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Question: A not-for-profit museum receives a


A not-for-profit museum receives a painting by Monet valued at $750,000. The museum chose not to report the painting on its financial statements. What are the rules for such reporting?


> Allen Company acquired 100 percent of Bradford Company’s voting stock on January 1, 2017, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $14 per share). As of that date, Bradford had stockholders&acir

> Branson paid $465,000 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that date, the subsidiary had a book value of $340,000 (common stock of $200,000 and retained earnings of $140,000), although various unrecorded

> On January 1, 2021, Brooks Corporation exchanged $1,183,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,105,000. Chandler’s individual

> The following are selected accounts and balances for Mergaronite Company and Hill, Inc., as of December 31, 2021. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared

> On January 1, 2020, Pinnacle Corporation exchanged $3,200,000 cash for 100 percent of the out- standing voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: At the acquisition date, Strataâ€&#153

> Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $90,000 of the fair-value

> Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2021 (credit balances indicated by parentheses). Michael acquired all of Aaron’s outstanding voting stock on January 1, 2017, by issuing

> Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1 for $550,000 in cash. O’Brien reported net assets with a carrying amount of $350,000 at that time. S

> Go to the website www.cedarfair.com and click on “Investors,” then “Investor Information,” “Financial Reports,” and “Annual Reports.” Then click on “2017 Annual Report on 10-K” to access the 2017 Form 10-K annual report for Cedar Fair, L.P. Review the fi

> On January 1, 2020, Prestige Corporation acquired 100 percent of the voting stock of Stylene Corporation in exchange for $2,030,000 in cash and securities. On the acquisition date, Stylene had the following balance sheet: At the acquisition date, the boo

> On January 3, 2019, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc., in exchange for $6,000,000 in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting sy

> Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $5,875,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends.

> Foxx Corporation acquired all of Greenburg Company’s outstanding stock on January 1, 2019, for $600,000 cash. Greenburg’s accounting records showed net assets on that date of $470,000, although equipment with a 10-year

> The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021: On January 1, 2021, Penske acquired all of Stanza’s outstanding stock for $680,000 fair value in cash and common stock. Pens

> Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $510,000 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is ac

> Assume that Chapman Company acquired Abernethy’s common stock by paying $520,000 in cash. All of Abernethy’s accounts are estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its

> Assume that Chapman Company acquired Abernethy’s common stock for $500,000 in cash. Assume that the equipment and long-term liabilities had fair values of $220,000 and $120,000, respectively, on the acquisition date. Chapman uses the initial value method

> Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the

> Purchase Company recently acquired several businesses and recognized goodwill in each acquisition. Purchase has allocated the resulting goodwill to its three reporting units: RU-1, RU-2, and RU-3. Purchase opts to skip the qualitative assessment and ther

> Go to www.epiqbankruptcysolutions.com or www.kccllc.net. Look through the list of active bankruptcy cases, and select one to research. Required Read through the information that is available for the case that selected. Assume your boss needs information

> Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In its qualitative assessment, one particular reporting unit, Sellers, emerged as a candidate for possible goodwill impairment. Sellers had recognized

> Many companies make annual reports (sometimes on Form 10-K) available on their corporate website. Access the annual report indicated for each of the following U.S.-based multinational corporations to complete the requirements: International Business Mach

> The accountant for the City of Abernethy calls the local CPA firm that audits the city’s financial statements with a question. “At the start of the current year, city officials signed a contract to lease a new police car for seven years, its entire usefu

> Download a recent copy of Pfizer’s annual report (search Pfizer Investor Relations). Locate the firm’s consolidated statement of cash flows and answer the following: ∙ Does the firm employ the direct or indirect method of accounting for operating cash fl

> Jonas Tech Corporation recently acquired Innovation Plus Company. The combined firm consists of three related businesses that will serve as reporting units. In connection with the acquisition, Jonas requests your help with the following asset valuation a

> On January 31, 2018, The Hershey Company acquired Amplify Snack Brands, Inc., its largest business acquisition to date. Access Hershey’s 2018 financial statements and media reports near the time of the acquisition, and answer the following questions. 1.

