Question: Siry Company offers all its employees the

> Draft a footnote to disclose the accounting change implemented by the Mills Abrams Manufacturing Company using the information provided in BE21-2. Assume that pre-tax income for the current year is $230,000 under the LIFO method but would have been $455,

> Mills Abrams Manufacturing Company changed its method of accounting for inventory from the average-cost method to the LIFO basis as of January 1 of the current year. It still uses the average-cost method for tax purposes. The company is subject to a 40%

> Tyrion Retailers, Inc. incorrectly recorded inventory in 2016. Rather than recording ending inventory as $570,000, Tyrion’s accounting manager entered $750,000. Tyrion’s controller discovered the error in 2017. Prepare the journal entry necessary to corr

> Using the information from BE21-12, prepare the journal entry necessary to correct the inventory error, assuming that Barin’s controller discovered the error in 2017 after the books had been closed for 2016. Ignore any income tax effects. Data from BE21

> Barin Retail Outlets incorrectly recorded inventory in 2016. Rather than recording ending inventory as $960,000, Barin’s accounting manager entered $690,000, understating ending inventory by $270,000. Barin’s controller discovered the error in 2018. Prep

> Using the data from BE21-10 for Wilson Incorporated, assume now that the general accountant discovered the error in 2019 when the books had already been closed for 2018. Prepare the correcting entry for this transaction. Data from BE21-10: Wilson Incorp

> Wilson Incorporated acquired a leather-cutting machine for $200,000 on December 31, 2018. The general accountant incorrectly coded the invoice as Miscellaneous Expense. The general accountant discovered the error in 2018 before the books were closed. The

> For each of the following events, indicate the type of change and the proper accounting treatment (retrospective or prospective).

> IFRS. Perlu Products, an IFRS reporter, reported a write-down loss of $65,000 for one of its plant assets on December 31, 2018. The asset is currently held for disposal. At December 31, 2019, the fair value of the asset increased by $90,000. Can Perlu re

> Fillepeel Manufacturing, Inc. has only one plant asset used in production. The asset had a cost of $500,000 and has been depreciated for 2 full years since the date of acquisition. This accounting resulted in a total accumulated depreciation of $200,000.

> Ardmore Pet Food Suppliers reported $7,000,000 net income for the current year. The company indicated that it has $6,000,000, 5% convertible debt issued at par and $450,000 par value, 6% nonconvertible, cumulative preferred shares outstanding. The firm d

> Fill in the following chart to indicate the capital structure type— simple or complex—for a company holding only this type of security.

> Bee-Boy Honey Products began the current year with 5,000 common shares outstanding. The firm issued additional shares of 1,500 and 1,800 on February 1 and June 1, respectively. In addition, the firm purchased 600 shares of treasury stock on September 1.

> Using the information provided in BE20-5, compute the weighted-average number of common shares outstanding for Elmwood Excavation Consultants assuming that the company implemented a 10% stock dividend on December Data From BE20-5: Elmwood Excavation Co

> Elmwood Excavation Consultants began the current year with 30,000 common shares outstanding. It issued additional shares of 15,000 and 18,000 on March 1 and August 1, respectively. The company also purchased 3,000 shares of treasury stock on November 1.

> Jackson Pet Food Suppliers reported $7,000,000 net income for the current year. The company indicated that it has $450,000 par value, 6% nonconvertible, cumulative preferred shares outstanding. The firm did not declare dividends for the current year. The

> Russo Watches, Ltd. reported $1,625,000 net income for the current year. Russo has $5,000,000, 6% convertible debt issued at par and $320,000 par value, 4% nonconvertible, noncumulative preferred shares outstanding. The firm declared dividends for the cu

> Rainbow Company reported $239,000 net income for the current year. It has 100,000 shares of common shares outstanding for the entire year and another 50,000 shares of 3% nonconvertible, cumulative, $10 par value preferred shares outstanding for the entir

> Axelon Enterprises has asked you to determine whether its proposed issue of convertible debt will have dilutive effects on earnings per share. If the convertible bonds prove to be dilutive, the company might consider an alternate vehicle to finance the $

> Nick’s Liquidators reported 450,000 shares of common stock outstanding for the year. The company also had stock options outstanding all year that will result in 125,000 incremental shares upon exercise. The company reported a net loss of $680,000 for the

