In September 2017, the company acquired Blue River Technology (Blue River), which is based in Sunnyvale, California. Blue River has designed and integrated computer vision and machine learning technology to optimize the use of farm inputs. Machine learning technologies could eventually be applied to a wide range of the company's products. The fair values assigned to the assets and liabilities related to the acquired entity were approximately $1 million of trade receivables, $2 million of property and equipment, $193 million of goodwill, $125 million of identifiable intangible assets, $1 million of accounts payable and accrued expenses, and $36 million of deferred tax liabilities. The identifiable intangibles were primarily related to in-process research and development, which will not be amortized until the research and development efforts are complete or end. The goodwill is not expected to be deducted for tax purposes.

(a) Assuming that Blue River has never acquired another company, what were the assets on its balance sheet before acquisition by John Deere?

(b) The exhibits tell us that the fair value of Blue River’s net identifiable assets is $91 million. What is the amount of cash paid for Blue River?

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 45,000 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:

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?

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?

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?

Karane Enterprises, a calendar year manufacturer based in College Station, Texas, began business in 2017. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2017:

Assets    Cost Date   Placed in Service

Office furniture 150,000 2/3/17

Machinery 1,560,000 7/22/17

Used delivery truck 40,000 8/17/17

During 2017, Karane was very successful (and had no 179 limitation) and decided to acquire more assets this next year to increase its production capacity. These are the assets acquired during 2018:

Assets                    Cost Date    Placed in Service

Computers & info syst 400,000 3/31/18

Luxury auto 80,000 5/26/18

Assembly equip 1,200,000 8/15/18

Storage bldg. 700,000 11/13/18

Karane generated taxable income in 2018 of $1,732,500 for purposes of computing the 179 expense.

Required:

Compute the maximum 2018 depreciation deductions including 179 expense (ignoring bonus depreciation) AND Compute Part 1 of Form 4562.

6-40 Replacement of Old Equipment

Three years ago, the Oak Street TCBY brought a frozen yogurt machine for $11,200. A salesman has just suggested to the TCBY manager that she replace the machine with a new $13,500 machine. The manager has gathered the following data:

1. Compute the difference in total costs over the next 5 years under both alternatives, that is, keeping the original machine or replacing in with the new machine. Ignore taxes.

2. Suppose the Oak Street TCBY manager replaces the original machine. Compute the “loss on disposal” of the original machine. How does this amount offset your computation in number 1? Explain

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On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,274,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,540,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $270,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $512,500 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.

During the two years following the acquisition, Sellinger reported the following net income and dividends:

1. Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.

2. Prepare a schedule showing Palka’s December 31, 2018, equity method balance for its Investment in Sellinger account.

On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,789,900 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,250,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $297,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $665,625 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.

During the two years following the acquisition, Sellinger reported the following net income and dividends:

Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.

Prepare a schedule showing Palka’s December 31, 2018, equity method balance for its Investment in Sellinger account.

Shari Patel of the controller's office of Sheridan Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ended December 31, 2020. Patel has gathered the following information.

1.The company is authorized to issue 8 million common shares. As at December 31, 2019, 2 million shares had been issued and were outstanding.2.The per share market prices of the common shares on selected dates were as follows:

Price per Share July 1,

2019 $18.00 Jan. 1,

2020 22.00 Apr. 1,

2020 24.00 July 1,

2020 13.00 Aug. 1,

2020 8.50 Nov. 1,

2020 8.00 Dec. 31,

2020 9.00

3.A total of 800,000 shares of an authorized 1.2 million convertible preferred shares had been issued on July 1, 2019. The shares were issued at $25, and have a cumulative dividend of $2 per share. The shares are convertible into common shares at the rate of one convertible preferred share for one common share. The rate of conversion is to be automatically adjusted for stock splits and stock dividends. Dividends are paid quarterly on September 30, December 31, March 31, and June 30.4.Sheridan Corporation is subject to a 30% income tax rate.5.The after-tax net income for the year ended December 31, 2020, was $11,600,000.

The following specific activities took place during 2020:

1.January 1: A 5% common stock dividend was issued. The dividend had been declared on December 1, 2019, to all shareholders of record on December 29, 2019.2.April 1: A total of 400,000 shares of the $2 convertible preferred shares were converted into common shares. The company issued new common shares and retired the preferred shares. This was the only conversion of the preferred shares during 2020.3.July 1: A 2-for-1 split of the common shares became effective on this date. The board of directors had authorized the split on June 1.4.August 1: A total of 600,000 common shares were issued to acquire a factory building.5.November 1: A total of 21,000 common shares were purchased on the open market at $8 per share and cancelled.6.Cash dividends to common shareholders were declared and paid as follows:

April 15:$0.30per shareOctober 15:$0.20per share

7. Cash dividends to preferred shareholders were declared and paid as scheduled.

Determine the number of shares to use in calculating basic earnings per share for the year ended December 31, 2020.

Number of shares

Enter your answer in accordance to the question statement

shares

Determine the number of shares to use in calculating diluted earnings per share for the year ended December 31, 2020.

Number of sharesEnter your answer in accordance to the question statement

shares

Calculate the adjusted net income amount to use as the numerator in the basic earnings per share calculation for the year ended December 31, 2020.

Adjusted net income$

Enter your answer in accordance to the question statement

Condensed balance sheet and income statement data for Swifty Corporation appear below:

Additional information:

1) Compute the following ratios for 2020 and 2021. (Round asset turnover, earnings per share and price earning ratio answers to 2 decimal places, e.g. 1.83 or 1.83% and all other answers to 1 decimal place e.g. 1.5%.)

2)

Based on the ratios calculated, indicate the improvement or lack thereof in Swifty Corporation’s financial position and operating results from 2020 to 2021.

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Condensed balance sheet and income statement data for Swifty Corporation appear below:

Additional information:

Compute the following ratios for 2020 and 2021. (Round asset turnover, earnings per share and price earning ratio answers to 2 decimal places, e.g. 1.83 or 1.83% and all other answers to 1 decimal place e.g. 1.5%.)

A) What will happen to the inflation and unemployment by connecting the AD-AS model to the Short Run Phillips Curve?

B) Suppose this continues until 2020. Consider what the economy will be like in 2020. Elaborate on what impacts this economic state will have on ability to make interest payments.

conditions for a perfect futures contract hedge. To illustrate the hedge, use an abattoir (consumer) who is required to purchase 20,000 kg of live cattle in December 2020.

Futures contract on live cattle:

Contract size: 10,000 Kg

Contract maturity: Dec. 2020