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intermediate accounting reporting
Intermediate Accounting 16th Edition Donald E. Kieso - Solutions
for Garcia Home Improvement Company, consider the following expanded data at May 31, 2017. Assume Garcia uses LIFO inventory costing.Replacement Sales Net Realizable Normal Cost Cost Price Value Profi t Aluminum siding $ 70,000 $ 62,500 $ 64,000 $ 56,000 $ 5,100 Cedar shake siding 86,000 79,400
(L02) EXCEL GROUPWORK (Lower-of-Cost-or-Market) Referring to the situation in
(L01) (LCNRV—Cost-of-Goods-Sold and Loss) Malone Company determined its ending inventory at cost and at LCNRV at December 31, 2017, December 31, 2018, and December 31, 2019, as shown below.Cost NRV 12/31/17 $650,000 $650,000 12/31/18 780,000 712,000 12/31/19 905,000 830,000 Instructions(a)
(L01) (LCNRV) Garcia Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2017. Jim Alcide, controller
(L01) (LCNRV) Remmers Company manufactures desks. Most of the company’s desks are standard models and are sold on the basis of catalog prices. At December 31, 2017, the following finished desks (10 desks in each category)appear in the company’s inventory.Finished Desks A B C D 2017 catalog
(L04) WRITING (Dollar-Value LIFO) Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so,
(L03) (Compute FIFO, LIFO, and Average-Cost) Some of the information found on a detail inventory card for Slatkin Inc. for the first month of operations is as follows.Received Issued, Balance, Date No. of Units Unit Cost No. of Units No. of Units January 2 1,200 $3.00 1,200 7 700 500 10 600 3.20
(L03) EXCEL (Compute FIFO, LIFO, and Average-Cost) Hull Company’s record of transactions concerning part X for the month of April was as follows.Purchases Sales April 1 (balance on hand) 100 @ $5.00 April 5 300 4 400 @ 5.10 12 200 11 300 @ 5.30 27 800 18 200 @ 5.35 28 150 26 600 @ 5.60 30 200 @
(L02) EXCEL (Purchases Recorded Gross and Net) Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.August 10 Purchased merchandise on account, $12,000, terms 2/10, n/30.13 Returned part of the purchase of August 10, $1,200, and
(L02) GROUPWORK (Inventory Adjustments) Dimitri Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2017.Inventory at December 31, 2017 (based on physical count of goods in Dimitri’s plant, at cost, on December 31,
(L09) (Expected Cash Flows) On January 1, 2017, Botosan Company issued a $1,200,000, 5-year, zero-interestbearing note to National Organization Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2018 Botosan fell into financial trouble due to increased competition. After
(L08) (Bank Reconciliation and Adjusting Entries) The cash account of Aguilar Co. showed a ledger balance of$3,969.85 on June 30, 2017. The bank statement as of that date showed a balance of $4,150. Upon comparing the statement with the cash records, the following facts were determined.1. There
(L06,7) GROUPWORK (Income Effects of Receivables Transactions) Sandburg Company requires additional cash for its business. Sandburg has decided to use its accounts receivable to raise the additional cash and has asked you to determine the income statement effects of the following contemplated
(L06) (Assigned Accounts Receivable—Journal Entries) Salen Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2017, it assigned, under guarantee, specific accounts amounting to$150,000. The finance company advanced to Salen 80% of the
(L04) (Comprehensive Receivables Problem) Braddock Inc. had the following long-term receivable account balances at December 31, 2016.Note receivable from sale of division $1,500,000 Note receivable from offi cer 400,000 Transactions during 2017 and other information relating to Braddock’s
(L04) (Notes Receivable Journal Entries) On December 31, 2017, Oakbrook Inc. rendered services to Beghun Corporation at an agreed price of $102,049, accepting $40,000 down and agreeing to accept the balance in four equal installments of $20,000 receivable each December 31. An assumed interest rate
(L04) (Notes Receivable with Realistic Interest Rate) On October 1, 2017, Arden Farm Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year,$120,000, 8% note (a realistic rate of interest for a note of this
(L02,3) (Journalize Various Accounts Receivable Transactions) The balance sheet of Starsky Company at December 31, 2016, includes the following.Notes receivable $ 36,000 Accounts receivable 182,100 Less: Allowance for doubtful accounts 17,300 $200,800 Transactions in 2017 include the following.1.
