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intermediate accounting reporting
Intermediate Accounting 18th Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions
On January 1, 2026, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were exercisable within a 5-year period beginning January 1, 2028, by grantees still in the employ of the
On January 1, 2024, Nichols Corporation granted 10,000 options to key executives. Each option allows the executive to purchase one share of Nichols’ $5 par value common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2026, if the grantee
Kalin Corporation had 2025 net income of $1,000,000. During 2025, Kalin paid a dividend of $2 per share on 100,000 shares of preferred stock. During 2025, Kalin had outstanding 250,000 shares of common stock. Compute Kalin’s 2025 earnings per share.
Derrick Company issues 4,000 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2025. The stock has a fair value of $120,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the
Tweedie Company issues 10,000 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2025. The stock has a fair value of $500,000 on this date. The service period related to this restricted stock is 5 years. Vesting occurs if Tokar stays with the company until December 31, 2029. The par
The 2025 income statement of Wasmeier Corporation showed net income of $480,000 and a loss from discontinued operations of $120,000. Wasmeier had 100,000 shares of common stock outstanding all year. Prepare Wasmeier’s income statement presentation of earnings per share.
Rockland Corporation earned net income of $300,000 in 2025 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $800,000 of 5% bonds, which are convertible into 16,000 shares of common. Rockland’s tax rate is 20%. Compute Rockland’s 2025 diluted
Tomba Corporation had 300,000 shares of common stock outstanding on January 1, 2025. On May 1, Tomba issued 30,000 shares. (a) Compute the weighted-average number of shares outstanding if the 30,000 shares were issued for cash. (b) Compute the weighted-average number of shares outstanding
DiCenta Corporation reported net income of $270,000 in 2025 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 5,000 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend of $5
At December 31, 2025, Reid Company had 600,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 200,000 of which were issued on October 1, 2025. Net income for 2025 was $2,000,000, and dividends declared on preferred stock were
The information below pertains to Barkley Company for 2026.There were no changes during 2026 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 75,000 shares
On July 1, 2025, Roberts Corporation issued $3,000,000 of 9% bonds payable in 20 years. The bonds include detachable warrants giving the bondholder the right to purchase for $30 one share of $1 par value common stock at any time during the next 10 years. The bonds were sold for $3,000,000. The
On September 1, 2025, Sands Company sold at 104 (plus accrued interest) 4,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $15 per
Presented below is an amortization schedule related to Spangler Company’s 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2023, for $108,660.The following schedule presents a comparison of the amortized cost and fair value of the bonds at
On January 1, 2025, Lennon Industries had stock outstanding as follows.To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 160,000 common shares. The acquisitions took place as shown below.On May 14, 2025, Lennon realized a $90,000 (before taxes)
Capulet Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $30 (also market price) on December 31, 2021, on 30,000 SARs. The date of grant is
On June 1, 2023, Andre Company and Agassi Company merged to form Lancaster Inc. A total of 800,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis.On April 1, 2025, the company issued an additional 400,000 shares of stock for cash. All 1,200,000
Sarazan Company issues a 4-year, 7.5% fixed-rate interest only, nonprepayable $1,000,000 note payable on December 31, 2024. It decides to change the interest rate from a fixed rate to variable rate and enters into a swap agreement with M&S Corp. The swap agreement specifies that Sarazan will
In 2024, Chirac Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Chirac had revenues of $17,500 and expenses other than interest and taxes of $8,400 for 2025. (Assume that the tax rate is 20%.) Throughout 2025, 2,000 shares of common stock were
On December 31, 2021, Beckford Company issues 150,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $4 per SAR on December 31, 2022;
On January 1, 2025, Crocker Company issued 10-year, $2,000,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Crocker common stock. Crocker’s net income in 2025 was $400,000, and its tax rate was 20%. The company had 100,000 shares of common stock outstanding
Garfield Company purchased, on January 1, 2025, as a held-to-maturity investment, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield’s journal entries for (a) The purchase of the investment, and (b) The receipt of annual
