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Question: Miga Company and Porter Company both bought


Miga Company and Porter Company both bought a new delivery truck on January 1, 2014. Both companies paid exactly the same cost, $30,000, for their respective vehicles. As of December 31, 2017, the net book value of Miga’s truck was less than Porter Company’s net book value for the same vehicle. Which of the following is an acceptable explanation for the difference in net book value?
a. Miga Company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation.
b. Both companies elected straight-line depreciation, but Miga Company used a longer estimated life.
c. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible.
d. Miga Company is using the straight-line method of depreciation, and Porter Company is using the double-declining-balance method of depreciation.


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> On January 1 of this year, Barnett Corporation sold bonds with a face value of $500,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest annually on December 31. Barnett uses the effective-interest amortization method. Ignore

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> Electrolux Corporation manufactures electrical test equipment. The company’s board of directors authorized a bond issue on January 1 of this year with the following terms: Face (par) value: $800,000 Coupon rate: 8 percent payable each December 31 Maturit

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> Serotta Corporation is planning to issue bonds with a face value of $300,000 and a coupon rate of 12 percent. The bonds mature in two years and pay interest quarterly every March 31, June 30, September 30, and December 31. All of the bonds were sold on J

> Serotta Corporation is planning to issue bonds with a face value of $300,000 and a coupon rate of 12 percent. The bonds mature in two years and pay interest quarterly every March 31, June 30, September 30, and December 31. All of the bonds were sold on J

> On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule bel

> Last year, Arbor Corporation reported the following: BALANCE SHEET Total Assets…………………………………………………. $800,000 Total Liabilities ……………………………………………….500,000 Total Shareholders’ Equity …………………………….$300,000 This year, Arbor is considering whether to issue mo

> For each of the following situations, determine whether the company should (a) report a liability on the balance sheet, (b) disclose a contingent liability in the footnotes, or (c) not report the situation. Justify your conclusions. 1. An automobile comp

> PepsiCo, Inc., is a dominant player in the beverage, snack food, and restaurant businesses. A recent PepsiCo annual report included the following note: At year-end, $3.5 billion of short-term borrowings were reclassified as long-term, reflecting PepsiCo’

> Columbia Sportswear is an outdoor and active lifestyle apparel and footwear company. Last year, Columbia reported cost of goods sold of $941 million. This year, cost of goods sold was $1,146 million. Accounts payable was $174 million at the end of last y

> Dell Computers is a leader in the computer industry with over $59 billion in sales each year. A recent annual report for Dell contained the following note: Warranty We record warranty liabilities at the time of sale for the estimated costs that may be in

> During its first year of operations, Walnut Company completed the following two transactions. The annual accounting period ends December 31. a. Paid and recorded wages of $130,000 during Year 1; however, at the end of Year 1, three days’ wages are unpaid

> Using data from the previous problem, complete the following: Required: For each transaction (including adjusting entries) listed in the previous problem, indicate the effects (e.g., cash + or −) using the format below. You do not need to include amount

> Refer to the financial statements of American Eagle Outfitters in Appendix B and Urban Outfitters in Appendix C. Financial statements of American Eagle: Financial statements of Urban Outfitters: Required: 1. How do American Eagle’s an

> Rogers Company completed the following transactions during Year 1. Rogers’s fiscal year ends on December 31. Required: 1. Prepare journal entries for each of these transactions. 2. Prepare all adjusting entries required on December 31.

> On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for all transactions): a. Borrowed $115,000 for seven years. Will pay $6,000 interest at the end of each year and repay the $115,000 at the end of the 7th ye

> a. A friend of yours, Grace, wants to purchase a house in five years. To save for the house, Grace decides to deposit $112,000 in a savings account on January 1 of this year. The savings account will earn 6% annually. Any interest earned will be added to

> Mansfield Corporation purchased a new warehouse at the beginning of Year 1 for $1,000,000. The expected life of the asset is 20 years with no residual value. The company uses straight-line depreciation for financial reporting purposes and accelerated dep

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