Cameco Corporation, a publicly traded company and the world's largest producerof uranium concentrates, has several long-term investments. These include a100% investment in Cameco Marketing Inc., and a 40% interest in JV Inkai (aprivate corporation with no determinable fair value that Cameco does not wish totrade). (a) Indicate whether each of the above investments should be accountedfor using the cost model, the fair value through profit or loss model, or the equitymethod. 100% Cameco Marketing Inc. 40% JV Inkai

The objective of the question is to determine the appropriate accounting method for Cameco…

Answered: Cameco Corporation, a publicly traded…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sunland Homes Company is considering the acquisition of Oriole, Inc. early in 2025. To assess the amount, it might be willing to pay. Sunland Homes makes the following computations and assumptions. A B Oriole, Inc. has identifiable assets with a total fair value of $15,030,000 and liabilities of $8,815,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 30% higher than book value, and land with a fair value 75% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Oridle, Inc. Oriole, Inc's pretax incomes for the years 2022 through 2024 were $1,200,900, $1,500,800, and $955,000, respectively. Sunland Homes believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments to the following items included in pretax eamings: Depreciation on buildings (each year) C 962,900…
A subsidiary entity, Crystal Ltd, is for sale at a price $ 6 million. There has been some interest from prospective buyers but no sale as yet. One buyer has made an offer of $ 5 million but the directors of the parent company have declined the offer. An accountant firm which was appointed by the parent company has just submitted a report and advice that the fair value of Crystal Ltd is $ 7.5 million. They have decided not to lower the sale price of Crystal Ltd at the moment. Discuss whether the subsidiary can be classified as held for sale. Please refer to above details when answering.
3.
In some commercial property operating agreements, investors are scheduled to receive their “pro rata” share of all cash flow distributions. Based on your understanding of what is meant by a “pro rata” distribution, an investor that contributed 1/10 of the required equity investment would be entitled to receive what proportion of all future cash flows?
VMAC company owns two leases in Brazil. The company’s accountantrecorded DD&A Expense of $246,380 using a common unit of measure basedon BOE and assuming no exclusions from the amortization. In 2018, thereported oil and gas prices were disproportionate relative to their energycontent. VMAC wants you to review the given number and decide whether youagree or disagree with it. Assuming you disagree, provide the appropriateDD&A number to be recorded for 2018 and explain why VMAC shouldconsider it. The company reported the following information at 31/12/2018:Lease AProved property $ 495,000Wells & equipment 3,900,000 Lease BUnproved property 180,000Wells-in-progress 375,000 Proved reservesOil 600,000 bblGas 2,700,000 Mcf ProductionOil (sold at $70 per bbl) 30,000 bblGas (sold at $5.50 Mcf) 150,000 Mcf Current prices:Oil$75 per bblGas$ 6 per Mcf
Breslin Incorporated made a capital contribution of investment property to its 100-percent-owned subsidiary, Crisler Company. The investment property had a fair market value of $3,000,000 and a tax basis to Breslin of $2,225,000. b. What is the tax basis of the investment property to Crisler Company after the contribution to capital?
Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 million
Yokoyama Company owns a machine with a cost of $92,000 and accumulated depreciation of $18,500 that can be sold for $66,000 less a 5% sales commission. Alternatively, Yokoyama Company can lease the machine to another company for 3 years for a total of $74,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Yokoyama Company on the machine would total $10,500 over the 3 years. Prepare a differential analysis on February 21 as to whether Yokoyama Company should lease (Alternative 1) or sell (Alternative 2) the machine. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machine (Alt. 1) or Sell Machine (Alt. 2) February 21 Differential Effect Lease Sell Machine Machine (Alternative 2) (Alternative 1) (Alternative 2) Revenues Costs Profit (loss) Should Yokoyama Company lease (Alternative 1) or sell (Alternative 2) the machine?
21.

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