Advanced Accounting 13th Global Edition Joseph H. Anthony, Bruce Bettinghaus, Floyd A. Beams, Kenneth Smith - Solutions

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4. According to the National Commission on Fraudulent Financial Reporting (Treadway Commission), the responsibility for reliable financial reporting lies first and foremost:a. At the corporate level.b. With the SEC.c. With independent auditors.d. With state boards of accountancy.
3. Conduct of a member’s personal affairs is addressed in the ethics code or codes of:a. The American Institute of Certified Public Accountants only.b. The Financial Executives International.c. The Institute of Management Accountants only.d. None of the three organizations cited above.
2. A rule of the AICPA Code of Professional Conduct that does not apply to AICPA members in private industry is:a. Rule 101 Independence.b. Rule 102 Integrity and Objectivity.c. Rule 201 General Standards.d. Rule 203 Accounting Principles.e. None of the foregoing.
1. The bylaws of the AICPA require members to adhere to the Code of Professional Conduct section entitled:a. Principlesb. Rulesc. Interpretationsd. Ethics Rulings
12. What classes of accountants are subject to regulation by the Public Company Accounting Oversight Board?
11. Does the Code of Professional Conduct of the American Institute of Certified Public Accountants require AICPA members in industry to maintain the appearance of independence?Explain.
10. Does the Code of Ethics of the Financial Executives International require FEI members to maintain the confidentiality of information acquired in the course of their work in all circumstances? Explain.
9. What are the obligations of management accountants regarding conflicts of interest?
8. Does the Securities and Exchange Commission accept a “good soldier” rationalization for fraudulent financial reporting? Explain.
7. What is insider trading of corporate securities?
6. Do the ethics codes of the Institute of Management Accountants and the Financial Executives International require their members to comply with generally accepted accounting principles? Explain.
5. What Rules of Professional Conduct of the American Institute of Certified Public Accountants apply to all members of the AICPA, including management accountants?
4. How did the National Commission on Fraudulent Financial Reporting (Treadway Commission) define fraudulent financial reporting?
3. Identify the four components of ethical conduct for management accountants, set forth in Standards of Ethical Conduct for Members of the Institute of Management Accountants.
2. Why is the Equity Funding Corporation of America fraud significant for management accountants and financial executives?
1. What are cute accounting and cooking the books?
PR 17-1 What events would require partnership liquidation?
P 17-12 Installment liquidation The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2016, included the following accounts and balances:Cash $120,000 Accounts receivable—net 140,000 Inventory 200,000 Plant assets—net 200,000 Trademarks 20,000 Total debits
P 17-11 Installment liquidation The adjusted trial balance of the Jee, Moe, and Ole partnership at December 31, 2016, is as follows:Cash $ 50,000 Accounts receivable—net 100,000 Nonmonetary assets 800,000 Expenses 400,000 Total debits $1,350,000 Accounts payable $ 80,000 Jee capital 250,000 Moe
E17-10 Installment liquidation Account balances for the Rob, Tom, and Val partnership on October 1, 2016, are as follows:Cash $ 21,000 Accounts payable $ 80,000 Accounts receivable 63,000 Note payable 50,000 Inventory 120,000 Rob capital (30%) 43,600 Equipment 150,000 Tom capital (50%) 150,000 Rob
P 17-9 Installment liquidation—Safe payments schedules The balance sheet of Ron, Sue, and Tom, who share partnership profits 30 percent, 30 percent, and 40 percent, respectively, included the following balances on January 1, 2016, the date of dissolution:Cash $ 20,000 Liabilities $ 40,100 Other
P 17-8 Installment liquidation—Safe payments schedule Jax, Kya, and Bud, who share partnership profits 50 percent, 30 percent, and 20 percent, respectively, decide to liquidate their partnership. They need the cash from the partnership as soon as possible but do not want to sell the assets at
2. If $25,000 cash is realized from the receivables and inventories during January 2017, how should the cash be distributed at the end of January? (Assume that this is the first distribution of cash during the liquidation period.)
