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intermediate accounting ifrs 4th edition
Intermediate Accounting IFRS Edition 2nd Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions
Kimmel Company uses the net method of accounting for sales discounts. Kimmel also offers trade discounts to various groups of buyers.On August 1, 2015, Kimmel sold some accounts receivable on a without guarantee (recourse) basis.Kimmel incurred a finance charge.Kimmel also has some notes receivable
On July 1, 2015, Wallace Company, a calendar-year company, sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Wallace Company will receive interest at the prevailing rate for a note of this type. Both the principal and interest are
Corrs Wholesalers Co. sells industrial equipment for a standard 3-year note receivable. Revenue is recognized at time of sale. Each note is secured by a lien on the equipment and has a face amount equal to the equipment’s list price. Each note’s stated interest rate is below the customer’s
On September 30, 2015, Rolen Machinery Co. sold a machine and accepted the customer’s zero-interest-bearing note. Rolen normally makes sales on a cash basis.Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices.After receiving the first of two
Company sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Moresan will receive interest at the prevailing rate for a note of this type. Both the principal and interest are due in one lump sum on June 30, 2016.On September 1, 2015,
Soon after beginning the year-end audit work on March 10 at Engone Company, the auditor has the following conversation with the controller.Controller: The year ended March 31st should be our most profi table in history and, as a consequence, the board of directors has just awarded the offi cers
As the manager of the accounts receivable department for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your accounts receivable clerk who is paid$1,200 per month, has been wearing unusually tasteful and expensive clothing. (This is Beavis’s first year in business.) This
Comparative Analysis Case adidas and Puma The financial statements of adidas (DEU) and Puma (DEU) are presented in Appendices B and C, respectively.The complete annual reports, including the notes to the financial statements, are available online.Instructions Use the companies’ financial
Bienvenu Enterprises reported cost of goods sold for 2015 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2015. Bienvenu later discovered that its ending inventories at December 31, 2014 and 2015, were overstated by $110,000 and $35,000, respectively. Determine the corrected
In your audit of Garza Company, you find that a physical inventory on December 31, 2015, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000.1. Merchandise of $61,000 which is held by Garza on consignment.
Assume that in an annual audit of Webber Inc. at December 31, 2015, you find the following transactions near the closing date.1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2015. The customer
Bradford Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, which is debited for materials purchased and
Werth Company asks you to review its December 31, 2015, inventory values and prepare the necessary adjustments to the books. The following information is given to you.1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31,
Presented below are transactions related to Guillen, Inc.May 10 Purchased goods billed at £20,000 subject to cash discount terms of 2/10, n/60.11 Purchased goods billed at £15,000 subject to terms of 1/15, n/30.19 Paid invoice of May 10.24 Purchased goods billed at £11,500 subject to cash
Ohno Industries purchased ¥12,000 of merchandise on February 1, 2015, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned ¥3,000 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. (All amounts in
At December 31, 2015, Dwight Corporation reported current assets of €390,000 and current liabilities of €200,000. The following items may have been recorded incorrectly. Dwight uses the periodic method.1. Goods purchased costing €22,000 were shipped f.o.b. shipping point by a supplier on
The net income per books of Wu Company was determined without knowledge of the following errors.Instructions Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Net Income Year per Books Error in Ending Inventory 2011
Esplanade Company was formed on December 1, 2014. The following information is available from Esplanade’s inventory records for Product BAP.A physical inventory on March 31, 2015, shows 1,500 units on hand.Instructions Prepare schedules to compute the ending inventory at March 31, 2015, under
The following independent situations relate to inventory accounting.1. Kim Co. purchased goods with a list price of €175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of these goods?2. Keillor Company’s inventory of
Dimitri Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2015.Additional information is as follows.1. Included in the physical count were tools billed to a customer f.o.b. shipping point on December 31, 2015.
