Question: The components of 2019 comprehensive income for

> Three years ago. Yeagley and Sons purchased the three assets listed in the following table. The chief financial officer, Kathy Dillon, is presently trying to decide what to do with each asset. She has to choose whether to sell it or keep it. The followin

> Assume that on January 1, Bush Enterprises borrowed $5,0O0 thorn Banking Corporation, promising to pay $'i,OO0 plus interest at the end of one year. The contractual rate of interest on the Joan is 5 percent, and the general rate of inflation for that yea

> Joe McGuire is a CPA who has recently completed the audit of Nelson Repairs Inc. The audited balance sheet and income statement follow: During his examination. Joe learned that a lawsuit is soon to be filed against Nelson. The lawsuit accuses Nelson of n

> Hydra Aire Inc. sells appliances to Seasons Depamnent Store. A recent order requires Hydra Aire to manufacture and deliver 500 toasters at a price of $100 per unit. Hydra Aire’s manufacturing costs are approximately $40 per unit. The fo

> During 2020, Brenda’s Bookstore (BB) opened ten new locations in the greater metro area. During 2020, the following took place for these new locations: Revenue recognition: BB sold $90,000 of books for which i1 received cash at the time of the sale;

> The net income and working capital accounts for two companies in the same industry, ABC Company and XYZ Company, follow: After reviewing the complete financial statements of the two companies, you note that ABC and XYZ use different inventory valuatio

> On January 1, 2020, you purchased a piece of property for $10,000. On December 31 of that year, you sold the property for $20,000. Assume that the general rare of inflation for 2020 was 10 percent. INSTRUCTIONS: a. According to generally accepted account

> Because of consistent losses in the past several years, Eat and Run, a fast-food franchise, is in danger of bankruptcy. lts most current balance sheet follows. Additional information: • The fair market value of the marketable securities

> Excerpts from the financial statements for Kroger, a major supermarket retailer, are as fol- lows (dollars in millions). INSTRUCTUION: Organize these numbers into income statements rind balance sheets.

> Access the Data Analytic worksheet at www.wiley.com/gofpratt/financialaccounbnglle and extract the data necessary to compare Nordstrom and Macys on the five fundamental measures of financial performance (net income; total assets; total liabilities; inves

> Compute the missing values for the following chari. The first year of operations is 2017.

> The following information Is available relating to the activities of Johnson Co. as of December 31, 2020. • Cash balance on 12/31/20 is $8,000. • Short-term investments have a value of $40,000 on 12/31f2D. • Accounts receivable balance of $125,000 on I 2

> Review Figure 2-12 and complete the blanks below to show the relationships among the four financial statements for Nimmo Brothers Corporation:

> The main section headings of the income statement are a. Sales b. Service revenue c. Other revenue d. Cost of goods sold e. Operating expenses f. Other expenses INSTRUCTIONS Classify the following descriptions under the appropriate headings and prepar

> Presented below are the main section headings of the balance sheet: a. Current assets b. Long-term investments c. Property, plant, and equipment d. Intangible assets e. Current liabilities f. Long-term liabilities g. Contributed capital h. Retained ea

> A summary of the December 31, 2020, balance sheet of Ellington Industries follows: On January 1, 2021, the company borrowed $40,000 (long-term debt) to purchase additional land. The debt covenant stares that Ellington must maintain a current asset balanc

> Ted Tooney has operated a smaller vice company for several years. The t’o1lowing information is from the financial statements prepared by Ted‘s accountant. INSTRUCTIONS: Assume that you have some capital to invest and

> The chief executive officer of Romney Heights has included the following information from the financial statements in a loan application submitted to Acme Bank. The company intends to acquire additional equipment and wishes to finance the purchase with a

> Joy Don Corp. sells a building to Trifle and Life in exchange for a note. The note specifies a lump-sum payment of $300,000 ten years in the future and annual payments (beginning today) of $2,000 at the beginning of each year for ten years. Assume an ann

