Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This material is also available under the Finance link at the company’s website (www.airfranceklm.com). Required: 1. How does AF account for information technology (IT) development costs before and during its development phase? 2. AF does not report any research and development expenditures. If it did, its approach to accounting for research and development would be significantly different from U.S. GAAP. Describe the differences between IFRS and U.S. GAAP in accounting for research and development expenditures. 3. AF does not report the receipt of any governments grants. If it did, its approach to accounting for government grants would be significantly different from U.S. GAAP. Describe the differences between IFRS and U.S. GAAP in accounting for government grants. If AF received a grant for the purchase of assets, what alternative accounting treatments are available under IFRS?
> Francesca’s Holdings Corporation is a specialty retailer that operates boutiques throughout the United States under Francesca’s trademark. Access the financial statements and related disclosure notes of Francesca for the fiscal year ended February 1, 202
> The date is January 10, 2023, and Mary ton Hotels’ CFO George Smith is looking with dismay at his company’s financial performance during 2022. Already facing stiff competition from other hotel chains as well as Earbob, Mary ton had run an operating loss
> The date is November 15, 2020. You are the new controller for Engineered Solutions. The company treasurer, Randy Pate, believes that as a result of pending legislation, the currently enacted 40% income tax rate may be decreased for 2021 to 25% and is unc
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion material, can be obtained from t
> An August 11, 2020 article from World Oil Magazine had the following headline: “Marathon Sets Up for $1.1 Billion Tax Refund via Coronavirus Aid Law.” * The article goes on to indicate, “That measure included a tax provision that allows companies to imme
> A company uses a perpetual inventory system. The company began its fiscal year with inventory of $267,000. Purchases of inventory on account during the year totaled $845,000. Inventory costing $902,000 was sold on account for $1,420,000. Prepare the jour
> Russell-James Corporation is a diversified consumer products company. During 2024, Russell-James discontinued its line of cosmetics, which constituted discontinued operations for financial reporting purposes. As vice president of the food products divisi
> As a senior auditor with Klein and Co, you are interacting with David Perkins, CFO of a prominent public company and an important client. Perkins has a reputation for pushing for favorable accounting treatments, and frequently asks auditors to “prove to
> Access the financial statements and related disclosure notes of Buckle for the fiscal year ended February 1, 2020, from its website at corporate.buckle.com. Buckle is a fashion retailer operating over 400 stores in more than 40 states under the names Buc
> General Tools is seeking ways to maintain and improve cash balances. As company controller, you have proposed the sale and leaseback of much of the company’s equipment. As seller-lessee, General Tools would retain the right to essentially all of the rema
> Why does FedEx show operating cash flows for both types of leases, but only financing cash flows for finance leases,” your colleague wonders aloud. “We need to draft our lease disclosure by tomorrow morning.â
> Anthony’s Restaurant has been has served award-winning, traditional Italian dishes, including pasta, steak, veal, ossobuco, saltimbocca, and seafood, using recipes that were handed down by Anthony’s grandmother and tha
> You know, we heard in our accounting class today that a few years ago, there were advantages to structuring lease arrangements as operating leases,” your study partner said unexpectedly. “Now I’m wond
> Walmart Inc. is the world’s largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements revealed the following information: Required: 1. The net asset “Finance leas
> Security Devices Inc. (SDI) needs additional office space to accommodate expansion. SDI wants to avoid income statement effects that would disrupt its attempts to “smooth” income over time. Required: 1. Which lease classification would management prefer
> Interstate Automobiles Corporation leased 40 vans to VIP Transport under a four-year no cancelable lease on January 1, 2024. Information concerning the lease and the vans follows: a. Equal annual lease payments of $300,000 are due on January 1, 2024, and
> It’s common in the electronics industry for unit costs of raw materials inventories to decline over time. In this environment, explain the difference between LIFO and FIFO in terms of the effect on cost of goods sold and ending inventory. Assume that inv
> Kevin Brantley is a new hire in the controller’s office of Fleming Home Products. Two events occurred in late 2024 that the company had not previously encountered. The events appear to affect two of the company’s liabi
> Late in 2024, you and two other officers of Curb Fabrications Corporation just returned from a meeting with officials of the City of Jackson. The meeting was unexpectedly favorable even though it culminated in a settlement with city authorities that requ
> I see an all-nighter coming on,” Gayle grumbled. “Why did Mitch just now give us this assignment?” Your client, Western Manufacturing, is involved with several situations that possibly involve contingencies. The assignment Gayle refers to is to draft app
> Domestic Transfer and Storage is a large trucking company headquartered in the Midwest. Rapid expansion in recent years has been financed in large part by debt in a variety of forms. In preparing the financial statements for 2023, questions have arisen r
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> Reporting requirements for contingent liabilities under IFRS differ somewhat from those under U.S. GAAP. Required: For each of the following, access the online version of the indicated financial report and answer the question. Also compare reporting und
> In the March 2025 meeting of Halleck Corporation’s board of directors, a question arose as to the way a possible obligation should be disclosed in the forthcoming financial statements for the year ended December 31. A veteran board memb
> Honda Motor Company, Ltd., is a Japanese manufacturer of automobiles, motorcycles, and power equipment. The company’s fiscal year ends Mach 31, 2020, and it filed its financial statements with the SEC on June 22, 2020. On August 26, 202
> The Boxcar Company shipped inventory to Depot Corporation on December 28, 2024. Depot received the shipment on January 3, 2025. December 31 is the fiscal year-end for both companies. The inventory was shipped f.o.b. shipping point. Explain the difference
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are provided in Connect. This ma
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF‘s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2020, are available in Connect. This m
> A Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This material is also avail
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li
> The birth of the Internet in the 1990s led to the creation of a new industry of online retailers such as Amazon, Overstock.com, and Insight Enterprises, Inc. Many of these companies often act as intermediaries between the manufacturer and the customer wi
> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C
> Mars Marine produces outboard motors for a variety of recreational and commercial boating configurations. Martin Quint, the owner of Mars Marine, is planning to provide to any person purchasing a Mars motor a coupon entitling them to a 40% discount on a
> Consider the following excerpts from revenue recognition disclosure notes: 1. Verizon: “We offer wireless services through a variety of plans on a postpaid or prepaid basis. For wireless service, we recognize revenue . . . either as the service allowance
> Refer to the situation described in BE 8–12. SAM uses a periodic inventory system. Calculate ending inventory and cost of goods sold for January using (1) FIFO and (2) average cost.