Company’s record of transactions concerning part X for the month of April was as follows.Instructions (a) Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (Carry unit costs to the nearest cent.)(1) Specific
The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2015 and 2016. The accounting department is to assume that the
George Solti, the controller for Garrison Lumber Company, has recently hired you as assistant controller. He wishes to determine your expertise in the area of inventory accounting and therefore asks you to answer the following unrelated questions.(a) A company is involved in the wholesaling and
During 2015, Williamson Company changed from FIFO to weighted-average inventory pricing.Pretax income in 2014 and 2013 (Williamson’s first year of operations) under FIFO was $160,000 and $180,000, respectively. Pretax income using weighted-average pricing in the prior years would have been
Vandross Company has recorded bad debt expense in the past at a rate of 1½% of net sales. In 2015, Vandross decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been €380,000 instead of €285,000. In 2015, bad debt expense
In 2015, Hollis Corporation reported net income of $1,000,000. It declared and paid preference dividends of $250,000. During 2015, Hollis had a weighted average of 190,000 ordinary shares outstanding.Compute Hollis’s 2015 earnings per share.
Tsui Corporation has retained earnings of NT$675,000 at January 1, 2015. Net income during 2015 was NT$1,400,000, and cash dividends declared and paid during 2015 totaled NT$75,000. Prepare a retained earnings statement for the year ended December 31, 2015.
On January 1, 2015, Otano Inc. had cash and share capital of ¥60,000,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2015, it purchased for cash ¥20,000,000 of equity securities that it classified as non-trading. It received cash dividends of
McEntire Corporation began operations on January 1, 2012. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.The following information relates to 2015.Income before income tax $220,000 Prior period adjustment: understatement of 2013 depreciation
Zehms Company began operations in 2013 and adopted weighted-average pricing for inventory. In 2015, in accordance with other companies in its industry, Zehms changed its inventory pricing to FIFO. The pretax income data is reported belowInstructions (a) What is Zehms’s net income in 2015? Assume
Gaertner Corporation reported the following for 2015: net sales €1,200,000, cost of goods sold €720,000, selling and administrative expenses €320,000, and an unrealized holding gain on non-trading equity securities €15,000.Instructions Prepare a statement of comprehensive income, using the
Bryant Co. reports the following information for 2015: sales revenue£750,000, cost of goods sold £500,000, operating expenses £80,000, and an unrealized holding loss on nontrading equity securities for 2015 of £50,000. It declared and paid a cash dividend of £10,000 in 2015.Bryant Co. has
The following information was taken from the records of Vega Inc.for the year 2015: income tax applicable to income from continuing operations R$119,000, income tax applicable to loss on discontinued operations R$25,500, and unrealized holding gain on non-trading equity securities R$15,000.Gain on
The equity section of Hasbro Inc. at January 1, 2015, was as follows.Share capital—ordinary $300,000 Accumulated other comprehensive income Unrealized holding gain on non-trading equity securities 50,000 Retained earnings 20,000 During the year, the company had the following transactions.1.
Wade Corp. has 150,000 ordinary shares of outstanding. In 2015, the company reports income before income tax of €1,210,000. Additional transactions not considered in the €1,210,000 are as follows.1. In 2015, Wade Corp. sold equipment for €40,000. The machine had originally cost €80,000 and
Bobek Inc. has recently reported steadily increasing income. The company reported income of €20,000 in 2012, €25,000 in 2013, and €30,000 in 2014. A number of market analysts have recommended that investors buy Bobek shares because the analysts expect the steady growth in income to continue.
The following financial statement was prepared by employees of Walters Corporation.Note 1: New styles and rapidly changing consumer preferences resulted in a £71,500 loss on the disposal of discontinued styles and related accessories.Note 2: The corporation sold an investment in marketable
Comparative Analysis Case Adidas and Puma The financial statements of adidas (DEU) and Puma (DEU) are presented in Appendices B and C, respectively.The complete annual reports, including the notes to the financial statements, are available online.Instructions Use the companies’ financial
Professional Research Your client took accounting a number of years ago and was unaware of comprehensive income reporting.He is not convinced that any accounting standards exist for comprehensive income.Instructions Access the IFRS authoritative literature at the IASB website
Included in Outkast Company’s December 31, 2015, trial balance are the following accounts: Prepaid Rent $5,200, Held-for-Collection Securities $56,000, Unearned Service Revenue $17,000, Land Held for Investment $39,000, and Notes Receivable (long-term) $42,000. Prepare the long-term investments
Crane Corporation has the following accounts included in its December 31, 2015, trial balance: Trading Securities £21,000, Goodwill £150,000, Prepaid Insurance £12,000, Patents £220,000, and Franchises£130,000. Prepare the intangible assets section of the statement of financial position.