> Perlu Products reported a write-down loss of $65,000 for one of its plant assets on December 31, 2018. The asset is currently held for disposal. At December 31, 2019, the fair value of the asset increased by $90,000. Can Perlu record a recovery? Prepare

> Nickelfront Welders, Inc. granted 300,000 employee options on July 1 of the current year. Employees can exercise each option and receive two shares of the company’s common stock at an exercise price of $15 per share. The average market price of Nickelfro

> Crowe Interior Designs of Santa Monica granted 300,000 qualified employee options on June 1 of the current year. The options allow employees to exchange each option for 36 shares of the company’s common stock at an exercise price of $20 per share. The av

> Molino Motors, Inc. reported net income equal to $1,200,000, which includes a $650,000 after-tax loss from discontinued operations. Molino has 700,000 common shares outstanding for the entire year. Prepare a partial income statement beginning with income

> Togo Incorporation started a share appreciation plan on January 1, 2018, when it granted 50,000 rights to its executives. The vesting period is 2 years. The stock appreciation rights are settled for cash. The plan expires on January 1, 2020. The fair val

> Tommi-Boy Jeans, Inc. awarded 4,000 options to acquire 4,000 shares of its preferred stock that can be sold back to the company. At the grant date, the options have a fair value of $12 each and cannot be exercised until employees complete a 2-year servic

> The Goldwick Company awarded 1,000 options to acquire 1,000 shares of its common stock, which can be sold back to the company. The options vest over 3 years. The market price and the exercise price were both equal to $12 per share on the date of the gran

> Prepare the necessary journal entry assuming that all the options granted by On-the-Fly in BE19-5 expired and were not exercised by any of the company’s employees.

> On-the-Fly Limousine Services granted 5,000 options to acquire 5,000 shares of its $1 par value common stock. At the grant date, the fair value of the options is $100,000 and the exercise price per option is $8 each. Assuming that employees exercise all

> Hillview Homes, Ltd. granted options at the beginning of the current year to all its salaried employees. At the grant date, the options had afair value of $900,000 and can be exercised only over a 3-year vesting period. At the end of the year, Hillview c

> B-Boy Jeans, Inc. awarded 2,000 options to acquire 2,000 shares of its common stock. The options have a fair value of $30 each and cannot be exercised until employees complete a 3-year service period. The market price and the exercise price were both equ

> IFRS. Airwave Corporation, an IFRS reporter, was required to write down one of its plant assets by $1,650,000 on December 31 of the current year because the asset’s technology was rendered obsolete. It used a discounted cash-flow model to estimate the as

> At December 31, 2019, the following information was provided by the Oscar Group: Determine the pension asset or liability that will be reported on Oscar’s balance sheet on December 31, 2019.

> OZ Leasing Associates provides you with the following information for the current year: Determine the pension asset or liability to be reported on the balance sheet of OZ Leasing Associates at the end of the year.

> The following information is provided regarding a company’s defined benefit pension plan. The projected benefit obligation (PBO) was $600,000 at the beginning of the current year. During the year, pension benefits paid were $165,000, service cost for the

> Using the data provided in BE19-24, determine the ending balance of the plan assets and indicate the funded status of the plan at the end of the year under IFRS. Data from BE19-24: Silva Blanca Fashions, Inc. sponsors a defined-benefit pension plan for

> Silva Blanca Fashions, Inc. sponsors a defined-benefit pension plan for its employees. The company’s pension trust provided the following information: fair value of beginning plan assets, $569,000; projected benefit obligation at the beginning of the yea

> Using the data provided in BE19-22, determine the ending balance of the plan assets and indicate the funded status of the plan at the end of the year. Data from BE19-22: Armando Hernandez Fashions, Inc. sponsors a defined-benefit pension plan for its em

> Armando Hernandez Fashions, Inc. sponsors a defined-benefit pension plan for its employees. The company’s pension trust provided the following information: fair value of beginning plan assets, $569,000; projected benefit obligation at the beginning of th

> IFRS. Bidell Builders, an IFRS reporter, has $500,000 of pension cost for the current year. In making this computation, Bidell informs you that the current-year actual return on plan asset in excess of expected returns is a $231,000 net actuarial gain. I