> Assume an annual interest rate of 8 percent for each of the following independent cases. Compute the value at time O and the value at the end of the investment period for all the cash flows described: a. $10,000 is invested and held for four years. b. $2

> Access the Data Analytic worksheet at www.wiley.coin/go/pratt/financialaccountinglle and compute the rate of growth from 2017 to 2018 and from 2018 to 2019 in “Sales” (from the income statement data) and â€&

> Boulder Wilderness Adventures purchased rafting and kayaking equipment by issuing a note to Recreational Co-op, the seller of the equipment. The note required a down payment of $5,000, annual payments of $10,000 at the end of each year for five years (th

> In its 2019 annual report, Home Depot reported that sales increased from $100.9 billion in 2018 to $108.2 billion in 2019, while profits increased to $11.1 from $8.6 billion. However, total assets decreased from $44.5 to $44.0 billion, with the company’s

> One of the factors contributing to the 2008-2009 recession was the unwillingness of commercial banks to extend loans to customers, some of whom were quite creditworthy. This unwillingness led to what was called a “credit crunch.” Discuss reasons why bank

> Explain the function of the audit committee, and describe why it is important that it consist of outside fnonmanagement) directors.

> The AICPA’s list of red flags alerting auditors to the possibility of management fraud includes a “domineering management with a weak board of directors.” Briefly explain the role of the board of directors and how such a situation could indicate the pote

> Financial accounting statements are used by many parties. Describe how each of the following parties might use them: equity analysts and shareholders, bank loan officers, a company’s customers and suppliers, public utilities, labor unions, and a company’

> Airbus, a global French aircraft manufacturer, prepares its financial statements in accordance with IFRS. On its 2019 income statement, it reported a net loss of approximately 1.3 billion euros, driven primarily by a charge (expense) recorded during the

> Starbucks is a relatively young, fast-growing company that is a pioneer and leader in its industry. Excerpts from its 2019 statement of cash flows are as follows (dollars in millions): INSTRUCTIONS: a. Discuss the cash management profile of Starbucks acr

> The following information was taken from the 2019 annual report and statement of cash flows of Eli Lilly, a major pharmaceutical (dollars in millions):* INSTRUCTIONS: a. Discuss the cash management profile of Lilly across the three-year period. Where did

> In May, 2019, Uber Technologies, Inc., went public. Selected information from its 2020 statement of cash flows is provided below (dollars in billions). INSTRUCTIONS: a. What has happened to Uber's cash balance over the three-year period? b. Where is the

> A 2018 balance sheet of Royal Dutch Shell, a huge oil and gas company that prepares financier statements using IFRS, reported the following dollar amounts (in millions). First, format these balance sheer sections in a manner that is used by many non-U.S.

> The financial press often uses the term cash flow to refer to a company's "net income + depreciation." In a well-known article in Barron's titled "No Substitutions, Please," Intel was criticized for relying heavily on a number the company called "cash ea

> Loan officer Han Blackford once commented that cash flow analysis has risen in importance due to a "trend over the past twenty years toward capitalizing and deferring more and more expenses. Although the practice may match revenues and expenses more clos

> The 2019 balance sheet of The Walt Disney Company includes a long-term asset account called "Investments" in the amount of $3.2 billion. Most of this account is comprised of investments where Disney owns enough of the investees' common shares to exert a

> You can review the Disney SEC Form 10-K by searching for "Disney Annual Report" online. INSTRUCTIONS: Review the 2019 10-K, and answer the following questions: a. What are the major sources of cash for the company, and what is it doing with that cash? b.