> Thomas Plastics is in the process of developing a revolutionary new plastic valve. A new division of the company was formed to develop, manufacture, and market this new product. As of year end (December 31, 2024), the new product has not been manufacture
> The focus of this case is the situation described in Case 10–7. What is the appropriate accounting for R&D costs? Do you believe that (1) capitalization is the correct treatment of R&D costs, (2) expensing is the correct treatment of R&D costs, or (3) th
> The Elegant Software Company recently completed the development and testing of a new software program for sale to customers that provides the ability to transfer data from among a variety of operating systems. The company believes this product will gener
> Mayer Biotechnical, Inc., develops, manufactures, and sells pharmaceuticals. Significant research and development (R&D) expenditures are made for the development of new drugs and the improvement of existing drugs. During 2024, $220 million was spent on R
> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C
> Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, the company purchased equipment used in manufacturing from an outside vendor. In March 2024, Chilton decided to design and build equipment to repla
> Darden Restaurants, Inc., is a full-service restaurant company, including brands such as Olive Garden, Long- Horn Steakhouse, and Bahama Breeze. The company’s fixed-asset turnover ratio, using the average book value of property, plant,
> Norfolk Southern Corporation, one of the nation’s premier transportation companies, reported the following amounts in the asset section of its balance sheets: In addition, information from the 2019 statement of cash flows and related no
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li
> Salt and Mineral (SAM) began 2024 with 200 units of its one product. These units were purchased near the end of 2023 for $25 each. During the month of January, 100 units were purchased on January 8 for $28 each and another 200 units were purchased on Jan
> Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a copper mine in West Virginia for $15 million. Hazelton incurred development costs of $6 million in preparing the mine for extraction, which began on July 1
> Mayfair Department Stores, Inc., operates over 30 retail stores in the Pacific Northwest. Prior to 2024, the company used the FIFO method to value its inventory. In 2024, Mayfair decided to switch to the dollar-value LIFO retail inventory method. One of
> The Brenly Paint Company, your client, manufactures paint. The company’s president, Mr. Brenly, decided to open a retail store to sell paint as well as wallpaper and other items that would be purchased from other suppliers. He has asked you for informati
> The lower of cost or net realizable value (LCNRV) approach to valuing inventory is a departure from the accounting principle of reporting assets at their historical costs. There are those who believe that inventory, as well as other assets, should be val
> Eddie’s Galleria sells billiard tables. The company has the following purchases and sales for 2024. Eddie is worried about the company’s financial performance. He has noticed an increase in the purchase cost of billiar
> Danville Bottlers is a wholesale beverage company. Danville uses the FIFO inventory method to determine the cost of its ending inventory. Ending inventory quantities are determined by a physical count. For the accounting yearend December 31, 2024, ending
> Fred’s Inc. operates general merchandise retail discount stores and full-service pharmacies in the Southeastern United States. Access the company’s 10-K for the fiscal year ended January 28, 2017. You can find the 10-K by using EDGAR at www.sec.gov (Hint
> Action and Fashion (A&F) Company is a specialty retail company operating over 1,000 stores globally. The following disclosure note was included in the financial statements: Required: 1. What approach should A&F take to account for its change in
> York Co. sells one product, which it purchases from various suppliers. York’s trial balance at December 31, 2024, included the following accounts: York Co.’s inventory purchases during 2024 were as follows: Additional
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Refer to the situation described in BE 8–10. Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts.
