Brad Berrett and Jim Wong are roommates in college. Berrett is an accounting major, and Wong is a finance major. Both recently studied the statement of cash flows in their classes. Wong’s finance professor stated that depreciation is a major source of cash for some companies. Berrett’s accounting professor indicated in class that depreciation cannot be a source of cash because cash is not affected by the recording of depreciation. Berrett and Wong wonder which professor is correct. Explain the positions taken by both professors and indicate which viewpoint you support and why.
> As payment for services rendered, the company received a 24-month note on January 1. The face amount of the note is $1,000; the note is non-interest-bearing. The cash price of the services rendered is $857. The market rate of interest is 8%, compounded a
> Sayer Co. enters into a contract with Bradford Construction Co. for construction of an office building at a cost of $680,000. Upon completion of construction, Bradford agrees to accept in full payment of the contract price Sayer Co.’s 10% bonds with a fa
> As payment for services rendered, the company received an 18-month note on January 1. The face amount of the note is $6,000, and the stated rate of interest is 9%, compounded annually. The 9% rate is equal to the market rate. The full amount of the note,
> On May 31, 2013, Julienne Corp. exchanged 20,000 shares of its $1 par common stock for the following assets: (a) A trademark valued at $183,000. (b) A building, including land, valued at $732,000 (20% of the value is for the land). (c) A franchise right.
> Refer to Practice 8-7. Assume that the company employs the efforts-expended method of estimating the percentage of completion. In particular, the company measures its progress by the number of support timbers laid in the trail. Compute the amount of reve
> Refer to Practice 7-15. Assume that Cammo received the entire $53,000 in cash immediately. Also assume that the transfer of receivables did not satisfy the three conditions contained in FASB ASC paragraph 860-10-40-5. Make the journal entry necessary on
> HiTech Industries purchases new electronic equipment for its telecommunication system. The contractual arrangement specifies 10 payments of $8,600 each to be made over a 10-year period. If HiTech had borrowed money to buy the equipment, it would have pai
> Cammo Company sold receivables (without recourse) for $53,000. Cammo received $50,000 cash immediately from the factor (the company to whom the receivables were sold). The remaining $3,000 will be received once the factor verifies that none of the receiv
> Custom Industries purchases new specialized manufacturing equipment on July 1, 2013. The equipment cash price is $96,000. Custom signs a deferred payment contract that provides for a down payment of $10,000 and a 10-year note for $112,420. The note is to
> You recently graduated from college with your accounting degree. Your father’s best friend is the director of the accounting department of a small manufacturing firm in the area, and you accepted a position on his staff. After a month on the job, you hav
> On St. Patrick’s Day 1992, Chambers Development Company, one of the largest landfill and waste management firms in the United States, announced that it had been improperly capitalizing costs associated with landfill development. Chambers announced that i
> In July 1990, U.S. federal regulators ordered U.S. banks to write off 20% of their $11.1 billion in loans to Brazil and also 20% of their $2.9 billion in loans to Argentina. The action significantly affected the loan loss reserves, that is, Allowance for
> Hunter Company has developed a computerized machine to assist in the production of appliances. It is anticipated that the machine will do well in the marketplace; however, the company lacks the necessary capital to produce the machine. Rosalyn Finch, sec
> Use the financial information for Wal-Mart Stores, Inc., given below, to answer the following questions: 1. For the most recent year given, compute Wal-Mart’s average collection period. 2. For the most recent year given, what percentage
> Locate the 2009 financial statements for The Walt Disney Company on the Internet. Use those financial statements and consider the following questions. 1. As illustrated in Exhibit 10-10, Interbrand estimates the value of the Disney brand name in 2009 at
> What characteristics must a construction project have before interest can be capitalized as part of the project cost?