P 17-7 Installment liquidation The after-closing trial balance of the Lin, Mae, and Nel partnership at December 31, 2016, was as follows:Debit Credit Cash $ 47,000 Receivables—net 25,000 Inventories 20,000 Plant assets—net 50,000 Accounts payable $ 55,000 Lin capital (50%) 55,000 Mae capital
P 17-6 Installment liquidation Jon, Sam, and Tad are partners in a furniture store that began liquidation on January 1, 2016, when the ledger contained the following account balances:Debit Credit Cash $ 15,000 Accounts receivable 20,000 Inventories 65,000 Land 50,000 Buildings 100,000 Accumulated
P 17-5 Statement of partnership liquidation Eli, Joe, and Ned agree to liquidate their consulting practice as soon as possible after the close of business on July 31, 2016. The trial balance on that date shows the following account balances:Debits Credits Cash $13,000 Accounts receivable 12,000
2. During January 2017, the inventories are sold for $100,000, the other liabilities are paid, and $50,000 is set aside for contingencies. The partners agree that loan balances should be closed to capital accounts and that remaining cash (less the contingency fund) should be distributed to
P 17-4 Installment liquidation The partnership of Gil, Hal, Ian, and Joe is preparing to liquidate. Profit- and loss-sharing ratios are shown in the summarized balance sheet at December 31, 2016, as follows:Cash $100,000 Other liabilities $ 50,000 Inventories 100,000 Gil capital (40%) 150,000 Loan
P 17-3[Cash distribution plan]Rama, Chakra, and Songkhla announced the liquidation of their partnership and they distribute all cash immediately using a cash distribution plan beginning on January 1, 2017. The partnership’s financial position and profit sharing on December 31, 2016, is as
P 17-2 Cash distribution plan Berin, Fetin, and Murat are partners in a business. They plan to liquidate their partnership as soon as possible.Profits and losses are shared between Berin, Fetin, and Murat as follows: 50 percent, 30 percent, and 20 percent, respectively. The trial balance of the
If Tom contributes $70,000 to the partnership to provide cash to pay the creditors, what amount of Wes’s $90,000 partnership equity would appear to be recoverable?a $90,000 b $81,000 c $79,000 d None of the above p R O B L E M S P 17-1 Safe Payment Fahran, Boosah, and Delbar agree to liquidate
6. The partnership of Wes, Van, and Tom was dissolved on June 30, 2016, and account balances after noncash assets were converted into cash on September 1, 2016, are:Cash $50,000 Accounts payable $120,000 Wes capital (30%) 90,000 Van capital (30%) (60,000)Tom capital (40%) (100,000)Personal assets
If available cash except for a $5,000 contingency fund is distributed immediately, Doc, Fae, and Hal, respectively, should receive:a $0, $60,000, and $15,000 b $11,000, $22,000, and $22,000 c $0, $70,000, and $5,000 d $0, $27,500, and $27,500
5. The following balance sheet summary, together with residual profit-sharing ratios, was developed on April 1, 2016, when the Doc, Fae, and Hal partnership began its liquidation:Cash $140,000 Liabilities $ 60,000 Accounts receivable 60,000 Loan from Fae 20,000 Inventories 85,000 Doc capital (20%)
4. The partnership of Gee, Ben, and Sim is liquidating and the ledger shows the following:Cash $80,000 Inventories 100,000 Accounts payable 60,000 Gee capital (50%) 40,000 Ben capital (25%) 45,000 Sim capital (25%) 35,000 586 CHAPTER 17 If all available cash is distributed immediately:a Gee, Ben,
3. After all noncash assets have been converted into cash in the liquidation of the Mal and Max partnership, the ledger contains the following account balances:Debit Credit Cash $34,000 —Accounts payable — $25,000 Loan payable to Mal — 9,000 Mal capital 8,000 —Max capital — 8,000
2. In accounting for the liquidation of a partnership, cash payments to partners after all nonpartner creditors’ claims have been satisfied, but before final cash distribution, should be according to:a Relative profit- and loss-sharing ratios b The final balances in partner capital accounts c The
