Take-Two Interactive Software, Inc. (TTWO) is a developer, marketer, publisher, and distributor of video game software and content to be played on a variety of platforms. There is an increasing demand for the ability to play these games in an on line environment, and TTWO has developed this capability in many of its products. In addition, TTWO maintains servers (or arranges for servers) for the online activities of its customers. TTWO considers that its products have multiple performance obligations. The first performance obligation is to provide software to the customer that enables the customer to play the game offline or online. That performance obligation is fulfilled at the point at which the software is provided to the customer. In addition, TTWO's customers benefit from "online functionality that is dependent on our online support services and/or additional free content updates." This second performance obligation is fulfilled over time, and the estimated time period for which an average user plays the software product is judged to be a faithful depiction of the fulfillment of this performance obligation. At the beginning of the first quarter of fiscal year 2018, TTWO had a deferred net revenue liability of $566,141 thousand. When that quarter ended on June 30, 2018, the deferred net revenue liability was $466,429 thousand. Revenue for the quarter was $387,982 thousand. REQUIRED a. What would cause the deferred net revenue liability to go down over the quarter? b. What was the amount of online-enabled games purchased by TIWO's customers in the first quarter ended June 30, 2018? Were the purchases greater or less than the revenue recognized in the income statement? How might that information be useful for a financial statement reader?
> At the beginning of January, the first month of the accounting year. the supplies account had a debit balance of $825. During January, purchases of $260 worth of supplies were debited to the account. Although only $630 of supplies were still available at
> On December 31, 2018, Miller Company had $700,000 in total assets and owed $220,000 to creditors. If this corporation's common stock totaled $300,000, what amount of retained earnings is reported on its December 3 1, 2018, balance sheet?
> Vista Company sold for $98,000 cash land originally costing $70,000. The company recorded a gain on the sale of $28,000. How is this event reported in a statement of cash flows using the indirect method?
> What are the two fundamental qualitative characteristics and the six enhancing qualitative characteristics of accounting information? Explain how each characteristic improves the quality of accounting disclosures.
> What are the objectives of financial accounting? Which of the financial statements satisfies each of these objectives?
> What is the primary function of the auditor? To what does the auditor attest in its opinion'!
> What are International Financial Reporting Standards (IFRS)? Why are IFRS needed? What potential issues can you see with requiring all public companies to prepare financial statements using IFRS?
> What are generally accepted accounting principles and what organization presently establishes them?
> Business decision makers external to the company increasingly demand more financial information on business activities of companies. Discuss the reasons why companies have traditionally opposed the efforts of regulatory agencies like the SEC to require m
> The current asset section of the 2017 and 2016 fiscal year end balance sheets of The Kroger Co. are presented in the accompanying table: In addition, Kroger provides the following footnote describing its inventory accounting policy (assume the following
> Caterpillar Inc., consists of two business units: the manufacturing company (parent corporation) and a wholly owned finance subsidiary. These two units are consolidated in Caterpillar's 2018 10-K report. Following is a supplemental disclosure that Caterp
> Columbia Company began operations in 20 19 and by year-end (December 31) had made six bond investments. Year-end information on these bond investment follows. REQUIRED a. At what total amount will the trading bond investments be reported in the December
> Vireo Manufacturing Corp. provided the following note in its annual report for the year ended January 31, 2011: On January 31, 2011, the Company elected to change its costing method for the material component of raw materials, work in process, and finish
> On January 1, 2016, Gem Company purchased for $392,000 cash a 70% stock interest in Alpine, Inc., which then had common stock of $420,000 and retained earnings of $ 140,000. Balance sheets of the two companies immediately after the acquisition were as fo
> Following is a portion of the investments footnote 8 from MetLife lnc.'s 2017 I 0-K report. Investment earnings are a crucial component of the financial performance of insurance companies such as MetLife, and investments comprise a large part of its asse
> The 2017 and 2018 statements of stockholders' equity for Alphabet Inc. are presented below along with portions on Notes LO and 12 relating to stockholders' equity and equity-based compensation. Note 10: Stockholders' Equity Convertible Preferred Stock Ou
> Following is the stockholders' equity section of the balance sheet for The Procter & Gamble Company along with selected earnings and dividend data. For simplicity, balances for non-controlling interests have been left out of income and shareholders'
> Following is the stockholders' equity of Dennis Corporation at December 31, 2018. The following transactions, among others, occurred during 201 9. Jan. 15 Issued 1,000 shares of preferred stock for $62 cash per share. Jan. 20 Issued 4,000 shares of commo
> The stockholders' equity of Verrecchia Company at December 31, 2018 follows. During 2019, the following transactions occurred. Jan. 5 Issued 10,000 shares of common stock for $ 12 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the tre
> The stockholders' equity of Sougiannis Company at December 31, 2018, follows. The following transactions, among others, occurred during 20 I 9. Jan. 12 Announced a 3-for-l common stock split, reducing the par value of the common stock to $5 per share. Th
> The stockholders' equity section of Gupta Company at December 31, 2018, follows. During 2019, the following transactions occurred: Jan. 10 Issued 28,000 shares of common stock for $ 17 cash per share. Jan. 23 Purchased 8,000 shares of common stock for th
> Macy's, Inc., reported the following in its 2017 annual report: On December 22, 2017, H.R. 1 was enacted into law. This new tax legislation, among other things, reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. In app
> Carter Inc. began operations in 2019. The company reported $130,000 of depreciation expense on its 2019 income statement and $128,000 in 2020. Carter Inc. deducted $ 140,000 for depreciation on its tax return in 2019 and $122,000 in 2020. The company rep
> What is the definition of cash equivalents? Give three examples of cash equivalents.