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li
> Hudson Company, which is both a wholesaler and a retailer, purchases its inventories from various suppliers. Additional facts for Hudson’s wholesale operations are as follows: a. Hudson incurs substantial warehousing costs. b. Hudson values inventory at
> Maxi Corporation uses the unit LIFO inventory method. The costs of the company’s products have been steadily rising since the company began operations in 2008, and cost increases are expected to continue. The chief financial officer of the company would
> An accounting intern for a local CPA firm was reviewing the financial statements of a client in the electronics industry. The intern noticed that the client used the FIFO method of determining ending inventory and cost of goods sold. When she asked a col
> You have just been hired as a consultant to Tangier Industries, a newly formed company. The company president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should use to value its inventory and cost of goods sold. Mr.
> You were recently hired to work in the controller’s office of the Balboa Lumber Company. Your boss, Alfred Eagleton, took you to lunch during your first week and asked a favor. “Things have been a little slow lately, and we need to borrow a little cash t
> The table below contains selected financial information included in the financial statements of Kohl’s Corporation and Dillards, Inc., two companies in the department store industry. Required: Calculate the 2019 gross profit ratio, inv
> Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Coca- Cola and Pepsico for the year ended December 2019. Locate the “Consolidated Statements of Income” (income statement) and “Consolidated Balanc
> Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc., appears below: The significant accounting policies note disclosure contained the following: Required: 1. Is Wolverine disclosing the FIF
> In 2023, the Moncrief Company purchased from Jim Lester the right to be the sole distributor in the western states of a product called Zelenex. In payment, Moncrief agreed to pay Lester 20% of the gross profit recognized from the sale of Zelenex in 2024.
> On December 28, 2024, Video tech Corporation (VTC) purchased 10 units of a new satellite uplink system from Tristar Communications for $25,000 each. The terms of each sale were 1/10, n/30. VTC uses the gross method to account for purchase discounts and a
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li
> Determining the physical quantity that should be included in inventory normally is a simple matter because that amount consists of items in the possession of the company. The cost of inventory includes all necessary expenditures to acquire the inventory
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> The table below contains selected financial information included in the 2016 financial statements of Tyson Foods Inc. and Pilgrim’s Pride Corp. Required: 1. Calculate the 2019 receivables turnover ratio and average collection period fo
> You are spending the summer working for a local wholesale furniture company, Samson Furniture, Inc. The company is considering a proposal from a local financial institution, Old Reliant Financial, to factor Samson’s receivables. The company controller is
> Search on the Internet for the 2019 annual report for Sanofi-Aventis. Find the accounts receivable disclosure note. Required: 1. Has Sanofi-Aventis factored or securitized accounts receivable? How do you know? 2. Assume that Sanofi-Aventis decided to in
> McLaughlin Corporation uses the allowance method to account for bad debts. At the end of the company’s fiscal year, accounts receivable are analyzed and the allowance for uncollectible accounts is adjusted. At the end of 2024, the compa
> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C
> Tough built Industries, Inc., designs, manufactures, and distributes tools and accessories to the do-it-yourself and professional building industry. Required: 1. Access EDGAR on the Internet. The web address is www.sec.gov. 2. Search for Tough built Ind
> Refer to the situation described in BE 8–8. Record (1) the purchase of inventory on account and (2) the purchase return, assuming the company uses a periodic inventory system.
> Hogan Company uses the net method of accounting for sales discounts. Hogan offers trade discounts to various groups of buyers. On August 1, 2024, Hogan factored some accounts receivable on a without recourse basis. Hogan incurred a finance charge. Hogan
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li
> You have recently been hired as the assistant controller for Stanton Industries, a large, publicly held manufacturing company. Your immediate superior is the controller, who, in turn, is responsible to the vice president of finance. The controller has as
> You have been hired as a consultant by a parts manufacturing firm to provide advice as to the proper accounting methods the company should use in some key areas. In the area of receivables, the company president does not understand your recommendation to
> For each of the following independent situations, indicate whether there is an apparent internal control weakness, and, if one exists, suggest alternative procedures to eliminate the weakness. 1. John Smith is the petty cash custodian. John approves all
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Horizon Corporation manufactures personal computers. The company began operations in 2019 and reported profits for the years 2019 through 2022. Due primarily to increased competition and price slashing in the industry, 2023’s income statement reported a
> Jerry’s Ice Cream Parlor is considering a marketing plan to increase sales of ice cream cones. The plan will give customers a free ice cream cone if they buy 10 ice cream cones at regular prices. Customers will be issued a card that will be punched each
> The following Trueblood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from th
> The following Trueblood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from th
> A company purchased inventory on account for $250,000. The company returned $20,000 of the inventory to the supplier for credit. Record (1) the purchase of inventory on account and (2) the purchase return, assuming the company uses a perpetual inventory
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> Consider the following excerpts from revenue recognition disclosure notes: 1. eBay: “The transaction price is allocated to each performance obligation based on its stand alone selling price (SSP). In instances where SSP is not directly observable, we gen
> The following is an excerpt from Note 2 of Deere & Company’s annual report: “Under the terms of sales agreements with dealers, interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range
> For each of the following note disclosures, indicate whether the disclosure would likely appear in (A) environmental, (B) social, or (C) governance disclosures: (1) ratio of pay of chief executive offer to median full-time employee; (2) ratio of independ
