Analyst with a uk-based investment firm

Assignment Help Accounting Basics
Reference no: EM131044808

Percy Byron, CFA, is an equity analyst with a UK-based investment firm. One firm Byron follows is Nin Mount PLC, a UK-based company. On 31 December 2008, Nin Mount paid £320 million to purchase a 50 percent stake in Boswell Company. The excess of the purchase price over the fair value of Boswell's net assets was attributable to previously unrecorded licenses. These licenses were estimated to have an economic life of six years. Th e fair value of Boswell's assets and liabilities other than licenses was equal to their recorded book values. Nin Mount and Boswell both use the pound sterling as their reporting currency and prepare their financial statements in accordance with IFRS.

Byron is concerned whether the investment should affect his "buy" rating on Nin Mount common stock. He knows Nin Mount could choose one of several accounting methods to report the results of its investment, but Nin Mount has not announced which method it will use.  Byron forecasts that both companies' 2009 financial results (excluding any merger accounting adjustments) will be identical to those of 2008. Nin Mount's and Boswell's condensed income statements for the year ended 31 December 2008, and condensed balance sheets at 31 December 2008, are presented in Exhibits 1 and 2, respectively.

Nin Mount's current ratio on 31 December 2008 most likely will be highest if the results of the acquisition are reported using:

A. the equity method.

B. consolidation with full goodwill.

C. consolidation with partial goodwill.

Reference no: EM131044808

Questions Cloud

Hypothetical company based in the united kingdom : Kensington plc, a hypothetical company based in the United Kingdom, offers its employees a defined benefit pension plan. Kensington complies with IFRS. Th e assumed discount rate that the company used in estimating the present value of its pension..
Which is defined as a major life activity : In Guz v. Bechtel National, Guz was fired by Bechtel after 22 years of service. The company eliminated his position despite his good performance and no financial problems in the company. The California high court held that Guz could:
Kind of stuck and any help would be much appreciated : If ACAC and BCBC are the events complementary to AA and BB, and p(A|B)>p(A)p(A|B)>p(A) and p(BC)>0p(BC)>0, prove that p(AC|BC)>p(AC)p(AC|BC)>p(AC). Been trying to get my head around this but kind of stuck and any help would be much appreciated.
Likely encourage a firm to increase the debt : Which of the following would likely encourage a firm to increase the debt in its capital structure?
Analyst with a uk-based investment firm : Percy Byron, CFA, is an equity analyst with a UK-based investment fi rm. One firm Byron follows is Nin Mount PLC, a UK-based company. On 31 December 2008, Nin Mount paid £320 million to purchase a 50 percent stake in Boswell Company.
What is the effective annual rate for loans : What is the effective annual rate (EAR) for each of the following one-year, $1,000 bank loans? A loan with an APR of 5.8%, compounded monthly. A loan with an APR of 5.8%, compounded annually, that also has a compensating balance requirement of 9.5% (..
Invoices are sampled at random : A large industrial firm allows a discount on any invoice that is paid within 30 days. Of all invoices, 10% receive the discount. In a company audit, 15 invoices are sampled at random. The mean (average) value of the number of the 15 sampled invoic..
Normal approximation to this binomial distribution : The total number of employees who leave each year follows a binomial distribution. Now, we want to use the normal approximation to this binomial distribution. Then in this normal distribution, the mean is ______ and the standard deviation is _____..
Produce a separate plot of all the phoneme curves : Implement your procedure on the phoneme data, and try it out. Divide the data into a training set and a test set (50-50), making sure that speakers are not split across sets (why?). Use K = 1, 3, 5, 7 centers per class, and for each use J = 5, 10,..

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd