How are operating expenses (not included in cost of goods sold) handled under the installment-sales method of accounting? What is the justification for such treatment?
> Where can authoritative IFRS related to the statement of cash flows be found?
> What is a major difference between IFRS and GAAP as regards revenue recognition practices?
> Where can authoritative IFRS related to the accounting for leases be found?
> Where can authoritative IFRS related to the accounting for taxes be found?
> In this simulation, you are asked to address questions related to the accounting for leases. Prepare responses to all parts. KWW_Professional_Simulation Accounting for Leases Time Remaining 2 hours 00 minutes Ursplit Split Horiz Spik Vertical | Spre
> In this simulation, you are asked to address questions related to the accounting for taxes. Prepare responses to all parts. KWW_Professional_Simulation Accounting for Taxes Time Remaining 2 hours 40 minutes Unsplit Spit Horiz Spit Vertical Spreadshe
> Explain the difference between pretax financial income and taxable income.
> In this simulation, you are asked to address questions related to revenue recognition issues. Prepare responses to all parts. KwW_Professional_Simulation Revenue Time Remaining Recognition 3 hours 00 minutes Unspit Split Horiz Split Vertical Spreads
> The professional simulation for this chapter asks you to address questions related to the accounting for the statement of cash flows. KWW_Professional_Simulation Statement of Cash Flows Time Remaining 1 hour 00 minutes Unaplit Spit Horiz Spik Vertic
> In this simulation, you are asked to address questions regarding accounting for pensions. Prepare responses to all parts. KWW_Professional_Simulation Accounting for Pensions Time Remaining 2 hours 20 minutes Unsplit Spit Horiz Spit Vertical Spreadsh
> Where can authoritative IFRS related to accounting changes be found?
> Kleckner Company started operations in 2009, and although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2013), Kleckner appears to have turned the corner
> In this simulation, you are asked questions about changes in accounting principle. Prepare responses to all parts. KWW_Professional_Simulation Changes in Accounting Principle Time Remaining 1 hour 20 minutes Unspit Spit Horiz Split Verical Spreadshe
> As part of the year-end accounting process for your company, you are preparing the statement of cash flows according to GAAP. One of your team, a finance major, believes the statement should be prepared to report the change in working capital, because an
> Daniel Hardware Co. is considering alternative financing arrangements for equipment used in its warehouses. Besides purchasing the equipment outright, Daniel is also considering a lease. Accounting for the outright purchase is fairly straightforward, but
> Monat Company has grown rapidly since its founding in 2002. To instill loyalty in its employees, Monat is contemplating establishment of a defined benefit plan. Monat knows that lenders and potential investors will pay close attention to the impact of th
> Access the glossary (“Master Glossary”) to answer the following. (a) What is the definition of “ordinary income” (loss)? (b) What is an error in previously issued financial statements? (c) What is the definition of “earnings per share”? (d) What is a pub
> Employees at your company disagree about the accounting for sales returns. The sales manager believes that granting more generous return provisions can give the company a competitive edge and increase sales revenue. The controller cautions that, dependin
> As part of the year-end audit, you are discussing the disclosure checklist with your client. The checklist identifies the items that must be disclosed in a set of GAAP financial statements. The client is surprised by the disclosure item related to accoun
> As part of the year-end accounting process and review of operating policies, Cullen Co. is considering a change in the accounting for its equipment from the straight-line method to an accelerated method. Your supervisor wonders how the company will repor
> Salaur Company is evaluating a lease arrangement being offered by TSP Company for use of a computer system. The lease is noncancelable, and in no case does Salaur receive title to the computers during or at the end of the lease term. The lease starts on
> PENCOMP’s balance sheet at December 31, 2012, is as follows. Additional information concerning PENCOMP’s defined benefit pension plan is as follows. Projected benefit obligation at 12/31/12 …&acir
> Allman Company, which began operations at the beginning of 2010, produces various products on a contract basis. Each contract generates a gross profit of $80,000. Some of Allman’s contracts provide for the customer to pay on an installment basis. Under t
> Diversified Products, Inc. operates in several lines of business, including the construction and real estate industries. While the majority of its revenues are recognized at point of sale, Diversified appropriately recognizes revenue on long-term constru
> Savannah, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2012 are projected as follows. Quarter________________Units First …………………………………………. 80,000 Second ……………………………………… 150,000 Third ……………………
> The income statement for the year ended December 31, 2012, for Laskowski Manufacturing Company contains the following condensed information. Included in operating expenses is a $24,000 loss resulting from the sale of machinery for $270,000 cash. The co
> A Wall Street Journal article discussed a $1.8 billion charge to income made by General Electric for postretirement benefit costs. It was attributed to previously unrecognized healthcare and life insurance cost. As financial vice president and controller
> Access the glossary (“Master Glossary”) to answer the following. (a) What are cash equivalents? (b) What are financing activities? (c) What are investing activities? (d) What are operating activities?
