...CHAPTER 1 ANSWERS TO QUESTIONS 1. Internal expansion involves a normal increase in business resulting from increased demand for products and services, achieved without acquisition of preexisting firms. Some companies expand internally by undertaking new product research to expand their total market, or by attempting to obtain a greater share of a given market through advertising and other promotional activities. Marketing can also be expanded into new geographical areas. External expansion is the bringing together of two or more firms under common control by acquisition. Referred to as business combinations, these combined operations may be integrated, or each firm may be left to operate intact. 2. Four advantages of business combinations as compared to internal expansion are: (1) Management is provided with an established operating unit with its own experienced personnel, regular suppliers, productive facilities and distribution channels. (2) Expanding by combination does not create new competition. (3) Permits rapid diversification into new markets. (4) Income tax benefits. 3. The primary legal constraint on business combinations is that of possible antitrust suits. The United States government is opposed to the concentration of economic power that may result from business combinations and has enacted two federal statutes, the Sherman Act and the Clayton Act to deal with antitrust problems. 4. (1) A horizontal combination involves...
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...To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 1 Test Bank BUSINESS COMBINATIONS Multiple Choice Questions LO1 1. Which of the following is a reason why a company would expand through a combination, rather than by building new facilities? a. A combination might provide cost advantages. b. A combination might provide fewer operating delays. c. A combination might provide easier access to intangible assets. d. All of the above are possible reasons that a company might choose a combination. LO2 2. A business combination in which a new corporation is created and two or more existing corporations are combined into the newly created corporation is called a a. b. c. d. merger. purchase transaction. pooling-of-interests. consolidation. 3. A business combination occurs when a company acquires an equity interest in another entity and has a. b. c. d. at least 20% ownership in the entity. more than 50% ownership in the entity. 100% ownership in the entity. control over the entity, irrespective of the percentage owned. ©2009 Pearson Education, Inc. publishing as Prentice Hall 1-1 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 4. FASB favors consolidation of two entities when a. one acquires less than 20% equity ownership of the other. b. one company’s ownership interest in another gives it control of the acquired company, yet the acquiring company does...
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...Solution Manual Chapter 5 - Consolidated Financial Statements with Less than 100% Ownership 1. The FASB ASC Master Glossary defines a noncontrolling interest “The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.” 2. FASB ASC 810-10-10-1 defines the objective of consolidated financial statements as follows: “The purpose of consolidated statements is to present, primarily for the benefit of the shareholders and creditors of the parent entity, the results of operations and the financial position of a parent entity and its subsidiaries essentially as if the group were a single entity with one or more branches or divisions. There is a presumption that consolidated statements are more meaningful than separate statements and that they are usually necessary for a fair presentation when one of the entities in the group directly or indirectly has a controlling financial interest in the other entities.” 3. FASB ASC 810-10-45-12 provides the following guidance: “It ordinarily is feasible for the subsidiary to prepare, for consolidation purposes, financial statements for a period that corresponds with or closely approaches the fiscal period of the parent. However, if the difference is not more than about three months, it usually is acceptable to use, for consolidation purposes, the subsidiary's financial statements for its fiscal period; if this is...
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...Problem 14 Year 9 income statements P Company S Company Sales 630,000 340,000 Interest income 1,850 Investment income 15,339 Gain on sale of land 7,000 Total revenues 652,339 341,850 Cost of sales 485,000 300,000 Interest expense 17,000 Selling and admin. expense 50,000 20,000 Income tax expense 34,000 8,740 Total expenses 586,000 328,740 Net income 66,339 13,110 Bonds payable – P Company Issued Jan. 1, Year 2 200,000 (a) Discount Jan. 1, Year 2 10,000) Amortized – Years 2 to 8 (10,000 / 10 ( 7) (7,000) – to July 1, Year 9 (1,000 ( ½) (500) 2,500 Balance, July 1, Year 9 197,500 (b) Discount amortization July to Dec., Year 9 500 Balance, Dec. 31, Year 9 198,000 Investment in bonds – S Company Par value July 1, Year 9 40,000 Purchase discount, July 1, Year 9 (40,000 – 38,750) 1,250) Amortized, Year 9 (1,250 / 2½ ( ½) (250) (c) 1,000 Balance, Dec. 31, Year 9 39,000 Cost of intercompany bonds July 1, Year 9 38,750 Par value 40,000 Gain on bond – S Company (before tax) 1,250 (d) Par value, July 1, Year 9 40,000 Book value ((b) 197,500 ( 20%) 39,500 Loss on bonds – P Company (before tax) 500 (e) Gain to entity, July 1, Year 9 ((d) 1,250 – (e) 500) 750 (f) Before tax 40% tax After tax Entity Gain July 1, Year 9 (f) 750 300 450 Interest elimination gain Year 9* 150 60 90 (g) Balance gain Dec. 31, Year 9 600 240 360 (h) P Company Gain...
