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intermediate accounting
Intermediate Accounting 14th Edition Kieso, weygandt and warfield. - Solutions
Sport Pro Magazine sold 12,000 annual subscriptions on August 1, 2012, for $18 each. Prepare Sport Pro’s August 1, 2012, journal entry and the December 31, 2012, annual adjusting entry.
What factors must be considered in determining whether or not to record a liability for pending litigation? For threatened litigation?
Under what conditions should a contingent liability be recorded?
How does unearned revenue arise? Why can it be classified properly as a current liability? Give several examples of business activities that result in unearned revenues.
Under what conditions should a short-term obligation be excluded from current liabilities?
Waters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $800,000. The recoverable amount of the division is estimated to be $1,000,000. Prepare Waters’ journal
Where can authoritative IFRS guidance related to intangible assets be found?
After securing lease commitments from several major stores, Auer Shopping Center, Inc. was organized and built a shopping center in a growing suburb. The shopping center would have opened on schedule on January 1, 2012, if it had not been struck by a severe tornado in December. Instead,
Montana Matt’s Golf Inc. was formed on July 1, 2011, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid
Information concerning Sandro Corporation’s intangible assets is as follows. 1. On January 1, 2012, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and
Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then
Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2011, the company expends $325,000 on a research project, but by the end of 2011 it is impossible to determine whether any benefit will be derived from
Presented below is net asset information related to the Mischa Division of Santana, Inc.The purpose of the Mischa Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To
During 2009, Thompson Corporation spent $170,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2009, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $24,000 related to the
Devon Harris Company has provided information on intangible assets as follows. A patent was purchased from Bradtke Company for $2,500,000 on January 1, 2011. Harris estimated the remaining useful life of the patent to be 10 years. The patent was carried in Bradtke’s accounting records
Presented below is selected information for Palmiero Company. 1. Palmiero purchased a patent from Vania Co. for $1,500,000 on January 1, 2010. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2020. During 2012, Palmiero determined that the
Presented below is selected information for Palmiero Company. 1. Palmiero purchased a patent from Vania Co. for $1,500,000 on January 1, 2010. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2020. During 2012, Palmiero determined that the
Last year Zeno Company recorded an impairment on an intangible asset held for use. Recent appraisals indicate that the asset has increased in value. Should Zeno record this recovery in value?
On January 1, 2011, Locke Company, a small machine-tool manufacturer, acquired for $1,260,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $60,000. Locke estimates that the new equipment can produce 12,000 machine
Bronson Paper Products purchased 10,000 acres of forested timberland in March 2012. The company paid $1,700 per acre for this land, which was above the $800 per acre most farmers were paying for cleared land. During April, May, June, and July 2012, Bronson cut enough timber to build roads using
Assume the same information as E11-16, except that Pujols intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $20,000.Instructions (a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2012. (b)
Presented below is information related to Morrow Manufacturing Corporation.Instructions (a) Compute the rate of depreciation per year to be applied to the machines under the composite method. (b) Prepare the adjusting entry necessary at the end of the year to record depreciation for the
Jeeter Industries presents you with the following information.InstructionsComplete the table for the year ended December 31, 2013. The company depreciates all assets using the half-year convention.
