Question: Four years ago Omega Technology, Inc., acquired

> Starbucks Corp., the passionate purveyors of coffee and everything else that goes with a full and rewarding coffeehouse experience, included the following table in its 2009 annual report: Total stock based compensation and ESPP expense recognized in the

> At January 1, 2017, Archer Co.’s PBO is $500,000 and the fair value of its pension plan assets is $630,000. The average remaining service period of Archer’s employees is 12 years. The AOCI—net actuari

> At January 1, 2017, Milo Co.’s projected benefit obligation is $300,000, and the fair value of its pension plan assets is $340,000. The average remaining service period of Milo’s employees is 10 years. Milo Co. uses th

> Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 2016 and 2017 related to the pension plan: Bonny Corp. had no beginning balance in its AO

> Zeff Manufacturing provides the following information about its postretirement health care plan for 2017: Accumulated postretirement benefit obligation on 1/1 ………… $300,000 Fair value of plan assets on 1/1 ………………………………………… 30,000 Benefits paid to retiree

> Jones Company has a postretirement benefit (health care) plan for its employees. On January 1, 2017, the balance in the Accumulated postretirement benefit obligation account was $300 million. The assumed discount rate—for purposes of determining postreti

> Cummings Inc. had the following reconciliation at December 31, 2017: Fair value of plan assets …………………………. $5,000 PBO …………………….………………………………. 4,200 Funded status …………………….………………. $ 800 AOCI—prior service cost ………………………. $ 300 AOCI—net actuarial loss …………

> Neighborhood Supermarkets is preparing to go public, and you are asked to assist the firm by preparing its statement of cash flows for 2017. Neighborhood’s balance sheets at December 31, 2016, and December 31, 2017, and its income state

> The Barden Corporation’s comparative balance sheets for 2017 and 2016 are presented below. The income statement of Barden Corporation for the year ended December 31, 2017, is as follows: Additional Information: a. On January 11, 2

> Metro Inc. reported net income of $150,000 for 2017. Changes occurred in several balance sheet accounts during 2017 as follows: Investment in Videogold Inc. stock, carried on the equity basis ……………...……………...……………...v $5,500 increase Accumulated deprec

> Alp Inc. had the following activities during 2017: Acquired 2,000 shares of stock in Maybel Inc. for $26,000. Sold an investment in Rate Motors for $35,000 when the carrying value was $33,000. Acquired a $50,000, four-year certificate of deposit from

> Lino Company’s worksheet for the preparation of its 2017 statement of cash flows included the following information: Lino’s 2017 net income is $150,000. Required: What amount should Lino include as net cash that is

> The income statement and statement of cash flows for ABC Equipment Company for 2017 are provided below. Supplemental Information: Other current liabilities represent obligations for general and administrative expenses. Derive a direct method presen

> Bostonian Company provided the following information related to its defined benefit pension plan for 2017: PBO on 1/1 …………………….…………………….………… $2,500,000 Fair value of plan assets on 1/1 ………………………… 2,000,000 Service cost …………………….…………………….………... 120,000 Ac

> On January 1, 2017, Pack Corp. acquired all of Slam Corp.’s common stock for $500,000. On that date, the fair values of Slam’s net assets equaled their book values of $400,000. During 2017, Slam paid cash dividends of

> Fountain Inc. has 5,000,000 shares of common stock outstanding on January 1, 2017. It issued an additional 1,000,000 shares of common stock on April 1, 2017, and 500,000 more on July 1, 2017. On October 1, 2017, Fountain issued 10,000 convertible bonds;

> Effective April 27, 2017, Dorr Corporation’s shareholders approved a two-for-one split of the company’s common stock and an increase in authorized common shares from 100,000 shares (par value of $20 per share) to 200,000 shares (par value of $10 per shar

> The following information pertains to Lee Corporation’s defined benefit pension plan for 2017: Service cost ……………….……………….……………….…………… $160,000 Actual and expected return on plan assets ……………….……………….35,000 Amortization of prior service costs ……………….……

> Hukle Company has provided the following information pertaining to its postretirement plan for 2017: Service cost ……………….…………………………. $240,000 Benefit payment made at 12/31 ……………………. 110,000 Interest on accumulated postretirement benefit obligation…

