Advanced Accounting 9th Edition Paul M. Fischer, William J. Tayler, Rita H. Cheng - Solutions

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3. A component unit a Is financially accountable to the primary government b Must be discretely presented in a primary government’s CAFR c Is excluded from a primary government’s CAFR d Is a legally separate organization for which the primary government is financially accountable
2. An expense would be reported in which of the following funds?a General fund b Internal service fund c Debt service fund d Special revenue fund
E 19-5 Multiple choice 1. Which of the following are eliminated from the financial statements under GASB 34?a General long-term debt account group b General fixed asset account group c Both a and b d None of the above
5. Which of the following funds would be used to account for an activity that provides goods or services to other funds?a General fund b Enterprise fund c Debt service fund d Internal service fund
4. Which of the following funds would not be included in governmental fund financial statements?a Debt service fund b General fund c Pension trust fund d Permanent fund
3. Which of the following funds will report fixed assets in the fund financial statements?a General fund b Special revenue fund c Debt service fund d None of the above An Introduction to Accounting for State and Local Governmental Units 661
2. Which of these funds generally follows the accrual basis of accounting?a General fund b Internal service fund c Debt service fund d Special revenue fund
E 19-4 Multiple choice 1. Which of the following is not a governmental fund?a Special revenue fund b Debt service fund c Trust fund d General fund
5. The simplified governmental fund accounting model is as follows:a Assets Liabilities Fund Balance b Current Assets Current Liabilities Fund Balance c Current Assets Noncurrent Assets Current Liabilities Noncurrent Liabilities Fund Balance d Current Assets Noncurrent Assets
4. Which fund follows the modified accrual basis of accounting?a General fund b Special revenue fund c Debt service fund d All of the above
3. The cash received from the sale of vehicles used by the sheriff’s office should be recorded in a The general fund b The general fixed assets account group c A capital projects fund d A debt service fund
2. One would not expect to find fixed asset accounts in the a Governmental fund financial statements b Proprietary fund financial statements c Government-wide financial statements d Financial statements of a governmental entity
E 19-3 Multiple choice 1. Which of the following is considered an exchange transaction under GASB 33?a A city receives a federal grant b A bus driver collects bus fare from a rider c Property taxes are collected from a homeowner d An employer withholds state income tax from employee paychecks
5. An expense would be reported in which of the following funds?a Special revenue funds b Capital projects funds c Enterprise funds d Permanent funds
4. Authority granted by a legislative body to make expenditures and to incur obligations is the definition of an a Appropriation b Allowance c Encumbrance d Expenditure
3. Under the modified accrual basis of accounting for a governmental unit, revenues should be recognized in the accounting period in which they a Are earned and become measurable b Are collected c Become available and measurable d Become available and earned 660 CHAPTER 19
2. The government-wide statements of a state government a May not be issued separately from the comprehensive annual financial report b Are prepared on both the accrual and modified accrual bases of accounting c Include both governmental and proprietary funds d Contain more-detailed information
E 19-2 Multiple choice [AICPA adapted]1. Depreciation expense accounts would likely be found in the a General fund b Capital projects fund c Debt service fund d Enterprise fund
5. Ketchum County issues general obligation serial bonds to finance construction of a new high school. Which of the following funds are affected by the transaction?a Special revenue fund b Capital projects fund and general fund c Capital projects fund, general fund, and debt service fund d Capital
4. Which of the following will not appear in financial statements prepared under GASB 34?a Government-wide statements b Fund financial statements c Management’s discussion and analysis d General long-term debt account group
3. The term appropriation, as used in governmental accounting, is:a A budget request b A commitment c An authorization to spend d An allotment
2. The primary emphasis in accounting and reporting for governmental funds is on:a Flow of current financial resources b Income determination c Capital transfers d Transfers relating to proprietary activities
E 19-1 Multiple choice 1. Which of the following items has the greatest GAAP authority under SAS 69?a GASB implementation guides b Consensus positions of GASB’s Emerging Issues Task Force c GASB statements and interpretations d FASB statements and interpretations
23. How do operational accountability and fiscal accountability differ? In what context are they used?E x E R c I S E S
22. What are the three sections of a CAFR? Briefly identify the contents of each section.
21. How does an expenditure differ from an expense? Identify the funds that report expenditures and those that report expenses.
