Question: On January 1, 2021, the Allegheny Corporation

> The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2021, the allowance account had a credit balance of $75,000. Credit sales for 2021 totaled $2,400,000 and the year-end accounts receivable balance was $490,00

> Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually

> Cupola Awning Corporation introduced a new line of commercial awnings in 2021 that carry a two-year warranty against manufacturer’s defects. Based on their experience with previous product introductions, warranty costs are expected to a

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Required: 1. Obtain the relevant authoritative literature on recognition of contingent losses. What is the specific eight-digit Codification citation (XXX-XX-XX-X) that

> At December 31, 2021, Newman Engineering’s liabilities include the following: 1. $10 million of 9% bonds were issued for $10 million on May 31, 1999. The bonds mature on May 31, 2029, but bondholders have the option of calling (demanding payment on) the

> 1. How would Sprint report the debt in its balance sheet if it reported under IFRS? Why? 2. Would your answer to requirement 1 change if Sprint obtained its long-term credit facility after the balance sheet date? Why? Data from E13-11: An annual report

> An annual report of Sprint Corporation contained a rather lengthy narrative entitled “Review of Segmental Results of Operation.” The narrative noted that short-term notes payable and commercial paper outstanding at the end of the year aggregated $756 mil

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Required: Determine the specific eight- or nine-digit Codification citation (XXX-XX-XX-XX) that describes the following items: 1. If it is only reasonably possible that

> On November 1, 2021, Quantum Technology, a geothermal energy supplier, borrowed $16 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 12

> Samuelson and Messenger (SAM) began 2021 with 200 units of its one product. These units were purchased near the end of 2020 for $25 each. During the month of January, 100 units were purchased on January 8 for $28 each and another 200 units were purchased

> Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities a

> Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selected transactions rel

> Mills Corporation acquired as an investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills p

> Tanner-UNF Corporation acquired as an investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Ta

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Required: 1. What is the specific eight-digit Codification citation (XXX-XX-XX-X) that describes examples of circumstances under which an investment in debt is availabl

> Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc. bonds that Rell accounts for at amortized cost, given that the bonds pay only interest and principal and Rell’s business purpose is to hold the bonds to maturity. Rell purc

> Assume all of the same facts and scenarios as E 12–30, except that Bloom Corporation classifies its Taylor investment as AFS. Required: 1. For each of the scenarios shown in E 12–30, prepare the appropriate entry(s) at December 31, 2021. Indicate how the

> Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as HTM. Unfortunately, a combination of problems at Tayl

> FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&T’s investment activities during the last two months of 2021. At November 1,

> Below are two unrelated situations relating to life insurance. Required: Prepare the appropriate journal entry for each situation. 1. Ford Corporation owns a whole life insurance policy on the life of its president. Ford Corporation is the beneficiary. T

> Refer to the situation described in BE 8–4. Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts. Data from BE 8-4: On December 28, 2021, Videotech Corporation (VTC) purchased 10 units of a new sa

> Edible Chemicals Corporation owns a $4 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as beneficiary. The annual premiums are $70,000 and are payable at the beginning of each year. The cash surrender value of the poli

> As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares of capital stock for $56 million. The fair value and book value of the shares were the same at that time.

> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at their face amount on July 1, 2021, with interest paid semi-annually. The bonds mature in 20 years but Colah planned to keep them for less than 3 years, and classified them as available for

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decide

> On July 1, 2021, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $100 million cash, giving Gupta the ability to exercise significant influence over VB’s operations. At the date of acquisition of the stock, VB’s net assets h

> On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash, giving Cameron the ability to exercise significant influence over Lake’s operations. At the date of acquisition of the stock,

> Fizer Pharmaceutical paid $68 million on January 2, 2021, for 4 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne’s

> On December 12, 2021, an equity investment costing $80,000 was sold for $100,000. The investment was carried in the balance sheet at $75,000, and was accounted for under the equity method. An error was made in which the total of the sale proceeds was cre

> As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. During the year,

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of si

> On December 28, 2021, Videotech Corporation (VTC) purchased 10 units of a new satellite uplink system from Tristar Communications for $25,000 each. The terms of each sale were 1/10, n/30. VTC uses the gross method to account for purchase discounts and a

> The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions): Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 20

> The accounting records of Jamaican Importers, Inc., at January 1, 2021, included the following: No changes occurred during 2021 in the investment portfolio. Required: Prepare appropriate adjusting entry(s) at December 31, 2021, assuming the fair value of

> On January 2, 2021, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $90 million. Jackson Industry’s net income for the year ended December 31, 2021, was $120 million. The fair value of the shares held by Sanborn was $98 million at

> On March 31, 2021, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2021, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2021.

