Questions from Financial Reporting

Q: On January 2, 2014, Lava, Inc., purchased a

On January 2, 2014, Lava, Inc., purchased a patent for a new consumer product for $90,000. At the time of purchase, the patent was valid for 15 years; however, its useful life was estimated to be only...

Q: Akers Company sold bonds on July 1, 2017, with a

Akers Company sold bonds on July 1, 2017, with a face value of $100,000. These bonds are due in 10 years. The stated annual interest rate is 6% per year, payable semiannually on June 30 and December 3...

Q: In 2017, Ball Labs incurred the following costs: Direct

In 2017, Ball Labs incurred the following costs: Direct costs of doing contract research and development…….……$400,000 work for the government to be reimbursed by a governmental unit Research and devel...

Q: Pearl, Inc., develops and markets computer software. During 2016

Pearl, Inc., develops and markets computer software. During 2016, one of Pearl’s engineers began developing a new and very innovative software product. On July 1, 2017, a team of Pearl engineers deter...

Q: In January 2017, Vorst Company purchased a mineral mine for $

In January 2017, Vorst Company purchased a mineral mine for $2,640,000. Removable ore was estimated at 1,200,000 tons. After it has extracted all the ore, Vorst will be required by law to restore the...

Q: On January 1, 2016, Roland Inc. issued $125

On January 1, 2016, Roland Inc. issued $125 million of 8% bonds at par. The bonds pay interest semiannually on June 30 and December 31 of each year, and they mature in 15 years. On December 31, 2017 (...

Q: On July 1, 2017, Mirage Company issued $250 million

On July 1, 2017, Mirage Company issued $250 million of bonds with an 8% coupon interest rate. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The ma...

Q: Royal Dutch Shell had pretax income of $2,047 million

Royal Dutch Shell had pretax income of $2,047 million, $28,314 million and $33,592 million in 2015, 2014, and 2013, respectively. Presented below are excerpts from the 2015 annual report of Royal Dutc...

Q: On January 1, 2017, Tusk Company issued $300 million

On January 1, 2017, Tusk Company issued $300 million of bonds with a 6% coupon interest rate. The bonds mature in 10 years and pay interest annually on December 31 of each year. The market rate of int...

Q: Required: 1. Which of the following qualifies as a

Required: 1. Which of the following qualifies as a hedged item? a. A company’s work-in-process inventory of unfinished washers, dryers, and refrigerators. b. Credit card receivables at JCPenney. c. Bu...