Questions from Financial Reporting

Q: On January 1, 2017, Mason Manufacturing borrows $500,

On January 1, 2017, Mason Manufacturing borrows $500,000 and uses the money to purchase corporate bonds for investment purposes. Interest rates were quite volatile that year and so were the fair value...

Q: On July 1, 2017, Stan Getz, Inc., bought

On July 1, 2017, Stan Getz, Inc., bought call option contracts for 500 shares of Selmer Manufacturing common stock. The contracts cost $200, expire on September 15, and have an exercise price of $40 p...

Q: On January 1, 2017, Tango-In-The-

On January 1, 2017, Tango-In-The-Night, Inc., issued $75 million of bonds with an 8% coupon interest rate. The bonds mature in 10 years and pay interest semi-annually on June 30 and on December 31 of...

Q: In 2009, Citigroup used the fair value option for some of

In 2009, Citigroup used the fair value option for some of its own debt. During the first quarter of 2009, the fair value of its debt declined by $2.7 billion. Its reported net income for the quarter w...

Q: Describes Chalk Hill’s use of an interest rate swap to hedge its

Describes Chalk Hill’s use of an interest rate swap to hedge its cash flow exposure to interest rate risk from variable rate debt. The journal entries in the exhibit illustrate how special “hedge acco...

Q: Groupe Casino is a French multinational company that operates more than 9

Groupe Casino is a French multinational company that operates more than 9,000 multiformat retail stores—hypermarkets, supermarkets, discount stores, convenience stores, and restaurants—throughout the...

Q: Bunker Company negotiated a lease with Gilbreth Company that begins on January

Bunker Company negotiated a lease with Gilbreth Company that begins on January 1, 2017. The lease term is three years, and the asset’s economic life is four years. The annual lease payments are $7,500...

Q: Railcar Leasing Inc. early adopts ASU 2016-02 on January

Railcar Leasing Inc. early adopts ASU 2016-02 on January 1, 2017. Also, on January 1, 2017, Railcar Leasing Inc. (the lessor) purchased 10 used boxcars from Railroad Equipment Consolidators at a price...

Q: Refer to the information in P12–10. Assume that at

Refer to the information in P12–10. Assume that at the commencement of the lease, collectibility of the payments is not probable and the lessor uses the straight-line depreciation method. Required:...

Q: Moore Company sells and leases its computers. Moore’s cost and sales

Moore Company sells and leases its computers. Moore’s cost and sales price per machine are $1,200 and $3,000, respectively. At the end of three years, the expected residual value is $400, which is gua...