. In the medium-run, labor is mobile but capital is specific to each industry. In the long run, both capital and labor are mobile. If the US decides to withdraw from its free trade agreements and impose much higher tariffs, what happens to real incomes in the U.S.? Who wins and who loses in the short run? Who wins and who loses in the medium run? Who wins and who loses in the long run?

How do competing airline carrier fares compare?  A frequent flyer investigated round-trip fares for non-stop travel from Philadelphia to 10 different U.S. destinations on Southwest Airlines and US Airways. The following data was collected:

a.  At the .05 level of significance, is there evidence of a difference in the mean round-trip fare between Southwest Airlines and US Airways?

b.  What assumption is necessary about the population distribution in order to perform this test?

Unions represent under 7% of the private sector work force, perhaps 1/3d of public sector employees, down from a peak of union representation in the 1950’s.   Some argue that unions are necessary, and the decline of unionization is a root cause of the economic decline in the US middle class for several decades.   Have unions outlived their usefulness in the US economy, should be shut down as a right of employees to bargain with their employers?   Or do unions have an important role in the economy, ensuring that the economic pie is shared among everyone who helps “bake” that pie?   What public policies would you advocate, based on your view of the future role of unions in the US?

Buffalo Ranch & Farm is a distributor of ranch and farm equipment. Its products include small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company Internet site. However, given some of its specialty products, select farm implement stores carry Buffalo’s products. Pricing and cost information on three of Buffalo’s most popular products are as follows.

Respond to the requirements related to the following independent revenue arrangements for Buffalo Ranch & Farm. IFRS is a constraint.

On January 1, 2020, Buffalo sells augers to Mills Farm & Fleet for $39,360. Mills signs a six-month note at an annual interest rate of 12%. Buffalo allows Mills to return any auger that it cannot use within 60 days and receive a full refund. Based on prior experience, Buffalo estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Buffalo’s costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entries for Buffalo on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

On August 10, 2020, Buffalo sells 19 mini-trenchers to a farm co-op in western Canada. Buffalo provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Buffalo compared with the prior year. Given the slowdown in the farm economy, sales to the co-op have been flat, and it is highly uncertain that the benchmark will be met.

Prepare the journal entries for Buffalo on August 10, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Buffalo sells three grain/hay dryers to a local farmer at a total contract price of $38,000. In addition to the dryers, Buffalo provides installation, which has a stand-alone sales value of $520 per unit installed. The contract payment also includes a $1,170 maintenance plan for the dryers for three years after installation. Buffalo signs the contract on June 20, 2020, and receives a 20% down payment from the farmer. The dryers are delivered and installed on October 1, 2020, and full payment is made to Buffalo.

Prepare the journal entries for Buffalo in 2020 related to this arrangement as well as any adjusting journal entries at its December year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)

On April 25, 2020, Buffalo ships 80 augers to Farm Depot, a farm supply dealer in Alberta, on consignment. By June 30, 2020, Farm Depot has sold 50 of the consigned augers at the listed price of $984 per unit. Farm Depot notifies Buffalo of the sales, retains a 10% commission, and remits the cash due to Buffalo.

Prepare the journal entries for Buffalo and Farm Depot for the consignment arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

On 1 July 1987 Charles acquired a leather sofa for $30,000. Charles borrowed $29,000 of the money from Corp Bank. The loan was a fixed interest loan on which Charles paid interest of $19,000. Charles sold it in September 2018 for $61,000.

Required: Calculate the indexed cost base for Capital Gains Tax purposes.