Ames Company reported 2015 net income of HK$151,000. During 2015, accounts receivable increased by HK$13,000 and accounts payable increased by HK$9,500. Depreciation expense was HK$44,000. Prepare the cash flows from operating activities section of the statement of cash flows(amounts in thousands).
Martinez Corporation engaged in the following cash transactions during 2015.Compute the net cash provided (used) by investing activities. Sale of land and building R$191,000 Purchase of treasury shares 40,000 Purchase of land 37,000 Payment of cash dividend 95,000 Purchase of equipment 53,000
Bruno Company has decided to expand its operations. The bookkeeper recently completed the statement of financial position shown on the next page in order to obtain additional funds for expansion.Instructions Prepare a revised statement of financial position given the available information. Assume
The bookkeeper for Garfield Company has prepared the following statement of financial position as of July 31, 2015 (amounts in thousands).The following additional information is provided.1. Cash includes ¥1,200 in a petty cash fund and ¥12,000 in a bond sinking fund.2. The net accounts receivable
Pascal Corporation is preparing its December 31, 2015, statement of financial position. The following items may be reported as either a current or non-current liability.1. On December 15, 2015, Pascal declared a cash dividend of $2.00 per share to shareholders of record on December 31. The dividend
The current assets and current liabilities sections of the statement of financial position of Jin Liu Company appear as follows (amounts in thousands).The following errors in the corporation’s accounting have been discovered:1. January 2016 cash disbursements entered as of December 2015 included
Mary Pierce is the controller of Arnold Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year.(a) Bonuses to key employees based on net income for 2015 are estimated to be $150,000.(b) On December 1, 2015, the
Presented below is the adjusted trial balance of Abbey Corporation at December 31, 2015.Additional information:1. Net loss for the year was £2,500.2. No dividends were declared during 2015.Instructions Prepare a classified statement of financial position as of December 31, 2015. Debit Credit Cash
Presented below is the trial balance of Vivaldi Corporation at December 31, 2015.Instructions Prepare a statement of financial position at December 31, 2015, for Vivaldi Corporation. (Ignore income taxes.) Cash Sales Revenue Trading Securities (at cost, 145,000) Cost of Goods Sold Debit 197,000
The comparative statements of financial position of Lopez Inc. at the beginning and the end of the year 2015 appear on the next page.Net income of $34,000 was reported, and dividends of $13,000 were paid in 2015. New equipment was purchased and none was sold.Instructions Prepare a statement of cash
Presented below is a condensed version of the comparative statements of financial position for Yoon Corporation for the last two years at December 31(amounts in millions).Additional information:Investments were sold at a loss of W7,000; no equipment was sold; cash dividends paid were W50,000; and
A comparative statement of financial position for Orozco Corporation is presented below.Additional information:1. Net income for 2015 was €105,000.2. Cash dividends of €40,000 were declared and paid.3. Bonds payable amounting to €50,000 were retired through issuance of ordinary
Chekov Corporation’s statement of financial position at the end of 2014 included the following items.The following information is available for 2015.1. Net income was $55,000.2. Equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $9,000.3. Depreciation expense was $4,000 on
The comparative statements of financial position of Menachem Corporation at the beginning and end of the year 2015 appear below.Net income of €34,000 was reported, and dividends of €23,000 were paid in 2015. New equipment was purchased and none was sold.Instructions (a) Prepare a statement of
Presented below are a number of statement of financial position items for Montoya, Inc., for the current year, 2015.Instructions Prepare a classified statement of financial position in good form. Share capital—ordinary shares authorized was 400,000 shares, and share capital—preference shares
The adjusted trial balance of Asian-Pacific Company and other related information for the year 2015 are presented below (amounts in thousands).Additional information:1. The average-cost method of inventory value is used.2. The cost and fair value of the long-term investments that consist of
Presented on the next page is the statement of financial position of Kishwaukee Corporation as of December 31, 2015.Note 1: Goodwill in the amount of £120,000 was recognized because the company believed that book value was not an accurate representation of the fair value of the company. The gain
Presented below is the statement of financial position of Sargent Corporation for the current year, 2015.The following information is presented.1. The current assets section includes cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventory $180,000,
Lansbury Inc.had the statement of financial position shown below at December 31, 2014.During 2015, the following occurred.1. Lansbury Inc. sold part of its investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as
