I have uploaded the required documents, and I have almost finished the second question. Only question one is left. I hope the teacher can help me check question two after finishing the question one.
Advanced Financial Accounting Fall 2020
Mathematical problems will be graded based on mathematical accuracy and appropriate accounting treatment (correct journal entries, account balances, etc.). Responses to the real-world case will be graded holistically based on how sufficiently your responses identify correct information from SEC filings.
|Clear presentation and formatting||10|
As a reminder, the individual project will be weighted as 15% of the total grade for ACCN 7120.
Problem 1 (120 points)
Alpha Ltd. effectively gained control over Beta Inc. by acquiring 70% of Beta’s common shares paying $200,000 in cash and issuing shares with value of $500,000 to Beta’s shareholders on December 31, 2010. The balance sheets of Alpha (including the effects of the acquisition) and Beta on December 31, 2010 are shown below:
|Dec 31 2010||Dec 31 2010|
|Other current assets||240,000||50,000|
|Equipment acc depr||(200,000)||(200,000)|
|Building acc depr||(45,000)|
|Investment in B||700,000|
At the date of acquisition, the due diligence team determined the following fair values:
The turnover of receivables and inventory is one year and Beta’s equipment had a useful life of five years at the acquisition date. The long-term liabilities balance on this date is comprised of just one specific bank loan with a remaining term of four years.
In addition, Alpha identified an additional intangible asset, a patent with estimated value of 50,000 and a useful life of ten years at the acquisition date.
All fair value differences are amortized using straight line.
During 2011 the following transactions took place:
|BONDS ISSUED ON DEC 30 2011 WHEN MARKET RATE = COUPON RATE = 12%|
|FACE VALUE = 500,000||MATURE DEC 31 2016|
|12/31||Face Value||Unamortized Prem/Discount||Carrying Amount||Effective Interest||Cash Interest||Discount Amortized|
During 2012, the following transactions took place:
During 2013 the following transactions took place:
The financial statements of Alpha and Beta for 2011 and 2012 were as follows:
|Dec 31 2011||Dec 31 2011|
|Other current assets||235,000||55,000|
|Equipment acc depr||(380,000)||(290,000)|
|Building acc depr||(15,000)|
|Investment in B||686,927|
|INCOME STATEMENT||ALPHA 2011||BETA 2011|
|Loss on sale of equipment||(20,000)|
|Gain on sale of building||131,250|
|Equity in Investee Income||21,927|
|Dec 31 2012||Dec 31 2012|
|Other current assets||30,000||45,000|
|Equipment acc depr||(560,000)||(380,000)|
|Building acc depr||(45,000)|
|Investment in B||603,649|
|INCOME STATEMENT||ALPHA 2012||BETA 2012|
|Gain on bond retirement|
|Equity in Investee Income||(48,278)|
Provide the following:
|ALPHA 2013||BETA 2013|
|Bond Interest Revenue||63,718|
|Bond Interest Expense||60,000|
Problem 2 (34 points)
Example of disclosures related to the class material
Open Newmont Mining Corporation investor relations website com/investor-relations/default.aspx”>http://www.newmont.com/investor-relations/default.aspx and find the 2014 Annual Report (Form 10-K Filed 02/20/15 for the Period Ending 12/31/14). Using information from the company’s financial statements and its footnotes (pages 83-130 of the 10-K) answer the following questions:
“Newmont Mining Corporation is primarily a gold producer with significant operations and/or assets in the United States, Australia, Peru, Indonesia, Ghana and New Zealand.” “Newmont is also engaged in the production of copper, principally through Batu Hijau in Indonesia, Boddington in Australia and Phoenix in the United States. Newmont Mining Corporation’s original predecessor corporation was incorporated in 1921 under the laws of Delaware.”(10K)
There are 126 million dollar gain on the investment income (basically selling the investment).
Euronimba Ltd. (43.5%)
Minera La Zanja S.R.L. (46.94%)
Novo Resources Corp. (28.75%)
The NCI for 2014 in income statement is 184 million dollars.
From the Book basis, the investment is 332 million dollars, From the fair value basis is 334 million dollars.
Current marketable equity securities fair value is 73 million. Net Book Value 89M- fair value 73M= unrealized loss 16 million dollars.
Long-term marketable equity securities fair value is 172 million dollars, Net book value 170M- fair value 172M= unrealized gain 2 million dollars.
NCI on balance sheet 2014 is 2815 million dollars.
Goodwill in 2014 balance sheet is 883 million dollars.
VIEs based on the footnotes are (i) a pledge of their combined 20% share of PTNNT; (ii) an assignment of dividends payable on the shares, net of withholding tax; (iii) a commitment from them to support the application of our standards to the operation of Batu Hijau; and (iv) as of September 16, 2011, in respect of PTPI only, powers of attorney to vote and sell PTNNT shares in support of the pledge, enforceable in an event of default as further security for the funding. (10K)
Segments based on geographical regions, North America, South America, Australia/New Zealand, Indonesia, Africa.
The largest segment is North America.
The most profitable segment is Africa. 530/ 3057 Around 17%
The OCI foreign currency translation adjustment in 2014 Comprehensive income is 23 million dollars.
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