Question: What is meant by dividend arrearage on

> Return on equity (ROE) is an important summary measure of financial performance. How is it computed? Describe what this metric reveals about company performance.

> Potter Company has outstanding 15,000 shares of $50 par value, 8% preferred stock, and 50,000 shares of $5 par value common stock. During its first three years in business, it declared and paid no cash dividends in the first year, $280,000 in the second

> What ethical issues might managers face in dealing with confidential information?

> What are the two essential characteristics of an asset?

> Soliman Corporation began the year 2018 with 25,000 shares of common stock and 5,000 shares of convertible preferred stock outstanding. On May I, an additional 9,000 shares of common stock were issued. On July I, 6,000 shares of common stock were acquire

> Financial statements are used by several interested stakeholders. Develop a listing of three or more potential external users of financial statements and their applications.

> Moser Company began business on March I, 2018. At that time, it issued 20,000 shares of $60 par value, 7% cumulative preferred stock, and I 00,000 shares of $5 par value common stock. Through the end of 2020, there has been no change in the number of pre

> Why might a company voluntarily disclose more information than is required by GAAP?

> Following is the stockholders' equity section from the The Coca-Cola Company 2017 balance sheet. (All amounts in millions except par value.) a. Compute the number of shares outstanding. b. At what average price were the Coca-Cola shares issued? c. At wha

> The trade-off between risk and return is a fundamental business concept. Briefly describe both risk and return and their trade-off. Provide some examples that demonstrate investments of varying risk and the approximate returns that you might expect to ea

> McNichols Corp. reports the following transactions relating to its stock accounts. Jan. 15 Issued 25,000 shares of $5 par value common stock at $ 17 cash per share. Jan. 20 Issued 6,000 shares of $50 par value, 8% preferred stock at $78 cash per share. M

> Explain what is meant by the articulation of financial statements.

> Lipe Company reports the following transactions relating to its stock accounts. Feb. 20 Issued I 0,000 shares of $1 par value common stock at $25 cash per share. Feb. 21 Issued 15,000 shares of$ I 00 par value, 8% preferred stock at $275 cash per share.

> Does a statement of cash flows report on a period of time or at a point in time? Also, explain the information and activities conveyed in that report.

> On January 2, 2019, DeSantis Company is comparing two alternatives for leasing a machine. Alternative A is a lease that requires 24 quarterly payments of $3,000 with the first payment due on March 31, 2019. Alternative B is a lease that requires five ann

> The Boeing Company reports the following tax information in its 2018 financial report. a. Record Boeing's provision for income taxes for 2018 using the financial statement effects template. b. Record Boeing's provision for income taxes for 2018 using jou

> Bradshaw Company owns I 00% of Dee Company. At year-end, Dee owes Bradshaw $75,000. If a consolidated balance sheet is prepared at year-end, how is the $75,000 handled? Explain.

> Nike, Inc., reports the following tax information in the notes to its 2018 financial report. Income before income taxes is as follows: The provision for income taxes is as follows: Nike also states the following: The effective tax rate for the year ended

> Finn Company purchases all of the common stock or Murray Company for $750.000 when Murray Company has $300,000 of common stock and $450,000 of retained earnings. Book values of the assets and liabilities of Murray Company equal their fair values. If a co

> Bens' Corporation paid $ 12,000 on December 31, 20 I 9, for equipment with a three-year useful life. The equipment will be depreciated in the amount of $4,000 each year. Bens' took the entire $12,000 as an expense in its tax return in 2019. Assume this i

> What is the underlying objective of consolidated financial statements'!

> Early in January 2019, Oler, Inc., purchased equipment costing $ I 6,000. The equipment had a 2-year useful life and was depreciated in the amount of $8,000 in 2019 and 2020. Oler deducted the entire $16,000 on its tax return in 2019. This difference was

> What accounting method is used when a stock investment represents more than 50% of the investee company"s voting clock? Explain.