(L03) (Bad-Debt Reporting) Presented below is information related to the Accounts Receivable accounts of Gulistan Inc.during the current year 2017.1. An aging schedule of the accounts receivable as of December 31, 2017, is as follows.% to Be Applied after Age Net Debit Balance Correction Is Made
(L03) (Bad-Debt Reporting) From inception of operations to December 31, 2017, Fortner Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were
(L03) EXCEL (Bad-Debt Reporting—Aging) Manilow Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Manilow’s Accounts Receivable account was $555,000 and Allowance for Doubtful Accounts had a credit balance of $40,000. The
(L05) (Fair Value Estimate) Murphy Mining Company recently purchased a quartz mine that it intends to work for the next 10 years. According to state environmental laws, Murphy must restore the mine site to its original natural prairie state after it ceases mining operations at the site. To properly
(L04,5) (Expected Cash Flows and Present Value) Danny’s Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2017, Danny sold $300,000 of new specialty mowers for golf greens for which Danny’s service department does not have the equipment
(L05) ETHICS (Pension Funding) Craig Brokaw, newly appointed controller of STL, is considering ways to reduce his company’s expenditures on annual pension costs. One way to do this is to switch STL’s pension fund assets from First Security to NET Life. STL is a very well-respected computer
(L05) (Pension Funding) You have been hired as a benefit consultant by Jean Honore, the owner of Attic Angels. She wants to establish a retirement plan for herself and her three employees. Jean has provided the following information. The retirement plan is to be based upon annual salary for the
(L02,4) (Analysis of Lease vs. Purchase) Dunn Inc. owns and operates a number of hardware stores in the New England region. Recently, the company has decided to locate another store in a rapidly growing area of Maryland. The company is trying to decide whether to purchase or lease the building and
(L02,4) (Analysis of Business Problems) James Kirk is a financial executive with McDowell Enterprises. Although James Kirk has not had any formal training in finance or accounting, he has a “good sense” for numbers and has helped the company grow from a very small company ($500,000 sales) to a
(L04) (Analysis of Alternatives) Ellison Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The Engineering
(L02,3,4) (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Dubois Inc.(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12
(L05) (Purchase Price of a Business) During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for $30,000 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation.The vineyard will bear no grapes for the
(L02,4) (Analysis of Alternatives) Julia Baker died, leaving to her husband Brent an insurance policy contract that provides that the beneficiary (Brent) can choose any one of the following four options.(a) $55,000 immediate cash.(b) $4,000 every 3 months payable at the end of each quarter for 5
(L04) EXCEL (Evaluating Payment Alternatives) Howie Long has just learned he has won a $500,000 prize in the lottery.The lottery has given him two options for receiving the payments. (1) If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of 46%
(L02,4) (Analysis of Alternatives) Assume that Wal-Mart Stores, Inc. has decided to surface and maintain for 10 years a vacant lot next to one of its stores to serve as a parking lot for customers. Management is considering the following bids involving two different qualities of surfacing for a
(L02,3,4) GROUPWORK EXCEL (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund
(L02,4) GROUPWORK (Various Time Value Situations) Answer each of these unrelated questions.(a) On January 1, 2017, Fishbone Corporation sold a building that cost $250,000 and that had accumulated depreciation of$100,000 on the date of sale. Fishbone received as consideration a $240,000
*P3-12 (L03,4,5,9) (Worksheet, Balance Sheet, Adjusting and Closing Entries) Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.Instructions (a) Prepare a complete worksheet.(b) Prepare a classified balance sheet. (Note: $10,000
*P3-11 (L07) (Cash and Accrual Basis) On January 1, 2017, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $90,000 cash. The new company, Arkansas Sales and Service, has the following transactions during January.1. Pays $6,000 in advance
(L03) (Adjusting Entries) A review of the ledger of Baylor Company at December 31, 2017, produces the following data pertaining to the preparation of annual adjusting entries.1. Salaries and Wages Payable $0. There are eight employees. Salaries and wages are paid every Friday for the current
(L02,4,5) (Transactions, Financial Statements—Service Company) Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September.Sept. 1 Kawabata begins practice as a dentist and invests $20,000 cash.2 Purchases dental equipment on account from Green Jacket Co. for
Subsequent events are reviewed through which date under IFRS?(a) Statement of financial position date.(b) Sixty days after the year-end date.(c) Date of independent auditor’s opinion.(d) Authorization date of the financial statements.