Venzuela Company’s net income for 2025 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issued during 2024, each exercisable for one share at $6. None has been exercised, and 10,000 shares of common were outstanding during 2025. The average market price of
The Simon Corporation issued 10-year, $5,000,000 par, 7% callable convertible subordinated debentures on January 2, 2025. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in 2 years it will increase to 18:1. At the date of issue, the
At January 1, 2025, Langley Company’s outstanding shares included the following.280,000 shares of $50 par value, 7% cumulative preferred stock900,000 shares of $1 par value common stockNet income for 2025 was $2,530,000. No cash dividends were declared or paid during 2025. On February 15, 2026,
Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday’s income for 2025 was $110,000 or more, 10,000 additional shares would be issued to Holiday’s stockholders in 2026. Holiday’s income for 2024 was
On January 1, 2026, Wilke Corp. had 480,000 shares of common stock outstanding. During 2026, it had the following transactions that affected the common stock account.Instructionsa. Determine the weighted-average number of shares outstanding as of December 31, 2026.b. Assume that Wilke Corp. earned
Ace Company had 200,000 shares of common stock outstanding on December 31, 2026. During the year 2027, the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2027, Ace Company reported net income of $249,690 after a loss from discontinued operations of
Ferraro, Inc. established a stock-appreciation rights (SARs) program on January 1, 2025, which entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $20 on 5,000 SARs. The required service period is 2
Define the following terms.a. Basic earnings per share.b. Potentially dilutive security.c. Diluted earnings per share.d. Complex capital structure.e. Potential common stock.
Bedard Corporation reported net income of $300,000 in 2025 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stock at $10 per share. The average market price of the stock during the year was $15. Compute diluted
On August 15, 2024, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $360. The notional value of the call option is 400 shares, and the option price is $40. The option expires on January 31, 2025. The following data are available with respect to
At December 31, 2025, Percheron Inc. had a deferred tax asset of $30,000. At December 31, 2026, the deferred tax asset is $59,000. The corporation’s 2026 current tax expense is $61,000. What amount should Percheron report as total 2026 income tax expense?
Crosley Corp. sold an investment on an installment basis. The total gain of $60,000 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is
Mitchell Corporation had income before income taxes of $195,000 in 2025. Mitchell’s current income tax expense is $24,000, and deferred income tax expense is $15,000. Prepare Mitchell’s 2025 income statement, beginning with “Income before income taxes.”
The income statement for the year ended December 31, 2025, for Laskowski Manufacturing Company contains the following condensed information.Included in operating expenses is a $24,000 loss resulting from the sale of machinery for $270,000 cash. The company purchased machinery at a cost of
You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2025. The balance sheet accounts at the beginning and end of the year are shown belowYour working papers from the audit contain the following information:1. On April 1, 2025, the
Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2025.Additional information:1. Dividends in the amount of $6,000 were declared and paid during 2025.2. Depreciation expense and amortization expense are included in operating expenses.3. No unrealized
Michaels Company had available at the end of 2025 the following information.InstructionsPrepare a statement of cash flows for Michaels Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are debt securities, classified as available-for- sale.
Following are selected balance sheet accounts of Allman Bros. Corp. at December 31, 2025 and 2024, and the increases or decreases in each account from 2024 to 2025. Also presented is selected income statement information for the year ended December 31, 2025, and additional information.Additional
Condensed financial data of Pat Metheny Company for 2025 and 2024 are presented below.Additional information:During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2025.InstructionsPrepare a statement of cash flows using the indirect method. Pat
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2025, are as follows. The company is preparing its statement of cash flows.The following is
Los Lobos Corp. uses the direct method to prepare its statement of cash flows. Los Lobos’s trial balances at December 31, 2025 and 2024, are as follows.Additional information:1. Los Lobos purchased $5,000 in equipment during 2025.2. Los Lobos allocated one-third of its depreciation expense to
In 2025, Leppard Inc. issued 1,000 shares of $10 par value common stock for land worth $40,000.a. Prepare Leppard’s journal entry to record the transaction.b. Indicate the effect the transaction has on cash.c. Indicate how the transaction is reported on the statement of cash flows.