> Mason Manufacturing had 600,000 shares of common stock outstanding and 150,000 shares of $100 par value preferred stock outstanding January 1, 2017. An additional 120,000 shares of common stock were issued on August 1 and 24,000 common shares were repurc

> On January 1, 2017, Pitt Company acquired an 80% investment in Saxe Company. The acquisition cost was equal to Pitt’s equity in Saxe’s recorded net assets at that date. On January 1, 2017, Pitt and Saxe had retained earnings of $500,000 and $100,000, res

> On April 1, 2017, Dart Company paid $620,000 for all issued and outstanding common stock of Wall Corporation in a transaction properly accounted for under the acquisition method. Wall’s recorded assets and liabilities on April 1, 2017,

> On April 30, 2017, Pound Corp. acquired for cash all 200,000 shares of the outstanding common stock of Shake Corp. for $20 per share. At April 30, 2017, Shake’s balance sheet showed net assets with a $3,000,000 book value. On that date, the fair value of

> Superfine Company collected the following data in preparing its cash flow statement for the year ended December 31, 2017: Amortization of bond discount ……………...……………...……………...……………...$ 1,000 Dividends declared ……………...……………...……………...……………...……………...22,

> ESCO Technologies Inc. and Take-Two Interactive Software, Inc., both capitalize software development costs in accordance with their respective policies as summarized here. The condensed financial information that follows was extracted from each company&a

> In January 2017, Harold Corporation acquired 20% of Otis Company’s outstanding common stock for $400,000. This investment gave Harold the ability to exercise significant influence over Otis. The book value of Otis’s net assets was $1,500,000. The excess

> Spridget Company has 1 million shares of common stock authorized with a par value of $3 per share, of which 600,000 shares are outstanding. The company received $7 per share when it issued shares to the public. Required: What is the book value of the Co

> On January 2, 2017, Loch Company established a defined benefit plan covering all employees and contributed $1,000,000 to the plan. At December 31, 2017, Loch determined that the 2017 service and interest costs totaled $620,000. The expected and the actua

> At December 31, 2017, Kerr Corporation’s pension plan administrator provided the following information: Fair value of plan assets ………………. $3,450,000 Accumulated benefit obligation ……………….4,300,000 Projected benefit obligation ……………….5,700,000 Required

> The following information pertains to Seda Company’s pension plan for 2017: Actuarial estimate of projected benefit obligation at ……………….1/1 $72,000 Actuarial estimate of projected benefit obligation at ……………….1/1 $72,000 Service cost ……………….……………….……

> Omega Corporation’s comparative balance sheet accounts worksheet at December 31, 2017 and 2016, follow, together with a column showing the increase (decrease) from 2016 to 2017. Additional Information: On December 31, 2016, Omega ac

> A statement of cash flows for Friendly Markets, Inc., for 2017 appears below. Required: Prepare the worksheet entry that would be made to prepare a cash flow statement for each of the numbered line items. For example, the worksheet entry for item (1) i

> Presented next are the balance sheet accounts of Bergen Corporation as of December 31, 2017 and 2016. Additional Information: On January 2, 2017, Bergen sold all of its marketable investment securities for $95,000 cash. On March 10, 2017, Bergen paid

> Excerpts from the financial statements of Stanley Black & Decker, Inc. follow. From Stanley Black & Decker’s Accounts receivable note: Required: 1. Determine the difference between the change in accounts and notes receiv

> The balance sheets of Global Trading Company follow: Additional Information: The company reported a net loss of $279,500 during 2017. There are no income taxes. Goodwill as of December 31, 2016, was part of an acquisition made during 2016. The com

> The following information is based on a real company whose name has been disguised. Opus One operates in a single business segment, the retailing and servicing of home audio, car audio, and video equipment. Its operations are conducted in Texas through 2

> The following are selected balance sheet accounts of Zach Corporation at December 31, 2017 and 2016, as well as the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended Decem

> Rite Aid Corporation operates retail drugstores in the United States. It is one of the country’s largest retail drugstore chains with 3,333 stores in operation as of March 3, Year 3. The company’s drugstoresâ&#12

> The management of Banciu Corporation provides you with the comparative analysis of changes in account balances between December 31, 2016, and December 31, 2017, appearing below. Supplemental Information: a. The following table presents a comparative

> On January 1, 2017, Pluto Company acquired all of Saturn Company’s common stock for $1,000,000 cash. On that date, Saturn had retained earnings of $200,000 and common stock of $600,000. The book values of Saturn’s asse

