Must a major customer be identified by name?
> The partnership agreement of Ale, Car, and Eri provides that profits are to be divided as follows: 1. Ale is to receive a salary allowance of $10,000 for managing the partnership business. 2. Partners are to receive 10 percent interest on average capital
> Ash and Bar are partners with capital balances on January 1, 2016, of $70,000 and $80,000, respectively. The partnership agreement provides that each partner is allowed 10 percent interest on beginning capital balances; that Ash receives a salary allowan
> Distinguish between indirect holding affiliation structures and mutual holding affiliation structures.
> The partnership of Mor and Osc is being dissolved, and the assets and equities at book value and fair value and the profit- and loss-sharing ratios at January 1, 2016, are as follows: Mor and Osc agree to admit Tre into the partnership for a one-third
> Ell, Far, and Gar are partners who share profits and losses 30 percent, 30 percent, and 40 percent, respectively, after Ell and Far each receive a $32,000 salary allowance. Capital balances on January 1, 2016, are as follows: Ell (30%)..................
> Tim and Las have been operating an accounting firm as partners for a number of years, and at the beginning of 2016, their capital balances were $60,000 and $75,000, respectively. During 2016, Tim invested an additional $10,000 on April 1 and withdrew $6,
> A condensed balance sheet for the Pet, Qua, and She partnership at December 31, 2016, and their profitand loss-sharing percentages on that date are as follows: On January 1, 2017, the partners decided to bring Tom into the partnership for a one-fourth
> The partnership of Par and Boo was formed and commenced operations on March 1, 2016, with Par contributing $30,000 cash and Boo investing cash of $10,000 and equipment with an agreed-upon valuation of $20,000. On July 1, 2016, Boo invested an additional
> Har, Ion, and Jer formed a partnership on January 1, 2016, with each partner contributing $20,000 cash. Although the partnership agreement provided that Jer receive a salary of $1,000 per month for managing the partnership business, Jer has never withdra
> The AT Partnership was organized several years ago, and on January 1, 2016, the partners agree to admit Car for a 40 percent interest in capital and earnings. Capital account balances and profit- and loss-sharing ratios at January 1, 2016, before the adm
> Three partners, Pat, Mic, and Hay, have capital balances and profit-sharing ratios at December 31, 2016, as follows: On January 1, 2017, Con invests $85,080 in the business for a one-sixth interest in capital and income. REQUIRED: 1. Prepare journal e
> The capital accounts of the Ann, Bob, and Car partnership at December 31, 2016, together with profitand loss-sharing ratios, are as follows: Ann (25%)............................ $75,000 Bob (25%)............................. 100,000 Car (50%)..........
> The partnership of Add and Bal is adding a new partner, Cat, and its assets and equities at book value and fair value just prior to her admission to the partnership on January 1, 2016, are as follows: On January 2, 2016, Add and Bal take Cat into the p
> What is an indirect holding of the stock of an affiliate?
> The partnership of Jon, Kel, and Gla was created on January 2, 2016, with each of the partners contributing cash of $30,000. Reported profits, withdrawals, and additional investments were as follows: The partnership agreement provides that partners are
> Capital balances and profit- and loss-sharing ratios of the partners in the BIG Entertainment Galley are as follows: Ben capital (50%)............................ $900,000 Irv capital (30%)................................ 680,000 Geo capital (20%)......
> On December 31, 2016, the total partnership capital (assets less liabilities) for the Bir, Cag, and Den partnership is $186,000. Selected information related to the pre-closing capital balances follows: REQUIRED: Prepare a statement of partnership capi
> The partnership agreement of Dan, Hen, and Bai provides that profits are to be divided as follows: ■ Bai receives a salary of $24,000, and Hen receives a salary of $18,000 for time spent in the business. ■ All partners receive 10 percent interest on aver
> Mel and Dav created a partnership to own and operate a health-food store. The partnership agreement provided that Mel receive a salary of $10,000 and Dav a salary of $5,000 to recognize their relative time spent in operating the store. Remaining profits
> Arn, Bev, and Car are partners who share profits and losses 30:30:40, respectively, after Bev, who manages the partnership, receives a bonus of 10 percent of income, net of the bonus. Partnership income for the year is $198,000. REQUIRED: Prepare a sche
> Car and Lam establish an equal partnership in both equity and profits to operate a used-furniture business under the name of C&L Furniture. Car contributes furniture inventory that cost $120,000 and has fair value of $160,000. Lam contributes $60,000 cas
> The Cas, Don, and Ear partnership balance sheet and profit and loss percentages at June 30, 2016, are summarized as follows: On July 1, 2016, the partners agree that Cas is to retire immediately and receive $161,000 for her partnership interest. REQUI
> After operating as partners for several years, Gro and Ham decided to sell one-half of each of their partnership interests to Lot for a total of $70,000, paid directly to Gro and Ham. At the time of Lot’s admittance to the partnership, Gro and Ham had ca
> The partnership agreement of Kra, Lam, and Man provides for the division of net income as follows: 1. Lam, who manages the partnership, is to receive a salary of $11,000 per year. 2. Each partner is to be allowed interest at 10 percent on beginning capit
> Describe the concept of a constructive retirement of parent stock. Should the parent adjust its equity accounts when its stock is constructively retired?