E 17-12 Liquidation—Various situations 1. In partnership liquidation the final cash distribution to the partners should be made in accordance with the:a Partner profit- and loss-sharing ratios b Balances of partner capital accounts c Ratio of the capital contributions by partners d Safe payments
3. If a total amount of $7,500 is available for distribution to partners after all nonpartner liabilities are paid, it should be paid as follows:Sam Red Sal a $7,500 $0 $0 b 0 3,750 3,750 c 2,250 3,750 1,500 d 2,500 2,500 2,500
2. If $90,000 is available for the first distribution, it should be paid to:Creditors, Including Sal Sam Red Sal (Capital)a $60,000 $18,000 $0 $12,000 b 60,000 9,000 15,000 6,000 c 50,000 12,000 20,000 8,000 d 60,000 27,000 0 3,000
E 17-11 Installment liquidation—Various situations The assets and equities of the Sam, Red, and Sal partnership at the end of its fiscal year on October 31, 2016, are as follows:Assets Equities Cash $ 15,000 Liabilities $ 50,000 Receivables—net 20,000 Loan from Sal 10,000 Inventory 40,000 Sam
2. In January, half of the receivables were collected. Inventory that cost $75,000 was liquidated for $45,000.The land was sold for $250,000.REQuIRED: Prepare a schedule of safe payments for the Dee, Ema, Lyn, and Geo partnership for January 31, 2016.
E 17-10 Safe payments schedule The partnership of Dee, Ema, Lyn, and Geo is being liquidated over the first few months of 2016. The trial balance at January 1, 2016, is as follows:Debits Credits Cash $200,000 Accounts receivable 56,000 Inventory 142,000 Equipment (net) 300,000 Land 150,000 Loan to
6. Available cash is distributed and the partnership books are closed on July 31, 2016.REQuIRED: Prepare a liquidation statement for the Ace, Ben, Cid, and Don Partnership for the period June 30, 2016, to July 31, 2016.
5. Losses from the bankruptcy of Cid are divided among the solvent partners on July 15, 2016.
4. On July 15, 2016, Cid pays $100,000 into the partnership and Don pays $80,000. No further contributions from either Cid or Don are possible.
3. Ace pays $200,000 into the partnership, and partnership liabilities are paid on July 1, 2016.
E 17-9 Statement of partnership liquidation—Partner insolvency case The partnership of Ace, Ben, Cid, and Don is dissolved on January 5, 2016, and the account balances at June 30, 2016, after all noncash assets are converted into cash, are as follows:Debits Credits Cash $200,000 Cid capital (20%)
E 17-8 Statement of partnership liquidation—Partner insolvency case After all partnership assets were converted into cash and all available cash distributed to creditors, the ledger of the Dan, Edd, and Fed partnership showed the following balances:Debit Credit Accounts payable $20,000 Dan
E 17-7 Statement of partnership liquidation The partnership of Ali, Bev, and Cal became insolvent during 2016, and the partnership ledger shows the following balances after all partnership assets have been converted into cash and all available cash distributed:Partnership Liquidation 583 Debit
E 17-6 Safe payments schedule The partnership of Sachi, Tora, and Ika is going to be liquidated immediately. The partnership’s financial position on December 31, 2016, is as follows:Cash $15,000 Accounts payable $15,000 Inventories 60,000 Sachi capital (35%) 55,000 Other assets 100,000 Tora
E 17-5 Liquidation—Correcting an error On December 31, 2016, the Slamet, Basuki, and Baskoro partnership’s capital balances after closing are $125,000,$75,000, and $100,000, respectively. Net income for 2016 is $30,000 and it is divided as follows: 40 percent to Slamet, 25 percent to Basuki,
E 17-4 Liquidation—Cash distribution, overlooked bill Arjuna, Nakula, and Sadewa announce plans to liquidate their partnership immediately. The partnership’s financial position at December 31, 2016, is as follows:Cash $30,000 Arjuna capital (25%) $50,000 Inventories 50,000 Nakula capital (35%)
E 17-3 Liquidation—Cash distribution Jamal, Abdul, and Mira decide to end their partnership on January 1, 2017. The partnership’s financial position at December 31, 2016, is as follows:582 CHAPTER 17 Cash $100,000 Accounts payable $10,000 Inventories 20,000 Jamal capital (30%) 60,000
