Questions from Intermediate Accounting

Q: Sesame Company purchased a computer system for $74,000 on

Sesame Company purchased a computer system for $74,000 on January 1, 2013. It was depreciated based on a 7-year life and an $18,000 salvage value. On January 1, 2015, Sesame revised these estimates...

Q: Shetland Inc. had pretax financial income of $154,000

Shetland Inc. had pretax financial income of $154,000 in 2014. Included in the computation of that amount is insurance expense of $4,000 which is not deductible for tax purposes. In addition, deprecia...

Q: Petrenko Corporation has outstanding 2,000 $1,000 bonds

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10par value common stock. The bonds are converted on December 31, 2014, when the unamortized discount is...

Q: Indiana Jones Corporation enters into a 6-year lease of equipment

Indiana Jones Corporation enters into a 6-year lease of equipment on January 1, 2014, which requires 6 annual payments of $40,000 each, beginning January 1, 2014. In addition, Indiana Jones guarantees...

Q: Pechstein Corporation issued 2,000 shares of $10 par value

Pechstein Corporation issued 2,000 shares of $10 par value common stock upon conversion of1,000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The...

Q: An annual report of Ford Motor Corporation states, “Net income

An annual report of Ford Motor Corporation states, “Net income a share is computed based upon the average number of shares of capital stock of all classes outstanding. Additional shares of com...

Q: Eisler Corporation issued 2,000 $1,000 bonds at

Eisler Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market...

Q: Geiberger Corporation manufactures replicators. On January 1, 2014, it

Geiberger Corporation manufactures replicators. On January 1, 2014, it leased to Althaus Company a replicator that had cost $110,000 to manufacture. The lease agreement covers the 5-year useful life o...

Q: Morlan Corporation is preparing its December 31, 2014, financial statements

Morlan Corporation is preparing its December 31, 2014, financial statements. Two events that occurred between December 31, 2014, and March 10, 2015, when the statements were issued, are described be...

Q: Bridgewater Corp. offered holders of its 1,000 convertible bonds

Bridgewater Corp. offered holders of its 1,000 convertible bonds a premium of $160 per bond to induce conversion into shares of its common stock. Upon conversion of all the bonds, Bridgewater Corp. re...