Do firms capitalize stock issue costs as intangible assets on the balance sheet? Explain
> When can firms recognize net deferred tax assets on the balance sheet?
> When do deferred tax liabilities occur?
> How does the balance sheet approach measure deferred taxes?
> How are deferred tax assets and deferred tax liabilities created?
> Farris Casinos recently acquired a newly built hotel and casino in Atlantic City. The cost of the complex was $6,000,000 with a 6-year useful life and no residual value expected. Farris depreciates its buildings using the straight-line method for financi
> When do permanent differences arise?
> Will permanent differences cause the effective tax rate to be lower than the statutory rate?
> When will income tax expense and income taxes payable be equal?
> Are extensive disclosures required for deferred taxes?
> Do U.S. GAAP and IFRS classify deferred tax accounts in the same manner?
> How do firms classify deferred tax accounts?
> For each case, provide the missing information. Assume that payments occur at the end of each period.
> Do U.S. GAAP and IFRS have similar approaches to accounting for tax contingencies?
> How does an entity account for uncertain tax positions?
> Does accounting for a net operating loss (NOL) carryback require less judgment than accounting for the NOL carryforward?
> Repeat E16-8 assuming that Greenburg Company is an IFRS reporter and the company would like to elect to report the investment at fair value through other comprehensive income if it qualifies for this treatment. Greenburg is holding the investment in comm
> When do firms adjust for the cumulative effect of changes in future tax rates affecting income?
> Do firms measure deferred tax accounts at the statutory tax rate expected to be in effect at the future reversal date to properly value the deferred tax asset and deferred tax liability?
> How does a firm determine the need for a valuation allowance against a deferred tax asset in the more-likelythan-not test?
> Do the objectives of GAAP accounting and tax accounting methods differ?
> Does the fair value option enable firms to offset earnings volatility in financial reporting? Explain.
> When is the equity method of accounting for investments required
> What categories can managers use to classify equity investments?
> Sallie Corporation borrowed $700,000 on November 1, 2016. The note agreement specifies that it will pay interest quarterly at 6% and the principal will be due on October 31, 2017. The company’s fiscal year ends December 31. What journal entry will Sallie
> Do entities report unrealized gains and losses on fair value adjustments to both debt and equity security investments in earnings? Explain.
> How does a company account for equity investments in which it has significant influence?
> Greenburg Company reported the following investment activity occurring at January 1 of the current year. Greenburg does not have significant influence over the investees Required: a. Prepare the journal entry required to record the acquisition of the
> What categories can managers use to classify debt investments?
> Is the fair value of an investment subjective? Explain
> Is reporting an investment at its cost considered relevant? Explain.
> Are companies required to assess whether their equity investments are impaired? Explain
> Is there a difference in how companies report impairment losses on equity investments under U.S. GAAP and IFRS?
> Is there a difference in how companies report impairment losses on debt investments under IFRS compared to U.S. GAAP?
> How do companies report impairment losses on equity investments?
> How do companies report impairment losses on debt investments measured at amortized cost?
> Use the following excerpt from the financial statements of Fixet Company’s debt footnote (from Fixet Company’s 2018 annual report) to answer these questions: a. At December 31, 2018, what is the amount of the current
> Do companies generally disclose the amounts of debt investment by classification: held to maturity, trading, or available for sale? Explain.
> Using the information provided in E16-6, satisfy the following requirements assuming that the equity securities held by Armonico Capital do not have a readily determinable fair value because neither company is publicly traded. Armonico elects to carry bo
> What is the fair value hierarchy for investment securities?
> Can companies apply the fair value option to all financial instruments? Explain.
> Are debt investments classified as current or non-current investments? Explain.
> Does IFRS classify mandatorily redeemable preferred stock as equity? Explain.
> Is mandatorily redeemable preferred stock classified as equity? Explain
> Are preferred shares hybrid financial instruments? Explain
> What are the two available methods used to account for treasury stock transactions? Explain each method
> Does an entity have to legally dissolve treasury stock shortly after acquiring the shares? Explain.
> How do firms measure the value of the shares issued in a nonmonetary exchange?
> Saratoga Company issued bonds with a face value of $300,000 on January 1, 2018, for $306,000. Saratoga uses the fair value option to measure the bonds. At the end of 2018, the carrying value of the bonds is $304,702 and their fair value is $301,600. Half
> Armonico Capital Partners, Ltd. acquired the following equity investments at the beginning of Year 1. Armonico does not have significant influence over the investees. Required: a. Prepare the journal entry to record the acquisition of the investments.
> What are the retained earnings of a firm?
> Do current accounting standards require extensive shareholders’ equity disclosures? Explain.
> Is a specific format required for reporting comprehensive income? Explain
> What is included in other comprehensive income?
> How do firms record prior-period adjustments?
> Do firms often use stock dividends to avoid providing a cash return to shareholders? Explain.
> Are dividends in arrears on cumulative preferred shares a legal liability of the corporation? Explain.
