Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $118,300. At that date, the noncontrolling interest had a fair value of $50,700 and Soda reported $70,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $24,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $44,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:

On December 31, 20X2, Soda purchased inventory for $27,000 and sold it to Pop for $45,000. Pop resold $28,000 of the inventory (i.e., $28,000 of the $45,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3.

During 20X3, Soda sold inventory purchased for $54,000 to Pop for $90,000, and Pop resold all but $26,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $14,000 to Soda for $28,000. Soda sold all but $7,000 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.

Required:
a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda.

b. Prepare a three-part consolidation worksheet for 20X3.

What are the journal entries for the following?

1. Company purchased inventory on credit (with accounts payable), cost of $330,000.
2. Company made credit sales (with accounts receivable), amount of $200,000.
3. Company collected accounts receivable, amount of $100,000.
4. Company hired a new assistant store manager. He will start in June 2020.
5. Company made cash sales, amount of $100,000.
6. Company paid off accounts payable in the amount of $300,000.
7. Company counted inventory at year-end, and found that the inventory sold cost $200,000.
8. Company paid $21,000 in salaries in cash.
9. Company paid $5,000 for interest on the note payable (Noncurrent).
10. Company recognized $7,000 in depreciation on the Property, Plant and Equipment.
11. Company pays income taxes at a rate of 21%. It uses an income tax payable account now, and will pay cash in the future.

Define credit rating of a company and of long-term securities (bonds, shares etc.)

A. List down credit rating agencies in US.

B. Pick one credit crediting agency and explain in detail the services offered by that agency.

C. Explain criteria for assigning credit rating to the companies.

1. Wu Dang, based in Hong Kong, hacks into the Hewlett-Packard database and “steals” plans and specifications for HP’s latest products. The HP server is located in the United States. He sells this information to a Chinese company in Shanghai. Has he violated the US Economic Espionage Act?

Name a US-based or foreign company that practices Corporate Social Responsibility (CSR) and describe what it is they do.

Do you tend to do business with companies who support social causes that you as a consumer are in favor of? Or does this have any bearing on your purchasing decision at all?

Please share with us the best and worst company names in your opinion. Explain your selections and the criteria you used to make your determinations. Your examples must be existing businesses. THE EFFECTS AND RELEVANCE OF NAMES OF THE BUSINESS ARE TO BE MENTIONED. HOW APPROPRIATE THEY ARE AND HOW THEY HAVE ADVANTAGED THE ORGANISATION.

Consider you are a regional soft drink company competing in the US soft drink market. Dr. Pepper was such a player, operating mostly in and around Texas. How could you compete successfully in this industry that is dominated by two large companies? Use appropriate frameworks to support your answer.

Question C11.2 is based on the following case.

King Companies, Inc (KCI) is a private company that owns five auto parts stores in urban Los Angeles, California. KCI has gone from two auto parts stores to five stores in the last three years, and it plans continued growth. Eric and Patricia King own the majority of the shares in KCI. Eric is the chairman of the board of directors of KCI and CEO, and Patricia is a director as well as the CFO. Shares not owned by Eric and Patricia are owned by friends and family who helped the Kings get started. Eric started the company with one store after working in an auto parts store. To date, he has funded growth from an inheritance and investments from a few friends. Eric and Patricia are thinking about expanding by opening three to five additional stores in the next few years. In October 2021, Eric approached your accounting firm, Thornson & Danforth, LLP, to conduct an annual audit of KCI for the year ended December 31, 2022. KCI has not been audited before, but this year the audit has been requested by the company's bank because of anticipated bank loans and by a new private equity investor that has just acquired a 20% share of KCI. KCI employs 20 full-time staff. These workers are employed in store management, sales, parts delivery, and accounting. About 40% of KCI's business is retail walk-in business, and the other 60% is regular customers where KCI delivers parts to their locations and bills these customers on account. During peak periods, KCI also uses part-time workers. Eric is focused on growing revenues. In his opinion, revenue growth is particularly important to obtaining bank financing. Patricia trusts the company's workers to work hard for the company, and she feels they should be rewarded well. The accounting staff, in particular, is very loyal to the company. Eric tells you that accounting staff enjoy their jobs so much they have never taken any annual vacations, and hardly any workers ever take sick leave. There are two people currently employed as accounting staff, the most senior of whom is Jonathan Jung. Jonathan heads the accounting department and reports directly to Patricia. He is in his late fifties and hopes to retire in two or three years and move away from Los Angeles. Jonathan keeps a close watch on accounting and does many activities himself; including opening mail, cash receipts and vendor payments, depositing funds received, performing reconciliations, posting journals, and performing the payroll function. His second employee, Abby Owens, is a recent college graduate who just passed the CPA exam. Abby is responsible for the payroll functions and posting all journal entries into the accounting system. Jonathan and Abby often help each other out in busy periods.

(11.2) Audit data analytics for revenue Analysis: You have been asked by your audit

manager to consider how the audit firm might audit revenues by using audit data

analytics to evaluate 100% of the revenue transactions. Where do you feel that it would

be most effective to audit 100% of the transactions using ADA? In addition to the sales

information, what other information should you consider in your analysis? Develop a

specific audit strategy for how you would screen 100% of the revenues, how you would

identify exceptions, and how you might consider what would be acceptable variations

from your expectation norm versus unacceptable variations.

On 1 July, 2020 Bushman Ltd entered into a four-year lease of a building from Lessor Ltd. The terms of the lease agreement are as follows.

• Four payments of $200,000 are due starting on 30 June 2021 (after interest has accrued).

• Bushman can elect to terminate the lease at any time, but they need to pay 20% of an annual lease payment for administrative purposes upon termination

• The economic life of the building is estimated to be ten years.

• The fair value of the building at the commencement of the lease is $1,000,000.

• At the end of the lease term, Bushman has the option to purchase the building from

  Lessor Ltd at a price that is 10% lower than the predicted market value of the building

  at that time.

• The interest rate implicit in the lease is 5 per cent.

  Assume that the contract is a lease for the purposes of AASB 16 ‘Leases’.

  REQUIRED:

  Explain how Lessor Ltd would classify the lease in accordance with the requirements of AASB 116 ‘Leases’. Show all necessary working, explanations and assumptions to support your answer. Also prepare the necessary journal entries for the first year in the books of Lessor Ltd (i.e. 1 July 2020 to 30 June 2021).