E 17-2 Simple Liquidation The partnership of Binh, Huyen, and Nguyen had profit- or loss-sharing ratio of 50%, 30%, and 20%, respectively. After operating for several years, Binh, Huyen, and Nguyen decided to liquidate their partnership. Information regarding the partnership’s non cash assets is
E 17-1 Simple liquidation—Schedule of cash available The partnership of Flo and Fay is in the process of liquidation. On January 1, 2016, the ledger shows account balances as follows:Cash $10,000 Accounts payable $25,000 Accounts receivable 45,000 Flo capital 45,000 Lumber inventory 50,000 Fay
12. When all partnership assets have been distributed in the liquidation of a partnership, some partners may have debit capital balances and others may have credit capital balances. How are such balances eliminated if the partners with debit balances are personally solvent? What if they are
11. If a partnership is insolvent, how is the amount of cash distributed to individual partners determined?
10. What are vulnerability ranks? How are they used in the preparation of cash distribution plans for partnership liquidations?
9. A partnership in liquidation has satisfied all of its nonpartner liabilities and has cash available for distribution to partners. Under what circumstances would it be permissible to divide available cash in the profitand loss-sharing ratios of the partners?
8. What is a statement of partnership liquidation, and how is the statement helpful to partners and other parties involved in partnership liquidation?
7. How do safe payments computations affect partnership ledger account balances?
6. What are partner equities? Why are partner equities rather than partner capital balances used in the preparation of safe payments schedules?
5. What assumptions are made in determining the amount of distributions (or safe payments) to individual partners prior to the recognition of all gains and losses on liquidation?
4. What is the right of offset rule? How does it affect the amount to be distributed to partners in liquidation?
3. What is installment liquidation? How is it carried out?
2. Briefly explain how a partnership is generally liquidated.
1. Under what circumstances is a partnership liquidated?
1. If a parent in accounting for its subsidiary amortizes patents on its separate books, why do we include an adjustment for patents amortization in the consolidation workpaper?
How would push-down accounting simplify consolidated worksheet procedures?AppendixLO1
It seems as if consolidated net income is always less than the sum of the parent’s and subsidiary’s separately calculated net incomes. Is it possible that the consolidated net income of the two affiliated companies could actually exceed the sum of their individual net incomes?AppendixLO1
You are working on a consolidated trial balance of a parent and an 80%-owned subsidiary.What components will enter into the total noncontrolling interest, and how will it be displayed in the consolidated balance sheet?AppendixLO1
A parent company purchased an 80% interest in a subsidiary on January 1, 20X1, at a price high enough to result in goodwill. Included in the assets of the subsidiary are inventory with a book value of $50,000 and a fair value of $60,000 and equipment with a book value of$100,000 and a fair value of
A parent company purchased an 80% interest in a subsidiary on July 1, 20X1. The subsidiary reported net income of $60,000 for 20X1, earned evenly during the year. The parent’s net income, exclusive of any income of the subsidiary, was $140,000. The price paid for the subsidiary exceeded book
What is the noncontrolling share of consolidated net income? Does it reflect adjustments based on fair values at the purchase date? How has it been displayed in income statements in the past, and how should it be displayed?AppendixLO1
What is meant by date alignment? Does it exist on the consolidated worksheet under the following methods, and if not, how is it created prior to elimination of the investment account under each of these methods?a. The simple equity methodb. The sophisticated equity methodc. The cost method