> Refer to the balance sheets of Plate and Salad in the previous problem. Assume that Plate buys 80% of Salad’s common stock for $180,000 cash. The fair value of Salad’s land is $20,000, the fair value of Salad’s buildings and equipment is $110,000, and al

> The following are the balance sheets for Plate and Salad immediately prior to Plate’s September 1, 2017, acquisition of Salad: Consider the following cases: Case 1 Plate buys 100% of Salad’s common stock for $180,00

> Prince Corp. and Sprite Corp. reported the following balance sheets at January 1, 2017: On January 2, 2017, Prince issued $36,000 of stock and used the proceeds to purchase 90% of Sprite’s common stock. The excess of the purchase price

> On January 1, 2017, Delta Inc. acquired 80% of Sigma Company’s outstanding stock for $80,000 cash. Following are the balance sheets for Delta and Sigma immediately before the acquisition, as well as fair value information regarding Sigm

> On January 1, 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of Delta Crating Corp. for $250 million and accounts for this investment under the equity method. The following information is available regarding Delta Cratin

> On December 31, 2017, Pate Corporation acquired 80% of Starmont Corporation’s common stock for $900,000 cash. Assume that the fair values of Starmont’s identifiable assets and liabilities equaled book values on the acq

> The income statement for the year ended December 31, 2017, as well as the balance sheets as of December 31, 2017, and December 31, 2016, for Lucky Lady Inc. follow. This information is taken from the financial statements of a real company whose name has

> 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 world. In January 20X5, Casino issued €600 million of

> Yachting in Paradise, Inc., was founded late in 2010 by retired Admiral Andy Willits to provide executive retreats aboard a luxury yacht with ports of call scattered around the South Pacific. Yachting in Paradise is a U.S. firm and follows U.S. GAAP. On

> Fly-by-Night is an international airline company. Its fleet includes Boeing 757s, 747s, and 737s and McDonnell Douglas MD-83s and MD-80s. Assume that Fly-by-Night made the following expenditures related to these aircraft in 2017: Required: 1. New jet en

> Hoyle Company owns a manufacturing plant with a fair value of $4,600,000, a recorded cost of $8,500,000, and accumulated depreciation of $3,650,000. Patterson Company owns a warehouse with a fair value of $4,400,000, a recorded cost of $6,900,000, and ac

> On April 23, 2017, Starlight Department Stores, Inc., acquired a 75-acre tract of land by paying $25,000,000 in cash and by issuing a six-month note payable for $5,000,000 and 1,000,000 shares of its common stock. On April 23, 2017, Starlight’s common st

> Cayman Diving, Inc., needs to acquire a new dive boat. The seller will accept a noninterest bearing note for $400,000 due in four years or $250,000 in cash. The company’s incremental cost of borrowing is 10%. Required: Which option should Cayman Diving

> On June 30, 2017, Macrosoft Company acquired a 10-acre tract of land. On the tract was a warehouse that Macrosoft intended to use as a distribution center. At the time of purchase, the land had an assessed tax value of $6,300,000, and the building had an

> On January 2, 2016, Half, Inc., purchased a manufacturing machine for $864,000. The machine has an eight-year estimated life and a $144,000 estimated salvage value. Half expects to manufacture 1,800,000 units over the machine’s life. During 2017, Half ma

> Required: 1. Which of the following qualifies as a hedged item? a. A company’s work-in-process inventory of unfinished washers, dryers, and refrigerators. b. Credit card receivables at JCPenney. c. Bushels of corn owned by the Farmers’ Cooperative. d. Sa

> On January 1, 2017, Tusk Company issued $300 million of bonds with a 6% coupon interest rate. The bonds mature in 10 years and pay interest annually on December 31 of each year. The market rate of interest on January 1, 2017, for bonds of this risk class

> Royal Dutch Shell had pretax income of $2,047 million, $28,314 million and $33,592 million in 2015, 2014, and 2013, respectively. Presented below are excerpts from the 2015 annual report of Royal Dutch Shell, a Dutch company that finds, extracts, process

> On July 1, 2017, Mirage Company issued $250 million of bonds with an 8% coupon interest rate. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The market rate of interest on July 1, 2017, for bonds of th