20. Distinguish between the various types of interfund activity.An Introduction to Accounting for State and Local Governmental Units 659
19. List the authoritative documents available to financial statement preparers and auditors related to governmental accounting and financial reporting. Which is the most authoritative?
18. How do nonreciprocal transfers differ from reciprocal transfers?
17. List the required governmental fund and proprietary fund financial statements. On what basis of accounting are these statements prepared?
16. What is an appropriation? How can budgetary approval be arranged to give the legislative body maximum control over the budget? How can it be arranged to give the executive maximum flexibility?
15. Are interfund transfers expenditures or expenses? Explain.
14. Describe the functions of an agency fund. State the accounting equation for an agency fund.
13. Differentiate between pension trust funds, investment trust funds, and fiduciary trust funds.
12. What does measurement focus mean? What two focuses are used in governmental accounting? Which fund types use each?
11. What is the modified accrual basis of accounting? Which funds utilize the modified accrual basis of accounting?
10. List and explain the four GAAP guidelines for state and local governments, in descending order of authority.
9. What are the simplified and complete accounting equations for a proprietary fund?
8. List the two types of proprietary funds. What distinguishes them from each other?
7. What are the simplified and complete accounting equations for a governmental fund?
6. List the five types of governmental funds. What are the primary distinctions among them?
5. Distinguish between governmental funds, proprietary funds, and fiduciary funds. Which funds are classified as governmental funds?
4. Why do governmental entities use fund accounting? How many funds might be used by a single governmental unit? How many fund types?
3. What are the characteristics of a government?
2. What is the GAAFR? Who creates the GAAFR?
1. What organization provides accounting standards for state and local governmental units? What hierarchy of authority do they use?
PR 18-2 Under what circumstances does a firm emerging from bankruptcy qualify for fresh start reporting? Can you find an example of how a firm should report in a fresh start reporting situation?
PR 18-1 What are the special requirements for the presentation of financial statements for a firm that is operating under Chapter 11 Bankruptcy protection?
3. Prepare a fresh-start balance sheet for Hip as of July 8, 2016.
2. Prepare journal entries to adjust Lop’s accounts for the reorganization plan.
P18-7 Installment liquidation Lop filed for relief under Chapter 11 of the bankruptcy act on January 2, 2016. A summary of Lop’s assets and equities on this date, and at June 30, 2016, follows. Estimated fair values of Lop’s assets at June 30 are also shown.January 2, 2016 June 30, 2016 Per
Val is in financial difficulty, and its stockholders and creditors have requested a statement of affairs for planning purposes. The following information is available:1. The company estimates that $63,000 is the maximum amount collectible for the accounts receivable.2. Except for 20 percent of the
P18-6 Financial reporting during bankruptcy The balance sheet of Val at June 30, 2016, contains the following items:Assets Cash $40,000 Accounts receivable—net 70,000 Inventories 50,000 Land 30,000 Building—net 200,000 Machinery—net 60,000 Goodwill 50,000$500,000 Equities Accounts payable
2. Develop a schedule showing how available cash will be distributed to each class of claims, assuming that(a) the estimated realizable values are actually received and (b) the trustee and other fees of liquidating the estate are $11,000.