> Bidell Builders reported $500,000 of pension cost for the current year. In making this computation, Bidell informs you that the actual return on plan asset in excess of expected returns in the current year is a $231,000 net gain. In addition, the amortiz

> Vince Pickwick Company awarded 1,000 options to acquire 1,000 shares of its common stock. The options have a fair value of $12 each. The market price and the exercise price were both equal to $6 per share on the date of the grant. Prepare the journal ent

> Airwave Corporation was required to write down one of its plant assets by $1,650,000 on December 31 of the current year because the asset’s technology has been rendered obsolete. It estimated the fair value of the asset using a discounted cash-flow model

> Chester West Shoes, Inc., provided the following information regarding its defined-benefit pension plan: service cost, $257,000; interest on the PVDBO, $121,000; expected return on plan assets, $56,000; past service costs of $24,000, and net actuarial ga

> Chester West Shoes, Inc., provided the following information regarding its defined-benefit pension plan: service cost, $257,000; interest on the beginning PBO, $121,000; expected return on plan assets, $56,000; amortization of prior service costs related

> Northhead Equipment offers its unionized employees a defined-benefit plan. The company determines that the beginning balance of its unamortized net actuarial gain is equal to $136,000. A recent report from the pension plan indicates that the beginning ba

> Jen and Benny’s Ice Cream offers a defined-contribution plan to its employees. Under the terms of the plan, Jen and Benny must contribute 2% of its employees’ salaries. Prepare the journal entry required to record the cost of this plan assuming that tota

> Tash Company offers select executives the opportunity to purchase its $1 par value common stock at a 10% discount. The employees have 2 weeks to elect to participate in the plan. The current market price of the stock is $40 per share. Employees purchased

> Using the information from BE19-13, now assume that Siry Company offers the plan only to top executives. What journal entry will the company make on the date the employees purchase the shares? Data from BE19-13: Siry Company offers all its employees the

> Samsong Company issued 100,000 shares of $1 par value, restricted stock to its top five key employees on January 1, 2017. The market value of Samsong’s shares is $45 per share on the date of issue. The restricted shares require a vesting period of 4 year

> Kogo Incorporation started a share appreciation plan on January 1, 2017, when it granted 100,000 rights to its executives. The vesting period is 2 years. The stock appreciation rights are settled for cash. The plan expires on January 1, 2019. The fair va

> Using the information from BE19-9, now assume that the stock appreciation rights are settled for stock. Prepare the journal entries to record the SAR plan. The par value of common stock is $1 per share. What journal entry will the company make on the dat

> IFRS. Local Craft Designs, Inc., an IFRS reporter, reported goodwill at $600,000 related to its Central Avenue Division. The fair value less costs to sell Central Avenue is $2,500,000. Its value in use is $2,550,000. The firm reports Central Avenue’s car

> Match the type or form of stock compensation with its definition. Form or Type a. Option b. Equity-classified awards c. Liability-classified award d. Stock appreciation rights e. Restricted stock plans f. Employee stock purchase plan

> Using the information provided in BE18-7, prepare the journal entries at the commencement of the lease and at the end of the first year for Perry Leasing assuming now that Perry paid $23,000 to acquire the equipment Data from BE18-7: Jenkins Manufacturi

> Repeat the requirements of BE18-7 for the lessor, Perry Leasing. Data from BE18-7: Jenkins Manufacturing Company leased a piece of nonspecialized machinery for use in its operations from Perry Leasing on January 1. The 10-year lease requires lease payme

> Jenkins Manufacturing Company leased a piece of nonspecialized machinery for use in its operations from Perry Leasing on January 1. The 10-year lease requires lease payments of $4,000 due on January 1 of each year. The machinery is estimated to have a 10

> Using the information provided in BE18-5, prepare the journal entries for the lessee at the commencement of the lease. Data from BE18-5: Iman Iron Works signed a lease on January 1 with Borko Bank for an iron-stamping machine. The equipment is not speci

> Iman Iron Works signed a lease on January 1 with Borko Bank for an iron-stamping machine. The equipment is not specialized in nature. The lease has a 12-year term with no purchase option or transfer of ownership. Under the terms of the contract, Iman mus

> Using the information provided in BE18-3, determine whether this lease is a finance or an operating lease if Dial Digital knows that the lessor’s implicit rate is 6%. Data from BE18-3: Dial Digital Solutions signed a 3-year lease at the beginning of the