> Homestake Mining Company is a 120-year-old international gold mining company with substantial gold mining operations and exploration in the United States, Canada, and Australia. At year-end, Homestake reported the following items related to income taxes
> The following note appears in the “Summary of Significant Accounting Policies” section of the Annual Report of Westinghouse Electric Corporation. Note 1 (in part): Revenue Recognition. Sales are primarily recorded as products are shipped and services are
> RNA Inc. manufactures a variety of consumer products. The company’s founders have run the company for 30 years and are now interested in retiring. Consequently, they are seeking a purchaser who will continue its operations, and a group
> Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipie
> Presented in Illustration 21-31 are the financial statement disclosures from the 2009 annual report of Tasty Baking Company. Instructions Answer the following questions related to these disclosures. (a) What is the total obligation under capital leases
> Why in franchise arrangements may it not be proper to recognize the entire franchise fee as revenue at the date of sale?
> When is revenue recognized under the deposit method? How does the deposit method differ from the installment sales and cost-recovery methods?
> When is revenue recognized under the cost-recovery method?
> At what time is it proper to recognize income in the following cases: (a) Installment sales with no reasonable basis for estimating the degree of collectibility? (b) Sales for future delivery? (c) Merchandise shipped on consignment? (d) Profit on incompl
> What is the difference between the APBO and the EPBO? What are the components of postretirement expense?
> How should the results of installment sales be reported on the income statement?
> On January 1, 2012, Lesley Benjamin signed an agreement to operate as a franchisee of Campbell Inc. for an initial franchise fee of $50,000. The amount of $10,000 was paid when the agreement was signed, and the balance is payable in five annual payments
> In preparation for significant international operations, ABC Co. has adopted a plan to gradually shift to the same accounting methods as used by its international competitors. Part of this plan includes a switch from LIFO inventory accounting to FIFO (re
> Presently, the profession requires that earnings per share be disclosed on the face of the income statement. What are some disadvantages of reporting ratios on the financial statements?
> What are the major differences between postretirement healthcare benefits and pension benefits?
> Why didn’t the FASB cover both types of postretirement benefits—pensions and healthcare—in the earlier pension accounting rules?
> When interest is involved in installment-sales transactions, how should it be treated for accounting purposes?
> Explain the meaning of the following terms: (a) Commonsize analysis, (b) Vertical analysis, (c) Horizontal analysis, (d) Percentage analysis.
> Mojave sold her condominium for $500,000 on September 14, 2012; she had paid $330,000 for it in 2004. Mojave collected the selling price as follows: 2012, $80,000; 2013, $320,000; and 2014, $100,000. Mojave appropriately uses the installment-sales method
> What is the relationship of the asset turnover ratio to the rate of return on assets?
> What are postretirement benefits other than pensions?