Luo Inc. had the following statement of financial position at December 31, 2014 (amounts in thousands).During 2015, the following occurred.1. Luo liquidated its non-trading equity investment portfolio at a loss of ¥5,000.2. A tract of land was purchased for ¥38,000.3. An additional ¥30,000 in
In an examination of Arenes Corporation as of December 31, 2015, you have learned that the following situations exist. No entries have been made in the accounting records for these items.1. The corporation erected its present factory building in 2000. Depreciation was calculated by the straightline
Below are the titles of a number of debit and credit accounts as they might appear on the statement of financial position of Hayduke Corporation as of October 31, 2015.Instructions Select the current asset and current liability items from among these debit and credit accounts. If there appear to be
The partner in charge of the Kappeler Corporation audit comes by your desk and leaves a letter he has started to the CEO and a copy of the cash flow statement for the year ended December 31, 2015. Because he must leave on an emergency, he asks you to finish the letter by explaining(1) the disparity
Comparative Analysis Case adidas and Puma The financial statements of adidas (DEU) and Puma (DEU) are presented in Appendices B and C, respectively.The complete annual reports, including the notes to the financial statements, are available online.Instructions Use the companies’ fi nancial
International Reporting Case Presented below is the balance sheet (statement of financial position) for Nordstrom, Inc. (USA).Instructions (a) Identify at least three differences in statement of financial position reporting between IFRS and U.S.GAAP, as shown in Nordstrom’s balance sheet.(b)
Accounting, Analysis, and Principles Early in January 2016, Hopkins Company is preparing for a meeting with its bankers to discuss a loan request. Its bookkeeper provided the following accounts and balances at December 31, 2015.Except for the following items, Hopkins has recorded all adjustments in
Calder, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2015. Each employee covered by the plan is
Rual Fernandez borrowed $90,000 on March 1, 2013. This amount plus accrued interest at 12% compounded semiannually is to be repaid March 1, 2023. To retire this debt, Rual plans to contribute to a debt retirement fund five equal amounts starting on March 1, 2018, and for the next 4 years. The fund
Answer each of these unrelated questions.(a) On January 1, 2015, Yang Corporation sold a building that cost ¥25,000,000 and that had accumulated depreciation of ¥10,000,000 on the date of sale. Yang received as consideration a ¥24,000,000 non-interest-bearing note due on January 1, 2018. There
Danny’s Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2015, Danny sold $300,000 of new specialty mowers for golf greens for which Danny’s service department does not have the equipment to do the service. Danny has entered into an
At the end of 2015, Sawyer Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations.Given the nature of Sawyer’s production process, the equipment is for special use. (No second-hand market values are available.) The
Financial Statement Analysis Case Assume the following information for Alta Gas (CAN). In 2014, Alta estimated the cash inflows from its oil and gas producing properties to be $375,000 per year. During 2015, a write-down caused the estimate to be decreased to $275,000 per year. Production costs
The book basis of depreciable assets for Erwin Co. is €900,000 and the tax basis is €700,000 at the end of 2015.The enacted tax rate is 34% for all periods. Determine the amount of deferred taxes to be reported on the statement of financial position at the end of 2015.
What is the difference between a future taxable amount and a future deductible amount? When is it not appropriate to recognize a portion or all of a deferred tax asset?
How does an “asset gain or loss” develop in pension accounting?
Whittier Construction Co. had followed the practice of expensing all materials assigned to a construction job without recognizing any residual inventory. On December 31, 2015, it was determined that residual inventory should be valued at CHF52,000. Of this amount, CHF29,000 arose during the current
Prior to 2015, Heberling Inc. excluded manufacturing overhead costs from work in process and finished goods inventory. These costs have been expensed as incurred. In 2015, the company decided to change its accounting methods for manufacturing inventories to full costing by including these costs as
In January 2014, installation costs of £6,000 on new equipment were charged to Maintenance and Repairs Expense. Other costs of this equipment of £30,000 were correctly recorded and have been depreciated using the straight-line method with an estimated life of 10 years and no residual value. At
An entry to record Purchases and related Accounts Payable of ¥130,000 for merchandise purchased on December 23, 2015, was recorded in January 2016. This merchandise was not included in inventory at December 31, 2015. What effect does this error have on reported net income for 2015? What entry
Equipment was purchased on January 2, 2015, for $24,000, but no portion of the cost has been charged to depreciation.The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no residual value. What effect does this error have
What is the major difference in accounting for errors under IFRS versus U.S. GAAP?