> Lynch Company began operations in 2019. The company reported $24,000 of depreciation expense on its income statement in 2019 and $26,000 in 2020. On its tax returns, Lynch deducted $32,000 for depreciation in 2019 and $37,000 in 2020. The 2020 tax return
> Deere & Company reports the following tax information in its fiscal 2018 financial report. The provision for income taxes by taxing jurisdiction and by significant component consisted of the following in millions of dollars: REQUIRED a. What amount o
> Hoopes Corporation 's December 31, 2019, I 0-K report has the following disclosures related to its retirement plans. The following table provides a reconciliation of the changes in the pension plans' benefit obligations and fair value of assets over the
> Cisco Systems, Inc., reports the following in the Commitments and Contingencies note to their 10-K for the year ended July 2018. Purchase Commitments with Contract Manufacturers and Suppliers We purchase components from a variety of suppliers and use se
> American Airlines Group, Inc., provides the following disclosures in the notes to their 2018 financial statements (excerpted for brevity): Note 1: Basis of Presentation and Summary of Significant Accounting Policies ASU 2016-02: Leases (Topic 842) (the N
> United Continental Holdings, Inc., did not adopt the new lease standard in 2018 but provides the following disclosure its 2018 10-K report($ millions). The adoption of the New Lease Standard primarily resulted in the recording of assets and obligations o
> BP operates off-shore oil drilling platforms including rigs in the Gulf of Mexico. In April 2010, explosions and a fire on the Deepwater Horizon rig led to the death of 11 crew members and a 200-million-gallon oil spill in the Gulf of Mexico. BP's 2010 a
> On December 31, 2018, Watts Corporation borrowed $950,000 on an 8%, 5-year mortgage note payable. The note is to be repaid with equal quarterly installments, beginning March 31, 20 19. REQUIRED a. Compute the amount of the quarterly installment payment.
