Splish Brothers Industries has the following patents on its December 31, 2019, balance sheet.

The following events occurred during the year ended December 31, 2020.

The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.)

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(a)

Compute the total carrying amount of Splish Brothers’ patents on its December 31, 2019, balance sheet.

B) Compute the total carrying amount of Marin' patents on its December 31, 2020, balance sheet.

Total carrying amount $

R.A Fisher advanced the "constitutional hypothesis:" there is a genetic factor that disposes you both to smoke and die. To refute Fisher's idea, the epidemiologists used twins studies. They identified sets of smoking-discordant monozygotic twin pairs. Now there is a race. Which twin dies first, the smoker or non-smoker? Data from the Finnish twin study are shown below.

Data from Finnish Twin Study

According to the first line of the table, there were 22 smoking-discordant monozygotic twin pairs where at least one twin of the pair died. In 17 cases the smoker died first; in 5 cases the non-smoker died first. According to the second line, there were 9 pairs where at least one twin died of coronary heart disease; in all 9 cases, the smoker died first. According to the last line, there were 2 pairs where at least one twin died from lung cancer, and in both pairs, the smoker won the race to death. (Lung cancer is a rare disease, even among smokers.)

For parts (a-c), suppose that each twin in the pair is equally likely to die first, so the number of pairs in which the smoker dies first is like the number of heads in coin-tossing.

(a) On this basis, what is the chance of having 17 or more pairs out of 22 where the smoker dies first?

(b) Repeat the test in part (a), for the 9 deaths from coronary heart disease.

(c) Repeat the test in part (a), for the 2 deaths from lung cancer.

(d) Can the difference between the death rates for smoking and non-smoking twins be explained by ...

(i) chance?

(ii) genetics?

(iii) health effects of smoking?

Somnath Ltd manufactures and sells product G. The company operates a standard marginal costing system, and the standard variable cost of production and selling price of product G is provided in the table below.

The variable production overhead is incurred in direct proportion to the direct labour hours worked and budgeted fixed manufacturing overheads are £1,200,000 annually.

In June 2020, Somnath Ltd budgeted to produce and sell 15,000 units of product G. The finance director projected a profit forecast of £350,000 for the month based on these sales level.

In June 2020 however, actual production and sales were 15,500 units and a profit of £417,125 was recorded. There were no inventories at the beginning and at the end the month.

The production and purchasing department managers stated that because of their hard work, they have been able to keep costs down and this is reflected in the increased profit for the company. They said they that they deserve to be rewarded with a bonus for their contribution to the increased profits.    

The CEO of the company asked the management accountant to produce the actual profit statement for June 2017, which is provided below:

Required

1. Calculate all the operating variances and sub-variances and present them in a statement which reconciles the budgeted contribution to the actual contribution and profit for the month of June 2020.  

The variances that you are expected to calculate are:

• Sales volume and Sales price variances;
• Material A cost, Material A price and Material A usage variances;
• Material B cost, Material B price and Material B usage variances;
• Labour cost, Labour rate and Labour efficiency variances;
• Variable production overhead cost, Variable production overhead expenditure and Variable production overhead efficiency variances;
• Fixed production overhead expenditure variance.

You should state clearly whether a variance is favourable (F) or adverse (A).                                                                                                                                                                     [11 marks]

2. Write a report to the CEO of Somnath Ltd evaluating the production and purchasing department managers claim that they have been able to keep costs down and should receive a bonus for their hard work. Your report should include a discussion of possible reasons for the variances that you have calculated in part (a) and any recommendations for the organisation to consider for the future.  (Maximum of 800 words)                                                               [14 marks]

On September 1, 2019, Undisputed Corporation acquired TLC Enterprises for a cash payment of $850,000. At the time of purchases, TLC’s balance sheet showed assets of $620,000, liabilities of $240,000, and owner's equity of $420,000. The fair value of TLC’s assets is estimated to be $970,000.

A: Compute the amount of goodwill acquired by Undisputed Corporation.

On September 30th, 2020 assume the TLC Enterprises Division of Undisputed Corporation has the following balance sheet. Assets (including goodwill): $1,030,000 – 350,000= 680k net asset Liabilities: 350,000 Equity: 680,000

B: Based on the above information, Assuming the FMV of the division is $750,000, determine the Goodwill Impairment to be recorded (and prepare the journal entry)

C: Independently from “B”, now Assuming the FMV of the division is $650,000 determine the Goodwill impairment to be recorded (and prepare the journal entry)

Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The sKansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Kansas Company?

$180,000

$210,000

$120,000

$60,000

On January 1, 2016, Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $141,300. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the initial value method. Any excess of fair value of consideration transferred over book value is attributable to undervalued land on Simbel’s books. Simbel had no retained earnings at the date of acquisition. Following are the 2017 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds (£E), respectively.

During 2016, the first year of joint operation, Simbel reported income of £E 181,000 earned evenly throughout the year. Simbel declared a dividend of £E 33,600 to Cayce on June 1 of that year. Simbel also declared the 2017 dividend on June 1.

On December 9, 2017, Simbel classified a £E 11,800 expenditure as a rent expense, although this payment related to prepayment of rent for the first few months of 2018.

The exchange rates for 1 £E are as follows:

A. Translation Worksheet

B. consolidation worksheet

Question 1 25 Marks
Malali Traders had the following transactions for 29 February 2020 financial year.
The following transactions was extracted from the books of Tesco Traders for February 2019.
1. Malali Traders borrowed N$ 18 400 from East Bank, and was deposited into AC Traders bank account. AC Traders’ is Malali Traders cement supplier.
2. Malali Traders acquired a Motor Vehicle on 01 February 2020 for N$ 10 600 from MZ Motors and it was paid on the 2nd March 2020 by cheque.
3. Sold goods on credit to Jayz Traders valued at N$ 28 000 and received a cheque of N$ 25 000 in full settlement of account on the 20 April 2020.
4. Purchased good for resale from NTN for N$ 8 000 and paid by cheque on 28 February 2020.
5. Cheque issued to NTN was dishonoured on the 29 February 2020 (see no.4 above).
6. Issued a debit note to Jayz on the 29 February 2020 for N$ 2 000.
7. Sold goods worth N$ 22 500 to SSS on credit, and SSS paid 10% deposit into Malali Traders Bank upon signing the sale contract on 07 February 2020.
8. Mr. Malali deposited N$ 11 000 into the business bank account on 01 February 2020 and in the same day he withdraws N$ 1 000 cash for business use.
9. Received Computers worth N$ 7 000 on 03 February 2020 as token of appreciation from Web Trader.
10. Sold goods valued at N$ 5 000 and received a cheque of N$ 4 750 from Unam in exchange for goods on 29 February 2020.
Required:
Page 12 of 14
Journalise the above transactions as at 29 February 2020: NARATIONS ARE NOT REQUIRED

At 30 June 2019, the financial statements of McMaster Ltd showed a building with a cost of $300 000 and accumulated depreciation of $152 000. The business uses the straight-line method to depreciate the building. When acquired, the building’s useful life was estimated at 30 years and its residual value at $60 000. On 1 January 2020, McMaster Ltd made structural improvements to the building costing $94 000. Although the capacity of the building was unchanged, it is estimated that the improvements will extend the useful life of the building to 40 years, rather than the 30 years originally estimated. No change is expected in the residual value.

Required

1. Calculate the number of years the building had been depreciated to 30 June 2019.
2. Give the general journal entry to record the cost of the structural improvements on 1 January 2020.   

c.Give the general journal entry to record the building’s depreciation expense for the year ended 30 June 2020.

Equity in Net Income and Noncontrolling Interest in Net Income

Palm Resorts acquired its 70 percent interest in Sun City on January 1, 2017, for $41,750,000. The fair value of the 30 percent non‑

controlling interest at the date of acquisition was $14,750,000. Sun City’s date‑of‑acquisition reported net

assets of $5,000,000 were carried at amounts approximating fair value, but it had unrecorded identifiable

intangibles, capitalizable per ASC Topic 805, valued at $7,500,000. These intangibles are determined to

have limited lives, amortized on a straight-line basis over five years. It is now December 31, 2020, and

Sun City reports net income of $10,000,000.

Required

a. Calculate the amount of goodwill originally reported for this acquisition, and its allocation to the

controlling and noncontrolling interests.

b. Calculate equity in net income and the noncontrolling interest in net income for 2020, assuming

goodwill from this acquisition is impaired by $2,000,000 in 2020