> Verizon Communications Inc. reports the following pension data in its 2017 10-K report. a. Describe what is meant by service cost and interest cost. b. What is the source of funds to make payments to retirees'.' c. Show the computation of Vcrizonâ&

> On January 1 of the current year, Yetman Company purchases 40% of the common stock of Livnat Company for $250.000 cash. During the year. Livnat reports $80.000 of net income and pays $60.000 in cash dividends. At year-end. what amount should appear in Ye

> What is the statement of stockholders' equity? What information is conveyed in that statement?

> YUM! Brands, Inc., reports the following pension footnote in its 10-K report. a. Describe what is meant by service cost and interest cost. b. What is the source of funds to make payments to retirees? c. Show the computation of the 2017 funded status for

> What does significant influence imply regarding financial investments? Describe the accounting procedures used for such investments.

> Where are unrealized holding gains and losses related to trading securities reported in the financial statements? Where are unrealized holding gains and losses related to available-for-sale securities reported in the financial statements?

> Under Armour, Inc., provides the following disclosure in the notes to its 20 18 financial statements: 7. Commitments and Contingencies (excerpts only) Sports Marketing and Other Commitments Within the normal course of business, the Company enters into co

> What is an unrealized holding gain (loss)? Explain. For passive investments in equity securities how are unrealized holding gains (losses) treated?

> Verizon Communications Inc. provides the following balance sheet (excerpted and abbreviated) and discussion and disclosure of leases: The aggregate minimum rental commitments under non-cancelable leases for the periods shown at December 31, 2018, are as

> What are some limitations of consolidated financial statements?

> JetBlue's balance sheet and discussion of the new lease standard is as follows in their 2018 I 0-K: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) of the Codification, which requires lessees to recognize leases on the balance sheet and

> For investments in debt securities. what measure l fair value or amortized cost is used for the balance sheet to report (a) trading securities. (b) available-for-sale securities and (c) held-to-maturity securities?

> Burnham Corporation is comparing two alternatives for leasing a machine. Alternative A is a lease that requires six annual payments of $8,000 with the first payment due immediately. Alternative B is a lease that requires two payments of $11,000 and three

> Target Corporation provides the following footnote relating to its retirement plans in its 2017 10-K report: Defined Contribution Plans Team members who meet eligibility requirements can participate in a defined contribution 401 (k) plan by investing up

> Define treasury stock. Why might a corporation acquire treasury stock? How is treasury stock reported in the balance sheet?

> Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms: a. Compute the value of the right-of-use asset and the lease liability on the date the lease commences. b. Prepare a lease liability amortization schedule and righ

> Define stock split. What are the major reasons for a stock split'?

> On December 31, Dehning, Inc .. borrowed $500,000 on an 8%. I 0-year mortgage note payable. The note is to be repaid in equal quarterly installments of $18,278 (beginning March 31). a. Prepare journal entries to reflect (1) the issuance of the mortgage

> How does the account "additional paid-in capital" (APIC) arise? What inferences if any can you draw from the amount of APlC as reported on the balance sheet relative to the common stock amount in relation to the financial condition of the company?

> The adjusted trial balance for the Hass Corporation at the end of2018 contains the following accounts: Prepare the long-term liabilities section of the balance shee1. Indicate the proper balance sheet classification for accounts listed above that do not

> Describe the difference between contributed capital and earned capital. Specifically, how can earned capital be considered as an investment by the company's shareholders'!

> On January 1, 2019 Trueman Corp. issued $600,000 of 20-year. 11 % bonds for $554.860, yielding a market (yield) rate of I 2%. Interest is payable semiannually on June 30 and December 31. a. Confirm the bond issue price. b. Prepare journal entries to reco

> Distinguish between authorized stock and issued stock. Why might the number of shares issued be more than the number of shares outstanding?

> GAAP is based on the concept of accrual accounting. Define and describe accrual accounting.

> Following is a price quote for $200 million of 6.55% coupon bonds issued by Deere & Company that mature in October 2028: This quote indicates that, on this day, Deere's bonds have a market price of 123.962 ( 123.962% of face value) resulting in a yie

> On January 1, 2019, Shields, Inc., issued $800,000 of 9%, 20-year bonds for $879,172, yielding a market (yield) rate of 8%. Semiannual interest is payable on June 30 and December 31 of each year. a. Show computations to confirm the bond issue price. b. P

> What features make preferred stock similar to debt? Similar to common stock?

