Accounting Theory Conceptual Issues In A Political And Economic Environment 6th Edition Harry I. Wolk, James Dodd, Michael G. Tearney - Solutions

=+What has been the response based on research findings to date?
=+11. Why was there some reason to expect negative economic consequences arising from lease capitalization? What is the role of neutrality in such a sit-uation?
=+10. Evaluate the manner in which initial direct lease costs are accounted for under SFAS No. 13.
=+9. Is there a measurement reliability (verifiability) problem with lease capitalization?
=+8. How is representational faithfulness achieved in the capitalization requirements of SFAS No. 13:
=+Should symmetry be a goal of lease accounting?
=+7. Does symmetry exist between lessors and lessees under SFAS No. 13?
=+What research evidence exists to help evaluate this question?
=+6. Does it matter if capital leases are reported in a footnote or in the body of the balance sheet?
=+ Has there been an underlying theme in the develop-ment of lease accounting?
=+5. Review the evolution of capitalization criteria in lease accounting stan-dards. Why did APB Opinion No. 5 have little impact? What impact has SFAS No. 13 had?
=+ Why might noncan-cellability override the executory nature?
=+How have leases been interpreted?
=+4. Is the executory nature of lease contracts important in assessing lease accounting?
=+ How can these similarities and differences be reported in the financial statements?
=+3. What are the similarities and differences between leases and other means of property acquisition?
=+2. Why is the conveyancing aspect of leases emphasized in capital leases and the contractual element emphasized in operating leases?
=+Why is finite uniformity difficult to achieve? Explain what the relevant circumstances are in accounting for different types of leases.
=+1. What is the argument for finite uniformity in accounting for leases?
=+. Should the minimum liability be brought on the balance sheet and how should it be measured? What if an asset results? Discuss.
=+3. Using SFAS No. 87 and SFAS No. 106 for additional background, list and briefly discuss as many similarities and differences as you can between pension accounting and OPEB accounting.
=+c. What was the total actuarial gain or loss for 1998?
=+b.Did the actual return on plan assets for 1998 exceed or fall short of expectations?
=+2. Shown below are the pension and OPEB footnote disclosures for Case Corporation, a large manufacturer of agricultural and construction equipment, for the year 1998 (in millions).Amounts recognized in the statement of financial position consist of:Prepaid benefit cost $ 139 $ 127 Accrued benefit
=+1. Refer to Appendix 15-A. Assume that the firm is using projected accrued benefit cost funding. Suppose that a plan amendment was introduced during 2002 granting one year of prior service (for the year 2000) to each employee.Required:Determine the contribution to the pension fund for 2002 and
=+21. Is it inconsistent to use future salaries for service cost calculations and current salaries for minimum liability calculation purposes?
=+20. In what ways are the minimum liability and the transitional net obliga-tion (or asset) similar and in what ways do they differ?
=+19. What is the danger, particularly to older employees of restructuring pension plans into "cash benefit plans?"
=+18. While ERISA has been helpful, how well are employees protected in sit-uations where overfunded pension plans exist?
=+17. According to The Wall Street Journal article on February 1. 1996("Intrinsic Value" by Roger Lowenstein, p. C1), pension fund assets in the United States grew dramatically -- by approximately 29 percent-during 1995, an excellent year in the stock market. However, under-funding of pension plans
=+16. What types of economic consequences may arise from accrual account-ing for OPEBs in SFAS No. 106?
=+15. What issues of qualitative characteristics of accounting information(SFAC No. 2) are important relative to accrual accounting for OPEBs?
=+14. Voluntary pension plan terminations have been increasing [sce Stone(1987)] in which surplus plan assets are recaptured by sponsoring com-panies after deferred annuities (of equivalent value to accrued benefits)are purchased for plan participants. Why do you think this practice has been
=+13. How did the "give-and-take" differ between the FASB and its con-stituents in the drafting of SFAS No. 87 on pensions versus SFAS No. 106?
=+12. Evaluate if the implicit contract (economic liability) view of pensions meets the SFAC No. 6 definition of an accounting liability. What contra-diction exists in SFAS No. 87 regarding the legal versus economic liabil-ity viewpoints?
=+11. Is SFAS No. 87's argument favoring recognition of a pension liability for accumulated benefits consistent with the conceptual framework project?
=+Why do you think firms favor using a higher rate?