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...ACCT3039 Advanced Managerial Accounting Graded Tutorial Activity No.3 Worth 5% of the overall grade Due by March 19th 2014. N.B. Students should note that this tutorial assignment should be submitted on a Word document by the due date stated above at the appropriate drop box on the Learning exchange. H is an investment group which owns a number of subsidiary companies. Each subsidiary produces a particular product, product range or service. For the purposes of management control, subsidiaries are organised into 3 sectors. 1) Consulting and Services (CS): comprising a consultancy practice which provides advice on product design, manufacturing technique and material usage both to H group companies as well as businesses outside the group. Salaries comprise about 95% of the costs in CS sector. 2) Heavy Engineering (HE): comprising 2 subsidiary companies producing machinery, equipment and tools used in a variety of industrial applications. These companies require a major investment in the form of factory premises, plant and transport facilities. 3) Light Engineering (LE): comprising 4 subsidiaries which produce a range of small mechanical and electrical components, many of which are designed into the products of HE sector companies. The production of these components is generally considered to be labour intensive. At the start of 2012 the management of H decides to prepare a five year plan strategic plan for the group. A team of H executives is assembled to prepare this plan. At its...
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...CHAPTER 10 SUGGESTED ANSWERS EXERCISES Exercise 10 - 1 |1. Assets, other than goodwill |550,000 | | | Goodwill |196,000 | | | Liabilities | |230,000 | | Ordinary Share Capital | |516,000 | | | |Co. A |Co. B |Co. C |Total | | |Net asset contribution |P 90,000 |P120,000 |P110,000 |P320,000 | | |Goodwill contribution | | | | | | | Average earnings |P 16,000 |P 20,000 |P 22,000 | | | | Normal earnings | 10,800 | 14,400 | 13,200 | | | | Excess earnings |P 5,200 |P 5,600 |P 8,800 | | | | Capitalization rate | 10% | ...
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...|1a) | | | | | | | |Colton Company Sales | |300,000 | | | | | |Mota Company Sales | |172,000 | | | | | | | |472,000 | | | | | |2008 Colton Sales |-50,000 | | | | | | |2008 Mota Sales |-100,000 | | | | | | | | |-150,000 | | | | | |Sales reported in 2008 | |322,000 | | | | | | | | | | | | | |1b) | | | | | | | |Colton...
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...Writing Methodology To: Pastor and his wife Date: February 10, 2013 Facts: TICKET TO HEAVEN Your client a pastor has not filed tax returns for 2010, 2009, 2008, 2007, 2006, 2005, and 2004. He is married. Their combined income is follows: | |Wife |Pastor |Parsonage Allowance | |2004 |15500 |22000 |8500 | |2005 |16000 |24000 |8700 | |2006 |16500 |26000 |9500 | |2007 |16500 |30000 |12000 | |2008 |20100 |35000 |18000 | |2009 |25000 |38500 |24000 | |2010 |26500 |42000 |30000 | Pastor built his own home in 2008 and there was no mortgage on the house. He has promised you that if make him clean with the IRS, he will guarantee you a place in heaven. Law and Analysis: Publication 517 Social Security and Other Information for Members of the Clergy and Religious Workers Ministerial Services Ministerial service, in general, is the...