Differential reporting for small- and medium-sized entities:(a) is required for all companies less than a certain size.(b) omits accounting topics not relevant for SMEs, such as earnings per share, and interim and segment reporting.(c) has different rules for topics such as earnings per share, and
Which of the following is false?(a) In general, IFRS note disclosures are more expansive compared to GAAP.(b) GAAP and IFRS have similar standards on subsequent events.(c) Both IFRS and GAAP require interim reports although the reporting frequency varies.(d) Segment reporting requirements are very
For purposes of the statement of cash flows, under IFRS income taxes paid are treated as:(a) cash fl ows from operating activities unless they can be separately identifi ed as part of investing or fi nancing activities.(b) an operating activity in all cases.(c) an investing or operating activity,
For purposes of the statement of cash flows, under IFRS interest paid is treated as:(a) an operating activity in all cases.(b) an investing or operating activity, depending on use of the borrowed funds.(c) either a fi nancing or investing activity.(d) either an operating or fi nancing activity, but
Under IFRS, significant non-cash transactions:(a) are classifi ed as operating, if they are related to income items.(b) are excluded from the statement of cash fl ows and disclosed in a narrative form or summarized in a separate schedule.(c) are classifi ed as an investing or fi nancing
In the case of a bank overdraft:(a) GAAP typically includes the amount in cash and cash equivalents.(b) IFRS typically includes the amount in cash equivalents but not in cash.(c) GAAP typically treats the overdraft as a liability, and reports the amount in the fi nancing section of the statement of
Which of the following is true regarding the statement of cash flows under IFRS?(a) The statement of cash fl ows has two major sections—operating and non-operating.(b) The statement of cash fl ows has two major sections—fi nancing and investing.(c) The statement of cash fl ows has three major
Which of the following is true regarding whether IFRS specifically addresses the accounting and reporting for effects of changes in accounting policies?Direct effects Indirect effects(a) Yes Yes(b) No No(c) No Yes(d) Yes No
Under IFRS, the retrospective approach should not be used if:(a) retrospective application requires assumptions about management’s intent in a prior period.(b) the company does not have trained staff to perform the analysis.(c) the effects of the change have counterbalanced.(d) the effects of the
IFRS requires companies to use which method for reporting changes in accounting policies?(a) Cumulative effect approach.(b) Retrospective approach.(c) Prospective approach.(d) Averaging approach.
Which of the following is not classified as an accounting change by IFRS?(a) Change in accounting policy.(b) Change in accounting estimate.(c) Errors in fi nancial statements.(d) None of the above.
Which of the following is false?(a) GAAP and IFRS have the same absolute standard regarding the reporting of error corrections in previously issued fi nancial statements.(b) The accounting for changes in estimates is similar between GAAP and IFRS.(c) Under IFRS, the impracticability exception
All of the following statements about lease accounting under IFRS and GAAP are true except:(a) IFRS requires a year-by-year breakout of payments related to leasing arrangements.(b) IFRS is more general in its lease accounting provisions than is GAAP.(c) The IFRS leasing standard, IAS 17, is the
Which of the following statements is true when comparing the accounting for leasing transactions under GAAP with IFRS?(a) IFRS for leases is more “rules-based” than GAAP and includes many bright-line criteria to determine ownership.(b) IFRS requires that companies provide a year-by-year
A lease that involves a manufacturer’s or dealer’s profit is a(an):(a) direct financing lease.(b) finance lease.(c) operating lease.(d) sales-type lease.
Under IFRS, in computing the present value of the minimum lease payments, the lessee should:(a) use its incremental borrowing rate in all cases.(b) use either its incremental borrowing rate or the implicit rate of the lessor, whichever is higher, assuming that the implicit rate is known to the
Which of the following is not a criterion for a lease to be recorded as a finance lease?(a) There is transfer of ownership.(b) The lease is cancelable.(c) The lease term is for the major part of the economic life of the asset.(d) There is a bargain-purchase option.
Towson Company has experienced tough competition for its talented workforce, leading it to enhance the pension benefits provided to employees. As a result, Towson amended its pension plan on January 1, 2017, and granted past service costs of $250,000. Current service cost for 2017 is $52,000.