> A company located in a foreign country is preparing for a listing of its common shares on the New York Stock Exchange in the United States. The company must decide whether to use U.S. GAAP or IFRS in preparing the financial statements that will accompany

> Many companies make annual reports available on their corporate website. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filing Type, search for 10-K). Access the most recent annual report for each of the followin

> Many companies make annual reports available on their corporate website. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filing Type, search for 10-K). Access the most recent annual report for each of the followin

> Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $198,000 in cash and issued 100,000 shares of its own $1 par value com- mon stock. On this date, Alfonso’s stock had

> Many companies make quarterly reports available on their corporate website. Quarterly reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filing Type, search for 10-Q). Access the most recent quarterly report for a company w

> Many companies make annual reports available on their corporate website. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filing Type, search for 10-K). Access the most recent annual report for a company with which

> Access a recent copy of The Coca-Cola Company’s financial statements (www.coca-colacompany .com). Identify and discuss the following aspects of consolidated tax expense disclosed in the financial statements: 1. Loss carry-forwards. 2. Components of defer

> How does the presence of an indirect ownership (such as a father-son-grandson relationship) affect the mechanical aspects of the consolidation process?

> Able Company owns 70 percent of the outstanding voting stock of Baker Company, which, in turn, holds 80 percent of Carter Company. Carter possesses 60 percent of Dexter Company’s capital stock. How much income actually accrues to the consolidated entity

> Describe the concept of a synergy. What are some examples of possible synergies in business combinations?

> What advantages does a company achieve when it possesses significant influence over another company through voting stock ownership?

> What disclosure is necessary to describe the liquidity position of a not-for-profit entity? Why is this disclosure viewed as significant to readers of the financial statements?

> What are board-designated funds, and how are they reported?

> In reporting the functional expenses of a not-for-profit entity, what are the two general types of expenses? How can functional expenses be reported?

> Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2020, by issuing 9,000 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner report

> What are net assets with donor restrictions?

> What are net assets without donor restrictions?

> A private not-for-profit health care entity charges patients $4 million that will be covered by various government programs. These programs are entitled to $1.9 million in explicit price concessions. The health care entity believes it has a 60 percent ch

> In the reporting of a private not-for-profit health care entity, officials are allowed to apply a portfolio approach. What is meant by a portfolio approach?

> A private not-for-profit entity applies for and receives status as a 501(c)(3) organization. What is the importance of this tax-exempt status?

> Helping Hand NFP is a private not-for-profit entity that has equipment with a net book value of $1.1 million but a fair value of $1.4 million. Fancy Fingers NFP is also a private not-for-profit entity that has equipment with a net book value of $1.0 mill

> Sunshine NFP, a private not-for-profit entity, gains control over Dancing Ducks NFP, another not- for-profit entity. The acquisition price is $2.5 million although the identifiable assets and liabilities of Dancing Ducks only have a total net fair value

> A donor conveys a gift to a charity that is to be conveyed to a separate beneficiary. What is the normal method for each party to report this transfer?

> A not-for-profit entity reports contributed services valued at $38,000. How was the decision made to report these services?

> Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $574,000 in cash. Annual excess amortization of $12,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $400,000,

> What is an in-kind donation? How are in-kind donations reported?

> A not-for-profit entity receives a pledge for $50,000, money that must be used for a stipulated purpose. How is the pledge reported if it is judged to be unconditional? How is the pledge reported if it is judged to be conditional?

> The accountant for a not-for-profit entity is trying to determine whether a gift is conditional. How is that decision made?

> A not-for-profit entity receives $20,000 as a donation. They money must be spent for a stipulated purpose. How does the reporting differ based on whether the gift is unconditional or conditional?

> How does the reporting of a statement of cash flows by a not-for-profit entity differ from the reporting by a for-profit business?

> A donor gives $10,000 to a not-for-profit entity to be used to pay for a new piece of equipment with a 10-year life. Subsequently, the money is properly spent. How is the expenditure reported?

> A donor gives $10,000 to a not-for-profit entity to be used to pay the salary of a new administrator. Subsequently, the money is properly spent. How is the expenditure reported?

> Wilson Helps is a not-for-profit entity that has exchange transactions but also receives donor contributions. How can the entity’s accountant differentiate the exchange transactions from the contributions?

> A private not-for-profit hospital provides services for patients without any health insurance. The standard charge for individuals with some ability to pay is $700,000. The standard charge for individuals with no ability to pay is $300,000. How will the

> A city believes its new landfill will fill to capacity gradually over a 10-year period. At the end of the first year of operations, the landfill is only 7 percent filled. How much liability for closure and postclosure costs should be recognized on govern

> SK Corporation acquired Neptune, Inc., on January 1, 2020, by issuing 125,000 shares of common stock with a $5 per share par value and a $30 market value. This transaction resulted in recognizing $95,000 of goodwill. SK also agreed to compensate Neptune’

> Pittston County has an empty school building with a net book value of $700,000 and a remaining life of 10 years with no expected residual value. The building is leased to the City of Lincoln at the start of the current year for 10 years. Annual payments

> At the start of Year 1, the City Peacock leases 30 computers for use by various officials in school administration and public safety at a total cost of $90,000 per year. The first lease payment is made immediately. The contracts are for five years, the e

> A teacher employed by the City of Lights qualifies for a defined benefit pension plan. The city sets up a pension trust fund to monitor the resources held for these future payments. How is the amount of net pension liability to be reported in the governm

> What effect does application of the modified approach have on reporting within the government- wide financial statements?