P18-5 Financial reporting during bankruptcy The unsecured creditors of Dan filed a petition under Chapter 7 of the bankruptcy act on July 1, 2016, to force Dan into bankruptcy. The court order for relief was granted on July 10, at which time an interim trustee was appointed to supervise liquidation
P18-4 Statement of affairs, claims for each class Pop Inc. filed for Chapter 7 bankruptcy on August 1, 2014, and reported the following (in thousands):Book Value Estimated Net Realizable Values Cash and equivalents $250 $250 Accounts receivable 150 125 Inventories 200 100 Land 300 275
2. Show how the available cash will be distributed in final liquidation of the corporation.Corporate Liquidations and Reorganizations 623
P18-3 Claims rankings and cash distribution upon liquidation Jun is being liquidated under Chapter 7 of the bankruptcy act. All of Jun’s assets have been converted into cash, and $400,000 cash is available to pay the following claims:1. Administrative expenses for liquidation $10,000 2.
P18-2 Financial reporting during bankruptcy Minang filed a petition under Chapter 7 of the bankruptcy act and was liquidated by a court-appointed trustee. The following financial information was reported by the trustee:Book Values Estimated Realizable Values Assets Cash $50,000 $50,000 Accounts
P18-1[Balance sheet for fresh-start reporting evaluation]Tessa Ltd. which operated under Chapter 11 of the bankruptcy act, released its balance sheet when they submited their reorganization plan as follows (in thousands):August 1, 2014 Cash and equivalents $ 275 Accounts receivable 200 Inventories
E18-5 Financial reporting during bankruptcy – Distributions to creditors PT Keraton filed for Chapter 7 bankruptcy and was liquidated by a court-appointed trustee. The following financial report was prepared by the trustee:Assets Cash $220,000 Approved claims $90,000 Note payable (secured by
E18-4 Chapter 7 bankruptcy—expected payment of a bond payable Madeline SA had a bond payable partially secured by 50% of plant assets realization. Madeline file a Chapter 7 bankruptcy and a calculation showed that 10% of all unsecured claim can be paid. The expected realization value of the plant
E18-3 Financial reporting during bankruptcy—Distributions to creditors Noona Corporation files for Chapter 7 bankruptcy, when the book value of its net land and building is $80,000, and these assets have a fair value similar to their estimated realizable value of $40,000. It is also learned that
4. When fresh-start reporting is used, the initial financial statement disclosures should not include:a Adjustments made in the amounts of individual assets and liabilities b The amount of debt forgiven c The amount of prior retained earnings or deficit eliminated d Current and prior-year EPS
3. Uni, a parent company with five wholly owned operating subsidiaries, is in the process of preparing consolidated financial statements for the year. Two of Uni’s subsidiaries are operating as debtors in possession under Chapter 11 of the bankruptcy act. Which of the following statements is
2. Two-and-a-half years after filing the petition for bankruptcy, Hal’s management, its creditors, the equity holders, and other parties in interest agree on a reorganization value of $500,000. Which of the following statements is most likely?a The reorganization value approximates the appraised
1. The December 31, 2016, balance sheet will show prepetition liabilities of:a $340,000 (the claims at filing)b $240,000 (the original claims less the secured portion of the mortgage bonds)c $350,000 (the original claims plus six months’ interest on the bonds)d $290,000 (the original claims less
E18-2 Financial reporting during bankruptcy Use the following information in answering questions 1 and 2:Hal Company filed for protection from creditors under Chapter 11 of the bankruptcy act on July 1, 2016. Hal had the following liabilities at the time of filing:10% mortgage bonds payable,
4. A corporation may not be a debtor in possession if:a The case is initiated in a voluntary filing b The case is initiated in an involuntary filing c Loans other than for goods and services exceed $5,000,000 d The court concludes that appointment of a trustee is in the best interests of creditors
3. A trustee’s election in a Chapter 7 case requires:a Approval by a majority of creditors b Approval by a majority of claims represented c Approval by a majority in dollar amount of voting creditors, and at least 20 percent of claims must vote d Approval of two-thirds in dollar amount and a
2. Aside from liability discharge provided for in the reorganization plan, the discharge of a debtor corporation’s liabilities occurs when:a The plan is accepted by a majority of unsecured creditors b Each class of claims has accepted the plan or is not impaired under it c Each holder of a claim
E18-1 Differences among types of bankruptcy filings and other terminology related to bankruptcy law 1. Bankruptcy Insolvency means:a Book value of assets is greater than liabilities b Fair value of assets is less than liabilities c Inability to meet financial obligations as they come due d
17. A firm emerging from Chapter 11 bankruptcy that does not qualify for fresh-start reporting must still report the effect of the reorganization plan on its financial position and results of operations. How is debt forgiveness reported in the reorganized company’s financial statements?Corporate
16. FASB ASC 852 provides two conditions that must be met for an emerging firm to use fresh-start reporting.What are these two conditions?