A parent company paid $400,000 for a 100% interest in a subsidiary. At the end of the first year, the subsidiary reported net income of $30,000 and paid $5,000 in dividends. The price paid reflected understated equipment of $50,000, which will be amortized over 10 years. What would be the
(Appendix B) Explain the impact of tax-related complications arising on the purchase date.AppendixLO1
(Appendix A) Consolidate a subsidiary using vertical worksheet format.AppendixLO1
Demonstrate an understanding of when goodwill impairment loss exists and how it is calculated.AppendixLO1
Demonstrate the worksheet procedures used for investments purchased during the financial reporting period.AppendixLO1
Distribute and amortize multiple adjustments resulting from the difference between the price paid for an investment in a subsidiary and the subsidiary equity eliminated.AppendixLO1
Describe the special worksheet procedures that are used for an investment maintained under the sophisticated equity method.AppendixLO1
Complete a consolidated worksheet using the cost method for the parent’s investment account.AppendixLO1
Complete a consolidated worksheet using the simple equity method for the parent’s investment account.AppendixLO1
Show how an investment in a subsidiary account is maintained under the simple equity, sophisticated equity, and cost methods.AppendixLO1
PR 9-2 Pop Corporation owns 80 percent of Son Corporation, and properly included Son as a subsidiary in preparing consolidated financial statements for the year ended December 31, 2016. Pop issued the financial statements on March 1, 2017. In May of 2017, Son had an explosion that severely damaged
PR 9-1 Par Corporation owns a 30 percent interest in Sox Corporation, which Par properly accounts for using the equity method. Sox is in need of capital and decides to issue an additional 10,000 shares of common stock to the public. After issuance, Par’s ownership interest will decline to 25
8. Prepare the adjusting and eliminating entries needed to consolidate the financial statements of Pop and Son for the year ended December 31, 2018.
7. Compute the noncontrolling interest in Son on December 31, 2018.
6. Determine the total stockholders’ equity of Pop and Son on December 31, 2018.
5. Determine the balances of Pop’s and Son’s investment accounts on December 31, 2018.
4. Compute Pop’s and Son’s net incomes for 2018.
3. Prepare journal entries on Son’s books to account for its investment in Pop under the equity method (conventional approach).
2. Prepare journal entries to account for Pop’s investment in Son for 2018 under the equity method (conventional approach).
P9-7 Computations and entries (parent stock mutually held)Pop Corporation purchased an 80 percent interest in Son Corporation for $170,000 on January 1, 2016, when Son’s stockholders’ equity was $200,000. The excess of fair value over book value is due to goodwill.At December 31, 2017, the
P9-6 Consolidation workpaper second year (conventional approach)Par Corporation acquired an 80 percent interest in Sip Corporation for $180,000 cash on January 1, 2016, when Sip had capital stock of $50,000 and retained earnings of $150,000. The excess of fair value over book value acquired is due
Pamela and Shin declared dividends of $40,000 and $30,000, respectively, in 2014.REQuIRED: Prepare the consolidation workpaper entries and a consolidation workpaper for Pamela Inc.and its subsidiary at December 31, 2014, using the treasury stock approach.
P9-4 Computations for mutually held subsidiaries A schedule of intercompany investment interests and separate earnings for Par Corporation, Sit Corporation, and Tot Corporation is presented as follows:Percentage Interest in Sit Percentage Interest in Tot Separate Earnings Current Year Par
P9-3 Financial statement workpaper (with unrealized profits)Comparative financial statements for Pandu Corporation and its subsidiaries, Sakti and Kunthi Corporations, at December 31, 2016, are as follows (in thousands):Pandu Sakti Kunthi Income and Retained Earnings Statement for the Year Ended

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Advanced Accounting 13th Global Edition Joseph H. Anthony, Bruce Bettinghaus, Floyd A. Beams, Kenneth Smith - Solutions

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