Hendrickson Corporation reported net income of $50,000 in 2025. Depreciation expense was $17,000. The following working capital accounts changed.Compute net cash provided by operating activities. Accounts receivable Available-for-sale debt securities Inventory Nontrade note payable Accounts
In 2025, Wild Corporation reported a net loss of $70,000. Wild’s only net income adjustments were depreciation expense $81,000, and increase in accounts receivable $8,100. Compute Wild’s net cash provided (used) by operating activities.
Colbert Corporation had the following 2025 income statement.In 2025, Colbert had the following activity in selected accounts.Prepare Colbert’s cash flows from operating activities section of the statement of cash flows using (a) The direct method (b) The indirect method. Revenues Expenses Net
Mortonson Company has not yet prepared a statement of cash flows for the 2025 fiscal year. Comparative balance sheets as of December 31, 2024 and 2025, and a statement of income and retained earnings for the year ended December 31, 2025, are presented as follows.InstructionsPrepare a statement of
Krauss Company’s income statement for the year ended December 31, 2025, contained the following condensed information.Krauss’s balance sheet contained the following comparative data at December 31.(Accounts payable pertains to operating expenses.)InstructionsPrepare the operating activities
Broussard Company reported net income of $3.5 million in 2025. 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.
Ballard Co. reported $145,000 of net income for 2025. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2025 that might affect cash flows from operating activities.1. Ballard purchased 100 shares of treasury stock at a cost of $20 per share. These
The following are Sullivan Corp.’s comparative balance sheet accounts at December 31, 2025 and 2024, with a column showing the increase (decrease) from 2024 to 2025.Additional information:1. On December 31, 2024, Sullivan acquired 25% of Myers Co.’s common stock for $275,000. On that date, the
In 2025, Elbert Corporation had net cash provided by operating activities of $531,000, net cash used by investing activities of $963,000, and net cash provided by financing activities of $585,000. At January 1, 2025, the cash balance was $333,000. Compute December 31, 2025, cash.
Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Turbulent Indigo Inc. for the year ended December 31, 2025.a. Plant assets that had cost $20,000 6 years before and were being depreciated on a straight-line basis over 10 years with no
Bloom Corporation had the following 2025 income statement.The following accounts increased during 2025: Accounts Receivable $12,000, Inventory $11,000, and Accounts Payable $13,000. Prepare the cash flows from operating activities section of Bloom’s 2025 statement of cash flows using the direct
Presented below are two independent situations.Situation A: Annie Lennox Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2025. Accounts receivable and accounts payable at year-end were $71,000 and $29,000, respectively. Assume that the accounts
At January 1, 2025, Eikenberry Inc. had accounts receivable of $72,000. At December 31, 2025, accounts receivable is $54,000. Sales revenue for 2025 total $420,000. Compute Eikenberry’s 2025 cash receipts from customers.
Each of the following items must be considered in preparing a statement of cash flows for Cruz Fashions Inc. for the year ended December 31, 2025.1. Fixed assets that had cost $20,000 6½ years before and were being depreciated on a 10-year basis, with no estimated scrap value, were sold for
Stansfield Corporation had the following activities in 2025.1. Payment of accounts payable $770,000. 2. Issuance of common stock $250,000. 3. Payment of dividends $350,000. 4. Collection of note receivable $100,000.5. Issuance of bonds payable $510,000.6. Purchase of treasury stock
Ashley Company is a young and growing producer of electronic measuring instruments and technical equipment. You have been retained by Ashley to advise it in the preparation of a statement of cash flows using the indirect method. For the fiscal year ended October 31, 2025, you have obtained the
Wainwright Corporation had the following activities in 2025.1. Sale of land $180,000.2. Purchase of inventory $845,000.3. Purchase of treasury stock $72,000. 4. Purchase of equipment $415,000.5. Issuance of common stock $320,000.6. Purchase of available-for- sale debt securities
Anthony Incorporated leases a piece of machinery to Irving Company on January 1, 2025, under the following terms.1. The lease is to be for 4 years with rental payments of $12,471 to be made at the beginning of each year.2. The machinery has a fair value of $67,000, a book value of $50,000, and an