> 1. Partners All, Bak, and Coe share profits and losses 50:30:20, respectively. The balance sheet at April 30, 2016, follows: The assets and liabilities are recorded and presented at their respective fair values. Jon is to be admitted as a new partner w
> 1. Cob, Inc., a partner in TLC Partnership, assigns its partnership interest to Ben, who is not made a partner. After the assignment, Ben asserts the rights to: I. Participate in the management of TLC II. Cob’s share of TLC’s partnership profits Ben is c
> 1. Shi purchased an interest in the Ton and Olg partnership by paying Ton $40,000 for half of his capital and half of his 50 percent profit-sharing interest. At the time, Ton’s capital balance was $30,000 and Olg’s cap
> 1. Bil and Ken enter into a partnership agreement in which Bil is to have a 60 percent interest in capital and profits and Ken is to have a 40 percent interest in capital and profits. Bil contributes the following: There is a $30,000 mortgage on the bu
> The capital account balances and profit- and loss-sharing ratios of the Byd, Box, Dar, and Fus partnership on December 31, 2016, after closing entries are as follows: Byd (30%)............................ $30,000 Box (20%)..............................
> Kat and Edd formed the K & E partnership several years ago. Capital account balances on January 1, 2016, were as follows: Kat................................... $496,750 Edd.................................. $268,250 The partnership agreement provides
> A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows: Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their
> Capital balances and profit- and loss-sharing ratios for the Nix, Man, and Per partnership on December 31, 2016, just before the retirement of Nix, are as follows: Nix capital (30%)................................... $128,000 Man capital (30%)..........
> Capital balances and profit-sharing percentages for the partnership of Man, Eme, and Fot on January 1, 2016, are as follows: Man (36%)............................ $140,000 Eme (24%).............................. 100,000 Fot (40%)........................
> The capital balances and profits- and loss-sharing percentages for the Sip, Jog, and Run partnership at December 31, 2016, are as follows: Sip capital (30%)............................ $160,000 Jog capital (50%)........................... $180,000 Run c
> Are the treasury stock and conventional approaches equally applicable to all mutual holdings? Explain.
> Bow and Mon are partners in a retail business and divide profits 60 percent to Bow and 40 percent to Mon. Their capital balances at December 31, 2016, are as follows: Bow capital................................... $120,000 Mon capital...................
> The capital accounts of the Fax and Bel partnership on September 30, 2016, were: Fax capital (75% profit)..................... $140,000 Bel capital (25% profit).......................... 60,000 Total capital........................................ $200,
> Revenue information for Mahoney Corporation is as follows: Consolidated revenue (from the income statement).............. $400,000 Intersegment sales and transfers.................................................. 80,000 Combined revenues of all industr
> What is the difference between the integral theory and the discrete theory with respect to interim financial reporting?
> Describe the 10 percent revenue test for determining reportable segments.
> Describe the 10 percent operating-profit test for determining reportable segments.
> How are the segments that are not reportable segments handled in the required disclosures of FASB ASC Topic 280?
> What is a reportable segment according to FASB ASC Topic 280? What criteria are used in determining what operating segments are also reportable segments?
> What is an operating segment?
> Describe the minimum financial information to be disclosed in interim reports under the provisions of FASB ASC Topic 270.
> P owns 80 percent of S1, and S1 owns 70 percent of S2. Separate incomes of P, S1, and S2 are $20,000, $10,000, and $5,000, respectively, for 2016. During 2016, S1 sold land to P at a gain of $1,000. Compute S1’s income on an equity basis. Discuss why you
> Explain how a company estimates its annual effective tax rate for interim reporting purposes.
> Do the requirements of FASB ASC Topic 280 apply to financial statements for interim periods? If so, how?
> When is an enterprise required to include information in its financial statements about its foreign and domestic operations?
