Question: Are there any book-tax differences that

> Since the early 1970s, the U.S. dollar has both increased and decreased in value against other currencies such as the Japanese yen, the Swiss franc, and the British pound. The value of the U.S. dollar, as well as the value of currencies of other countrie

> Rainy Day Insurance Company maintains an extensive portfolio of bond investments classified as available-for-sale securities under ASC 320. The bond investments have a variety of fixed interest rates and have maturity dates ranging from 1 to 15 years. R

> Avanti Corporation is a small Midwestern company that manufactures wooden furniture. Tim Martin, Avanti’s president, has decided to expand operations significantly and has entered into a contract with a German company to purchase specialty equipment for

> The consolidated cash flows from operations of Jones Corporation and its subsidiary Short Manufacturing for 20X2 decreased quite substantially from 20X1 despite the fact that consolidated net income increased slightly in 20X2. Required: What

> Johnson Corporation purchased 100 percent ownership of Freelance Company at book value on March 3, 20X2. Johnson, which makes frequent inventory purchases from Freelance, uses the equity method in accounting for its investment in Freelance. Both companie

> Cowl Company, a public company, has been reporting losses for the last three years and has been unable to pay its bills from cash generated from its operations. On December 31, 20X4, Cowl’s president instructed its treasurer to transfer a large amount of

> Mighty Corporation holds 80 percent of Longfellow Company’s common stock. The following balance sheet data are presented for December 31, 20X7: Longfellow reported net income of $115,000 in 20X7 and paid dividends o

> Branch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies’ balance sheets as of December 31, 20X4, were as follows: Short Retail’s 8 percent preferred stock is conver

> Hardtack Bread Company holds 70 percent of the common shares of Custom Pizza Corporation. Trial balances for the two companies on December 31, 20X7, are as follows: At the beginning of 20X7, Hardtack held inventory purchased from Custom Pizza contai

> Broom Manufacturing used cash to acquire 75 percent of the voting stock of Satellite Industries on January 1, 20X3, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of Satellite’s book value. B

> Acme Powder Corporation acquired 70 percent of Brown Company’s stock on December 31, 20X7, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 30 percent of Brown Company’

> Peace Corporation acquired 100 percent of Harmony Inc. in a nontaxable transaction on December 31, 20X1. The following balance sheet information is available immediately following the transaction: Additional Information: The current and future effectiv

> Famous Products Corporation acquired 90 percent ownership of Sanford Company on October 20, 20X2, through an exchange of voting shares. Famous Products issued 8,000 shares of its $10 par stock to acquire 27,000 shares of Sanford’s $5 pa

> Blase Company operates on a calendar-year basis, reporting its results of operations quarterly. For the first quarter of 20X1, Blase reported sales of $240,000 and operating expenses of $180,000 and paid dividends of $10,000. On April 1, 20X1, Mega Theat

> Detecto Corporation purchased 60 percent of Strand Company’s outstanding shares on January 1, 20X1, for $24,000 more than book value. At that date, the fair value of the noncontrolling interest was $16,000 more than 40 percent of Strand

> Following are the consolidated balance sheet accounts of Brimer Inc. and its subsidiary, Dore Corporation, as of December 31, 20X6 and 20X5. Additional Information: On January 20, 20X6, Brimer issued 10,000 shares of its common stock for land having a

> Using the data presented in P10-22, prepare a worksheet to develop a consolidated statement of cash flows using the direct method for computing cash flows from operations. Data from P10-22: Sun Corporation was created on January 1, 20X2, and quickly

> Sun Corporation was created on January 1, 20X2, and quickly became successful. On January 1, 20X6, its owner sold 80 percent of the stock to Weatherbee Company at underlying book value. At the date of that sale, the fair value of the remaining shares was

> Using the data presented in P10-20: Prepare a worksheet to develop a consolidated statement of cash flows for 20X4 using the direct method of computing cash flows from operations. Prepare a consolidated statement of cash flows for 20X4.

> Using the data presented in P10-18: Prepare a worksheet to develop a consolidated statement of cash flows for 20X3 using the direct method of computing cash flows from operations. Prepare a consolidated statement of cash flows for 20X3. Da

> Metal Corporation acquired 75 percent ownership of Ocean Company on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Ocean Company. Consolidated balance sh

> Car Corporation owns 70 percent of the voting common stock of Bus Company. At December 31, 20X1, the companies reported the following: During 20X1, Bus sold inventory costing $70,000 to Car for $100,000, and Car resold 40 percent of the inventory prior

> What are some ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies?