Broussard Company reported net income of $3.5 million in 2015. Depreciation for the year was $520,000, accounts receivable increased $500,000, and accounts payable increased $300,000. Compute net cash flow from operating activities using the indirect method.
Chen Enterprises made the following entry on December 31, 2015.What entry would Hibernia Bank make regarding its outstanding loan to Chen Enterprises? Explain why this must be the case. Interest Expense Interest Payable (To record interest expense due on loan from Hibernia Bank) 10,000 10,000
Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2015.(a) The service life of certain equipment was changed from 8 to 5 years. If a 5-year life had been used previously, additional depreciation of £425,000 would have been
Cooper Investments reported an unusual gain from the sale of certain assets in its 2015 income statement. How does intraperiod tax allocation affect the reporting of this unusual gain?
Gribble Company reported the following amounts in 2015:Net income, €150,000; Unrealized gain related to revaluation of buildings, €10,000; Unrealized loss related to nontrading equity securities, €(35,000). Determine Gribble’s total comprehensive income for 2015.
In its December 31, 2015, statement of financial position, Oakley Corporation reported as an asset, “Net notes and accounts receivable, €7,100,000.” What other disclosures are necessary?
Manchester United, Inc. sold 10,000 season tickets at £2,000 each. By December 31, 2015, 8 of the 20 home games had been played. What amount should be reported as a current liability at December 31, 2015?
Will Smith will receive $80,000 on December 31, 2020 (5 years from now), from a trust fund established by his father. Assuming the appropriate interest rate for discounting is 12% (compounded semiannually), what is the present value of this amount today?
Answer the following questions.(a) On May 1, 2015, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2015. What present value concept is appropriate for this situation?(b)
The Wangs are planning for a retirement home. They estimate they will need ¥20,000,000 4 years from now to purchase this home. Assuming an interest rate of 10%, what amount must be deposited at the end of each of the 4 years to fund the home price? (Round to two decimal places.)
Verma Enterprises leases property to Pandey, Inc. Because Pandey, Inc. is experiencing financial difficulty, Verma agrees to receive five rents of £20,000 at the end of each year, with the rents deferred 3 years. What is the present value of the five rents discounted at 12%?
On January 1, 2015, Fong Co. sells property for which it had paid NT$690,000 to Chou Company, receiving in return Chou’s zero-interest-bearing note for NT$1,000,000 payable in 5 years. What entry would Fong make to record the sale, assuming that Fong frequently sells similar items of property for
Simonis Company, which uses IFRS, has a note receivable with a carrying value of $30,000 at December 31, 2015. On January 2, 2016, the borrower declares bankruptcy, and Simonis estimates that only $25,000 of the note will be collected. Prepare the journal entry to record this loss.Briefly describe
In the third quarter of 2016, David Beckham, the controller for Swiss Precision Company, discovers an error in ending inventory counts for the December 31, 2015, cutoff. After Beckham reports the error in a management meeting, the president for Swiss argues that this error in the prior year is of
A fire destroys all of the merchandise of Assante Company on February 10, 2015. The following is information compiled up to the date of the fire.What is the approximate inventory on February 10, 2015? Inventory, January 1, 2015 Sales to February 10, 2015 Purchases to February 10, 2015 Freight-in to
At December 31, 2015, Ashley Co. has outstanding purchase commitments for purchase of 150,000 gallons, at £6.20 per gallon, of a raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or net realizable value, whichever is lower. Assuming that
LaTour Inc. is based in France and prepares its financial statements in accordance with IFRS. In 2015, it reported cost of goods sold of €578 million and average inventory of €154 million. Briefly discuss how analysis of LaTour’s inventory turnover (and comparisons to a company using U.S.
Crowe Company purchased a heavy-duty truck on July 1, 2012, for €30,000. It was estimated that it would have a useful life of 10 years and then would have a residual value of €6,000. The company uses the straight-line method. It was traded on August 1, 2016, for a similar truck costing
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