ACC407 WEEK 1 ASSIGNMENT 1

On January 1, 2023, Ridge Road Company acquired 30 percent of the voting shares of Sauk Trail, Incorporated, for $4,500,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail's board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail's board, which gave it the ability to significantly influence Sauk Trail's operating and investing activities. The January 1, 2023, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow: Carrying Amount $ 200,000 5,810,000 Fair Value $ 200,000 7,140,000 4,180,000 2,180,000 (275,000) Assets and Liabilities Cash and Receivables Computing Equipment Patented Technology Trademark Liabilities Also, as of January 1, 2023, Sauk Trail's computing equipment had a seven-year remaining estimated useful life. The patented…

On January 1, 2020, Ridge Road Company acquired 30 percent of the voting shares of Sauk Trail, Inc., for $4,400,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities.   The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow:     Carrying Amount Fair Value Cash and receivables $ 195,000   $ 195,000   Computing equipment   5,765,000     7,060,000   Patented technology   185,000     4,170,000   Trademark   235,000     2,170,000   Liabilities   (270,000 )   (270,000 )     Also, as of January 1, 2020, Sauk Trail’s computing equipment had a…

On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $3,700,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities.   The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow:     Carrying Amount Fair Value Cash and receivables $ 160,000   $ 160,000   Computing equipment   5,450,000     6,500,000   Patented technology   150,000     4,100,000   Trademark   200,000     2,100,000   Liabilities   (235,000 )   (235,000 )     Also, as of January 1, 2020, Sauk Trail’s computing equipment had a…

On January 1, 2023, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Incorporated, for $3,500,000 in cash. Both companies provide commercial Internet support services but serve markets in different Industries. Ridge Road made the Investment to gain access to Sauk Trail's board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail's board, which gave it the ability to significantly influence Sauk Trail's operating and Investing activities. The January 1, 2023, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow: Assets and Liabilities Cash and Receivables Computing Equipment Patented Technology Trademark Carrying Amount $ 150,000 5,360,000 Fair Value $ 150,000 Liabilities Years 2023 2024 Also, as of January 1, 2023, Sauk Trail's computing equipment had a seven-year remaining estimated useful life. The patented technology was…

On January 1, 2020, Ridge Road Company acquired 20 percent of the voting shares of Sauk Trail, Inc., for $2,700,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail's board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail's board, which gave it the ability to significantly influence Sauk Trail's operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow: Cash and Receivables Computing Equipment Patented Technology Trademark Liabilities 2020 2021 Carrying Amount $ 110,000 5,000,000 100,000 150,000 (185,000) Net Income $1,800,000 1,985,000 Also, as of January 1, 2020. Sauk Trail's computing equipment had a seven-year remaining estimated useful life. The patented technology was…

On January 1, 2017, Ridge Road Company acquired 20 percent of the voting shares of Sauk Trail, Inc., for $3,400,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail's board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail's board which gave it the ability to significantly influence Sauk Trail's operating and investing activities.   The January 1, 2017, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow:     Carrying Amount Fair Value Cash and receivables $ 145,000   $ 145,000   Computing equipment   5,315,000     6,260,000   Patented technology   135,000     4,070,000   Trademark   185,000     2,070,000   Liabilities   (220,000 )   (220,000 )   Also as of January 1, 2017, Sauk Trail's computing equipment had a…

On 1 July 2020, Lada Ltd (LL) acquired a 20 per cent interest in Hupmobile Ltd (HL) for a cash consideration of $40,000. Despite its small shareholding in HL, LL is considered to have significant influence over HL, since LL is able to appoint a director to HL’s Board of Directors, and HL is a major customer of LL. LL also provides management personnel to HL, and the two companies share technical information. On the date of the acquisition, the assets of HL were reported at fair value. The share capital and reserves of HL at the date of acquisition were: Share capital 50,000 Retained earnings 140,000 Total shareholders’ equity $190,000 Additional information For the year ending 30 June 2021, HL recorded an after-tax profit of $100,000, from which it paid a dividend of $50,000. For the year ending 30 June 2022, HL recorded an after-tax profit of $80,000, from which it paid a dividend of $60,000. On 30 June 2022, HL revalued its Land upwards by $10,000. Before this revaluation, the Land…