At January 1, 2017, Wembley Company had plan assets of$250,000 and a defined benefit obligation of the same amount.During 2017, service cost was $27,500, the discount rate was 10%, actual return on plan assets was $25,000, contributions were $20,000, and benefits paid were $17,500. Based on this
For 2017, Carson Majors Inc. had pension expense of $77 million and contributed $55 million to the pension fund.Which of the following is the journal entry that Carson Majors would make to record pension expense and funding?(a) Pension Expense 77,000,000 Pension Asset/Liability 22,000,000 Cash
At the end of the current year, Kennedy Co. has a defined benefit obligation of $335,000 and pension plan assets with a fair value of $245,000. The amount of the vested benefits for the plan is $225,000. Kennedy has an actuarial gain of$8,300. What account and amount(s) related to its pension plan
At the end of the current period, Oxford Ltd. has a defined benefit obligation of $195,000 and pension plan assets with a fair value of $110,000. The amount of the vested benefits for the plan is $105,000. What amount related to its pension plan will be reported on the company’s statement of
Lincoln Company has the following four deferred tax items at December 31, 2017. The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same tax authority.On Lincoln’s December 31, 2017, statement of financial position, it will report:(a) $394,000 non-current
Stephens Company has a deductible temporary difference of $2,000,000 at the end of its first year of operations. Its tax rate is 40 percent. Stephens has $1,800,000 of income taxes payable. After a careful review of all available evidence, Stephens determines that it is probable that it will not
Under IFRS:(a) “probable” is defi ned as a level of likelihood of at least slightly more than 60%.(b) a company should reduce a deferred tax asset when it is likely that some or all of it will not be realized by using a valuation allowance.(c) a company considers only positive evidence when
Which of the following statements is correct with regard to IFRS and GAAP?(a) Under GAAP, all potential liabilities related to uncertain tax positions must be recognized.(b) The tax effects related to certain items are reported in equity under GAAP; under IFRS, the tax effects are charged or
Which of the following is false?(a) Under GAAP, deferred taxes are reported based on the classifi cation of the asset or liability to which it relates.(b) Under IFRS, all potential liabilities must be recognized.(c) Under GAAP, the enacted tax rate is used to measure deferred tax assets and
Under IFRS, a company:(a) should evaluate only equity investments for impairment.(b) accounts for an impairment as an unrealized loss, and includes it as a part of other comprehensive income and as a component of other accumulated comprehensive income until realized.(c) calculates the impairment
Select the investment accounting approach with the correct valuation approach:Not Held-for-Collection Held-for-Collection(a) Amortized cost Amortized cost(b) Fair value Fair value(c) Fair value Amortized cost(d) Amortized cost Fair value
IFRS requires companies to measure their financial assets at fair value except when based on:(a) whether the equity method of accounting is used.(b) whether the fi nancial asset is a debt investment.(c) whether the fi nancial asset is an equity investment.(d) whether an investment is classifi ed as
Which of the following statements is correct?(a) IFRS permits the fair value option for the equity method of accounting.(b) GAAP permits recovery of impairment losses.(c) Under IFRS, non-trading equity investments are accounted for at amortized cost.(d) IFRS and GAAP both have a trading investment
All of the following are key similarities between GAAP and IFRS with respect to accounting for investments except:(a) IFRS and GAAP require the same accounting for equity securities.(b) IFRS and GAAP apply the equity method to signifi -cant infl uence equity investments.(c) IFRS and GAAP have a
Anazazi Co. offers all its 10,000 employees the opportunity to participate in an employee share-purchase plan. Under the terms of the plan, the employees are entitled to purchase 100 ordinary shares (par value $1 per share) at a 20% discount.The purchase price must be paid immediately upon
Mae Jong Corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. The market rate of interest on similar bonds is 12%. Interest is payable annually on December 31, and the bonds were issued for total proceeds of $1,000,000. In
Under IFRS, convertible bonds:(a) are separated into the bond component and the expense component.(b) are separated into debt and equity components.(c) are separated into their components based on relative fair values.(d) All of the above.
Which of the following statements is correct?(a) IFRS separates the proceeds of a convertible bond between debt and equity by determining the fair value of the debt component before the equity component.(b) Both IFRS and GAAP assume that when there is choice of settlement of an option for cash or
All of the following are key similarities between GAAP and IFRS with respect to accounting for dilutive securities and EPS except:(a) the model for recognizing stock-based compensation.(b) the calculation of basic and diluted EPS.(c) the accounting for convertible debt.(d) the accounting for modifi
Under IFRS, a purchase by a company of its own shares results in:(a) an increase in treasury shares.(b) a decrease in assets.(c) a decrease in equity.(d) All of the above.
