How do VHWOs account for donated services?
> Express Company paid one week’s wages of $21,200 in cash (net pay after all withholdings and deductions) to its employees. Income tax withholdings were equal to 17% of the gross payroll, and the only other deductions were 7.65% for FICA tax and $160 for
> What are the principal advantages to a lessee in leasing rather than purchasing property?
> On January 1 of Year 1, the company had a projected benefit obligation (PBO) of $10,000 and a pension fund with a fair value of $9,200. Prior service cost was $2,000; it was being amortized on a straight-line basis over the 5-year average remaining life
> What other factors are considered when determining whether effective control exists when the investor does not possess absolute voting control?
> Refer to Practice 17-6 and Practice 17-7. Assume that as of January 1, 2013, Wu Company changed the discount rate it uses to compute the PBO from 8% to 12%. Assume that before this change, Wu Company had the following pension-related balances: Projected
> Describe the component approach to computing depreciation.
> What is “the fair value option”?
> As of January 1, the company had the following pension-related balances: Projected benefit obligation (PBO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(15,000) Fair value of pension fund . . . . . . . . . . .
> Why is the impairment of a loan accounted for differently from the decline in value of a debt security?
> Refer to Practice 17-8. Enter all of the pension information, including the beginning balances, in a pension work sheet. Use the pension work sheet to display the computation of pension expense for the year as well as the ending balances for all pension-
> What additional disclosures are recommended under FASB Statement No. 115 for trading, available-for-sale, and held-to-maturity securities?
> You have just completed a preliminary draft of the year-end financial statements and notes and have distributed it to members of the board of directors for the upcoming board meeting. At the meeting, board members will have an opportunity to analyze, ask
> Where are the cash flow effects of purchases and sales of equity securities reported?
> Deferred taxes in the United Kingdom have historically been computed in a slightly different manner than in the United States. The concept underlying this “crystallisation” approach is that if a liability is deferred indefinitely, then the present value
> What securities fall under the scope of FASB ASC Topic 320?
> FASB ASC Topic 740 discusses uncertain tax positions and highly certain tax positions. In one page or less, discuss the difference between an uncertain tax position and a highly certain tax position.
> How should compensated absences be accounted for?
> Are trading, available-for-sale, and held-to-maturity securities disclosed on the balance sheet as current or long-term assets?
> Sara Lee Corporation owns the following brands: Ball Park franks, Sara Lee bakery goods, Hillshire Farm, Jimmy Dean, Kiwi shoe care products, and many other products. The following information relates to the company’s deferred taxes.
> How are realized gains and losses on trading securities handled in the statement of cash flows? How are unrealized gains and losses on trading securities handled?
> The 2009 financial statements for The Walt Disney Company can be found on the Internet. 1. Using the financial statements and information contained in the notes, determine how much income tax expense Disney reported for the fiscal year ended October 3, 2
> When transferring securities between categories, how is the transfer accounted for? At what value are the securities recorded?
> Assume that you go to work for one of the large accounting firms upon your graduation from college and that for your first assignment, you are asked to review the deferred income tax asset account to determine whether a valuation allowance seems to be wa
> What impact does the sale of investment securities during the year have on the computation of unrealized gains and losses on trading securities? On unrealized increases and decreases on available-for-sale securities?
> When the corporate tax rate was lowered from 46% to 34% in 1986, most firms that had adopted the asset and liability method of deferred tax accounting reported onetime gains as a result of the revaluation of their deferred tax items. In fact, one writer
> How is an “other-than-temporary” decline in the value of investments recorded?
> Tyler Dee is the controller for Martinez Company, a major employer in the area. Tyler has just come from a meeting of a local civic group. The meeting was an opportunity for Tyler to present and explain Martinez’s financial statements for the fiscal year
> Briefly describe group depreciation, and describe how asset retirements are recorded under this method.
> What type of account is Market Adjustment? How is it disclosed on the financial statements?