> Hayes Co. reported the following pretax financial income (loss) for the years 2011–2015. 2011 …………………………. $240,000 2012 …………………………… 350,000 2013 ……………………………… 90,000 2014 …………………………. (550,000) 2015 ……………………………. 180,000 Pretax financial income (loss) and
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What are the amounts of Coca-Cola’s and PepsiCo’s provision for income taxes for the year 2009? Of
> A headline in the Wall Street Journal stated, “Firms Increasingly Tap Their Pension Funds to Use Excess Assets.” What is the accounting issue related to the use of these “excess assets” by companies?
> In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory turnover increases, what increasing risk does the business assume?
> Describe the installment-sales method of accounting.
> On January 1, 2012, Wetzel Company sold property for $250,000. The note will be collected as follows: $120,000 in 2012, $90,000 in 2013, and $40,000 in 2014. The property had cost Wetzel $150,000 when it was purchased in 2010. Instructions (a) Compute t
> The accounting staff of Holder Inc. has prepared the postretirement benefit worksheet on page 1262. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the
> Nielson Inc. reports the following pretax income (loss) for both book and tax purposes. (Assume the carryback provision is used where possible for a net operating loss.) The tax rates listed were all enacted by the beginning of 2011. Instructions (a)
> Distinguish between ratio analysis and percentage analysis relative to the interpretation of financial statements. What is the value of these two types of analyses?
> Determine the meaning of the following terms. (a) Contributory plan. (b) Vested benefits. (c) Retroactive benefits. (d) Years-of-service method.
> What is the nature of an installment sale? How do installment sales differ from ordinary credit sales?
> Sondgeroth Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) The tax rates listed were all enacted by the beginning of 2011. Instr
> Gamble Corp. was a 30% owner of Sabrina Company, holding 210,000 shares of Sabrina’s common stock on December 31, 2012. The investment account had the following entries. On January 2, 2013, Gamble sold 126,000 shares of Sabrina for $3
> Using the information in E20-22, prepare a worksheet inserting January 1, 2012, balances, showing December 31, 2012, balances, and the journal entry recording postretirement benefit expense. In E20-22 Englehart Co. provides the following information abo
> A close friend of yours, who is a history major and who has not had any college courses or any experience in business, is receiving the financial statements from companies in which he has minor investments (acquired for him by his now-deceased father). H
> Describe the reporting of pension plans for a company with multiple plans, some of which are underfunded and some of which are overfunded.
> Boey Company reported net income of $25,000 in 2013. It had the following amounts related to its pension plan in 2013: Actuarial liability gain $10,000; Unexpected asset loss $14,000; Accumulated other comprehensive income (G/L) (beginning balance), zero
> The differences between the book basis and tax basis of the assets and liabilities of Morgan Corporation at the end of 2012 are presented below. It is estimated that the litigation liability will be settled in 2013. The difference in accounts receivabl
> On January 1, 2012, Sandburg Co. purchased 25,000 shares (a 10% interest) in Yevette Corp. for $1,400,000. At the time, the book value and the fair value of Yevette’s net identifiable assets were $13,000,000. On July 1, 2013, Sandburg p
> What is the deposit method and when might it be applied?
> “The significance of financial statement data is not in the amount alone.” Discuss the meaning of this statement.
> Equipment was purchased on January 2, 2012, for $24,000, but no portion of the cost has been charged to depreciation. The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no sal
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) (1) Whatspecifi c items does Coca-Cola discuss in its Note 1—Accounting Policies? (Prepare a list
> Basler Corporation, which began business on January 1, 2012, appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2012 and 2013. Instructions (a) Compute the balance in the deferred gross profit
> When the records of Archibald Corporation were reviewed at the close of 2013, the errors listed below were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or
> Flynn Inc. has two temporary differences at the end of 2012. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Flynn’s accounting department has developed a schedule of
> Below is the comparative balance sheet for Lowenstein Corporation. Dividends in the amount of $10,000 were declared and paid in 2012. Instructions From this information, prepare a worksheet for a statement of cash flows. Make reasonable assumptions as
> Why is it desirable to use a worksheet when preparing a statement of cash flows? Is a worksheet required to prepare a statement of cash flows?