> Locate the 2009 financial statements for The Walt Disney Company on the Internet. Use the information contained in these statements to answer the following questions: 1. Review The Walt Disney Company’s note disclosure to determine how the company recogn
> Rouse Company, a real estate developer, is well known as one of the few U.S. companies to have reported the current value of property and equipment in its financial statements. As mentioned in the text of the chapter, IAS 16 permits the inclusion of upwa
> Assume you are the treasurer for Fullmer Products Inc. and one of your responsibilities is to ensure that the company always takes available cash discounts on purchases. The corporation needs $150,000 within one week in order to take advantage of current
> In 1996, Financial World magazine estimated and ranked the most valuable brand names in the world. Number 11 in the ranking was Gillette with an estimated value of $10.3 billion. Financial World explained its brand value estimation process for Gillette a
> Jonathan Mitchell is the accountant for Mantua Service Company. Due to heavy investments in lottery tickets, Jonathan found himself short of cash and decided to “borrow” funds from Mantua. Jonathan received and deposited cash receipts, recorded the check
> In 1974, as the FASB considered requiring the expensing of all in-house research and development expenditures, the Board received many comments predicting that if firms were required to expense R&D, they would significantly cut back on research expenditu
> Bruno Johnson, chief financial officer of Tollerud Company, has determined that Tollerud should keep on hand $35 million in cash or near-cash assets in order to maintain proper liquidity. Bruno is now trying to determine how to allocate the $35 million a
> Far from being an exact science, accounting involves estimation and judgment. Consider the case of Dwight Nelson, chief financial officer of Pilot Enterprises. Pilot is a relatively young, privately held company with thoughts of going public in the near
> You are a finance and accounting analyst for Bunscar Company and have been with the firm for five years. Bunscar is a closely held corporation—all of the shares are owned by the founder, Ryan Brown, and by other longtime employees. Bunscar is preparing t
> Write a one-page paper identifying the benefits, both from an economic and a financial reporting perspective, that a company might reap through recognizing a big-bath restructuring charge.
> Refer to the information in Practice 5-6. Compute cash paid for inventory purchases. (All Accounts Payable relate to inventory purchases.) In Practice 5-6 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
> You are a senior credit analyst for Far West Bank. The president of Moran Auto Sales has asked you for a loan of $2,000,000. Moran’s accountant has compiled and submitted a current balance sheet and income statement. Moran has had moderate income over th
> The consolidated statement of income for Ford Motor Company appears below. 1. What do you notice about the way revenues and expenses are partitioned? 2. For the Automotive division, compute the ratio (Cost of sales/Sales) for each of the three years pr
> The following data were obtained from the cash flow statements (prepared using the indirect method) of The Coca-Cola Company from 2006 through 2009. All amounts are in millions of U.S. dollars. Instructions: 1. Using the information given, estimate the
> Apple Inc. is one of the country’s most successful computer technology companies. The company designs, manufactures, and sells computers, digital music devices, communication devices, and various software products. The companyâ
> Lockheed Martin Corporation is a well-known producer of advanced aircraft, missiles, and space hardware. Lockheed Martin is most famous for its super-secret research and development division, nicknamed the “Skunk Works.â€
> Wells Fargo & Company is the fourth largest bank in the U.S. (based on consolidated asset data gathered by the Federal Reserve as of March 31, 2010). Its consolidated statement of income follows. 1. How is this income statement different from all t
> Locate the 2009 financial statements for The Walt Disney Company on the Internet and consider the following questions: 1. Does Disney use the direct method or the indirect method? Explain. 2. Analyze Disney’s overall cash flow picture for 2007, 2008, and
> The computation of comprehensive income for 2009 for Coca-Cola is presented in Exhibit 4-11. 1. Which is greater in 2009—Coca-Cola’s net income or comprehensive income? 2. With respect to the currencies in the count
> The case of W. T. Grant is a classic in cash flow analysis. During the 1960s and 1970s, Grant was one of the largest retailers in the United States, with more than 1,200 stores nationwide. Grant was a stable New York Stock Exchange firm that had paid cas
> Locate the 2009 financial statements for The Walt Disney Company on the Internet. 1. Did Disney have any below-the-line items in 2009? Explain. 2. Disney’s net income decreased from $4,427 million in 2008 to $3,307 million in 2009. Identify the major rea
> The company had the following loans outstanding for the entire year: The company began the self-construction of a building on January 1. The following expenditures were made during the year: January 1 . . . . . . . . . . . . . . . . . . . . . . . . .