> Hurst Inc. is a new corporation that has just completed a highly successful first year of operations. Hurst is a privately held corporation, but its president, Byron Hurst, has indicated that if the company continues to do as well for the next four or fi
> How are changes in value reported in the financial statements for trading securities? Available-for-sale securities? Held-to-maturity securities?
> 1. At December 31, 2013, Bren Co. had the following deferred income tax items: • A deferred income tax liability of $15,000 related to a noncurrent asset • A deferred income tax asset of $3,000 related to a noncurrent liability • A deferred income tax as
> How is a joint venture a form of off-balance-sheet financing?
> The financial history below shows the income and losses for Irontree Company for the 10-year period 2004–2013. Assume that no adjustments to taxable income are necessary for purposes of the NOL carryback and that the company elects to u
> (a) What factors may indicate the ability of an investor owning less than a majority voting interest to exercise significant influence on the investee’s operating and financial policies? (b) What factors may indicate the investor’s inability to exercise
> The following information is taken from the financial statements of Aruban Enterprises. The company elects to use the carryback provisions of the tax law. Instructions: 1. Given the information from the financial statements, compute the amount of inco
> Explain the difference in the accounting for detachable and nondetachable warrants.
> Hermann Company analyzed its temporary differences as of December 31, 2013. The enacted tax rate was 35% for 2013 and all future tax years. The total amount of taxable temporary differences as of the end of 2013 was $540,000. All the temporary difference
> Gross payroll is taxed by both federal and state governments. Identify these taxes and indicate who bears the cost of the tax, the employer or the employee.
> Identify the major components included in the definition of liabilities established by the FASB.
> Using the Internet, find the comprehensive annual financial report (CAFR) of a local government selected by your instructor. At a minimum, a CAFR includes (1) MD&A, (2) the basic financial statements—governmentwide and fund-based financial statements, (3
> The following are selected transactions of the specific-purpose fund, the plant fund, and the endowment fund of Toddville Hospital, a not-for-profit entity: 1. Received in the endowment fund new permanent endowments totaling $150,000 and new term endo
> This case provides learning opportunities using available databases and/or the Internet to obtain contemporary information about the topics in advanced financial accounting. Note that the Internet is dynamic and the specific address of the website listed
> The following are transactions and events of the general fund of Sycamore Hospital, a not-for-profit entity, for the 20X6 fiscal year ending December 31, 20X6. 1. Provided a total of $6,200,000 in patient services. 2. Had total operating expenses o
> What are two examples of contributions to an ONPO that should be reported as temporarily restricted and two that should be reported as permanently restricted?
> Describe the statement of activities for an ONPO. How does it compare with a VHWO’s statement of activities?
> Are donated services received by an ONPO accounted for in the same manner as those received by hospitals? Why or why not?
> An alumna of a sorority donates $12,000 to it for restricted use in its community service activity. How does this ONPO account for the contribution? How does it account for the $12,000 expenditure?
> Describe the statement of functional expenses. What organizations must prepare it?
> Why do VHWOs not report all pledges received in the period in the unrestricted assets section of the statement of activities? Identify what is not included.
> How does a VHWO account for pledges from donors?
> An individual contributes $10,000 to a VHWO for restricted use in a public health education service. How does the VHWO account for this contribution and for the $10,000 expenditure?
> Where does a VHWO record fixed assets? Does it record depreciation?
> Which of the following would be included in the unrestricted funds of a not-for-profit hospital? a. Permanent endowments. b. Term endowments. c. Board-designated funds originating from previously accumulated income. d. Funds desig
> A donor contributes $15,000 to a hospital to use for operating costs in the intensive care unit. How does it account for this contribution? How does it account for the expenditure of the $15,000?
> How does a hospital account for donated services, equipment, and medical supplies?
> What are the major differences in financial reporting for a public university and a private university?
> What are the classifications of net assets reported in the statement of financial position by private colleges? Identify the types of assets assigned to each classification.