> Dial Digital Solutions signed a 3-year lease at the beginning of the current year. The leased equipment has an economic life of 5 years and a fair value of $1,450. Under the terms of the lease, Dial is required to pay $500 on January 1 of each year. Ther

> Scott Manufacturing is considering a lease to acquire new equipment. The useful life of the asset is 10 years. Scott can lease the equipment from New City Bank for $1,000 per year over an 8-year period. The lease does not contain a purchase option. There

> IFRS. Aviata Products, Inc. leases a high-capacity printer from Dewey Office Services for $4,200. The original cost of the printer was $4,900. Under the terms of the agreement, Aviata will make even payments over the 42-month rental period. What is the j

> IFRS. Lenny Schaeffer Bakeries, an IFRS reporter, is required to test goodwill for impairment each year. The current carrying value of its reported goodwill is $800,000. The goodwill pertains to the cash-generating unit. The book value of the net assets

> Morris Products, Inc. leases several copy machines from Stanley Office Services. Under the terms of the agreement, Morris will pay rentals of $800 per month for an 11-month period. Morris elects to apply the exemption for short-term leases. That is, Morr

> Assume that you are given the following information for a 5-year lease (with payments due on January 1 of each year): • The lease payments are $60,000 per year. • The fair value of the underlying asset is $500,000. • The deferred initial indirect cost

> Assume that Anderson Associates, Inc. leases conference and training facilities from The Learning Company. Anderson will conduct training seminars for the clients at the leased space. The lease requires annual payments of $400,000 plus a percentage of sa

> Assume that Sting Stores leases office space from Ramona Realty for $15,000 per month. According to the terms of the lease, monthly rentals will increase by the annual increase in the Consumer Price Index (CPI). Index decreases will not be considered. Wh

> Sun Bank recently leased machinery to Claude Company. The 8-year lease contract requires rental payments of $100,000 due on January 1 of each year. The lease is classified as a finance lease for the lessee and a sales-type lease for the lessor. Claude kn

> VJ Leasing Company recently leased machinery to Berg Building Associates. The 5-year lease contract requires rental payments of $20,000 on January 1 of each year. The lease meets at least one of the Group I criteria. The 9% implicit rate on the lease is

> Assume that Imprescia Industries leases machinery for 3 years with fixed rentals of $8,000 per year. The agreement also requires that Imprescia purchase consumables (such as lubrication, drive belts, and springs) directly from the lessor and must spend a

> IFRS. Repeat the requirements of BE18-9 for the lessor, Perry Leasing assuming that Perry is an IFRS reporter. Perry is not a dealer. Data from BE18-9: Prepare the journal entries at the commencement of the lease and at the end of the first year for Per

> Deane Company leases office space from Blossom Building Associates for a term of 20 years in order to expand its operations into the southern region of the state. The office space includes the use of office equipment and computer equipment. In addition,

> The Block Company uses the accrual basis to account for all sales transactions. Total sales for the current year amounted to $450,000. Of this amount, $120,000 is from sales on installment. The firm uses the installment method (i.e., cash basis) to accou

> IFRS. Genius Auto Malls, an IFRS reporter, recently conducted its annual impairment review of the value of its trademark (an indefinite-life intangible), which it currently carries at $2,500,000. Evidence exists that the trademark may be impaired. Genius

> Mathus, Inc. reported income before tax of $180,000, and taxable income was $200,000. This $20,000 difference resulted from unearned revenues that the firm recorded as revenue for tax purposes but as a liability for book purposes. Mathus is subject to a

> Marlena Group uses straight-line depreciation for financial reporting purposes and accelerated depreciation on its tax returns. The company reported $40,000 in income before tax and depreciation for book purposes. The equipment has an original cost of $2

> Plimmox Company’s income before taxes is $410,000, and its tax rate is 35%. Plimmox included $60,000 in nondeductible fines in the $410,000. There are no other book-tax differences. Prepare a reconciliation of Plimmox’s statutory tax rate to its effectiv

> Simmox Company’s income before taxes is $290,000, and its tax rate is 35%. Note that $40,000 is nontaxable interest income from its investment in municipal bonds and is included in the $290,000. There are no other book-tax differences. Prepare a reconcil

> Plimmox Company’s income before taxes is $410,000, and its tax rate is 35%. Plimmox included $60,000 in nondeductible fines in the $410,000. There are no other book-tax differences. What are its tax expense and taxes payable? What is its net income?