Which of the following is false?(a) Under GAAP, companies cannot record gains on transactions involving their own shares.(b) Under IFRS, companies cannot record gains on transactions involving their own shares.(c) Under IFRS, the statement of stockholders’ equity is a required statement.(d) Under
The term reserves is used under IFRS with reference to all of the following except:(a) gains and losses on revaluation of property, plant, and equipment.(b) capital received in excess of the par value of issued shares.(c) retained earnings.(d) fair value differences.
Under IFRS, the amount of capital received in excess of par value would be credited to:(a) Retained Earnings.(b) Contributed Capital.(c) Share Premium.(d) Par value is not used under IFRS.
Which of the following does not represent a pair of GAAP/IFRS-comparable terms?(a) Additional paid-in capital/Share premium.(b) Treasury stock/Repurchase reserve.(c) Common stock/Share capital—ordinary.(d) Preferred stock/Preference shares.
Martinez uses the effective-interest method of amortizing bond premium.At the end of the first year, Martinez should report bonds payable of:(a) $3,185,130. (c) $3,173,550.(b) $3,184,500. (d) $3,165,000.
On January 1, Martinez Inc. issued $3,000,000, 11% bonds for $3,195,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December
Patterson uses the effective-interest method of amortizing bond discount.At the end of the first year, Patterson should report bonds payable of:(a) $4,725,500. (c) $258,050.(b) $4,714,500. (d) $4,745,000.
On January 1, Patterson Inc. issued $5,000,000, 9% bonds for $4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December
All of the following are differences between IFRS and GAAP in accounting for liabilities except:(a) When a bond is issued at a discount, GAAP records the discount in a separate contra liability account.IFRS records the bond net of the discount.(b) Under IFRS, bond issuance costs reduce the carrying
Which of the following is stated correctly?(a) Current liabilities follow non-current liabilities on the statement of fi nancial position under GAAP but non-current liabilities follow current liabilities under IFRS.(b) IFRS does not treat debt modifi cations as extinguishments of debt.(c) Bond
Under IFRS, bond issuance costs, including the printing costs and legal fees associated with the issuance, should be:(a) expensed in the period when the debt is issued.(b) recorded as a reduction in the carrying value of bonds payable.(c) accumulated in a deferred charge account and amortized over
In determining the amount of a provision, a company using IFRS should generally measure:(a) using the midpoint of the range between the lowest possible loss and the highest possible loss.(b) using the minimum amount of the loss in the range.(c) using the best estimate of the amount of the loss
A typical provision is:(a) bonds payable. (c) a warranty liability.(b) cash. (d) accounts payable.
Under IFRS, a provision is the same as:(a) a contingent liability. (c) a contingent gain.(b) an estimated liability. (d) None of the above.
In accounting for short-term debt expected to be refinanced to long-term debt:(a) GAAP uses the authorization date to determine classification of short-term debt to be refinanced.(b) IFRS uses the authorization date to determine classification of short-term debt to be refinanced.(c) IFRS uses the
The presentation of current and non-current liabilities in the statement of financial position (balance sheet):(a) is shown only on GAAP financial statements.(b) is shown on both a GAAP and an IFRS statement of financial position.(c) is always shown with current liabilities reported first in an
Recovery of impairment is recognized under IFRS for all the following except:(a) patent held for sale. (c) trademark.(b) patent held for use. (d) goodwill.
A loss on impairment of an intangible asset under IFRS is the asset’s:(a) carrying amount less the expected future net cash flows.(b) carrying amount less its recoverable amount.(c) recoverable amount less the expected future net cash flows.(d) book value less its fair value.
Which of the following statements is correct?(a) Both IFRS and GAAP permit revaluation of property, plant, and equipment and intangible assets(except for goodwill).(b) GAAP permits capitalization of development costs.(c) IFRS requires capitalization of research and development costs once economic
Research and development costs are:(a) expensed under GAAP.(b) expensed under IFRS.(c) expensed under both GAAP and IFRS.(d) None of the above.
All of the following are key similarities between GAAP and IFRS with respect to accounting for intangible assets except:(a) for accounting purposes, costs associated with research and development activities are segregated into the two components.(b) the accounting for intangibles acquired in a
Under IFRS, value-in-use is defined as:(a) net realizable value.(b) fair value.(c) future cash fl ows discounted to present value.(d) total future undiscounted cash fl ows.
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