> On December 3 l, 2018, Wasley Corporation borrowed $500,000 on a 10%, I 0-year mortgage note payable. The note is to be repaid with equal semiannual installments, beginning June 30, 2019. REQUIRED a. Compute the amount of the semiannual installment payme
> On April 30, 2019, Cheng, Inc., issued $250,000 of 6%, 15-year bonds for $206,770, yielding an effective interest rate of 8%. Semiannual interest is payable on October 31 and April 30 each year. The firm uses the effective interest method to amortize the
> On December 31, 2018, Kasznik, Inc., issued $720,000 of 11 %, I 0-year bonds for $678,708, yielding an effective interest rate of 12%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amo
> Petroni, Inc., which closes its books on December 31, is authorized to issue $800,000 of 9%, 20 year bonds dated March I, 2019, with interest payments on September I and March I. REQUIRED Assuming that the bonds were sold at 100 plus accrued interest on
> CVS Health Corp. discloses the following footnote in its 10-K relating to its debt: Following is a summary of the Company's borrowings as reported in note 5 to the firm's 10-K / / CVS also discloses that its interest expense was $ 1.04 billion in 2017,
> Eskew, Inc., which closes its books on December 3 1, is authorized to issue $500,000 of 9%, 15- year bonds dated May I, 2018, with interest payments on November I and May I. REQUIRED Assuming that the bonds were sold at I 00 plus accrued interest on Octo
> The f0llowing information was extracted from the 10-K reports for the years ended in 2018 for Hewlett-Packard Enterprise and Cisco Systems, Inc. REQUIRED a. Compute the amount of warranty costs incurred in 2018 for each company. (That is, what amount was
> Note B from the fiscal 2010 I 0-K report of Williams-Sonoma, Inc., (February 3, 2019) follows. Its cash flow statement reported that the company made capital expenditures of $190. !02.000 during fiscal 2018, impaired assets of $9.639.000 and recorded dep
> The 2018and2017 income statements and balance sheets (asset section only) for Target Corporation follow, along with its footnote describing Target's accounting for property and equipment. Target's cash flow statement for fiscal 20 I 8 reported capital ex
> Aglent Technologies, Inc., the high-tech spin-off from Hewlett-Packard Company, reports the following operating profit for 2018 in its 10-K ($ millions): REQUIRED a. What percentage of its total net revenue is Agilent spending on research and development
> The following information was provided in the 2018 10-K of Hilton Worldwide Holdings, Inc. Note 7: Property and Equipment (S millions) Note 7 also revealed that depreciation expense on property and equipment totaled $54 million in 2018. The cash flow sta
> What four different types of adjustments are frequently necessary at the close of an accounting period? Give examples of each type.
> Refer to Exercise EA-5. How much interest will Robert Smith pay as part of his first monthly payment?
> In its income statement for the first quarter of fiscal year 2018, The Gap, Inc., reported net sales of $3,783 million and cost of goods sold and occupancy expenses of $2,356 million, resulting in a gross profit of $1,427 million. In its footnotes, The G
> Mattel, Inc. designs, manufactures, and markets a broad variety of toy products worldwide which are sold to its customers and directly to consumers. The company's brands include American Girl, Fisher-Price, Hot Wheels, and Barbie. The following informati
> Harris Corporation pays senior management an annual bonus from a bonus pool. The size of the bonus pool is determined as follows. REQUIRED a. Assume that senior management expects current earnings to be $21 million and next year's earnings to be $18 mill
> Philbrick Company signed a three-year contract to develop custom sales training materials and provide training to the employees of Elliot Company. The contract price is $1,200 per employee and the number of employees to be trained is 400. Philbrick can s
> The following information comes from recent DowDuPont Inc. income statements. REQUIRED a. Identify the components in its statement that you would consider operating. b. Identify those components that you would consider nonrecurring. c. Compute net operat
> Selected financial statement data for Best Buy Co., Inc., The Kroger Co .. Nordstrom, Inc., Office Depot, Inc., and Walgreens Boots Alliance, Inc. is presented in the following table: REQUIRED a. Compute return on assets (ROA), profit margin (PM), and as
> Selected income statement data for Abbott Laboratories, Bristol-Myers Squibb Company. Johnson & Johnson. GlaxoSmithKline pie. and Pfizer, Inc. is presented in the following table: REQUIRED a. Compute the profit margin (PM) and gross profit margin (GP
> Refer to the financial statements of United Parcel Service in P5-4 l to answer the following requirements. The following assumptions should be useful: UPS's sales forecast for 2018 is $70,000 million. • Operating expenses and operating profits increase i
> Balance sheet information for Lang Services at the end of 2018 and 2017 is: a. Prepare its balance sheet for December 31 of each year. b. Lang Services raised $5,000 cash through issuing additional common stock early in 2018, and it declared and paid a $
> Refer to the financial statements of United Parcel Service in PS-4 1 to answer the following requirements. REQUIRED a. Compute net operating profit after taxes (NOPAT) for 2017 and net operating assets (NOA) for 2017 and 2016. Assume a tax rate of 35%. b
> Refer to the financial information of United Parcel Service in PS-41 to answer the following requirements. REQUIRED a. Compute its current ratio and quick ratio for 2017 and 2016. Comment on any observed trends. b. Compute its times interest earned and i
> Balance sheets and income statements for United Parcel Service, Inc., (UPS) follow. Refer to these financial statements to answer the following requirements. REQUIRED a. Compute ROA and disaggregate it into profit margin (PM) and asset turnover (AT) for
> Refer to the financial statements of Home Depot and Lowe's presented in PS-38. REQUIRED a. Compute each company's net operating profit after taxes (NOPAT) for 2017 and net operating assets (NOA) for 201 7 and 2016. Classify other assets and other liabili
> Refer to the financial statements of Home Depot and Lowe's presented in PS-38. REQUIRED a. Compute each company's current ratio and quick ratio for each year. Comment on any changes that you observe. b. Compute each company's times interest earned ratio
> Balance sheets and income statements for The Home Depot, Inc., and Lowe's Companies, Inc., follow. Refer to these financial statements to answer the requirements. REQUIRED a. Compute return on equity (ROE) return on assets (ROA), and return on financial
> Refer to the financial statements of Nike and Adidas presented in PS-36. REQUIRED a. Compute each company's current ratio and quick ratio for each year. Comment on any changes that you observe. b. Compute each company's times interest earned ratio and de
> Balance sheets and income statements for Nike, Inc., and Adidas Group follow. Refer to these financial statements to answer the requirements. REQUIRED a. Compute return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for
> Why is the adjusting step of the accounting cycle necessary?