> Is non-mandatorily redeemable preferred stock classified as equity? Explain.
> What is stockholders’ equity?
> IFRS. Using the same information from E16-4, assume that Barney Equipment Corporation is an IFRS reporter and the company would like to elect to report these investments at fair value through other comprehensive income if it qualifies for this treatment.
> Saratoga Company issued bonds with a face value of $200,000 on January 1, 2018, for $202,716. Saratoga uses the fair value option to measure the bonds. At the end of 2018, the carrying value of the bonds is $201,403, and their fair value is $203,780. The
> Debt issued with warrants is considered a hybrid security that possesses both debt and equity characteristics. Will accountants always separate the total proceeds into debt and equity on the balance sheet? Explain.
> Under IFRS, how do firms account for convertible debt?
> What is convertible debt and how do firms account for it?
> If a company opts to retire debt before maturity, will it report a gain or loss in net income? Explain.
> When a bond is issued at a discount, will its periodic interest expense be greater or less than the interest payment? Explain.
> What method of amortization must companies use to amortize a bond discount or premium when reporting?
> What is included in bond issue costs and how should a company account for them?
> If the market rate of interest exceeds the face or stated rate on a long-term debt obligation, will the company issue the debt at a discount or premium? Explain.
> Does a company have to disclose the total amount of debt that matures each year for all long-term debt? Explain.
> Barney Equipment Corporation acquired the following equity investments at the beginning of Year 1. Barney does not have significant influence over the investees. Both companies are publicly traded. Required: a. Prepare the journal entry to record the
> If a company elects the fair value option for long-term liabilities, can it report unrealized gains and losses in other comprehensive income? Explain
> Using the information provided in BE14-34, how should Megga classify the $1,500,000 note payable on the December 31 balance sheet under IFRS? Provide any necessary journal entries. Data from BE14-34: U.S. GAAP. Megga Brands, Inc. borrowed $1,500,000 fr
> Can a company choose the fair value option for any long-term financial liability under IFRS? Explain
> Can a company choose the fair value option for any long-term financial liability? Explain
> Do companies always reclassify long-term debt that becomes callable by the creditor as a short-term obligation? Explain
> Under IFRS, can companies reclassify short-term debt expected to be refinanced on a long-term basis during the post-balance sheet period as long-term debt? Explain
> Can companies reclassify short-term debt expected to be refinanced on a long-term basis after the balance sheet date as long-term debt? Explain.
> What conditions or terms does a note payable contain?
> Do firms always accrue and record loss contingencies in the financial statements? Explain.
> What is a gain contingency? Is it accrued and recorded in the financial statements? Explain.
> Using the information provided in E16-2, prepare the fair value adjustment journal entries at the end of the second and third years after the acquisition of the investment assuming that the fair value of the bonds is equal to $5,100,000 at the end of Yea
> How do companies accrue compensated absences?
> Why are all compensated absences accrued as long as the obligation for future payment is due to services already performed by the employee and the benefits to be paid vest?
> U.S. GAAP. Megga Brands, Inc. borrowed $1,500,000 from Telcity Bank. The note payable has a term of 15 years and carries a 4% coupon interest. Because it had an inadequate credit score, Megga Brands agreed to several restrictive debt covenants. The debt
> Why are all compensated absences accrued as long as the obligation for future payment is due to services already performed by the employee and the benefits to be paid vest?
> Do sellers recognize sales taxes as expenses on their income statement? Explain
> Are advance collections from customers considered liabilities? Explain
> How are unearned revenues classified?
> What must firms use when estimating the amount of a loss contingency in a range of estimates to report in the financial statements?
> If the probability of a loss contingency is remote, is it necessary for a firm to accrue or disclose it? Explain
> Under IFRS, do firms always accrue and record loss contingencies in the financial statements? Explain
> Coral Boutique sold $1,400 of gift cards and received cash on May 25. On June 29, customers redeemed $800 of the gift cards, purchasing merchandise that cost Coral $425. The store uses a perpetual inventory system. Prepare the journal entries to record t
> IFRS. Use the same information from E15-15, assume that Fontlyn is an IFRS reporter. Prepare the journal entry for Fontlyn’s issue of the preferred shares. Data from E15-15: Fontlyn Inc. issued $20 million of $10 par preferred stock on February 1, 2018.
> When is a liability classified as current?
> Does an employer recognize payroll taxes as expenses on its income statement? Explain
> When does a company record an asset retirement obligation?
> IFRS. Using the information provided in BE14-32, prepare the journal entry to record the effect of the call on the debtor’s financial statements under IFRS. Data from BE14-32: U.S. GAAP. Braylon Brands, Inc. borrowed $2,000,000 from Home Town Bank. The
> Are all warranty costs accounted for under the accrual basis of accounting? Explain.
> Under IFRS, what must firms use when estimating the amount of a loss contingency in a range of estimates to report in the financial statements?
> Under IFRS, when do firms test plant assets and finite-life intangible assets for impairment?