> On January I, 2019, McKeown, Inc., issued $250,000 of 8%, 9-year bonds for $220,776, yielding a market (yield) rate of I 0%. Semiannual interest is payable on June 30 and December 31 of each year. a. Show computations to confirm the bond issue price. b.

> What are the basic differences between preferred stock and common stock? What are the typical features of preferred stock?

> Lundholm, Inc., which reports financial statements each December 31, is authorized to issue $500,000 of9%, 15-year bonds dated May I, 2018, with interest payments on October 31 and April 30. Assume the bonds are issued at par on May I, 2018. a. Prepare j

> What is a stock dividend? How does a common stock dividend distributed to common shareholders affect their respective ownership interests?

> A corporation has total stockholders' equity of $4.628.000 and one class of $2 par value common stock. The corporation has 500,000 shares authorized; 300.000 shares issued; 260.000 shares outstanding; and 40.000 shares as treasury stock. What is its book

> On August 1, 2019, Paradise Airlines agreed to lease a passenger jet from Boeing Corporation. The 20-year lease requires an annual payment of $450,000. If Paradise were to purchase the jet, it could borrow the necessary funds at a 9% interest rate. a. Wh

> D'Souza, Inc., issues $900,000 of 11 % bonds that pay interest semiannually and mature in seven years. Assume that the market interest (yield) rate is 12% per year compounded semiannually. Compute the bond issue price.

> If a corporation purchases 600 shares of its own common stock at $10 per share and resells them at $ 14 per share where would the $2.400 increase in capital be reported in the financial statements? Why is no gain reported?

> On January I, 2019, Hutton Corp. issued $300,000 of 15-year, 11 % bonds payable for $377,814, yielding an effective interest rate of 8%. Interest is payable semiannually on June 30 and December 31. a. Show computations to confirm the issue price of $377,

> Define par value stock. What is the significance of a stock's par value from an accounting and analysis perspective?

> Demski Company pays its employees on the 1st and 15th of each month. It is March 31 and Demski is preparing financial statements for this quarter. Its employees have earned $25,000 since the 15th of this month and have not yet been paid. How will Demski'

> Over what time period should the cost of providing retirement benefits to employees be expensed?

> The following independent situations represent various types of liabilities. Analyze each situation and indicate which of the following is the proper accounting treatment for each company: (1) record in accounts, (2) disclose in a financial statement f

> How is the initial valuation determined for lease liability and the right-of-use asset for both an operating lease and a finance lease?

> Waymire Company sells a motor that carries a 60-day unconditional warranty against product failure. Waymire estimates that between the sale and lapse of the product warranty, 2% of the 69,000 units sold this period will require repair at an average cost

> What effect does the use of expected returns on pension investments and the deferral of unexpected gains and losses on those investments have on income?

> Two important concepts that guide income statement reporting are the revenue recognition principle and the expense recognition principle. Define and explain each of these two guiding principles.

> Zeibart Company purchases equipment for $225,000 on July I, 20 I 6, with an estimated useful life of 10 years and expected salvage value of $25,000. Straight-line depreciation is used. On July 1, 2020, economic factors cause the fair value of the equipme

> What are the components of pension expense that is reported in the income statement?

> R&D intensity is measured by the ratio of research and development expense to sales revenue. The following table compares the R&D intensity for various companies. a. Comment on the differences among these companies. To what extent are the differe

> Under what circumstances will a company report a net pension asset? A net pension liability?

> The following footnote is from Note 8 to the 2018 I 0-K of Tesla, Inc.: Note &-Property, Plant and Equipment Our property, plant and equipment, net, consisted of the following (in thousands): The summary of significant accounting policies included th

> What are the economic and accounting differences between a defined contribution plan and a defined benefit plan?

> In 2019, Eldenburg Mining Company purchased land for $7,200,000 that had a natural resource reserve estimated to be 500,000 tons. Development and road construction costs on the land were $420,000 and a building was constructed at a cost of $50.000. When

> ls the expense of a lease over its entire life the same whether it is a finance or an operating lease? Explain.

