Please complete in Excel.

Q 3-25Describe fair value as it relates to assets and liabilities.

P 3-3

The following information was obtained from the accounts of Alleg, Inc., as of December 31, 2012. It is presented in scrambled order.

Common stock, authorized 21,000 shares at $1 par value, issued 10,000 shares	$ 10,000
Additional paid-in capital	38,000
Cash	13,000
Marketable securities	17,000
Accounts receivable	26,000
Accounts payable	15,000
Current maturities of long-term debt	11,000
Mortgages payable	80,000
Bonds payable	70,000
Inventory	30,000
Land and buildings	57,000
Machinery and equipment	125,000
Goodwill	8,000
Patents	10,000
Other assets	50,000
Deferred income taxes (long-term liability)	18,000
Retained earnings	33,000
Accumulated depreciation	61,000

RequiredPrepare a classified balance sheet in report form. For assets, use the classifications of current assets, plant and equipment, intangibles, and other assets. For liabilities, use the classifications of current liabilities and long-term liabilities.

P 3-7

You have just started as a staff auditor for a small CPA firm. During the course of the audit, you discover the following items related to a single client firm:

• a.During the year, the firm declared and paid $10,000 in dividends.
• b.Your client has been named defendant in a legal suit involving a material amount. You have received from the client's counsel a statement indicating little likelihood of loss.
• c.Because of cost control actions and general employee dissatisfaction, it is likely that the client will suffer a costly strike in the near future.
• d.Twenty days after closing, the client suffered a major fire in one of its plants.
• e.The cash account includes a substantial amount set aside for payment of pension obligations.
• f.Marketable securities include a large quantity of shares of stock purchased for control purposes.
• g.Land is listed on the balance sheet at its market value of $1,000,000. It cost $670,000 to purchase 12 years ago.
• h.Duringtheyear,thegovernmentofUgandaexpropriatedaplantlocatedinthatcountry.Therewassubstantialloss.

P4-4

The following items are from Taperline Corporation on December 31, 2012. Assume a flat 40% corporate tax rate on all items, including the casualty loss.

Sales	$670,000
Rental income	3,600
Gain on the sale of fixed assets	$ 3,000
General and administrative expenses	110,000
Selling expenses	97,000
Interest expense	1,900
Depreciation for the period	10,000
Extraordinary item (casualty losspretax)	30,000
Cost of sales	300,000
Common stock (30,000 shares outstanding)	150,000

Required

• a.Prepare a single-step income statement for the year ended December 31, 2012. Include earnings per share for earnings before extraordinary items and net income.
• b.Prepareamultiple-stepincomestatement.Includeearningspershareforearningsbeforeextraordinaryitemsandnetincome.

P 4-9

List the statement on which each of the following items may appear. Choose from (A) income statement, (B) balance sheet, or (C) neither.

a. Net income	l. Interest payable
b. Cost of goods sold	m. Loss from flood
c. Gross profit	n. Land
d. Retained earnings	o. Taxes payable
e. Paid-in capital in excess of par	p. Interest income
f. Sales	q. Gain on sale of property
g. Supplies expense	r. Dividend income
h. Investment in G. Company	s. Depreciation expense
i. Dividends	t. Accounts receivable
j. Inventory	u. Accumulated depreciation
k. Common stock	v. Sales commissions

P 4-11

The income statement of Tawls Company for the year ended December 31, 2012, shows the following:

Revenue from sales	$ 980,000
Cost of products sold	510,000
Gross profit	470,000
Operating expenses:
Selling expenses	$110,000
General expenses	140,000	250,000
Operating income	220,000
Equity on earnings of nonconsolidated subsidiary	60,000
Operating income before income taxes	280,000
Taxes related to operations	100,000
Net income from operations	180,000
Extraordinary loss from flood (less applicable taxes of $50,000)	(120,000)
Net incomenoncontrolling interest	(40,000)
Net income	$ 20,000

Required

• a.Compute the net earnings remaining after removing nonrecurring items.
• b.Determine the earnings from the nonconsolidated subsidiary.
• c.For the subsidiary that was not consolidated, what amount of income would have been included if this subsidiary had been consolidated?
• d.What earnings relate to minority shareholders of a subsidiary that was consolidated?
• e.Determine the total tax amount.