> On January 1, 2016, Roland Inc. issued $125 million of 8% bonds at par. The bonds pay interest semiannually on June 30 and December 31 of each year, and they mature in 15 years. On December 31, 2017 (before the interest payment is made), the bonds are tr

> In January 2017, Vorst Company purchased a mineral mine for $2,640,000. Removable ore was estimated at 1,200,000 tons. After it has extracted all the ore, Vorst will be required by law to restore the land to its original condition. The expected present v

> Pearl, Inc., develops and markets computer software. During 2016, one of Pearl’s engineers began developing a new and very innovative software product. On July 1, 2017, a team of Pearl engineers determined that the software product was technologically fe

> In 2017, Ball Labs incurred the following costs: Direct costs of doing contract research and development…….……$400,000 work for the government to be reimbursed by a governmental unit Research and development costs not included above were: Depreciation ……

> Akers Company sold bonds on July 1, 2017, with a face value of $100,000. These bonds are due in 10 years. The stated annual interest rate is 6% per year, payable semiannually on June 30 and December 31. These bonds were sold to yield 8%. Required: How m

> On January 2, 2014, Lava, Inc., purchased a patent for a new consumer product for $90,000. At the time of purchase, the patent was valid for 15 years; however, its useful life was estimated to be only 10 years due to the product’s competitive nature. On

> On January 1, 2013 Vick Company purchased a trademark for $400,000, which had an estimated useful life of 16 years. In January 2017, Vick paid $60,000 for legal fees in a successful defense of the trademark. Required: How much should Vick record as trad

> McClelland Corporation agreed to purchase some landscaping equipment from Agri-Products for a cash price of $500,000. Before accepting delivery of the equipment, McClelland learned that the same equipment could be purchased from another dealer for $460,0

> Weir Company uses straight-line depreciation for its property, plant, and equipment, which, stated at cost, consisted of the following: Weir’s depreciation expense for 2017 and 2016 was $55,000 and $50,000, respectively. Required: W

> Diamond Offshore Drilling, Inc. (DOD), is an international company that provides contract drilling services to the energy industry. In its 2015 Form 10-K, it reports the following information related to Property and equipment. 2. Asset Impairments 2015 I

> Kobe Company began constructing a building for its own use in February 2017. During 2017, Kobe incurred interest of $70,000 on specific construction debt and $15,000 on other borrowings. Interest computed on the weighted-average amount of accumulated exp

> Clay Company started construction on a new office building on January 1, 2017, and it moved into the finished building on July 1, 2018. Of the building’s $2,500,000 total cost, $2,000,000 was incurred in 2017 evenly throughout the year. Clay’s incrementa

> For $20 million, Ross Adams Mining acquired a tract of land containing a large deposit of anthracite coal. Ross Adams believes the most economical way to extract the coal is to stripmine the site. The company is required by environmental regulations to r

> On January 1, 2017, Hardy, Inc., purchased certain plant assets under a deferred payment contract. The agreement called for making annual payments of $10,000 for five years. The first payment is due on January 1, 2017, and the remaining payments are due

> Samson Manufacturing Company, a calendar year company, purchased a machine for $65,000 on January 1, 2015 At the date of purchase, Samson incurred the following additional costs: Loss on sale of old machinery………………………………... $1,000 Freight-in ……………………………

> The Williamsport Crosscutters baseball team had a player contract with Clemens (a promising young catcher) that was recorded in its accounting records at $500,000. The Reading Phillies had a player contract with Ruiz (a veteran outfielder) that was recor

> Apex Company purchased a tooling machine on January 3, 2007, for $30,000. The machine was being depreciated on the straight-line method over an estimated useful life of 20 years, with no salvage value. At the beginning of 2017, when the machine had been

> On April 1, 2017, Mills Company acquired equipment for $125,000. The estimated useful life is six years, and the estimated residual value is $5,000. Mills estimates that the equipment can produce 25,000 units of product. During 2017 and 2018, respectivel

> Gonzo Co. owns a building in Georgia. The building’s historical cost is $970,000, and $440,000 of accumulated depreciation has been recorded to date. During 2017, Gonzo incurred the following expenses related to the building: Repainted the building …………

> Union Company acquired machinery on January 2, 2017, for $315,000. The machinery’s estimated useful life is 10 years, and the estimated residual value is $15,000. Union estimates that the machine will produce 15,000 units of product and that 20,000 direc