> What disclosures are required for the reportable segments and all remaining segments in the aggregate?
> Assume that an enterprise has 10 operating segments. Of these, five segments qualify as reportable segments by passing one of the 10 percent tests. However, their combined revenues from sales to unaffiliated customers total only 70 percent of the combine
> Describe the 10 percent asset test for determining reportable segments.
> When preparing interim reports, does an entity need to use the same method to value inventory that they use at the annual report date? What options are accepted?
> Does an entity need to disclose segment level information about depreciation and amortization (D&A) if the chief decision maker does not consider D&A in their assessment of the segments?
> DaP Corporation’s home country is the United States, but it also has operations in Canada, Mexico, Brazil, and South Africa and reports internally on a geographic basis. Information relevant to DaP’s operating-segment
> Pat Corporation owns 80 percent of the stock of Sam Corporation, and Sam owns 70 percent of the stock of Stan Corporation. Separate earnings of Pat, Sam, and Stan are $200,000, $160,000, and $100,000, respectively. Compute controlling and noncontrolling
> The following data for 2016 relate to Hay Industries, a worldwide conglomerate: REQUIRED: Answer the following questions related to Hay’s required segment disclosures and show computations: 1. Which segments are reportable segments un
> The following information has been accumulated for use in preparing segment disclosures for Wod Corporation (in thousands): REQUIRED: 1. Determine Wod’s reportable segments under the 10 percent revenue test. 2. Are additional reportab
> Tor Corporation is subject to income tax rates of 20 percent on its first $50,000 pretax income and 34 percent on amounts in excess of $50,000. Quarterly pretax accounting income for the calendar year is estimated by Tor to be as follows: Quarter.......
> The information that follows is for Cob Company at and for the year ended December 31, 2016. Cob’s operating segments are cost centers currently used for internal planning and control purposes. Amounts shown in the Total Consolidated co
> The consolidated income statement of Tut Company for 2016 is as follows (in thousands): TUT CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2016 Sales.................................................................................... $360
> Selected information, which is reported to the chief operating officer, for the five segments of Rad Company for the year ended December 31, 2016, is as follows: The lumber segment has not been a reportable segment in prior years and is not expected to
> Mer Corporation has five major operating segments and operates in both domestic and foreign markets. Mer is organized internally on an industry basis. Information about its revenue from operating segments and foreign operations for 2016 is as follows (in
> Sur Corporation’s internal divisions are based on industry. The revenues, operating profits, and assets of the operating segments of Sur are presented in thousands of dollars as follows: REQUIRED: Determine the reportable segments of
> Vic Corporation operates entirely in the United States but in different industries. It segments the business based on industry. Total sales of the segments, including intersegment sales, are as follows: Concrete and stone products.......................
> 1. The disclosure requirements for an operating segment do not include: a Unusual items b Income tax expense or benefit c Interest revenue d Cost of goods or services sold 2. A reconciliation between the numbers disclosed in operating segments and conso
> Par Corporation owns a 30 percent interest in Sox Corporation, which Par properly accounts for using the equity method. Sox is in need of capital and decides to issue an additional 10,000 shares of common stock to the public. After issuance, Par’s owners
> Tap Manufacturing Company records sales of $1,000,000 and cost of sales of $550,000 during the first quarter of 2016. Tap uses the LIFO inventory method, and its inventories are computed as follows: Before year-end, Tap expects to replace the 4,000 uni
> 1. An inventory loss from a market price decline occurred in the first quarter, and the decline was not expected to reverse during the fiscal year. However, in the third quarter, the inventory’s market price recovery exceeded the market decline that occu
> The estimated and actual pretax incomes of Ent Corporation by quarter for 2016 were as follows: Ent calculated its estimated annual effective income tax rate to be 27.8333 percent, based on estimated pretax income and existing income tax rates. REQUIR
> 1. Interim reporting under FASB ASC Topic 270 guidelines refers to financial reporting: a On a monthly basis b On a quarterly basis c On a regular basis d For periods less than a year 2. A liquidation of LIFO inventories for interim reporting purposes m
> A summary of the segment operations of the Nog Corporation for the year ended December 31, 2016, follows: 1. For which of the following geographic areas will separate disclosures be required if only the 10 percent revenue test is considered? a United S
> 1. Coy Corporation and its divisions are engaged solely in manufacturing operations. The following data (consistent with prior years’ data) pertain to the industries in which operations were conducted for the year ended December 31, 201
> The sales in thousands of dollars of the segments of Wow Corporation (Wow is organized on a geographic basis) for 2016 are as follows: The $178,000 sales to unaffiliated customers is the amount of revenue reported in Wow’s consolidate
> The gain or loss on remeasurement is included in net income each year if the temporal method is used. Explain why this makes sense economically.