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...HONG KONG POLYTECHNIC UNIVERSITY School of Accounting and Finance AF 4331 Business Valuation 2015/2016 Semester One Course Outline Subject Code : AF4331 Subject Title : Business Valuation Level : 4 Credits : 3 Mode of Study : Seminars 39 hours Pre-requisites : Corporate Finance (AF4320) Instructor ; Emmie SIU Office Phone : 27666340 E-mail : emmie.siu@polyu.edu.hk Consultation : Monday 2:30 pm to 6:30 pm Role and Purpose This subject aims to introduce an analytical framework for carrying out business analysis and valuation by using financial statements for valuing different kind of businesses. It contributes to the achievement of the BBA Programme Outcomes by enabling students to identify and resolve ethical issues contained in the financial statements (Outcome 4), apply basic accounting and financial theories to analyze financial reports and to identify potential problems and risks (Outcome 7). By the end of this subject, students will become a professional user of financial statements to advance further into the field of business valuation as investment analysis. It requires students to present and communicate effectively in English for general business communication (Outcome 1). Learning Outcomes Upon completion of the subject, students will be able to: a. Develop the ability to critically...
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...Institute and State University, Blacksburg, VA, USA School of Management, University of Michigan-Dearborn, MI, USA College of Business Administration, San Diego State University, San Diego, CA, USA Department of Accounting, University of Arkansas at Little Rock, AR, USA Zicklin School of Business, CUNY – Baruch College, New York, NY, USA Belk College of Business, University of North Carolina at Charlotte, NC, USA College of Business and Economics, West Virginia University, Morgantown, WV, USA RSM Erasmus University, Department of Financial Management, Rotterdam, The Netherlands Mohamed E. Bayou Chee W. Chow Cynthia M. Daily Harry Z. Davis Nabil Elias Arron Scott Fleming Frank G. H. Hartmann vii viii LIST OF CONTRIBUTORS Fred A. Jacobs Frances Kennedy James M. Kohlmeyer, III Leslie Kren John Y. Lee Michael S. Luehlfing Adam S. Maiga School of Accountancy, Georgia State University, Atlanta, GA, USA Department of Accountancy and Legal Studies, Clemson University, SC, USA College of Business, East Carolina University, Greenville, NC, USA School of Business, University of Wisconsin, Milwaukee, WI, USA Lubin School of Business, Pace University, Pleasantville, NY, USA School of Professional Accountancy, Louisiana Tech University, LA, USA School of Accounting, Florida International University, Miami, FL, USA I.H. Asper School of Business, University of Manitoba, Winnipeg, Canada School of Professional Accountancy, Louisiana Tech University, Ruston, LA, USA School of...
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...VMWM Research Department, March 31, 2014 WEEKLY STOCK PICKS Disclaimer: The following stock picks are for information purposes only. The information stated herein may reflect the opinion and views of VM Wealth Management in relation to market conditions and does not constitute any representation or warranties in relation to investment returns and the credibility of the sources of information relied upon in the preparation of this report, without further research and verification. Before making any investment decision, please consult a VM Wealth Management Advisor. STOCK STOCK DATA LAST TRADED PRICE: $18.05 4 WEEK PRICE MOVEMENT NCBJ RECOMMENDATION & RATIONALE RECOMMENDATION: BUY RATIONALE: The Company reported relatively flat earnings for the 3 months ended Dec 31. However, our outlook for NCBJ over the medium- to long-term is positive on the basis of an improving economy and ongoing structural changes at the Company, which could lower operating costs. NCBJ National Commercial Bank Jamaica YTD CHANGE: 0.28% P/E RATIO: 5.16x 20 19 18 17 P/B RATIO: 0.61x LAST TRADED PRICE: J$8.60 YTD CHANGE: 2.14% DCOVE Dolphin Cove Ltd P/E RATIO: 13.29x DCOVE 9 8.5 8 RECOMMENDATION: BUY RATIONALE: The majority of the Company's income is in US currency, which provides a good currency hedge for investors. The improving global economy should also provide tailwinds. The Company’s continuing expansion plans should continue to result in significant revenue and...