> Sun Company, a U.S. corporation, has an account payable of $200,000 denominated in Canadian dollars. If the direct exchange rate increases, will Sun experience a foreign currency transaction gain or loss on this payable?

> How are assets and liabilities denominated in a foreign currency measured on the transaction date? On the balance sheet date?

> What is the direct exchange rate if a U.S. company receives $1.3623 in Canadian currency in exchange for $1.00 in U.S. currency?

> What effect does the presence of a noncontrolling interest have on the computation of consolidated EPS?

> How are rights, warrants, and options of subsidiary companies treated in the computation of consolidated EPS?

> When a subsidiary’s convertible bond is treated as common stock in computing the subsidiary’s diluted EPS, how is the interest on the bond treated in computing diluted consolidated EPS

> What factors may cause a subsidiary’s income contribution to consolidated EPS to be different from its contribution to consolidated net income?

> Why is it not possible simply to add the separately computed EPS amounts of individual affiliates in deriving consolidated EPS?

> A forward exchange contract may be used (a) to manage an exposed foreign currency position, (b) to hedge an identifiable foreign currency commitment, (c) to hedge a forecasted foreign currency transaction, or (d) to speculate in foreign currency ma

> How do interperiod income tax allocation procedures affect consolidation entries in the period in which intercompany profits unrealized as of the beginning of the period are realized?

> How do interperiod income tax allocation procedures affect consolidation entries in the period in which unrealized intercompany profits arise?

> How do unrealized profits on intercompany transfers affect the amount reported as income tax expense in the consolidated financial statements?

> Why do companies that file consolidated tax returns often choose to allocate tax expense to the individual affiliates?

> Explain why a difference usually exists between a currency’s spot rate and forward rate. Give two reasons this difference is usually positive when a company enters into a contract to receive foreign currency at a future date.

> What factors would cause an acquirer to include deferred tax assets and liabilities in the net identifiable assets acquired?

> How do the consolidation entries at the end of the year change when an acquisition occurs at midyear rather than at the beginning of the year?

> How are dividends declared by an acquired company prior to the date of a midyear acquisition treated in the consolidated financial statements?

> Explain the difference between indirect and direct exchange rates.

> How is an increase in inventory included in the amounts reported as cash flows from operating activities under (a) the indirect method and (b) the direct method?

> What types of economic factors affect currency exchange rates? Give an example of a change in an economic factor that results in a weakening of the local currency unit versus a foreign currency unit.

> Differentiate between a foreign transaction and a foreign currency transaction. Give an example of each.

> Why are payments to suppliers not shown in the statement of cash flows when the indirect method is used in presenting cash flows from operating activities?

> Why are dividend payments to noncontrolling shareholders treated as an outflow of cash in the consolidated cash flow statement but not included as dividends paid in the consolidated retained earnings statement?

> Why not simply add a fourth part to the three-part consolidation worksheet to permit preparation of a consolidated cash flow statement?

> Why are changes in inventory balances not shown in the statement of cash flows when the direct method is used in presenting the cash flows from operating activities?

> How does the use of interperiod tax allocation procedures affect the amount of income assigned to noncontrolling shareholders in the period in which the subsidiary records unrealized intercompany profits?

> Distinguish between an exposed net asset position and an exposed net liability position.

> When are foreign currency transaction gains or losses recognized in the financial statements? Where are these gains or losses reported in the financial statements?

> What portion of the sales of an acquired company is included in the consolidated income statement following a midyear acquisition?

> Are sales included in the consolidated cash flows worksheet in computing cash flows from operating activities under (a) the indirect method or (b) the direct method?

> Power Corporation owns 75 percent of Turk Company’s stock; no intercompany purchases or sales were made in 20X4. For the year, Power and Turk reported sales of $300,000 and $200,000 and cost of goods sold of $160,000 and $95,000, respectively. Power’s in

> Toggle Company reported sales of $310,000 and cost of goods sold of $180,000 for 20X2. During 20X2, Toggle’s accounts receivable increased by $17,000, inventory decreased by $8,000, and accounts payable decreased by $21,000. Required: Compute the

> What is the direct exchange rate if a U.S. company receives $1.3623 in Canadian currency in exchange for $1.00 in U.S. currency?