> Simmox Company’s income before taxes is $290,000, and its tax rate is 35%. Note that $40,000 is nontaxable interest income from its investment in municipal bonds and is included in $290,000. There are no other book-tax differences. What are Simmox’s tax

> Bell Junior Apparel Incorporated reported pre-tax book income of $825,000 for the current year. The change in the difference in the basis of plant assets is $210,000; the book basis is higher than the tax basis. Bell invested in tax-free bonds and earned

> Following is a list of CCS Company’s deferred tax assets and liabilities. What will CCS report on its balance sheet?

> Using the data from BE17-22, now assume that Terrell Toy Company is an IFRS reporter. What amount should Terrell Toy report as a tax contingency? Data from BE17-22 Terrell Toy Company uses an acceptable tax method that provided a $10,000 tax deduction f

> Terrell Toy Company uses an acceptable tax method that provided a $10,000 tax deduction for the current year. Book income and taxable income before considering this tax deduction are equal to $245,000 (i.e., there are no book-tax differences). Terrell is

> IFRS. Fredrick Wilson Company, an IFRS reporter, determined that one of its finite-life intangible assets is impaired. The asset’s net carrying value on the date of the impairment is $905,000. Fredrick Wilson does not use a separate acc

> How would your answer to BE17-20 change if Year 1 income were equal to $100,000?

> W. Pickett Fence Company incurred a net loss for Year 3. The firm does not have any book-tax differences. We present the results of operations for the first 3 years of the company’s operations: Future tax rates are expected to be 35%.

> Limmox Company has conformity between its taxable income and income before taxes. Limmox Company’s net income after taxes is $195,000, and its tax rate is 35%. What is its taxes payable?

> Errol Toys, Inc. recorded book income of $240,000 in 2016. It does not have any permanent differences, and the only temporary difference relates to a $12,000 warranty expense that it recorded for book purposes. Errol Toys anticipates fulfilling half of t

> Use the same information as in BE17-17, but now assume that Finer Shoes Company is an IFRS reporter. What deferred tax amount should the company record for this temporary difference under IFRS? Data from BE17-17 Finer Shoes Company recorded book income

> Finer Shoes Company recorded book income of $120,000 in 2016. It does not have any permanent differences, and the only temporary difference relates to a $60,000 installment sale that it recorded for book purposes. Finer Shoes anticipates collecting the i

> Use the same information as in BE17-15 but now assume that Maves is an IFRS reporter. What is the journal entry to record the deferred tax asset? Data from BE17-15 Maves, Inc. booked a deferred tax asset of $45,000 resulting from a basis difference in w

> Maves, Inc. booked a deferred tax asset of $45,000 resulting from a basis difference in warranty liabilities. Management has assessed that it is more likely than not that the firm will not realize 30% of the deferred tax asset. Provide the necessary jour

> Wells Junior Apparel Incorporated reported pre-tax book income of $825,000 for the current year. The change in the difference in the basis of plant assets is $210,000, and the book basis is higher than the tax basis. Wells invested in tax-free bonds and

> Using the information for Reflections Mirrors, Ltd. provided in BE17-12, prepare the journal entries required to record the tax provision for Year 2 assuming that Reflections reported income before warranty costs and taxes of $200,000 and incurred actual

> IFRS. Perlu Products, an IFRS reporter, reported an impairment loss of $65,000 for one of its plant assets on December 31, 2018. At December 31, 2019, the asset’s recoverable amount increased by $90,000. The current carrying value is $100,000 less than i

> Reflections Mirrors, Ltd. offers a 3-year warranty on all its products. In Year 1, the company reported income before warranty expense of $620,000 and estimated that warranty repairs would cost the company $150,000 over the 3-year period. Actual repairs

> Bobby James Puppet Company acquired a new plastic molding machine at the beginning of the current year at a cost of $420,000. The asset has a 6-year useful life for financial reporting purposes and is depreciated on a straight-line basis with no residual

> Hondell Industries offers a 3-year basic warranty on all its products. At the beginning of the current year, the estimated warranty liability had a balance of $110,000. Actual repairs cost $35,000, and the company accrued an additional $60,000 for the cu