Consolidation at the end of the first year subsequent to date of acquisition—Equity method (purchase price equals book value) Assume that a parent company acquires its subsidiary on January 1, 2016, by exchanging 40,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $28 per share, for all of the outstanding voting shares of the acquiree. You have been charged with preparing the consolidation of these two companies at the end of the first year. On the acquisition date, all of the subsidiary’s assets and liabilities had fair values equaling their book values. Following are financial statements of the parent and its subsidiary for the year ended December 31, 2016.

Suppose a firm operates in a perfectly competitive market where every firm has the same cost function given by:

C(q)=5q²+q+20

Suppose initially the market price is p=31.

How much output will this firm produce?

At the price p=31, how much profit does this firm make?

Now suppose the market price changes. Below what price will this firm shut down? (what is the "shut-down price")

At what price will this firm earn zero profits (what is the "break-even price")?

Suppose the market consists of 20 firms. The market demand is Q_D=602-2p. What will be the short-run equilibrium price?

Suppose the market consists of 20 firms. The market demand is Q_D=602-2p.

What will be the short-run equilibrium output per firm?

Continuing with the previous question:

Suppose the market consists of 20 firms. The market demand is Q_D=602-2p.

What will be the short-run equilibrium market quantity?

Continuing with the previous question:

Suppose the market consists of 20 firms. The market demand is Q_D=602-2p.

In the long run, what do you expect to happen to the number of firms in the industry, the market price, margkey quantity, and output per firm?

Number of firms will             ["", "", ""]                      [ Select ]decreasestay the sameincrease

Market price will             ["", "", ""]                      [ Select ]stay the sameincreasedecrease

Market quantity will             ["", "", ""]                      [ Select ]stay the sameincreasedecrease

Output per firm will             ["", "", ""]                      [ Select ]increasestay the samedecrease

Sandboxes are produced according to the following cost function:

c(q) = q² + 100

where the fixed cost of 100 represents an annual license fee the firms pay. Every firm uses the same technology to produce sanboxes.

In the long run, what will be the equilibrium price?

The market demand for sandboxes is given by Q_D = 1500 – 5p. Find the long-run equilibrium market quantity.

The market demand for sandboxes is given by Q_D = 1500 – 5p. Find the long-run equilibrium number of firms.

Recent trends have increased the demand to Q_D=2250–5p. In the short run, what will be the new equilibrium price? (Note: you will need to use the number of firms you found in the previous question to find this)

Suppose demand remains high at QD=2250–5p in the long run.

What will be the long-run equilibrium price?

Suppose demand remains high at Q_D=2250–5p in the long run.  

What is the number of firms operating in the long run?

Suppose the operating fee is increased from 100 to 225. So now each firm has the cost function

C(q)=q² + 225

In the long run, with the demand Q_D=2250–5p, what will be the equilibrium price?

How did raising the operating fee from $100 to $225 affect the firm's profits in the long run? (compare the profits in the previous question to to the profits in the first question in this story).

Group of answer choices

It decreased from >0 to =0

it stayed the same as is =0

it decreased from 0 to <0

it increased from 0 to >0

it stayed the same and is >0

compute the percentage change in nominal gap, real gap and the gap deflator in 2011 and 2012 from the preceding year. for each year, identify the variable that does not change. explain in words why your answer makes sense.

Waterway Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $112,000.

Oriole Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $108,000.

(a) Prepare the journal entry for the issuance when the market price of the common shares is $164 each and market price of the preferred is $205 each.

(b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $186 per share.

Sandhill Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $101,000.

Flounder Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $105,000.

Oriole Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $110,000.

(a) Prepare the journal entry for the issuance when the market price of the common shares is $180 each and market price of the preferred is $225 each.

(b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $190 per share.

Nash Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $101,000.

Culver Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $117,000. (a) Prepare the journal entry for the issuance when the market price of the common shares is $176 each and market price of the preferred is $220 each. (b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $204 per share.