> Merit & Family purchased engines from Canada for 30,000 Canadian dollars on March 10 with payment due on June 8. Also, on March 10, Merit acquired a 90-day forward contract to purchase 30,000 Canadian dollars at C$1  =  $0.58.

> Chocolate De-lites imports and exports chocolate delicacies. Some transactions are denominated in U.S. dollars and others in foreign currencies. A summary of accounts receivable and accounts payable on December 31, 20X6, before adjustments for the effect

> On December 1, 20X1, Rone Imports, a U.S. company, purchased clocks from Switzerland for 15,000 francs (SFr) to be paid on January 15, 20X2. Rone’s fiscal year ends on December 31, and its reporting currency is the U.S. dollar. The exch

> Harris Inc. had the following transactions: On May 1, Harris purchased parts from a Japanese company for a U.S. dollar equivalent value of $8,400 to be paid on June 20. The exchange rates were On July 1, Harris sold products to a Brazilian cus

> Delaney Inc. has several transactions with foreign entities. Each transaction is denominated in the local currency unit of the country in which the foreign entity is located. For each of the following independent cases, determine the December 31, 20X2, y

> Stage Corporation has both convertible preferred stock and convertible debentures outstanding at the end of 20X3. The annual cash payment to the preferred shareholders and to the bondholders is the same, and the two issues convert into the same number of

> Draw a tree diagram to illustrate what the market shares would be next month for Problem 14-10. Problem 14-10: Over any given month, Dress-Rite loses 10% of its customers to Fashion, Inc., and 20% of its market to Luxury Living. But Fashion, Inc.,

> Zipper Products, Inc., produces granola cereal, granola bars, and other natural food products. Its natural granola cereal is sampled to ensure proper weight. Each sample contains eight boxes of cereal. The overall average for the samples is 17 ounces.

> Which of the following are NLP problems, and why? (a). Maximize profit = 3X1 + 5X2 + 99X3 subject to X1 > 10 X2 < 5 X3 > 18 (b). Maximize cost = 25X1 + 30X2 + 8X1X2 subject to X1 > 8 X1 + X2 > 12 0.0005X1 - X2 = 11 (c). Maximi

> Why are
and R-charts usually used hand in hand?

> When set at the standard position, Autopitch can throw baseballs toward a batter at an average speed of 60 mph. Autopitch devices are made for both major- and minor-league teams to help them improve their batting averages. Autopitch executives take sam

> Ray Cahn man is the proud owner of a 1955 sports car. On any given day, Ray never knows whether his car will start. Ninety percent of the time it will start if it started the previous morning, and 70% of the time it will not start if it did not start t

> Find the inverse of each of the following matrices:  

> Every commercial airline pilot visually inspects his/ her airplane before flying. If the number of visible defects (known as marks) exceeds a certain prescribed limit, the pilot can call for maintenance, causing flight delays or even flight cancellatio

> V. S. Industries in Parkersburg, West Virginia, is a small manufacturer of military-grade hybrid microcircuits. One of the many quality assurance procedures required by Military Standard 883 (MILSTD- 883) for hybrid microcircuits is known as nondestruc

> Cyber security is an area of increasing concern. The National Security Agency (NSA) monitors the number of hits at sensitive websites. When the number of hits is much larger than normal, there is cause for concern, and further investigation is warrante

> A new president at Big State University has made student satisfaction with the enrollment and registration process one of her highest priorities. Students must see an advisor, sign up for classes, obtain a parking permit, pay tuition and fees, and buy

> Kate Drew has been hand-painting wooden Christmas ornaments for several years. Recently, she has hired some friends to help her increase the volume of her business. In checking the quality of the work, she notices that some slight blemishes occasionall

> For Problem 15-16, develop upper and lower control limits for the range. Do these samples indicate that the process is in control? Problem 15-16: Colonel Electric is a large company that produces light bulbs and other electrical products. One parti

> The hit Broadway musical Jefferson is playing at the Richard Rodgers Theatre. Its producers have determined that if it is sold out on any one night, then there is a 96% chance that it will be sold out on the next night. Moreover, if it is not sold out

> Lulu is a surfer who lives in Conway, South Carolina. Through experience, she has determined the transition probabilities for surf conditions from any one day to the next at nearby North Myrtle Beach: Determine the equilibrium probabilities of g

> The following digraph represents the changes in weather from one day to the next in Lowell, Massachusetts. Determine the associated transition matrix and the overall percentage of sunny days.  