> How are tuition scholarships reported by a private college or university?
> Answer the following questions by reading the most recent consolidated financial statements of the American Red Cross (ARC) at its website, www.redcross.org . (The financial statements may be accessed through the Publications link on the website’s home p
> Finley, a manager in a public accounting firm, has volunteered to audit the financial statements of the Community Chest, a not-for-profit organization that raises funds to assist people in central Illinois who are homeless or have low incomes. In reviewi
> Gardner is the treasurer for the Central Illinois chapter of a national not-for-profit organization, the Alzheimer’s Association. The chapter sends some of the money it raises to the national organization to support research into Alzheimer’s disease. The
> Access the website for United Way Worldwide (www.unitedway.org) and then look through the site until you locate the most recent consolidated financial statements and supplemental schedule and the Form 990. Review the statements and Form 990 and then prep
> How are infrastructure and other long-term assets as well as general long-term debt reported on the government wide financial statements?
> An unrestricted gift pledge from an annual contributor to a not-for-profit hospital made in December 20X1 and paid in March 20X2 would generally be credited to a. Contribution revenue in 20X1. b. Contribution revenue in 20X2. c. Other i
> Gibson City reported the following items at December 31, 20X2. It has no component units and does not depreciate its infrastructure fixed assets. It issued all bonds—general obligation bonds and revenue—to acquire capi
> The City of Elmtree is preparing its financial statements for the year ended December 31, 20X2, and has asked for your assistance in determining whether its special revenue fund is a major or a non major fund for the financial statements of its governmen
> 1. The budgetary comparison schedule in the governmentwide financial statements for the period requires only the final budget and the actual amounts. 2. The accrual basis of accounting is used in the governmentwide financial statements. 3. A comp
> The City of Sycamore is preparing its financial reports for the year and has requested that you prepare the reconciliation schedules to accompany its governmentwide financial statements based on the following information: 1. The fund balances reported
> The City of Somerset has the following fund information: Required: Apply the criteria specified in GASB 34 to determine which of these funds meets the major fund reporting criteria. Expenditures (Expenses) Fund Assets Llabilities Revenues Gener
> Items 1 through 10 in the left-hand column represent various transactions pertaining to a municipality that uses encumbrance accounting. Items 11 through 20, also listed in the left-hand column, represent the funds and accounts used by the municipality.
> GASB 34 requires a budgetary comparison schedule for each governmental fund that has a legally adopted budget. What information does this budgetary comparison schedule present?
> A reconciliation schedules is a required disclosure in the government wide financial statements. What are the purpose and content of these reconciliation schedules?
> The following information relates to Dane City during its fiscal year ended December 31, 20X2: 1. On October 31, 20X2, to finance the construction of a city hall annex, Dane issued 8 percent, 10-year general obligation bonds at their face value of $60
> What are component units of a government, and how are they reported on the governmentwide financial statements?
> Donated medicines that a hospital normally would purchase should be recorded at fair value and should be credited directly to a. Unrestricted revenue. b. Expense of medicines. c. Fund balance. d. Deferred revenue
> The following information relates to Vane City during the year ended December 31, 20X8: 1. On October 31, 20X8, to finance the construction of a city hall annex, Vane issued 8 percent, 10-year general obligation bonds at their face value of $800,000.
> During the fiscal year ended June 30, 20X3, West City Council authorized construction of a new city hall building and the sale of serial bonds to finance the construction. The following transactions related to financing and constructing the city hall occ
> The town of Papillion has assigned you to examine its June 30, 20X1, balance sheet. You are the first CPA to be engaged by the town, and you find that acceptable methods of municipal accounting have not been employed. The town clerk stated that the books
> Olivia Village was recently incorporated and began financial operations on July 1, 20X2, the beginning of its fiscal year. The following transactions occurred during this first fiscal year, July 1, 20X2, to June 30, 20X3: 1. The village council adopted
> On June 30, 20X2, the end of the fiscal year, the Wadsworth Park District prepared the following trial balance for the general fund: An examination of the records disclosed the following information: 1. The recorded estimate of losses for the current
> Dawnes has just been elected treasurer of the local professional association of registered nurses. The association provides public health messages for the community as well as services for members. Dawnes is now preparing financial statements for the yea
> How are contributions to governmental funds as well as special or extraordinary items reported on the governmental funds’ statement of revenues, expenditures, and changes in fund balance?