=+10. Research has shown that discount rates used by firms are generally above rates suggested by the FASB. Will this make the interest cost portion of pension expense higher or lower than if discount rates were lower?
=+9. What economic consequences of SFAS No. 87 were suggested in the chapter?
=+8. Given the evidence from the research in the stock market, does it mat-ter whether pension information is disclosed in the formal financial statements or as supplemental disclosure?
=+7. How has ERISA affected pension accounting?
=+6. How do the accounting and economic conceptions of a pension liabil-ity differ?
=+5. Is the treatment of unrecognized prior service cost and actuarial gains/losses in SFAS No. 87 an example of the asset-liability or revenue-expense orientation?
=+4. Why did APB Opinion No. 8 only minimally improve uniformity between companies?
=+3. Explain how previous pension accounting standards were based on a revenue-expense approach to the financial statements.
=+2. Why is there a pension accounting problem with defined benefit pen-sion plans, but not with defined contribution plans?
=+how are they actuarially calculated?
=+How are projected benefit obligations, accumulated ben-efit obligations, and vested benefit obligations defined in SFAS No. 87, and
=+How are they measured?
=+1. What do the following actuarial terms mean: accumulated benefits, actuarial liability, vested benefits, service cost, and unfunded accumulated benefits?
=+b.Do you think, based on the numbers shown above, that Worldcom allocated the income taxes stemming from the incorrect capitaliza-tion of the switching expenses?
=+5. Worldcom in 2001 and 2002 capitalized basic switching costs from expenses to capital assets to the tune of $3.8 billion dollars with approx-imately $3.04 billion occurring in 2001. The corporate tax rate is 35 per-cent. For 2001, Worldcom's income before taxes was $2.432 billion and its income
=+e. Do you think that earnings management is being used by Gillette?
=+d. Why do you think Gillette maintains this account?
=+c. What is the valuation allowance?
=+b.Is the expensing of the reorganization and realignment costs of$347 million after taxes for 1998 correct? Explain.
=+In addition, following information appeared in the footnotes for the 1998 corporate annual report (figures are in millions).1998 1997 Noncurrent deferred tax assets:Benefit plans$180$163 Merger related costs 13 12 Operating loss and credit carryforwards 31 33 Valuation allowance(29)(31)Net
=+4. Gillette Company, maker of shaving products and many other personal products, showed a net income of $1.428 billion in 1998 and $1.427 bil-lion in 1997 on page one of its 1998 annual report. A note to the 1998 income said that the 1998 income of $1.428 billion was to be reduced$347 million due
=+ence has arisen. Bad-debt expense of $22,000 occurred during 2001, but the actual write-off (which is when the tax deduction is taken) is not expected to occur until 2002. Prepare a schedule and do the tax entries for 2001.
=+Prepare a schedule and do the tax entries for 2000.Taxable income in 2001 is $1,400,000. One new temporary differ-C.
=+3. Accounting income for the Kolbow Company for 2000 (its first year of operations) was $1,700,000. Differences between book and income were as follows:Municipal bond interest (permanent)$ 75,000 Excess of tax over book depreciation 240,000 Excess of installment sales over collections 30,000
=+2. Nowell Company is experimenting with comprehensive-liability income tax allocation called for in SFAS No. 109 but, in addition, they are employing discounting. No temporary differences exist up to 2000.Shown here is a schedule of tax depreciation, book depreciation, and income before
=+1. Refer to Exhibit 14-8. Assume that in 1996 accounting income is $2,000.There is one new temporary difference: installment sale income of $350 is recognized in 1996 but will not be taxed until 1997 when the cash is collected.Required:Prepare the tax entries for 1996 in accordance with SFAS No.
=+13. Do you think that income tax allocation can improve the prediction of future tax payments in the short-run?
=+12. If discounting were used in the area of deferred tax assets and liabilities(as this chapter advocates), would there be any particular difficulty rel-ative to tax-loss carryforwards?
=+11. Refer to Exhibit 14-8. Under SFAS No. 96, there was a "conservative"recognition of deferred tax assets, As a result, the $135 deferred tax asset in 1997 would need to be "carried back" to 1994. Why would this result not be conservative?
=+10. How does SFAS No. 109 differ from SFAS No. 96?
=+9. How did SFAS No. 96 differ from APB Opinion No. 11.