> What is the nature of a “sale-leaseback” transaction?
> Macinski Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2012. It is estimated that the warranty liability will be settled in 2013. The difference in
> The before-tax income for Fitzgerald Co. for 2012 was $101,000 and $77,400 for 2013. However, the accountant noted that the following errors had been made. 1. Sales for 2012 included amounts of $38,200 which had been received in cash during 2012, but for
> Using the information in E20-19, prepare a worksheet inserting January 1, 2012, balances, and showing December 31, 2012, balances. Prepare the journal entry recording postretirement benefit expense. In E20-19 Kreter Co. provides the following informatio
> The transactions below took place during the year 2012. 1. Convertible bonds payable with a par value of $300,000 were exchanged for unissued common stock with a par value of $300,000. The market price of both types of securities was par. 2. The net inco
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What method of computing net cash provided by operating activities does Coca-Cola use? What method
> Access the glossary (“Master Glossary”) to answer the following. (a) What is a change in accounting estimate? (b) What is a change in accounting principle? (c) What is a restatement? (d) What is the definition of “retrospective application”?
> An entry to record Purchases and related Accounts Payable of $13,000 for merchandise purchased on December 23, 2013, was recorded in January 2014. This merchandise was not included in inventory at December 31, 2013. What effect does this error have on re
> On January 2, 2012, $100,000 of 11%, 10-year bonds were issued for $97,000. The $3,000 discount was charged to Interest Expense. The bookkeeper, Mark Landis, records interest only on the interest payment dates of January 1 and July 1. What is the effect
> Shamess Co. establishes a $90 million liability at the end of 2012 for the estimated litigation settlement for manufacturing defects. All related costs will be paid and deducted on the tax return in 2013. Also, at the end of 2012, the company has $50 mil
> A partial trial balance of Dickinson Corporation is as follows on December 31, 2012. Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2012, totaled $1,100. 2. Through oversight, the Salaries and Wages Payable account w
> Kreter Co. provides the following information about its postretirement benefit plan for the year 2012. Service cost ……………………………………………………………………………………..…… $ 45,000 Contribution to the plan ………………………………………………………………………….... 10,000 Actual and expected return
> Data for Popovich Company are presented in E23-18. In E23-18 The following accounts appear in the ledger of Popovich Company Instructions Prepare entries in journal form for all adjustments that should be made on a worksheet for a statement of cash fl
> During 2012, Simms Company redeemed $2,000,000 of bonds payable for $1,880,000 cash. Indicate how this transaction would be reported on a statement of cash flows, if at all.
> What controversy relates to the accounting for net operating loss carryforwards?
> Berstler Construction Company began operations in 2012. Construction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2012, is expected to be completed in 2013. Instructions
> Emerson Tool Company’s December 31 year-end financial statements contained the following errors. An insurance premium of $60,000 was prepaid in 2011 covering the years 2011, 2012, and 2013. The entire amount was charged to expense in
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo Inc. (a) Identify the changes in accounting principles reported by Coca-Cola during the 3 years covered by i
> The accounting staff of Usher Inc. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks r
> During 2012, Graham Co.’s first year of operations, the company reports pretax financial income of $250,000. Graham’s enacted tax rate is 40% for 2012 and 35% for all later years. Graham expects to have taxable income
> The following accounts appear in the ledger of Popovich Company Instructions From the postings in the accounts above, indicate how the information is reported on a statement of cash flows by preparing a partial statement of cash flows using the indirec
> Stan Conner and Mark Stein were discussing the presentation format of the statement of cash flows of Bombeck Co. At the bottom of Bombeck’s statement of cash flows was a separate section entitled “Noncash investing and financing activities.” Give three e
> In January 2012, installation costs of $6,000 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $30,000 were correctly recorded and have been depreciated using the straight line method with an estimated li