> Kara Nemrow, a security analyst for Primer Mead & Co., asserts that she can tell more about a company’s financial condition by looking at the trends of the negative or positive cash flows in the three categories than from other info
> Shawn O’Neil owns two businesses, a drug store and a retail department store. Which business earns more income? Which business has the higher gross profit percentage? Return on sales? Which business would you consider more profitable?
> Early in the year 2014, John Roberts, a recent graduate of Southeast State College, delivers the financial statements shown below to Laura Dennis of Dennis, Inc. After a quick review, Dennis exclaims, “What do you mean I had net income
> Near the end of the fiscal year, preliminary financial results revealed that Stancomb Wills Company was in danger of not meeting corporate performance goals. According to an article in the business press, top executives at Stancomb Wills responded by def
> As the assistant controller of Do-It-Right Company, you have been given the assignment to study FASB ASC Topic 230 and make recommendations on how the company should prepare its statement of cash flows. Specifically, you are to indicate which method—the
> Flexisoft Company has had excellent success in developing business software for computers. Management has followed the accounting practice of deferring the research costs for the software until sufficient sales have developed to cover the software cost.
> Hot Lunch Delivery Service has always had a policy to pay stockholders annual dividends in an amount exactly equal to net income for the year. Joe Alberg, the company’s president, is confused because the Cash balance has been consistently increasing ever
> Management for Marlowe Manufacturing Company decided in 2012 to discontinue one of its unsuccessful product lines. (The product line does not meet the definition of a business component.) The planned discontinuance involved obsolete inventory, assembly l
> Price Auto Parts has hired you as a consultant to analyze the company’s financial position. One of the owners, DeeAnn Price, is in charge of the company’s financial affairs. She makes all deposits and pays the bills but has an accountant prepare a balanc
> Stan Crowfoot is a renowned sculptor who specializes in Native American sculptures. Typically, a cast is prepared for each work to permit the multiple reproduction of the pieces. A limited number of copies are made for each sculpture, and the mold is des
> Shop-at-Home Company operates a Web grocer. Customers submit their orders online to Shop-at-Home Company; Shop-at-Home then forwards the orders to a national grocery chain. The grocery chain arranges for assembly and shipment of the order. Shop-at-Home C
> Max Stevenson owns a local drug store. During the past few years, the economy has experienced a period of high inflation. Stevenson has had the policy of withdrawing cash from his business equal to 80% of the company’s reported net income. As the busines
> 1. Accounts Receivable has a beginning balance of $425,000 and an ending balance of $437,000. Cash collected from customers during the period was $1,263,000. Sales for the period were: (a) $1,251,000. (b) $1,263,000. (c) $1,275,000. (d) $1,287,000. 2. R
> During January 2013, Doe Corp. agreed to sell the assets and product line of its Hart division. The sale was completed on January 15, 2014; on that date, Doe recognized a gain on disposal of $900,000. Hart’s operating losses were $600,0
> Lorien Company wishes to prepare a forecasted income statement, a forecasted balance sheet, and a forecasted statement of cash flows for 2014. Lorien’s balance sheet and income statement for 2013 follow: Balance Sheet ___________________________________
> Lorien Company wishes to prepare a forecasted income statement and a forecasted balance sheet for 2014. Lorien’s balance sheet and income statement for 2013 follow. Balance Sheet ____________________________________________2013 Cash . . . . . . . . . .
> Following are data from the financial statements for Drury Lane Company: Instructions: 1. Compute the following for 2012 and 2013. (a) Return on sales (b) Return on assets (c) Return on equity (d) Cash-flow-to-net-income ratio (e) Cash flow adequacy ra
> The following information for the year ending December 31, 2013, has been provided for Calle Company. Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $530,00
> The following summary information is for Numbers Company: Instructions: 1. Compute net cash provided by (used in) operating activities for Numbers Company for the years 2010 through 2013. 2. One definition of cash flow often used in financial analysis
> Selected pre-adjustment account balances and adjusting information of Sunset Cosmetics Inc. for the year ended December 31, 2013, are as follows: Retained Earnings, January 1, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
> (a) Why is the “list price” of an asset often not representative of its fair market value? (b) Under these conditions, how should a fair value be determined?