On January 1, 2024, Cullumber Company, a public company, purchased 40% of the common shares of Triple Titanium Inc. for $575,000. The remaining shares (60%) are held by the family members of the company's founder. Cullumber considers this a strategic investment and a critical step into developing consumer markets. Triple Titanium is currently a supplier to Cullumber. Cullumber placed two members on Triple Titanium's 10-person board of directors and the two members believe they have been influential on the board through the year. Cullumber and Triple Titanium both have December 31 year ends. During 2024, Triple Titanium reported profit of $240,000 and paid total dividends of $60,000. (b) Prepare the following journal entries for Cullumber, assuming significant influence does exist. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all…

Kk.3. Subject  :- Account

In 2021, Google, a company that specializes in internet-related service, acquired Fitbit, the fitness tracking company, to bolster its wearable capabilities. Google paid shareholders $7.25 per share in cash. This is an example of which of the following?   Group of answer choices horizontal acquisition conglomerate acquisition vertical acquisition merger

CONVEX Ltd. is a new company that was established on 1st January, 2020 to oversee the production of coronavirus vaccines for Ghana. On 1st July, 2020, CONVEX Ltd. acquired 75% shares in CONCAVE Ltd., a pharmaceutical company, to speed up the vaccine production. As a new graduate from UGBS, CONVEX Ltd. has employed you as their accountant. At a management meeting held, a number of issues were raised about how CONVEX Ltd. should deal with its transactions and investment in CONCAVE Ltd. and the need to conduct financial ratio analysis to determine the profitability and sustainability of CONCAVE Ltd. In a memo to management, provide your views on how the following issues should be addressed. Issue  Assuming there is the need for CONVEX Ltd. to prepare consolidated financial statements and CONCAVE Ltd. has presented its separate financial statement to CONVEX Ltd., comment on how the following transactions between CONVEX Ltd. and CONCAVE Ltd. will be accounted for in the consolidated…

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Abaco is planning to acquire Cozumel Airlines, a freestanding C corporation, in the expectation that new management can be brought in to achieve substantial operating efficiencies. You have been retained to advise Abaco on how to structure the acquisition. Two graduate school friends, Monique and Denise, own Cozumel Airlines. Together, they have a $1 million basis in their Cozumel Airlines stock. Both Monique and Denise have held their Cozumel Airlines stock for several years but must sell their stock for nontax reasons. Cozumel Airlines' tax-basis balance sheet contains $14 million of assets, no liabilities, and no net operating loss carry-overs. All parties agree that Cozumel Airlines would be worth $20 million to Abaco with no step-up in Cozumel's inside (asset) basis, but $21.25 million if its inside (asset) basis was stepped up to fair market value. Monique and Denise each face a 40% tax rate on ordinary income and a 20% tax rate on capital gains.The corporate tax rate is 35%.…

Abaco is planning to acquire Cozumel Airlines, a freestanding C corporation, in the expectation that new management can be brought in to achieve substantial operating efficiencies. You have been retained to advise Abaco on how to structure the acquisition. Two graduate school friends, Monique and Denise, own Cozumel Airlines. Together, they have a $1 million basis in their Cozumel Airlines stock. Both Monique and Denise have held their Cozumel Airlines stock for several years but must sell their stock for nontax reasons. Cozumel Airlines' tax-basis balance sheet contains $14 million of assets, no liabilities, and no net operating loss carry-overs. All parties agree that Cozumel Airlines would be worth $20 million to Abaco with no step-up in Cozumel's inside (asset) basis, but $21.25 million if its inside (asset) basis was stepped up to fair market value. Monique and Denise each face a 40% tax rate on ordinary income and a 20% tax rate on capital gains.The corporate tax rate is 35%.…

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