> An article in Business Week described how Bob Olstein, a successful stock analyst, predicts that the prices of stocks issued by firms that "engage in aggressive accounting practices" will go down, stating that other "investors have unrealistic expectatio

> When luxury automaker BMW recently released earnings, the Wall Street Journal reported that it compared poorly to the prior year for a number of reasons, including the following: • rising raw material costs • strength of the euro • a large gain booked du

> Indicate how the income effects of the following items would be disclosed on the income statement and whether they represent a wealth change and/or can be expected to persist in the future: a. Federal Express reported $17 million on operating gains from

> General Electric's 2019 annual report, which included a statement of comprehensive income, contained the following items (dollars in millions): INSTRUCTIONS: a. From top to bottom, list each item as it would be disclosed on the income statement and state

> Eastman Kodak once recorded a third-quarter net loss of $206 million, but at the same time, posted a 22 percent rise in operating earnings to $835 million. Much of the loss was due to a $909.5 million charge taken to cover the costs associated with a wel

> Excerpts from the annual report of AT&T, Inc., are as follows. Compute the missing values and briefly discuss AT&€™s sources and uses of cash during the three-year period.

> Many e-tailers (retailers via the Internet) were not profitable in their early years. Analysts who believed in the futures of these firms, therefore, were forced to focus on other positive metrics of performance, such as revenues and gross profit margins

> In a particular year, PepsiCo's earnings either rose or fell, depending on the source of the information. Standard & Poor's reported that PepsiCo experienced a 25 percent earnings gain, while Value Line, another investor service, reported that PepsiCo ex

> Weyerhaeuser Company is engaged principally in the growing and harvesting of timber and the manufacture, distribution, and sale of forest products. When Mount St. Helens, a volcano located in Washington State, erupted, 68,000 acres of the company's stand

> Ratings agencies such as Moody's and Standard & Poor's rate securities to give investors an independent grading of the risks involved in financial transactions. A few years ago, both Moody's and S&P reported large increases in profits due to the increase

> You can review the Disney SEC Form 10-K by searching for "Disney Annual Report" online. INSTRUCTIONS: Review the 2019 Disney SEC Form 10-K, and answer the following questions: a. Describe how non-operating items affected Disney's reported net income ove

> Carrefour, a French retailer, publishes financial statements under IFRS, denominated in euros. Toyota, the Japanese automobile producer, publishes financial statements under U.S. GAAP, denominated in yen. Excerpts taken directly from their 2019 income st

> The Wall Street Journal reported that shareholders of Kraft Foods, now part of KraftHeinz, "can afford to give management more time to improve its brands, sales margins, and earnings" because of the dividends paid by the company and the share buyback pro

> For 20 years, Westinghouse Electric Corp. used PCBs in the manufacture of electrical capacitors at its plant in Bloomington, Indiana. A federal consent decree ordered the company to be prepared to build an incinerator in the future to destroy the PCB-con

> Preferred stock is often seen as a hybrid security, as it has characteristics of both debt and equity. The Wall Street Journal once reported two new securities used by companies going public: income deposit securities and enhanced income securities, both

> In BE2—2, Caterpillar’s current assures consisted primarily of cash and short-term investments of $8.3 billion, accounts receivable of $17.9 billion, inventory of $11.1 billion, and miscellaneous current assets of $1.7 billion. a. Does the company appear

> In an article entitled "Buybacks or Giveaways," CFO.com reported that "large repurchase programs require a whole lot of capital. Critics of buybacks contend that companies can put their cash to better use. They also point out that investors are more like

> The Wall Street Journal once reported, "Philip Morris Cos., in an aggressive move to boost its stock price, announced a $6 billion stock buyback plan and raised its quarterly dividend nearly 20% ... . The announcement, which came after a regularly schedu

> When companies cut dividends, it is usually a bad sign for the stock. But apparently not at Monsanto, maker of Roundup and now part of Bayer's farm science division. Several years ago, the company cut its dividend and the stock price went up. INSTRUCTION

> When Hershey Foods declared a 100 percent stock dividend, 149.5 million of its shares were outstanding. Assume that the stock dividend was declared and paid on the same day. INSTRUCTIONS: a. How many shares of stock were outstanding after the dividend? b

