Several years ago, United Technology Company expensed $20 million of research and development costs that eventually resulted in a patent. Earlier this year, United was acquired by its largest competitor, Spirit Incorporated. At the acquisition date, it was determined the patent had a fair value of $50 million. What amount, if any, should Spirit report […]
Johnson & Johnson 5-Step DuPont Analysis and Comparison with Regeneron Below are the 5-Step DuPont Analysis calculations for Johnson & Johnson and Regeneron Pharmaceuticals for 2020 and 2019. Johnson & Johnson Five-component disaggregation of ROE Metric ROE Tax Burden Internal Burden EBIT Margin Asset Turnover Financial Leverage Dec 31, 2020 23.25% 0.89 0.99 20.22% 0.47 […]
Clay Company owns the following marketable securities, all of which were purchased at the beginning of 2021: Firm # Shares Owned by Clay Ownership Held by Clay Clay’s Cost Market Value (12/31/21) Annual Dividend Total 2021 Earnings A 50,000 15% €40.00 €46.00 €0.75 €50,000 B 100,000 25% €10.00 €12.00 €0.30 €100,000 C 75,000 10% €25.00 […]
Clay sold its investment in Firm A for €44.50 per share Clay Company owns the following marketable securities, all of which were purchased at the beginning of 2021: Firm # Shares Owned by Clay Ownership Held by Clay Clay’s Cost Market Value (12/31/21) Annual Dividend Total 2021 Earnings A 50,000 15% €40.00 €46.00 €0.75 €50,000 […]
Carrying value of Clay Company’s marketable securities Clay Company owns the following marketable securities, all of which were purchased at the beginning of 2021: Firm # Shares Owned by Clay Ownership Held by Clay Clay’s Cost Market Value (12/31/21) Annual Dividend Total 2021 Earnings A 50,000 15% €40.00 €46.00 €0.75 €50,000 B 100,000 25% €10.00 […]
Marketable Securities’ Total Contribution to Pretax Income Clay Company owns the following marketable securities, all of which were purchased at the beginning of 2021: Firm # Shares Owned by Clay Ownership Held by Clay Clay’s Cost Market Value (12/31/21) Annual Dividend Total 2021 Earnings A 50,000 15% €40.00 €46.00 €0.75 €50,000 B 100,000 25% €10.00 […]
Miller Corp’s marketable equity securities portfolio acquired earlier this year is reported as follows: Category Fair Value through Profit or Loss Fair Value through Other Comprehensive Income Cost €64,000 €75,000 Fair Value €48,000 €62,000 According to IFRS, Miller should report an unrealized holding loss in its current year income statement of: a. €13,000 b. €16,000 […]
Kensington plc, a hypothetical company based in the United Kingdom The following information relates to Questions 1–7 Kensington plc, a hypothetical company based in the United Kingdom, offers its employees a defined benefit pension plan. Kensington complies with IFRS. The assumed discount rate that the company used in estimating the present value of its pension […]
Investment adjustment required under IFRS Munich Corporation owns a 30% equity interest in Cologne Inc. The carrying value of the investment at year end was €75 million and the fair value, less selling costs, was €62 million. The present value of the future expected cash flows is €65 million. What adjustment, if any, is required […]
What amount of goodwill is created on acquisition This year, Fat purchased a 40% interest in Thin for $275,000. On the acquisition date, Thin’s shareholders’ equity was $450,000. The carrying amounts of Thin’s identifiable net assets approximated their fair values except for land, whose fair value exceeded its carrying value by $75,000. What amount of […]