Novak Corporation is preparing its 2025 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2025 statement of cash flows.Items___ a. Purchase of land and building.___
Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The
Ludwick Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2025. Annual rental payments of $40,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%;
Norton Co. had the following amounts related to its pension plan in 2025.Determine for 2025 (a) Norton’s other comprehensive income (loss) and (b) Comprehensive income. Net income for 2025 is $26,000; no amortization of gain or loss is necessary in 2025. Actuarial liability loss for
Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2025 and 2026.Instructionsa. Compute pension expense for 2025 and 2026.b. Prepare the journal entries to record the pension expense and the company’s funding of the
At December 31, 2025, Fell Corporation had a deferred tax liability of $340,000, resulting from future taxable amounts of $2,000,000 and an enacted tax rate of 17%. In May 2026, a new income tax act is signed into law that raises the tax rate to 20% for 2026 and future years. Prepare the journal
Your firm has been engaged to examine the financial statements of Almaden Corporation for the year 2025. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2020. The client provides you with
Jobim Inc. had the following condensed balance sheet at the end of operations for 2024.During 2025, the following occurred.1. A tract of land was purchased for $9,000.2. Bonds payable in the amount of $15,000 were redeemed at par.3. An additional $10,000 in common stock was issued at par.4.
The balance sheet data of Brown Company at the end of 2025 and 2024 follow.Land was acquired for $30,000 in exchange for common stock, par $30,000, during the year; all equipment purchased was for cash. Equipment costing $10,000 was sold for $3,000; book value of the equipment was $6,000. Cash
The transactions below took place during the year 2025.1. Convertible bonds payable with a par value of $300,000 were exchanged for unissued common stock with a par value of $300,000. The market price of both types of securities was par.2. The net income for the year was $410,000.3. Depreciation
Koch Corporation is in the process of preparing its annual financial statements for the fiscal year ended April 30, 2026. Because all of Koch’s shares are traded intrastate, the company does not have to file any reports with the Securities and Exchange Commission. The company manufactures
The net income for Fallon Company for 2025 was $320,000. During 2025, depreciation on plant assets was $124,000, amortization of patent was $40,000, and the company incurred a loss on sale of plant assets of $21,000. Compute net cash flow from operating activities.
Each of the following items must be considered in preparing a statement of cash flows for Blackwell Inc. for the year ended December 31, 2025. State where each item is to be shown in the statement, if at all.a. Plant assets that had cost $18,000 6½ years before and were being depreciated on a
During 2025, Simms Company redeemed $2,000,000 of bonds payable for $1,880,000 cash. Indicate how this transaction would be reported on a statement of cash flows, if at all.
Madrasah Corporation issued its financial statements for the year ended December 31, 2025, on March 10, 2026. The following events took place early in 2026.a. On January 10, 10,000 shares of $5 par value common stock were issued at $66 per share.b. On March 1, Madrasah determined after negotiations
Cineplex Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2026.Sales of segments B and C included intersegment sales of $20,000 and $100,000, respectively.Instructionsa. Determine
Bradburn Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Bradburn and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On
Savannah, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2025 are projected as follows.Savannah incurs variable manufacturing costs of $0.40 per unit and variable nonmanufacturing costs of $0.35 per unit. Savannah will incur fixed
At December 31, 2025, Coburn Corp. has assets of $10,000,000, liabilities of $6,000,000, common stock of $2,000,000 (representing 2,000,000 shares of $1 par common stock), and retained earnings of $2,000,000. Net sales for the year 2025 were $18,000,000, and net income was $800,000. As auditors of
Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its stockholders and the Securities and Exchange Commission (SEC) at the end of the first quarter of the 2025–2026 fiscal year. Snider’s financial accounting department has compiled the
Picasso Company is a wholesale distributor of packaging equipment and supplies. The company’s sales have averaged about $900,000 annually for the 3-year period 2023–2025. The firm’s total assets at the end of 2025 amounted to $850,000.The president of Picasso Company has asked the controller