> The 201 7 cash flow statement for Apple Inc. is presented below (all $ amounts in millions): REQUIRED a. Did Apple's accounts receivable go up or down in 2017? Apple reported net sales of $229,234 in its fiscal 2017 income statement. What amount of cash
> Refer to the data for Rainbow Company in Problem 4-52. REQUIRED a. Compute the change in cash that occurred in 2018. b. Prepare a 201 8 statement of cash flows using the di rect method. Use one cash outflow for "cash paid for wages and other operating ex
> Rainbow Company's income statement and comparative balance sheets follow. During 2018, the following transactions and events occurred: I. Sold long-term investments costing $57,000 for $60,000 cash. 2. Purchased land for cash. 3. Capitalized an expenditu
> For this question, refer to the information in Exhibits 4.1 and 4.7. a. Based on the information presented in its statement of cash flows, what amount of revenues should CVS Health report in its 2017 income statement? b. CVS Health reported retained earn
> Dair Company's income statement and comparative balance sheets follow. During 2018, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. Also in 2018, new equipment worth $60,000 was acquired in
> Refer to the income statement and comparative balance sheets for Arctic Company presented in P4-48. REQUIRED a. Compute Arctic Company's cash flow from operating activities using the direct method. Use the format illustrated in Exhibit 4.5 in the chapter
> Arctic Company's income statement and comparative balance sheets follow. During 2018, Arctic sold land for $70,000 cash that had originally cost $45,000. Arctic also purchased equipment for cash, acquired treasury stock for cash, and issued bonds payable
> Refer to the income statement and comparative balance sheets for Wolff Company presented in P4-46. REQUIRED a. Compute Wolff Company's cash flow from operating activities using the direct method. Use the format illustrated in Exhibit 4.5 in the chapter.
> Wolff Company's income statement and comparative balance sheets follow. Cash dividends of $29,000 were declared and paid during 2018. Also in 2018, plant assets were purchased for cash, and bonds payable were issued for cash. Bond interest is paid semian
> Petroni Company reports the following selected results for its calendar year 2018. REQUIRED Prepare the operating section only of Petroni Company's statement of cash flows for 2018 under the indirect method of reporting.
> Match each item in the left column with the correct description in the right column.
> Rhoades Tax Services began business on December I, 2018. Its December transactions are as follows. Dec. I Rhoades invested $20,000 in the business in exchange for common stock. 2 Paid $1,200 cash for December rent to Bomba Realty. 2 Purchased $1,080 of s
> Fischer Card Shop is a small retail shop. Fischer's balance sheet at year-end 2018 is as follows. The following information details transactions and adjustments that occurred during 2019. 1. Sales total $ 145,850 in 2019; all sales were cash sales. 2. In
> The following selected accounts appear in Zimmerman Company's unadjusted trial balance at December 31 , 2018, the end of its fiscal year (all accounts have normal balances). Additional information is as follows. 1. On September I, 20 18, the company ente
> The following adjusted trial balance is for Mayflower Moving Service at December 31, 2018. REQUIRED a. Prepare closing entries in journal entry form. b. After its closing entries are posted, what is the post-closing balance for the Retained Earnings acco
> Trails, Inc., publishes magazines for skiers and hikers. The company's adjusted trial balance for the year ending December 31, 2018, is: REQUIRED a. Prepare its income statement and statement of stockholders' equity for 2018, and its balance sheet at Dec
> Wheel Place Company began operations on March I, 2019, to provide automotive wheel alignment and balancing services. On March 3 1, 20 I 9, the unadjusted balances of the firm's accounts are as follows. The following information is available. 1. The balan
> The following adjusted trial balance is for Wilson Company at December 31, 2018. REQUIRED a. Prepare closing entries in journal entry form. b. After the firm's closing entries are posted, what is the post-closing balance for the Retained Earnings account
> The following adjusted trial balance is for Trueman Consulting Inc. at December 31, 2018. The company had no stock issuances or repurchases during 2018. REQUIRED a. Prepare its income statement and statement of stockholders' equity for 2018 and its balan
> The following information relates to the December 31 adjustments for Kwik Print Company. The firm's fiscal year ends on December 31. 1. Weekly employee salaries for a five-day week total $ 1,800, payable on Fridays. December 31 of the current year is a T
> Murdock Carpet Cleaners ended its first month of operations on June 30, 2019. Monthly financial statements will be prepared. The unadjusted account balances are as follows. The following information is available. I. The balance in Prepaid Rent was the am
> What is a chart of accounts? Give an example of a coding system for identifying different types of accounts.