> At December 31, 2021, Hull-Meyers Corp. had the following investments that were purchased during 2021, its first year of operations: No investments were sold during 2021. All securities except Security D and Security F are considered short-term investmen

> On February 18, 2021, Union Corporation purchased 600 IBM bonds as a long-term investment at their face value for a total of $600,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2021,

> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2021, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2021, the Jackson bonds had

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 4% for bonds of similar ri

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 8% for bonds of simil

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds

> Kelly Corporation shipped goods to a customer f.o.b. destination on December 29, 2021. The goods arrived at the customer’s location in January. In addition, one of Kelly’s major suppliers shipped goods to Kelly f.o.b. shipping point on December 30. The m

> Dower Corporation prepares its financial statements according to IFRS. On March 31, 2021, the company purchased equipment for $240,000. The equipment is expected to have a six-year useful life with no residual value. Dower uses the straight-line deprecia

> On June 30, 2021, Rosetta Granite purchased equipment for $120,000. The estimated useful life of the equipment is eight years and no residual value is anticipated. An important component of the equipment is a specialized highspeed drill that will need to

> On March 31, 2021, Susquehanna Insurance purchased an office building for $12,000,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased se

> Tristen Company purchased a five-story office building on January 1, 2019, at a cost of $5,000,000. The building has a residual value of $200,000 and a 30-year life. The straight-line depreciation method is used. On June 30, 2021, construction of a sixth

> On January 1, 2021, the general ledger of Parts Unlimited included the following account balances: From January 1 to December 31, the following summary transactions occurred: a. Purchased inventory on account, $325,800. b. Sold inventory on account, $567

> On January 1, 2021, the general ledger of TNT Fireworks included the following account balances: During January 2021, the following transactions occurred: Jan. 1: Purchased equipment for $19,500. The company estimates a residual value of $1,500 and a fiv

> Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2019, the first year of the company’s operations, tools were purchased at a cost of $8,000. In 2021, tools originally costing $2,000 were sold f

> On September 30, 2019, Leeds LTD. acquired a patent in conjunction with the purchase of another company. The patent, valued at $6 million, was estimated to have a 10-year life and no residual value. Leeds uses the straight-line method of amortization for

> On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $420 million. The fair value of Harman’s identifiable tangible and intangible assets totaled $512 million, and the fair value of liabilities assumed by P

> At the beginning of 2021, a company adopts the dollar-value LIFO inventory method for its one inventory pool. The pool’s value on that date was $1,400,000. The 2021 ending inventory valued at year-end costs was $1,664,000 and the year-end cost index was

> Refer to the situation described in E 11–31, requirement 1. Alliant prepares its financial statements according to IFRS, and Centerpoint is considered a cash-generating unit. Assume that Centerpoint’s fair value of $220 million approximates fair value le

> In 2019, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. Fair value of Centerpoint Inc. = $220 million Book value of Centerpoint’s net assets (excluding goodwill) = 200 million Book value o

> On October 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Requir

> Collinsworth LTD., a U.K. company, prepares its financial statements according to International Financial Reporting Standards. Late in its 2021 fiscal year, a significant adverse change in business climate indicated to management that the assets of its a

> Refer to the situation described in Exercise 11–27. Required: How might your solution differ if Chadwick Enterprises, Inc., prepares its financial statements according to International Financial Reporting Standards? Assume that the fair value amount give

> In 2021, internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $350,000 cost of equipment purchased on January 1, 2018. The equipment’s life was expected to be five years with no residual value. Straight-line depreci

> For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,560,000. Its useful life was estimated to be six years, with a $160,000 residual value. A

> Alteran Corporation purchased office equipment for $1.5 million at the beginning of 2019. The equipment is being depreciated over a 10-year life using the double-declining-balance method. The residual value is expected to be $300,000. At the beginning of

> Wardell Company purchased a minicomputer on January 1, 2019, at a cost of $40,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $4,000. On January 1, 2021, the estimate o

> Saint John Corporation prepares its financial statements according to IFRS. On June 30, 2021, the company purchased a franchise for $1,200,000. The franchise is expected to have a 10-year useful life with no residual value. Saint John uses the straight-l

> Selected financial statement data for Schmitzer Inc. is shown below: What was the amount of net sales for 2021?

> Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-line basis since 2017, when it was acquired at a cost of $9 million at the beginning of that year. Due to rapid technological

> On January 2, 2021, David Corporation purchased a patent for $500,000. The remaining legal life is 12 years, but the company estimated that the patent will be useful only for eight years. In January 2023, the company incurred legal fees of $45,000 in suc

> On January 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Requir

> Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $700,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou&a

> Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2021 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately fo

> At the beginning of 2021, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000. After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations were constructed and completed on M

> On April 17, 2021, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $4,500,000. The company expects to extract 900,000 tons of coal

> On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $30,625. The expenditures made to acquire the asset were as follows

> Highsmith Rental Company purchased an apartment building early in 2021. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The foll

> On March 31, 2021, management of Quality Appliances committed to a plan to sell equipment. The equipment was available for immediate sale, and an active plan to locate a buyer was initiated. The equipment had been purchased on January 1, 2019, for $260,0

> Walgreens Boots Alliance, Inc., reported inventories of $8,899 million and $8,956 million in its August 31, 2017, and August 31, 2016, balance sheets, respectively. Cost of goods sold for the year ended August 31, 2017, was $89,052 million. The company u

> Prepare the necessary adjusting entries at its year-end of December 31, 2021, for the Jamesway Corporation for each of the following situations. No adjusting entries were recorded during the year. 1. On December 10, 2021, Jamesway received a $4,000 payme

> Howarth Manufacturing Company purchased equipment on June 30, 2017, at a cost of $800,000. The residual value of the equipment was estimated to be $50,000 at the end of a five-year life. The equipment was sold on March 31, 2021, for $170,000. Howarth use

> On July 1, 2016, Farm Fresh Industries purchased a specialized delivery truck for $126,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $30,000. On March 1, 2021, the truck was sold for $58,000

> Mercury Inc. purchased equipment in 2019 at a cost of $400,000. The equipment was expected to produce 700,000 units over the next five years and have a residual value of $50,000. The equipment was sold for $210,000 part way through 2021. Actual productio

> On January 1, 2021, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 mi

> On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows: Required: Calculate t

> In 2021, Bratten Fitness Company made the following cash purchases: 1. The exclusive right to manufacture and sell the X-Core workout equipment from Symmetry Corporation for $200,000. Symmetry created the unique design for the equipment. Bratten also pai

> Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2021 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately fo

> The Manguino Oil Company incurred exploration costs in 2021 searching and drilling for oil as follows: It was determined that Wells 104–108 were dry holes and were abandoned. Wells 101, 102, and 103 were determined to have sufficient oi

> Freitas Corporation was organized early in 2021. The following expenditures were made during the first few months of the year: Required: Prepare a summary journal entry to record the $107,000 in cash expenditures.

> On September 30, 2021, Athens Software began developing a software program to shield personal computers from malware and spyware. Technological feasibility was established on February 28, 2022, and the program was available for release on April 30, 2022.

> King Supply maintains its internal inventory records using perpetual FIFO, but for financial reporting purposes, reports ending inventory and cost of goods sold using periodic LIFO. At the beginning of the year, the company had a balance of $60,000 in it

> Early in 2021, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2021 at a cost of $6 million. Of this amount, $4 million was spent before technological feasibility was established. Excali

> NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards. The company incurred the following expenditures during 2021 related to the development of a chip to be used in mobile devices: Salaries and wage

> Janson Pharmaceuticals incurred the following costs in 2021 related to a new cancer drug: The development costs were incurred after technological and commercial feasibility was established and after the future economic benefits were deemed probable. The

> Delaware Company incurred the following research and development costs during 2021: The equipment has a seven-year life and will be used for a number of research projects. Depreciation for 2021 is $120,000. Required: Calculate the amount of research and

> In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: The equipment will be used on this and other research projects. Depreciation on the equipment for 20

> Thornton Industries began construction of a warehouse on July 1, 2021. The project was completed on March 31, 2022. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding t

> On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the cons

> On January 1, 2021, the Shagri Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The only interest-bearing debt the company had outstanding during 2021 was long-term bonds with a book value of

> On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, total

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific eight-digit Codification citation (XXX-XX-XX-X) that describes each of the following items: 1. The disclosure requirements in the notes to the fi

> Refer to the situation described in BE 8–8. Assuming an income tax rate of 25%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial statements? Data from BE 8-8: Esquire Inc. uses the LIF

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific eight-digit Codification citation (XXX-XX-XX-X) that describes each of the following items: 1. The basic principle for recording nonmonetary tran

> Nvidia Corporation, a global technology company located in Santa Clara, California, reported the following information in its 2017 financial statements ($ in millions): Required: 1. Calculate the company’s 2017 fixed-asset turnover rati