> What are the major steps in the simulation process?  

> The following digraph represents the changes in weather from one day to the next in Erie, Pennsylvania. Determine the associated transition matrix and the probability that it will be cloudy in 3 days given that it is cloudy today.  

> Find

> Set up both the vector of state probabilities and the matrix of transition probabilities given the following information: • Store 1 currently has 40% of the market; store 2 currently has 60% of the market. • In each period, store 1 customer

> In Section 14.6, we investigated an accounts receivable problem. How would the paid category and the bad debt category change with the following matrix of transition probabilities?  

> Brenda’s Bicycle and Surfboard Rentals leases quad-bikes each day from a supplier and rents them to customers who use them along Seawall Boulevard in Galveston, Texas. Each day, Brenda leases 30 quad-bikes from her supplier at a cost of $4 per qu

> Draw a flow diagram to represent the logic and steps of simulating barge arrivals and unloadings at the Port of New Orleans. For a refresher in flowcharts, see Figure 13.3. Figure 13.3: /  

> Upon arrival at the Sunkist Gate at Naval Base Ventura County in Port Hueneme, California, there are two security guards, each assigned to one of the two vehicular lanes that lead up to the gate, to check the identification (i.e., the military Common A

> When additional band members arrived to help at the car wash (see Problem 12-32), it was decided that two cars should be washed at a time instead of just the one. Both work crews would work at the same rate. Problem 12-32: The Clear Brook High Scho

> The Clear Brook High School band is holding a car wash as a fund-raiser to buy new equipment. The average time to wash a car is 4 minutes, and the time is exponentially distributed. Cars arrive at a rate of one every 5 minutes (or 12 per hour), and the

> The following table represents a network with the arcs identified by their starting and ending nodes. Draw the network and use the minimal-spanning tree technique to find the minimum distance required to connect these nodes. ARC DISTANCE 1–2

> List three ways in which random numbers may be generated for use in a simulation.  

> The average number of customers in the system in the single-channel, single-phase model described in Section 12.4 is L = μ μ−λ Show that for m = 1 server, the multichannel queuing model in Section 12.5, is identical to the s

> Customers arrive at an automated coffee vending machine at a rate of 4 per minute, following a Poisson distribution. The coffee machine dispenses a cup of coffee in exactly 10 seconds. (a). What is the average number of people waiting in line? (b).

> Mr. Fetterolf (see Problem 12-38) is considering changing the queuing characteristics of his shop. Instead of selecting a number for the first available barber, a customer will be able to select which barber he or she prefers upon arrival. Assuming tha

> Fetterolf's Barber Shop is a popular haircutting place near the campus of Penn State. Four barbers work full-time and spend an average of 15 minutes on each customer. Customers arrive all day long, at an average rate of 12 per hour. When they enter

> During peak times, the entry gate at a large amusement park experiences an average arrival of 500 customers per minute, according to a Poisson distribution. The average customer requires 4 seconds to be processed through the entry gate. The park’

> An operator processes jobs on a first-come, first served basis. The jobs have Poisson arrival rates, with an average of 6 minutes between arrivals. The objective is to process these jobs so that they spend no more than 8 minutes, on average, in the sys

> The director of security wants to connect security video cameras to the main control site from five potential trouble locations. Ordinarily, cable would simply be run from each location to the main control site. However, because the environment is pote

> Using the data in Solved Problem 10-3, develop a spreadsheet for a two-period weighted moving average forecast with weights of 0.6 1w12 for the most recent period and 0.4 (w2) for the other period. Note these weights sum to 1, so the forecast is simply

> In Solved Problem 10.3, nonlinear programming was used to find the best value for the smoothing constant, a, in an exponential smoothing forecasting problem. To see how much the MAD can vary due to the selection of the smoothing constant, use Excel and

> The XYZ Corporation is expanding its market to include Texas. Each salesperson is assigned to potential distributors in one of five different areas. It is anticipated that the salesperson will spend about three to four weeks in the assigned area. A state