> A company reports the following information as of the end of the year. Using the information, determine the total amount of cash and cash equivalents. (a) Investment securities of $10,000. These securities are common stock investments in 30 companies tha
> Why is the indirect order often preferred in letter reports?
> Which is the most useful way to organize data in a report? Why?
> What is the “you viewpoint” and how is it related to a courteous tone in your writing?
> What is the direct order in report writing? When should it be used?
> What is the difference between deductive and inductive paragraph organization? Give an example of each.
> What are some advantages of conversational writing? Give an example of conversational writing that you have observed.
> How can the format of a report reflect a writer’s strategic consideration of the situation?
> What are some disadvantages of using hackneyed phrases and jargon?
> Why should apologies be avoided in most negative situations?
> Which strategy should be used when the writer is uncertain of the reader’s reaction?
> What size is appropriate for a visual aid?
> What are some of the advantages of short words over long words?
> What is an effective way to end a directly organized memo report?
> How should the subject line be worded in an indirectly organized memorandum report?
> What are some forms of collaborative writing you are likely to encounter in business?
> In planning to write a document, what questions must a manager ask before putting words on paper? Should they all receive equal emphasis?
> What is the indirect order in report writing? When is it appropriate?
> Breakdowns in the written process are less difficult to locate than are breakdowns in the oral process. Discuss this statement.
> Pick one of the following scenarios and develop a 10-minute informative presentation. • For an audience of graduating seniors in business, discuss the topics of appropriate dress for employment interviews. • For an audience of business executives, discu
> This scenario provides a realistic opportunity for students to practice the negotiation principles explained in this chapter. Divide the class into groups of two—one is the job candidate and the other is the hiring agent. The negotiators should determi
> F. Clarify the following message by using paragraphs and transitions and by generally following the guidelines presented in this chapter. Most managers would agree that there are advantages to both the telephone and letters. Letters are more effective i
> When writers use the indirect order to convey negative news, what are they trying to accomplish?
> E. Change the negative tone and use more courteous words in the following sentences. 1. We cannot deliver all 100 units by Friday, March 6. 2. We don’t provide second mortgages. 3. We are sorry that your total deposit on the trip cannot be refunded. 4.
> D. Rewrite the following sentences to eliminate trite expressions and improve clarity. 1. Enclosed please find a check in the amount of $40. 2. Please be advised that your order will be shipped within a short period of time. 3. I enclose herewith an ord
> C. Reduce the length of the following sentences. 1. Record sales were set by the top division, from $48.2 million to $51.4 million; the home appliance division decreased from $67.2 million to $58.4; the big shock was in the electronic division, which sa
> B. Rewrite the following sentences using concrete words. 1. We received a lot of responses to our survey. 2. The personnel department has expanded in the last several years. 3. Profits are up throughout the industry. 4. If we don’t receive the order pre
> Rewrite the following sentences to eliminate confusing, long words. 1. Bill received excessive remuneration for his promulgated work according to his professional colleagues. 2. What form of personal conveyance shall we solicit between the airport and t
> Cite several examples in which you have observed the effective use of nonverbal communication in a presentation.
> What are the two most important considerations in an introduction? Give an example of an effective introduction that you have heard.
> Which of the approaches discussed in Question 4 is more likely to rely on facts and which is more likely to use opinions? Data from question 4: Explain the three major organization patterns for persuasive speaking. Identify three different situations a
> Explain the three major organization patterns for persuasive speaking. Identify three different situations and the appropriate presentation plan.
> List and discuss at least five items in an audience analysis.
> Note several aspects of the context of managerial writing that make it unique.
> Give an example in which each member of an audience may be trying to obtain a different goal from the same presentation.
> Give several examples of disruptive behavior that you have observed in a meeting, and explain how they should have been controlled.
> Briefly explain three strategies for reaching decisions in a meeting. What factors should be considered when determining which approach should be used?
> What are the possible seating arrangements for a meeting? When should each be used?
> How should an agenda be used? What are the major components of an agenda?
> Speculate on the reasons why complex information is not necessarily better communicated in a face-to-face format.
> What are the disadvantages of categorizing messages in the discussion on matching technology with the message?