> On the first day of 2019, Holthausen Company acquired the assets of Leftwich Company including several intangible assets. These include a patent on Leftwich's primary product. a device called a plentiscope Leftwich carried the patent on its books for $1.

> For comparative purposes, when the old lease standard was in effect, were footnote disclosures sufficient to overcome non-recognition on the balance sheet of assets and related liabilities for operating leases? Explain.

> On November 1, 2018, Ybarra Construction Company issued $200,000 of 5-year bonds that pay interest at an annual rate of 5%. The interest payments are due every six months (that is, the interest is compounded semi-annually). At the end of the five-year pe

> 3M Company reports the following financial statement amounts in its 10-K report: a. Compute the receivables, inventory, and PPE turnover ratios for both 2018 and 2017. (Receivables turnover and inventory turnover are discussed in Chapters 6 and 7, respec

> Explain what an unrecognized tax benefit is and where it is recorded on the balance sheet.

> The property and equipment footnote from the Deere & Company balance sheet follows ($ millions): PROPERTY AND DEPRECIATION A summary of property and equipment at October 28, 2018, in millions of dollars follows: During 2018, the company reported $7S4

> Under what circumstances would a tax payment be made that also requires the recording of a deferred tax asset or liability?

> In January 2019, Rankine Company paid $8,500,000 for land and a building. An appraisal estimated that the land had a fair value of $2,500,000 and the building was worth $6,000,000. Rankine estimated that the useful life of the building was 30 years, with

> What is the conceptual reason why income tax expense on the income statement is not equal to cash taxes paid?

> Lambert Company acquired machinery costing $110,000 on January 2, 2019. At that time, Lambert estimated that the useful life of the equipment was 6 years and that the residual value would be $15,000 at the end of its useful life. Compute depreciation exp

> Under the new lease accounting standard (Topic 842), what are the financial reporting differences between an operating lease and a finance lease? Explain.

> Palepu Company owns and operates a delivery van that originally cost $27,200. Straight-line depreciation on the van has been recorded for three years, with a $2,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was

> What do the following terms mean? (a) bonds payable, (b) call provision, (c) face value, (d) coupon, (e) bond discount, (f) bond premium, and (g) amortization of bond premium or discount.

> A delivery van costing $18,000 is expected to have a $ 1,500 salvage value at the end of its useful life of 5 years. Assume that the truck was purchased on January I, 2019. Compute the depreciation expense for 2020 (its second year) under each of the fol

> Jason Shields invested $7,500 in an account that pays a 12% return. How much will the account be worth in four years if the interest is compounded a. annually? b. quarterly? c. monthly?

> On January 2, 2019, Dechow Company purchases a machine to help manufacture a part for one of its key products. The machine cost $218,700 and is estimated to have a useful life of six years, with an expected salvage value of $23,400. Compute each year's d

> How would you interpret a company's reported gain or loss on the repurchase of its bonds?

> On January 2, 2019, Verdi Company acquired a machine for $85,000. In addition to the purchase price, Verdi spent $2,000 for shipping and installation, and $2,500 to calibrate the machine prior to use. The company estimates that the machine has a useful l

> How do debt ratings affect the cost of borrowing for a company?

> The following table presents sales revenue, cost of goods sold, and inventory amounts for three specialty retailers, Tiffany & Co., Best Buy, and RH. a. Compute the gross profit margin (GPM) for each of these companies for 2017 and 2016. b. Compute t

> Why do companies report a gain or loss on the repurchase of their bonds (assuming the repurchase price is different from bond book value)?

> The footnote below is from the 2017 I 0-K report of Whole Foods Market, Inc., a Texas-based retail grocery chain. Inventories The Company values inventories at the lower of cost or market. Cost was determined using the dollar value retail last-in, first-

> What is the difference between a bond coupon rate and its market interest rate (yield)?

> How does issuing a bond at a premium or discount affect the bond's effective interest rate vis-à-vis the coupon (stated) rate?

> Sylvia Owen, owner of Haul Trucking is considering expanding operation from seaule to the Portland area. Expansion is estimated to cost %10 million including the required new facilities and additional trucks. Sylvia has elected to finance the expansion b