Ace Inc. produces electronic components for sale to manufacturers of radios, television sets, and digital sound systems. In connection with her examination of Ace’s financial statements for the year ended December 31, 2026, Gloria Rodd, CPA, completed field work 2 weeks ago. Ms. Rodd now is
Morlan Corporation is preparing its December 31, 2025, financial statements. Two events that occurred between December 31, 2025, and March 10, 2026, when the statements were issued, are described below.1. A liability, estimated at $160,000 at December 31, 2025, was settled on February 26, 2026, at
The transactions listed below relate to Wainwright Inc. You are to assume that on the date on which each of the transactions occurred, the corporation’s accounts showed only common stock ($100 par) outstanding, a current ratio of 2.7:1, and a substantial net income for the year to date (before
Nancy Tercek, the financial vice president, and Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing the financial ratios of the company for the years 2025 and 2026. The financial vice president notes that the profit margin on sales ratio has increased from 6% to 12%, a
In June 2025, the board of directors for McElroy Enterprises Inc. authorized the sale of $10,000,000 of corporate bonds. Jennifer Grayson, treasurer for McElroy Enterprises Inc., is concerned about the date when the bonds are issued. The company really needs the cash, but she is worried that if the
On January 1, 2025, Acker Inc. had the following balance sheet.Instructions(Assume all transactions during the year were for cash.)a. Prepare the journal entry to record the sale of the available-for-sale debt securities in 2025.b. Prepare the journal entry to record the Unrealized Holding Gain or
On January 1, 2025, Novotna Company purchased $400,000, 8% bonds of Aguirre Co. for $369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Novotna Company uses the effective-interest method to amortize
McElroy Company has the following portfolio of investment securities at September 30, 2025, its most recent reporting date.On October 10, 2025, the Horton shares were sold at a price of $54 per share. In addition, 3,000 shares of Patriot common stock were acquired at $54.50 per share on November 2,
Fernandez Corp. invested its excess cash in securities during 2025. As of December 31, 2025, the securities portfolio consisted of the following common stocks. Fernandez does not have significant influence in any of these companies.Instructionsa. What should be reported on Fernandez’s December
Castleman Holdings, Inc. had the following equity investment portfolio at January 1, 2025.During 2025, the following transactions took place.1. On March 1, Rogers Company paid a $2 per share dividend.2. On April 30, Castleman Holdings, Inc. sold 300 shares of Chance Company for $11 per share.3. On
At December 31, 2025, the available-for-sale debt portfolio for Steffi Graf, Inc. is as follows.On January 20, 2026, Steffi Graf, Inc. sold security A for $15,100. The sale proceeds are net of brokerage fees.Instructionsa. Prepare the adjusting entry at December 31, 2025, to report the portfolio at
On January 1, 2025, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on January 1 of each year. Hi and Lois Company uses
On December 21, 2025, Bucky Katt Company provided you with the following information regarding its equity investments.During 2026, Colorado Co. stock was sold for $9,400. The fair value of the stock on December 31, 2026, was Clemson Corp. stock—$19,100; Buffaloes Co. stock—$20,500. None of the
On January 1, 2025, Phantom Company acquires $200,000 of Spiderman Products, Inc., 9% bonds at a price of $185,589. Interest is received on January 1 of each year, and the bonds mature on January 1, 2028. The investment will provide Phantom Company a 12% yield. The bonds are classified as
The following information relates to the debt securities investments of Wildcat Company.1. On February 1, the company purchased 10% bonds of Gibbons Co. having a par value of $300,000 at 100 plus accrued interest. Interest is payable April 1 and October 1.2. On April 1, semiannual interest is
Instar Company has several investments in the securities of other companies. The following information regarding these investments is available at December 31, 2025. 1. Instar holds bonds issued by Dorsel Corp. The bonds have an amortized cost of $320,000 and their fair value at December 31,
Carow Corporation purchased on January 1, 2025, as a held-to-maturity investment, $60,000 of the 8%, 5-year bonds of Harrison, Inc. for $65,118, which provides a 6% return. The bonds pay interest semiannually. Prepare Carow’s journal entries for (a) The purchase of the investment, and(b) The
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