Agazzi Company purchased equipment for $304,000 on October 1, 2012. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $16,000. Estimated production is 40,000 units and estimated working hours are 20,000. During 2012, Agazzi uses the equipment for 525 hours
Cominsky Company purchased a machine on July 1, 2013, for $28,000. Cominsky paid $200 in title fees and county property tax of $125 on the machine. In addition, Cominsky paid $500 shipping charges for delivery, and $475 was paid to a local contractor to build and wire a platform for the machine on
Cominsky Company purchased a machine on July 1, 2013, for $28,000. Cominsky paid $200 in title fees and county property tax of $125 on the machine. In addition, Cominsky paid $500 shipping charges for delivery, and $475 was paid to a local contractor to build and wire a platform for the machine on
Johnson & Johnson, the world’s leading and most diversified healthcare corporation, serves its customers through specialized worldwide franchises. Each of its franchises consists of a number of companies throughout the world that focus on a particular health care market, such as surgical
Klamath Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an effort to expand its production capacity to meet the increased demand for its product, the company recently made several acquisitions of plant and equipment. Rob Joffrey, newly hired in the position
Laserwords Inc. is a book distributor that had been operating in its original facility since 1985. The increase in certification programs and continuing education requirements in several professions has contributed to an annual growth rate of 15% for Laserwords since 2007. Laserwords’ original
Grieg Landscaping began construction of a new plant on December 1, 2012. On this date, the company purchased a parcel of land for $139,000 in cash. In addition, it paid $2,000 in surveying costs and $4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of
On January 1, 2012, Blair Corporation purchased for $500,000 a tract of land (site number 101) with a building. Blair paid a real estate broker’s commission of $36,000, legal fees of $6,000, and title guarantee insurance of $18,000. The closing statement indicated that the land value
Presented below is a schedule of property dispositions for Hollerith Co.The following additional information is available.LandOn February 15, a condemnation award was received as consideration for unimproved land held primarily as an investment, and on March 31, another parcel of unimproved land to
On April 1, 2012, Pavlova Company received a condemnation award of $410,000 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $60,000 and $280,000, respectively, when they were acquired. At April
On December 31, 2012, Chrysler Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows.Machine
The following transactions occurred during 2013. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no
McArthur Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $7,000 plus trade-in, f.o.b. factory. McArthur Inc. paid $7,000 cash and traded in used equipment. The used equipment had originally cost $62,000; it had a book value of $42,000 and a secondhand fair value
Montgomery Company purchased an electric wax melter on April 30, 2013, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.List price of new melter
Napoleon Corporation purchased a computer on December 31, 2011, for $130,000, paying $30,000 down and agreeing to pay the balance in five equal installments of $20,000 payable each December 31 beginning in 2012. An assumed interest rate of 10% is implicit in the purchase price.Instructions
Sterling Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2012, to expand its production capacity to meet customers’ demand for its product. Sterling issues a $900,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the
The following three situations involve the capitalization of interest.Situation 1:On January 1, 2012, Columbia, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,000,000. It was estimated that it would take 3 years to complete the
On July 31, 2012, Bismarck Company engaged Duval Tooling Company to construct a special purpose piece of factory machinery. Construction began immediately and was completed on November 1, 2012. To help finance construction, on July 31 Bismarck issued a $400,000, 3-year, 12% note payable at
On December 31, 2011, Hurston Inc. borrowed $3,000,000 at 12% payable annually to finance the construction of a new building. In 2012, the company made the following expenditures related to this building: March 1, $360,000; June 1, $600,000; July 1, $1,500,000; December 1, $1,200,000. Additional
McPherson Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2012. McPherson expected to complete the building by December 31, 2012. McPherson has the following debt obligations outstanding during
Plant acquisitions for selected companies are presented below and on the next page. 1. Natchez Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Vivace Co., for a lump-sum price of $680,000. At the time of purchase, Vivace’s assets had the following book and
Dane Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2013.InstructionsCompute the total cost for each of these two pieces of equipment. If an item is not
Shabbona Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2012. The terms of acquisition for each truck are described below. 1. Truck #1 has a list price of $15,000 and is acquired for a cash payment of
Use the information presented for Ottawa Corporation in BE10-14, but assume the machinery is sold for $5,200 instead of $10,500. Prepare journal entries to (a) update depreciation for 2013 and (b) record the sale.
Ottawa Corporation owns machinery that cost $20,000 when purchased on July 1, 2009. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2012. The machinery is sold on September 1, 2013, for $10,500. Prepare
Crowe Company purchased a heavy-duty truck on July 1, 2009, for $30,000. It was estimated that it would have a useful life of 10 years and then would have a trade-in value of $6,000. The company uses the straight-line method. It was traded on August 1, 2013, for a similar truck costing $42,000;
Mickelson Inc. owns land that it purchased on January 1, 2000, for $450,000. At December 31, 2012, its current value is $770,000 as determined by appraisal. At what amount should Mickelson report this asset on its December 31, 2012, balance sheet? Explain.