> Diamond Offshore Drilling, Inc. (DOD), is an international company that provides contract drilling services to the energy industry. In its 2015 Form 10-K, it reports the following information related to its interest expense and interest capitalization. A

> Phoenix Co. acquired a large piece of specialized machinery used in its manufacturing process. The following costs were incurred in connection with the acquisition: Finder’s fee ………………………………………….….….……. $ 2,000 List price ……………………………………………….….……… 230,000

> Black Company, organized on January 2, 2017, had pre-tax accounting income of $500,000 and taxable income of $800,000 for the year ended December 31, 2017. The only temporary difference is accrued product warranty costs, which are expected to be paid as

> Kent Inc.’s reconciliation between financial statement and taxable income for 2017 follows: Pre-tax financial income ……………â€&

> Dunn Company’s 2017 income statement reported $90,000 income before provision for income taxes. To aid in the computation of the provision for federal income taxes, the following 2017 data are provided: Rent received in advance ……………………………………………………… $1

> For the year ended December 31, 2017, Tyre Company reported pre-tax financial statement income of $750,000. Its taxable income was $650,000. The difference was due to the use of accelerated depreciation for income tax purposes and straight-line for finan

> Mill Company began operations on January 1, 2017, and recognized income from construction- type contracts under different methods for tax purposes and financial reporting purposes. Information concerning income recognition under each method is as follows

> In its 2017 income statement, Tow Inc. reported proceeds from an officer’s life insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow deducted depreciation

> Collins Company incurs a $1,000 book expense that it deducts on its tax return. The tax law is unclear whether this expense is deductible, so the deduction leads to an uncertain tax position. Assuming a 35% tax rate, the deduction results in a $350 tax b

> Millie Co. completed its first year of operations on December 31, 2017, with pre-tax financial income of $400,000. Millie accrued a contingent liability of $900,000 for financial reporting purposes; however, the $900,000 will be paid and therefore is ded

> On December 31, 2017, Toms River Rafting, Inc. (TRR), has a deferred tax asset related to a $250,000 net operating loss carryforward. The enacted tax rate (and substantively enacted tax rate) at the time was 35%. When it recognized this deferred tax asse

> Granite Construction is one of the largest heavy civil construction contractors in the United States. Granite operates nationwide, serving both public and private sector clients. Within the public sector, the company primarily concentrates on infrastruct

> (Note: Students may want to review the material on the equity method of accounting in Chapter 16 before beginning work on this exercise.) Taft Corporation uses the equity method to account for its 25% investment in Flame, Inc., which it made on January 1

> Melissa Corporation is domiciled in Germany and is listed on both the Frankfurt and New York Stock Exchanges. Melissa has chosen to prepare consolidated financial statements in accordance with U.S. GAAP for filing with the U.S. Securities and Exchange Co

> As of December 31, 2017, Colt Corporation has a loss carryforward of $180,000 available to offset future taxable income. At December 31, 2017, the company believes that realization of the tax benefit related to the loss carryforward is probable. The tax

> Dix Company reported operating income/loss before income tax in its first three years of operations as follows: 2016 ………………. $ 100,000 2017 ………………. (200,000) 2018 ……………….400,000 Dix had no permanent or temporary differences between book income and taxabl

> (Note: Students may want to review the material on the equity method of accounting in Chapter 16 before beginning work on this exercise.) Tara Corporation uses the equity method of accounting for its 40% investment in Flax’s common stock. During 2017, Fl

> On January 2, 2016, Allen Company purchased a machine for $70,000. This machine has a five-year useful life, a residual value of $10,000, and it is depreciated using the straight-line method for financial statement purposes. For tax purposes, depreciatio

> Below are three independent lease scenarios. Payments are made at the beginning of each year. Required: 1. Calculate the lease payments for the above three cases. 2. Explain whether each lease will be an operating lease or a finance lease under ASU 201

> Below are three independent lease scenarios. Payments are made at the end of each year. Required: 1. Calculate the lease payments for the above three cases. 2. Based on the relation between the lease life and economic life, the lessees will classify th

> Glade Company leases computer equipment to customers under direct financing leases. The equipment has no residual value at the end of the lease term, and the leases do not contain bargain purchase options. Glade wishes to earn 8% interest on a five-year