> SnapShot Company, a commercial photography studio, has just completed its first full year of operations on December 31, 2018. General ledger account balances before year-end adjustments follow; no adjusting entries have been made to the accounts at any t
> B. Lougee opened Lougee Roofing Service on April I. 2019. Transactions for April are as follows: Apr. I Lougee contributed$ I 1.500 cash to the business in exchange for common stock. I Paid $2,880 cash for two-year premium toward liability insurance effe
> Use the information in Problem 2-69 to complete the following requirements. REQUIRED a. Prepare journal entries for each of the transactions I through 11. b. Set up T-accounts, including beginning balances, for each of the accounts used in part a. Post t
> Kross, Inc., provides appraisals and feasibility studies. On January I, 2019, its beginning account balances are as follows: Cash, $6,700; Accounts Receivable, $ 14,800; Notes Payable, $2,500; Accounts Payable, $600; Retained Earnings, $12,400; and Commo
> Use the information in Problem 2-67 to complete the following requirements. REQUIRED a. Prepare journal entries for each of the transactions l through 10. b. Set up T-accounts, including beginning balances, for each of the accounts used in part a. Post t
> Schrand Aerobics, Inc., rents studio space (including a sound system) and specializes in offering aerobics classes. On January 1, 2019, its beginning account balances are as follows: Cash, $5,000; Accounts Receivable, $5,200; Equipment, $0; Notes Payable
> The records of Geyer, Inc., show the following information after al l transactions are recorded for 2018. Geyer, Inc., raised $1,400 cash through the issuance of additional common stock during this year and it declared and paid a $13,500 cash dividend ne
> Selected income statement information for Siemens AG, a global technology company, for four fiscal years follows: REQUIRED a. Compute the missing amounts for each of the four years shown. b. Compute the gross profit margin (gross profit/sales) for each o
> Selected income statement information for Starbucks Corporation, a coffee-related restaurant chain, for four recent fiscal years follows. REQUIRED a. Compute the missing amounts for each of the four years shown. b. Compute the gross profit margin (gross
> Use the information in Problem 2-62 to complete the following requirements. REQUIRED a. Prepare journal entries for each of the transactions I through 12. b. Set up T-accounts for each of the accounts used in part a and post the journal entries to those
> Financial accounting plays an important role in modern society and business. a. What role does financial accounting play in the allocation of society's financial resources? b. What are three aspects of the accounting environment that can create ethical p
> On June I, 2019, a group of pilots in Melbourne, Australia, formed Outback Flights by issuing common stock for $50,000 cash. The group then leased several amphibious aircraft and docking facilities, equipping them to transport campers and hunters to outp
> Selected income statement information for Nike, Inc., a manufacturer of athletic footwear, for four recent fiscal years ending May 31 follows. REQUIRED a. Compute the missing amounts for each of the four years shown. b. Compute the gross profit margin (g
> Selected balance sheet amounts for Alibaba Group Holding Ltd, a China-based online and mobile commerce company, for three recent fiscal years ending March 31 follow: REQUIRED a. Compute the missing balance sheet amounts for each of the three years shown.
> Selected balance sheet amounts for Apple Inc .a retail company for four recent fiscal years follow: REQUIRED a. Compute the missing balance sheet amounts for each of the four years shown. b. What asset category would you expect to constitute the majority