15. The reorganization value of a firm emerging from Chapter 11 bankruptcy is used to determine the accounting of the reorganized company. Explain reorganization value as used in FASB ASC 852.
14. Describe prepetition liabilities subject to compromise on the balance sheet of a company operating under Chapter 11 of the bankruptcy act.
13. Discuss the requirements for approval of a plan of reorganization.
12. When can a creditors’ committee file a plan of reorganization under a Chapter 11 case?
11. What is a debtor-in-possession reorganization case?
10. Does filing a case under Chapter 11 of the bankruptcy act mean that the company will not be liquidated?Discuss.
9. What is the purpose of a statement of affairs, and how are assets valued in this statement?
8. Does the BAPCPA establish priorities for holders of unsecured nonpriority claims (i.e., general unsecured claims)?
7. Which unsecured claims have priority in a Chapter 7 liquidation case? Discuss in terms of priority ranks.
6. Describe the duties of a trustee in a liquidation case under the BAPCPA 1978.
5. Is a trustee appointed in Title 11 cases? Is a trustee appointed in all Chapter 7 cases? In all Chapter 11 cases? Discuss.
4. What obligations does a debtor corporation have in a bankruptcy case?
3. What are the duties of the U.S. trustee under BAPCPA? Do U.S. trustees supervise the administration of all bankruptcy cases?
2. What is an order of relief and how does it affect a bankruptcy case?
1. How does Chapter 7 bankruptcy differ from Chapter 11 bankruptcy? Which comes first?
Pillow Company is purchasing an 80% interest in the common stock of Sleep Company.Sleep’s balance sheet amounts at book and fair value are as follows:Book Fair Account Value Value Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 250,000
Pillow Company is purchasing an 80% interest in the common stock of Sleep Company.Sleep’s balance sheet amounts at book and fair value are as follows:Book Fair Account Value Value Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 250,000
Pillow Company is purchasing a 100% interest in the common stock of Sleep Company.Sleep’s balance sheet amounts at book and fair value are as follows:Book Fair Account Value Value Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 250,000
Padro Company purchases a controlling interest in Salto Company. Salto had identifiable net assets with a cost of $400,000 and a fair value of $600,000. It was agreed that the total fair value of Salto’s common stock was $900,000. What adjustments will be made to Salto’s accounts, and what new
What does the elimination process accomplish?AppendixLO1
A parent must normally consolidate a company if it owns over 50% of the outstanding voting common stock of that company. In your own words, explain how a parent could gain control without an over 50% interest in a company.AppendixLO1
Johnson Company is considering an investment in the common stock of Bickler Company.What are the accounting issues surrounding the recording of income in future periods if Johnson purchases:a. 10% of Bickler’s outstanding shares.b. 30% of Bickler’s outstanding shares.c. 100% of Bickler’s
Define push-down accounting, and explain when it may be used and its impact.AppendixLO1
Show the impact of preexisting goodwill on the consolidation process.AppendixLO1
Explain the impact of a noncontrolling interest on worksheet procedures and financial statement preparation.AppendixLO1
Create a determination and distribution of excess (D&D) schedule.AppendixLO1

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Advanced Accounting 9th Edition Paul M. Fischer, William J. Tayler, Rita H. Cheng - Solutions

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