> Bellevue City’s printing shop had the following trial balance on January 1, 20X2: Additional Information for 20X2: 1. During 20X2, the printing shop acquired supplies for $96,000, furniture for $1,500, and a copier for $3,200. 2. P
> Hospitals, voluntary health and welfare organizations, and other not-for-profit organizations often rely heavily on donations of volunteers’ time and equipment, supplies, or other assets. Required: a. Specify the criteria to be used to determine
> During 20X8, the following transfers and transactions between funds took place in the City of Matthew. 1. On March 1, a $12,000 transfer was made from the general fund to establish a building maintenance internal service fund. Matthew uses transfer acco
> The funds of Lake City include a debt service fund, a capital projects fund, and an internal service fund. Required: a. Explain the use of capital projects funds. Include what they account for, the basis of accounting used, unusual entries and acc
> The BBB Wise Giving Alliance is widely known for presenting profiles of nationally soliciting charitable organizations. The BBB Wise Giving Alliance website provides information to donors and to assist charities to operate responsibly. Required:
> Augusta has a municipal water and gas utility district (MUD). The trial balance on January 1, 20X1, follows: Additional Information for 20X1: 1. Charges to customers for water and gas were $420,000; collections were $432,000. 2. A loan of $30,000
> Answer the following questions by reading the most recent annual report of the University of Notre Dame that can be accessed by going to www.nd.edu. a. For the most recent year, how much cash did donors contribute for the acquisition of buildings an
> The City of Waterman established a debt service fund to account for the financial resources used to service the bonds issued to finance the ramp (see Exercise 18-6). The 10 percent, $150,000 bond issue was sold at 104.0 on January 1, 20X2. It is a 10-yea
> The Governmental Accounting Standards Board places exposure drafts (EDs) of proposed future standards on its website. These exposure drafts provide an early view of the GASB’s consensus viewpoints on a project. Accountants wishing to remain current in go
> The City of Waterman established a capital projects fund for the construction of an access ramp from the parking garage to the city’s office building to be used by individuals with disabilities. The estimated cost of the ramp is $200,000. On January 1, 2
> The Statements of Governmental Accounting Standards are the final step in the GASB’s decision making process. Standard setting has a number of specific steps with open and thorough study of the issues and public participation and input encouraged through
> At June 30, 20X7, what total assets amount would appear on the internal service fund balance sheet? a. $700,000 b. $710,000 c. $713,000 d. $708,000
> For the year ended June 30, 20X7, what was the income of Westbury’s internal service fund? a. $13,000 b. $6,000 c. $3,000 d. $10,000.
> For the year ended June 30, 20X7, the trust fund should report the $75,000 spent to support local artists as a a. Deduction. b. Contra contribution. c. Transfer out. d. Direct adjustment from fund balance.
> The accounting system of Barb City is organized and operated on a fund basis. Among the types of funds used are a general fund, a special revenue fund, and an enterprise fund. Required: a. The accounting system of Barb City is organized and operat
> Union Local School District has bonds outstanding with a coupon rate of 3.7 percent paid semiannually and 16 years to maturity. The yield to maturity on these bonds is 3.9 percent, and the bonds have a par value of $5,000. What is the dollar price of the
> A put option and a call option with an exercise price of $55 expire in two months and sell for $2.65 and $5.32, respectively. If the stock is currently priced at $57.30, what is the annual continuously compounded rate of interest?