InstructionsGo to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What is the amount of inventory reported by Coca-Cola at December 31, 2009, and by PepsiCo at December 26, 2009? What
The market value of Lake Corporation’s inventory has declined below its cost. Sheryl Conan, the controller, wants to use the loss method to write down inventory because it more clearly discloses the decline in market value and does not distort the cost of goods sold. Her supervisor, financial
Davenport Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2012, and is now considering converting to the dollar-value LIFO inventory method. During your examination of the financial statements for the year ended December 31, 2013, management
Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2012. Amounts as shown below appear on the store’s books before adjustment.You are to assume that all markups and
Late in 2009, Joan Seceda and four other investors took the chain of Becker Department Stores private, and the company has just completed its third year of operations under the ownership of the investment group. Andrea Selig, controller of Becker Department Stores, is in the process of preparing
As of January 1, 2012, Aristotle Inc. installed the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2012, you obtain the following data.Instructions (a) Prepare a schedule to compute Aristotle’s June 30, 2012,
Fiedler Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The ] following information is available from the company’s inventory records as of December 31, 2012.InstructionsGreg Forda is an accounting clerk in the accounting department of Fiedler Co., and he cannot
Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1988, Maddox has used normal absorption costing and has assumed a first in,
Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2013.Instructions (a) Using the conventional retail method, prepare a schedule computing estimated
Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2013.Instructions (a) Using the conventional retail method, prepare a schedule computing estimated
Presented below is information related to Waveland Inc.InstructionsAssuming that Waveland Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2013.
On April 15, 2013, fire damaged the office and warehouse of Stanislaw Corporation. The only accounting record saved was the general ledger, from which the trial balance on page 534 was prepared.The following data and information have been gathered. 1. The fiscal year of the corporation ends
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, 2012, the following finished desks appear in the company’s inventory.The 2012 catalog was in effect through November 2012, and the 2013 catalog is
Mueller Ltd., a local retailing concern in the Bronx, N.Y., has decided to change from the conventional retail inventory method to the LIFO retail method starting on January 1, 2013. The company recomputed its ending inventory for 2012 in accordance with the procedures necessary to switch to LIFO
Springsteen Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2011. At that time the inventory had a cost of $54,000 and a retail price of $100,000. The following information is available.The price index at January 1, 2011, is 100.InstructionsCompute the ending
Mander Corporation began operations on January 1, 2012, with a beginning inventory of $34,300 at cost and $50,000 at retail. The following information relates to 2012.Instructions (a) Assume Mander decided to adopt the conventional retail method. Compute the ending inventory to be reported in
Presented below is information related to Atrium Corporation.InstructionsCompute the ending inventory under the dollar-value LIFO method at December 31, 2013. The cost-to-retail ratio for 2013 was 55%.
You assemble the following information for Dillon Department Store, which computes its inventory under the dollar-value LIFO method.InstructionsCompute the cost of the inventory on December 31, 2012, assuming that the inventory at retail is (a) $294,300 and (b) $359,700.
Robinson Company began operations late in 2012 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2012 and no markdowns during 2012, the ending inventory for 2012 was $14,000 under both the conventional retail method and the LIFO retail method. At the
Brewster Company began operations on January 1, 2012, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2012 and, because there was no beginning inventory, its ending inventory for 2012 of $41,100 would have been the same under either the
The financial statements of General Mills, Inc.’s 2010 annual report disclose the following information.InstructionsCompute General Mills’s (a) inventory turnover and (b) the average days to sell inventory for 2010 and 2009.
At December 31, 2013, Volkan Company has outstanding noncancelable purchase commitments for 40,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.Instructions (a)
Prater Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2013, at an agreed price of $400,000. At December 31, 2013,
During 2013, Crawford Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Crawford for a lump sum of $60,000 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload.