> How does ASC Topic 830 define a highly inflationary economy? If the economy is deemed to be highly inflationary, which method for converting the financial statements to the reporting currency is used? How does the use of this method improve the economic
> Define the functional currency concept and briefly describe how a foreign entity’s functional currency is determined. Why is this definition critical from a financial reporting perspective?
> Pop Corporation owns 80 percent of Son Corporation, and properly included Son as a subsidiary in preparing consolidated financial statements for the year ended December 31, 2016. Pop issued the financial statements on March 1, 2017. In May of 2017, Son h
> How does the choice of functional currency affect how the gain or loss on a hedge of a net investment in a foreign subsidiary is reported in the financial statements?
> Under the current rate method, all the expenses are translated using some form of current-period exchange rate. Under the temporal method, some expenses such as salaries and utilities are translated using current rates but others, such as cost of goods s
> In the current-rate-method example in the chapter, the parent’s other comprehensive income adjustment related to its investment in the subsidiary was larger than the other comprehensive income adjustment on the subsidiary’s translated financial statement
> If a company’s sales were very seasonal—for example, a holiday-tree grower—would it be appropriate to use the annual average exchange rate to translate and remeasure sales and other expenses? Why or why not?
> Under what circumstances would a foreign entity’s financial statements need to be both remeasured and translated? Would this process have an effect on both the income statement and other comprehensive income? Explain.
> If the current rate method is used, the gain or loss on translation is included under other comprehensive income. Explain why this makes sense economically.
> Describe what the temporal method is and under what circumstances it should be used.
> Describe what the current rate method is and under what circumstances it should be used.
> What procedure is used to allocate the investment purchase price at the date of acquisition of a foreign subsidiary?
> Should a firm readjust after the fiscal period end if before the release of their statements the exchange rate is materially different?
> A summary of the assets and equities of Pot Corporation and its 80 percent–owned subsidiary, Sea Corporation, at December 31, 2016, is given as follows (in thousands): On January 2, 2017, Sea acquired a 70 percent interest in Toy Corp
> Pam Corporation owns 60 percent of Sun Corporation and 80 percent of Tim Corporation. Tim owns 20 percent of Sun. Separate income and loss data (not including investment income) for the three affiliates for 2016 are as follows: Pam......................
> What is required to disclose concerning the changes in a firm’s cumulative translation adjustment?
> Pet acquired 80 percent of the common stock of Sul for $4,000,000 on January 2, 2016, when the stockholders’ equity of Sul consisted of 5,000,000 euros capital stock and 2,000,000 euros retained earnings. The spot rate for euros on this date was $0.50. A
> Pyl acquired all the outstanding capital stock of Soo of London on January 1, 2016, for $800,000, when the exchange rate for British pounds was $1.50 and Soo’s stockholders’ equity consisted of £400,000 ca
> Pla purchased a 40 percent interest in Sor, a foreign company, on January 1, 2016, for $342,000, when Sor’s stockholders’ equity consisted of 3,000,000 LCU capital stock and 1,000,000 LCU retained earnings. Sorâ&
> Pak purchased a 40 percent interest in Sco of Germany for $1,080,000 on January 1, 2016. The excess cost over book value is due to a patent with a 10-year amortization period. A summary of Sco’s net assets at December 31, 2015, and at D
> San is a 90 percent–owned foreign subsidiary of Par, acquired by Par on January 1, 2016, at book value equal to fair value, when the exchange rate for LCUs of San’s home country was $0.24. San’s funct
> PWA Corporation paid $1,710,000 for 100 percent of the stock of SAA Corporation on January 1, 2016, when the stockholders’ equity of SAA consisted of 5,000,000 LCU capital stock and 3,000,000 LCU-retained earnings. SAA’
> Pel, a U.S. firm, paid $308,000 for all the common stock of Sar of Israel on January 1, 2016, when the exchange rate for sheqels was $0.35. Sar’s equity on this date consisted of 500,000 sheqels common stock and 300,000 sheqels retained
> Phi, a U.S. firm, acquired 100 percent of Stu’s outstanding stock at book value on January 1, 2016, for $112,000. Stu is a New Zealand–based company, and its functional currency is the U.S. dollar. The exchange rate for New Zealand dollars (NZ$) was $0.7