=+8. What is permanent deferral?
=+7. What is the interpretation of income tax expenses under partial allocation?
=+6. What is the justification for discounting deferred tax liabilities under either comprehensive or partial allocation?
=+5. What is the rollover defense of the liability interpretation of deferred taxes, and how has it been attacked?
=+4. How do the deferral and liability methods of implementing compre-hensive allocation differ?
=+3. Although net-of-tax depreciation gives the same bottom-line result as comprehensive allocation, are there any financial ratios that would be affected by the choice between these methods?
=+2. Relative to depreciation, why is comprehensive allocation an example of rigid uniformity and partial allocation an example of finite uniformity?
=+1. As a type of allocation, why is income tax allocation unique?
=+would you favor?
=+b.Discuss the economic (and accounting) mening of the deprival value concept.. During a highly inflationary period, what type of inflation accounting
=+6. Listed here are several value listings for entry value (EV), exit value(NRV), and present value in cach of four periods for an asset.Period EV NRV PV 1$28,000$24,000$36,000 230,000 22,000 26,000 324,000 29,000 27,000 427,000 32,000 35,000 Required:a.Determine the deprival value (value in use)
=+b. Is this gain or loss to shareholders also a gain or loss to Cedros?Discuss.
=+2001-2003, with principal being repaid on December 31, 2003, The interest rate is 11.3 percent consisting of the company's basic rate of 5 percent and anticipated inflation of 6 percent (1.05 × 1.06 = 1.113 and 1.113 - 1 = 11.3 percent). The actual rate of inflation turned out to be 9
=+5. Cedros Company issued $10,000 of three-year debenture bonds on January 1. 2001. The bond interest is payable on December 31 of
=+4. Allentown Paving owns a cement mixer which is 3 years old with an expected life of 10 years. The machine originally cost $3,000,000.Replacement cost prior to the appearance of the new technology was$2,200,000. A newer machine comes on the market with a cost of$3,600,000. Annual production of
=+c.What would the holding gain be under EPI for the years 2001-2004?
=+b.What is the realized real holding gain for the years 2001-2004?
=+3, An asset is acquired at a cost of $10,000 with a five-year life and no antic-ipated salvage value. Straight-line depreciation is considered appropri-ate. The asset was acquired on January 2, 2000. Price indexes for the five years are 2000 2001 2002 2003 2004 Fixed asset index 100 95 108 120
=+2. Show capital maintenance proofs for GPLA and DI in Problem 1.
=+1. Using the balance sheet and income statement shown in Exhibits 13-4 and 13-5, construct the following types of income statements for 2002:a. GPLAb. DI C. RId. EPI Use the following general and specific indexes:2000 2001 2002 General price index 100 110 106 Specific price index applicable to
=+15. Why might it be said that both constant dollar and current cost income numbers under SFAS No. 33 are "disaggregated?"
=+14. Contrast financial capital maintenance with physical capital maintenance.
=+13. Price-level adjustment may be accomplished by using specific price indexes as well as a general price-level index. One possibility is to use a weighted-average price index for the firm's own mix of assets. What are the dangers here?
=+12. What is the argument against including bonds payable as a monetary liability in the purchasing power gain or loss computation?
=+11. A plot of land costing $200,000 was acquired on January 1, 2001. The "price level was 120 on that date. One-quarter of the land was sold on December 31, 2001, for $60,000 when the general price level was 180.Compute the following holding gains:a. Realized real holding gain.b. Unrealized real
=+10. A firm has a net monetary liability balance of $10,000 on January 1, 2001.During the first third of the year, the balance decreased to $7,500. During the second third of the year, the balance increased to $12,500. During the last third of the year, the balance increased to $20,000. The
=+9. What type of capital maintenance proof can be applied to EPI measurements?
=+8. Why are beginning balance sheets restated in capital maintenance proofs?
=+7. Why is DI primarily entity theory oriented?
=+6. Why is GPLA oriented to the proprietary theory?
=+5. What is the major purpose of EPI, and why is it likely that the objective will often not be achieved?
=+4. Why are the bottom-line income statement results quite similar between GPLA- and RI-type income statements?

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Accounting Theory Conceptual Issues In A Political And Economic Environment 6th Edition Harry I. Wolk, James Dodd, Michael G. Tearney - Solutions

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