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...Law 1 – Annulment Case SP. PROC. CASE No. ONA-1005 For Annulment/Declaration of Nullity of Marriage The annulment case happens in the Philippines that will be mention stated below of this sentence. This happened in the Regional Trial Court in the 7th Judicial Region Branch 25, Danao City in Cebu. SUMMONS BY PUBLICATION ANTONIO A GULTIANO,JR.- No. 662 Ipag Mariveles, Bataan WHEREAS on December 02, 2010, petitioner through counsel filed with this court a complaint as follows: COMPLAINT PETITIONER, by counsel unto this Honorable court, respectfully states under oath that: Petitioner Hazel A. Escosio-Gultiano is a Filipino of legal age, married and a resident of Goldenville countryside Homes, Santo Niño, Barangay Sabang, Danao City, Cebu. She is represented in the instant action by the undersigned counsel whom she may be served with notices and other court processes. Respondent Antonio A. Gultiano, Jr. is a Filipino, of legal age, married and a resident of 662 Mariveles, Bataan, where he may be served with summons and other court processes; Petitioner’s selfelss sacrifices to save her family resulted her subjection to emotional and psychological abuse from the respondent. Respondent’s intolerablecharacter and moral defect were already beyong the stretch of petitoner’s patience. Thus petitioner pursued any means of raising a child through the help of parents in order to scratch a living away from home. Such identified personality traits or mental problems is the integral...
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...Wal-Mart leadership became successful due to the company’s effective leadership style, their organizational structure and its culture. Wal-Mart’s organization culture is recognized to be more of bonded organization between the employer and the employee. Sam Walton, the company’s owner, shared his vision for the company with his associates and made them partners in the success of his company, after Sam died, his legacy remained the same with new management and continued to grow successfully and still remain number one in retail today, because management recognized his vision and carried it out as Sam would have done. New management did not dismantle Sam’s vision but kept the success going unlike Times Picayune, this organization lacked a successful organizational structure and endured more of procedural issues. After Times Picayune owner, Ashton Phelps Jr. retired, his vision was not carried out as he intended. After 175 years, new owner Ricky Matthews, dismantled Phelps vision and emphasized his own vision that became more procedural and steep, which caused the culture of the business to miscommunicate. Workers in this environment are more focus on pleasing the boss, instead of their work performance due to the company’s rules and policies being procedural and controlled without any flexibility. This type of culture causes employee turnovers and a bad reputation for the business. Matthews not only changed the culture of Time Picayune, but he lay off all active employees without...
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...Criticisms While Kim and Mauborgne propose approaches to finding uncontested market space, at the present there are few success stories of companies that applied their theories in advance. One success story that does exist is Nintendo, who first applied the Blue Ocean Strategy to create the Nintendo DS handheld game system which was the first portable gaming system to offer dual screen gaming and a touch screen in 2004. In 2006, Nintendo released the Wii, which redefined how video games are played by. The 3DS is Nintendo's third endeavour for its blue ocean strategy. Its first two attempts, the Nintendo DS and Wii, were wildly successful, becoming some of the biggest selling platforms in history. Nintendo revealed their Blue Ocean Strategy during an E3 press conference during the hype build-up of the Wii. However with just one case study, this hole in their data persists despite the publication of Value Innovation concepts since 1997. Hence, a critical question is whether this book and its related ideas are descriptive rather than prescriptive.[10] The authors present many examples of successful innovations, and then explain from their Blue Ocean perspective – essentially interpreting success through their lenses.[11] The research process followed by the authors has been criticized[11] on several grounds. Criticisms include claims that no control group was used, that there is no way to know how many companies using a Blue Ocean Strategy failed and the theory is thus unfalsifiable...
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...By Ahsan Manazir [pic] My aim is to investigate the role of the creativity in the business Game station, which is one of the UK’s leading computer and video games retailer. The definition of an aim is a target or to intend to move towards a certain goal. An objective is a goal that an individual or a team works toward to attain the end target. My objective for this particular research activity is to investigate different ways and ideas the business company Game station uses to improve creativity to attract customers. Primary research includes collecting data that does not already exist and therefore this could be data collected first hand. Examples could be conducting interviews or handing out questionnaires or observations. I will use secondary research which is data that already exists; this could be through published or recorded data that has already been collected for some other purpose rather than the current study. Therefore my research methods will consist of research from the internet and various websites. Game station provides customer service through numerous branches around the UK. Their products range from video games to electronic gadgets such as X-Box or Nintendo Wii, which are displayed throughout the shop for customers to observe and enquire about. The consumers for such products in Game station include children, teenagers as well as adults as most gadgets are designed for all ages while games on the other hand can specifically target a certain age group....
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