> The following information was taken from the 2019 statement of shareholders' equity for Microsoft ( dollars in billions). INSTRUCTIONS: a. Explain the nature of stock-based compensation expense. b. Why would it appear on the statement of shareholders' eq

> You can review the Disney SEC Form 10-K by searching for "Disney Annual Report" online. INSTRUCTIONS: Review the Disney 10-K, and answer the following questions: a. What percentage of Disney's total assets were provided by liabilities, contributed capita

> Unilever Group, a Dutch-based consumer-goods company that publishes IFRS-based financial statements, reported a net profit on its 2019 income statement of 6.0 billion euros. That same year, the company reported comprehensive income of 6.6 billion euros.

> Each year since 2014, Home Depot has purchased at least $7 billion of its own outstanding common stock , averaging over $8 billion per year, recording it all as treasury stock. The accumulated total of its treasury share holdings has grown to over $65 bi

> Refer to the statement of shareholders' equity reported by Emerson Electronics given in Figure 12-11. INSTRUCTIONS: Describe Emerson's dividend and treasury stock transactions and policies over the three-year period 2017- 2019. Consolidated Statements of

> When Walt Disney Co. declared a 4:1 split of its common stock, the announcement boosted the entertainment company's shares up by $3.50 per share. INSTRUCTIONS: a. What is a 4: 1 stock split, and how did it affect the financial statements of Walt Disney C

> A summary of a recent balance sheet for Caterpillar is as follows (dollars in billions): What amount and what percentage of Caterpillar’s assets were financed by (1) current liabilities, (2) long- term debt, and (3) shareholders&acir

> Bloomberg News Service reported that Rhodia, SA, France's largest specialty chemicals company, announced plans to sell 450 million euros in shares, in addition to a 600 million euro bond issue, to raise cash to prevent a liquidity crisis. Rhodia had post

> Prior to a recent buyout offer, the stock in Dow Jones & Co. Inc. (the publisher of the Wall Street Journal) had a book value (shareholders' equity per share) of approximately $6. The stock had been trading (market value) for $36 per share. Rupert Murdoc

> During the 2008-2009 financial crisis, the stock market plummeted, and many companies tried to take advantage of the depressed prices by buying back large amounts of their own stock. Amazon, for example, authorized a $2 billion stock buyback and borrowed

> The Wall Street Journal reported that many companies take advantage of the depressed market values of their own debt, and buy their own bonds at steep discounts below the debt's face value. Beazer Homes, Harrah's Entertainment, and Tenet Healthcare provi

> The following information was taken from the footnotes of Target's 2020 financial statements. It lists the contractual cash payments Target expects to make on its leases. INSTRUCTIONS: a. What percent of the total expected lease payments is associated wi

> The following excerpt was taken from a recent annual report of JCPenney: The ... Credit Agreement includes a requirement that the Company maintain, as of the last day of each fiscal quarter, a Leverage Ratio (a ratio of Funded Indebtedness to Consolidate

> As the United States slid deeper into a recession, companies with high amounts of cash relative to their debt were coveted by the stock market, while companies with high levels of debt slashed dividends, payrolls, and capital expenditures to stay afloat.

> The Wall Street Journal reported that on a particularly strong day in the stock market, the prices of long-term bonds issued by companies such as Apple, Merck, Microsoft, and McDonald's all dropped significantly. "High-rated, low-yielding debt of househo

> The following information was taken from the footnotes to Target's 2020 financial statements (dollars in millions): As of February 1, 2020, the carrying value and maturities of our debt portfolio were as follows: INSTRUCTIONS: a. Which amount appears in

> Revenues and expenses for PepsiCo during 2019 were $67.2 billion and $59.9 billion, respectively. The December 31, 2018 and 2019, balances in retained earnings were $59.9 billion and $61.9 billion, respectively. Compute dividends paid by PepsiCo during 2

