Questions from Intermediate Accounting

Q: Fantasy Fashions had used the LIFO method of costing inventories, but

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have...

Q: During 2016 and 2017, Faulkner Manufacturing used the sum-of

During 2016 and 2017, Faulkner Manufacturing used the sum-of-the-years’-digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes....

Q: In 2018, the Marion Company purchased land containing a mineral mine

In 2018, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional costs of $600,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would...

Q: Early one Wednesday afternoon, Ken and Larry studied in the dormitory

Early one Wednesday afternoon, Ken and Larry studied in the dormitory room they shared at Fogelman College. Ken, an accounting major, was advising Larry, a management major, regarding a project for La...

Q: DRS Corporation changed the way it depreciates its computers from the sum

DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to the straight-line method beginning January 1, 2018. DRS also changed its estimated residual val...

Q: Ray Solutions decided to make the following changes in its accounting policies

Ray Solutions decided to make the following changes in its accounting policies on January 1, 2018: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service co...

Q: Sunset Acres reported net income of $60 million. Included in

Sunset Acres reported net income of $60 million. Included in that number were trademark amortization expense of $2 million and a gain on the sale of land of $1 million. Records reveal decreases in acc...

Q: The shareholders’ equity of ILP Industries includes the items shown below.

The shareholders’ equity of ILP Industries includes the items shown below. The board of directors of ILP declared cash dividends of $8 million, $20 million, and $150 million in its f...

Q: Van Frank Telecommunications has a patent on a cellular transmission process.

Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the $18 million cost of the patent on a straight-line basis since it was acquired at the beginni...

Q: Direct Assurance Company revised the estimates of the useful life of a

Direct Assurance Company revised the estimates of the useful life of a trademark it had acquired three years earlier. How should Direct account for the change?