LaGreca Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2012, included product X. Relevant per-unit data for product X appear below.Estimated selling price $50Cost
The inventory of Oheto Company on December 31, 2013, consists of the following items.Instructions (a) Determine the inventory as of December 31, 2013, by the lower-of-cost-or-market method, applying this method directly to each item. (b) Determine the inventory by the
Use the information for Kemper Company from BE9-5. In 2013, Kemper paid $1,000,000 to obtain the raw materials which were worth $950,000. Prepare the entry to record the purchase.
Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $214,000 at both cost and market value. At December 31, 2013, the inventory was $286,000 at cost and $265,000 at market value. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method and (b) the
A fire destroys all of the merchandise of Assante Company on February 10, 2012. Presented below is information compiled up to the date of the fire.Inventory, January 1, 2012 $ 400,000Sales to February 10, 2012
At December 31, 2012, Ashley Co. has outstanding purchase commitments for 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 market, whichever is lower. Assuming that the market price as of
Englehart Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The following inventory data is available for the month of March.Accounting (a) Assuming Englehart uses a periodic inventory system, determine
SUPERVALU reported the following data in its annual report. (a) Compute SUPERVALU’s inventory turnover ratios for 2009 and 2010, using:(1) Cost of sales and LIFO inventory.(2) Cost of sales and FIFO inventory. (b) Some firms calculate inventory turnover using sales rather than cost of
Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, the management wishes to consider all of the effects on the company, including its reported performance, before making the final decision. The
In January 2012, Susquehanna Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in, first out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the
You are asked to travel to Milwaukee to observe and verify the inventory of the Milwaukee branch of one of your clients. You arrive on Thursday, December 30, and find that the inventory procedures have just been started. You spot a railway car on the sidetrack at the unloading door and ask the
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, as a private consultant, you have
Presented below is information related to Kaisson Corporation for the last 3 years.InstructionsCompute the ending inventories under the dollar-value LIFO method for 2011, 2012, and 2013. The base period is January 1, 2011, and the beginning inventory cost at that date was $45,000. Compute indexes
On January 1, 2012, Bonanza Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Bonanza continued to use the FIFO inventory method for internal accounting and management purposes. In applying the LIFO method, Bonanza
Norman’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2012, Norman adopted dollar-value LIFO and decided to use a single inventory pool. The company’s January 1 inventory consists of:During 2012, the company had the following
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 2012 and 2013. The accounting department is to assume that the
Dimitri Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2012. Inventory at December 31, 2012 (based on physical count of goods in Dimitri’s plant, at cost,
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
The following information relates to the Choctaw CompanyInstructionsUse the dollar-value LIFO method to compute the ending inventory for Choctaw Company for 2009 through 2013.
Presented below is information related to Martin Company.InstructionsCompute the ending inventory for Martin Company for 2009 through 2014 using the dollar-value LIFO method.
The dollar-value LIFO method was adopted by King Corp. on January 1, 2012. Its inventory on that date was $160,000. On December 31, 2012, the inventory at prices existing on that date amounted to $151,200. The price level at January 1, 2012, was 100, and the price level at December 31, 2012, was
Sisko Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Sisko’s records.InstructionsCalculate the index used for 2012 that yielded the above results.
Tom Brady Shop began operations on January 2, 2012. The following stock record card for footballs was taken from the records at the end of the year.A physical inventory on December 31, 2012, reveals that 110 footballs were in stock. The bookkeeper informs you that all the discounts were taken.
You are the vice president of finance of Mickiewicz Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2012. These schedules appear below.The computation of cost of goods sold in each schedule is based on the following
The following is a record of Cannondale Company’s transactions for Boston Teapots for the month of May 2012.Instructions (a) Assuming that perpetual inventories are not maintained and that a physical count at the end of the month shows 510 units on hand, what is the cost of the ending
Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade’s inventory records for Product BAP.A physical inventory on March 31, 2012, shows 1,500 units on hand.InstructionsPrepare schedules to compute the ending inventory at March 31, 2012, under each
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