> How are safe payments to partners calculated when cash becomes available for distribution?

> What authoritative pronouncements make up International Financial Reporting Standards (IFRS)?

> Was the IASB–FASB convergence process successful?

> How are changes in the fair value of an option accounted for in a cash flow hedge? In a fair value hedge?

> How does the accounting for a hedge of a foreign currency firm commitment affect assets and liabilities reported on the balance sheet differently from the accounting for a hedge of a forecasted foreign currency transaction?

> Under what conditions can a foreign currency derivative be considered “highly effective” as a hedge without conducting a quantitative assessment?

> On its December 31, 2021, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list? a. $10,000 b. $20,000 c. $25,000 d. $50,000

> When an indirect ownership is present, why is a specific ordering necessary for determining the incomes of the component corporations?

> In a recent acquisition, the consolidated value of a subsidiary’s assets exceeded the basis appropriate for tax purposes. How does this difference affect the consolidated balance sheet?

> If a parent and its subsidiary file separate income tax returns, why will the parent frequently have to recognize deferred income taxes? Why might the subsidiary have to recognize deferred income taxes?

> What is a father-son-grandson relationship?

> A subsidiary that has a net operating loss carry-forward is acquired. The related deferred income tax asset is $230,000. Because the parent believes that a portion of this carry-forward likely will never be used, it also recognizes a valuation allowance

> Jones acquires Wilson, in part because the new subsidiary has an unused net operating loss carry- forward for tax purposes. How does this carry-forward affect the consolidated figures at the acquisition date?

> Sloane, Inc., issues 25,000 shares of its own common stock in exchange for all of the outstanding shares of Benjamin Company. Benjamin will remain a separately incorporated operation. How does Sloane record the issuance of these shares?

> Reimers Company acquires Rollins Corporation on January 1, 2020. As part of the agreement, the parent states that an additional $100,000 cash payment to the former owners of Rollins will be made in 2021, if Rollins achieves certain income thresholds duri

> Why is the allocation of the income tax expense figure between the members of a business combination important? By what methods can this allocation be made?

> What are the advantages to a business combination filing a consolidated tax return? Considering these advantages, why do some members of a business combination file separate tax returns?

> What is Phoenix’s consolidated retained earnings balance at December 31, 2021? a. $250,000 b. $290,000 c. $330,000 d. $360,000

> For income tax purposes, how is affiliated group defined?

> In accounting for mutual ownerships, what is the treasury stock approach?

> What is the difference between a connecting affiliation and a mutual ownership?

> What is goodwill? a. An intangible asset representing the excess of consideration transferred over the collective fair values of the net identifiable assets acquired in a business combination b. An expense that an acquiring firm recognizes for the excess

> On January 1, 2021, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zee’s acquisition-date fair values, Jay concluded that the carrying value of Zee’s long- term debt (eight-year

> The equity method tends to be most appropriate if a. An investment represents 50 percent or more of the voting stock of an investee. b. An investment enables the investor to influence the operating and financial decisions of the investee. c. Majority own

> In a father-son-grandson business combination, which of the following is true? a. The father company always must have its total accrual-based income computed first. b. The computation of a company’s accrual-based net income has no effect on the accrual-b

> Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $495,000 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spiderâ€&#153

> 4. On January 1, 2021, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per shar

> On January 1, 2021, James Corporation exchanged $3,050,000 cash for 100 percent of the out- standing voting stock of Johnson Corporation. James plans to maintain Johnson as a wholly owned subsidiary with separate legal status and accounting information s

> What is consolidated net income for Phoenix and Sedona for 2021? a. $148,000 b. $203,000 c. $228,000 d. $238,000

> On January 1, 2021, Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information sys

> On June 30, 2020, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior

> In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount of total stockholders’ equity should be reported? a. $1,100,000 b. $1,125,000 c. $1,150,000 d. $1,355,000

> On January 1, 2020, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of

> On January 1, 2020, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of Bowden, Inc., for $982,000 in cash and began to use the equity method for the investment. The price paid represented a $60,000 payment in excess of the boo

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