> Assume that Southwest Airlines is planning to purchase a jet passenger plane with a price of $45,636,480 from The Boeing Company. Southwest is considering structuring the transaction in one of two ways. In Alternative 1, Southwest would borrow the necess

> JCPenney Company once issued bonds for 33.24 (percent of face value), with a face value of $200 million and a stated interest rate of zero, which matured eight years later. That same year, Martin Marietta, Northwest Industries, and Alcoa also issued bond

> You can review the Disney SEC Form 10-K by searching for "Disney Annual Report" online. INSTRUCTIONS: Review the Disney 2019 SEC Form 10-K, and answer the following questions: a. Compute Disney's long-term debt to total asset ratio for 20 19 and 2018. (I

> Sunoco Oil Company purchased all of its outstanding 8.5 percent (stated rate) debentures as part of a restructuring plan. The balance sheet value of each outstanding debenture at the time of the repurchase was $875, and the company paid $957.50 for each

> The SEC requires additional information in the proxy statements that describe the compensation packages of a company's top executives. A Wall Street Journal article published soon after the requirement became effective offered a list of recommendations a

> Abbott Laboratories, a major pharmaceutical company, reported the following current liabilities in its 2019 and 2018 annual reports (dollars in millions): INSTRUCTIONS: a. Briefly describe the transaction or event underlying each of the liabilities liste

> Agilent Technologies Inc., a diversified technology company, sells extended warranties for the products and services provided to customers, deferring the revenue until future recognition. The following information about the extended warranty liability ac

> The following quote refers to the problems of Campeau Corporation, a Canadian-based retail empire that later was dissolved through bankruptcy. At the time of the quote, Campeau's department store chains included many of the top upscale retailers in the i

> Lifschultz Fast Freight, which collapsed a few years ago when its owner died, once reported a book value of less than zero (i.e., reported liabilities exceeded reported assets). Yet the company's share price skyrocketed on news that it was pursuing a ma

> Several years ago in its annual report, Philip Morris Companies, a major manufacturer of tobacco and food products, included footnote 16, which was almost five pages long. It consisted of a number of separate sections covering such topics as an overview

> The following excerpts were taken from the annual reports of a variety of companies: 1. The company’s reporting period ends on the Saturday closest to January 31 (The Limited). 2. The consolidated financial statements include the accoun

> The 2019 annual report for HCA Inc., a nationwide chain of hospitals, contains the following statement in the footnotes to the financial statements: Reserves for professional liability risks were $ 1.827 billion and $1.741 billion at December 31, 2019 an

> United Airlines Holdings discloses two accounts on its financial statements entitled "Advanced ticket sales" and "Frequent flyer deferred revenue" with 2019 balances of $4.8 billion and $2.4 billion, respectively. INSTRUCTIONS: a. On what financial state

> You can review the Disney SEC Form 10-K by searching for "Disney Annual Report" online, and answer the following questions: a. What is working capital, and what is the trend in Disney's working capital position in recent years? b. How much did working ca

> The 2019 IFRS-based balance sheet published by Volkswagen AG, the well-known German automaker, listed an account called "provisions" (divided into current and noncurrent categories) with a total balance (in million euros) of 46,217 (2019) and 44,754 (201

> The Internet phone company Vonage Holdings faced two separate patent infringement lawsuits initiated by Verizon and Sprint Nextel due to the technology used to provide Web-based communication services for its customers. The threat to Vonage's viability w

> General Motors once posted net income of $552 million, compared with a loss of $112.9 million a year earlier. Over $200 million of the profit was due to an accounting adjustment in its North American operations because its marginal tax rates turned out t

> The following information was taken from the 2019 annual report of Emerson, a leader in process management, technology, network power, and industrial automation (dollars in millions): INSTRUCTIONS: Comment on whether Emerson's financial accounting method

> A major defense contractor, LTV, faced with huge liabilities, once declared Chapter 11 bankruptcy protection. Under Chapter 11, a company continues to operate but is protected from creditors while it tries to work out a reorganization plan. At that time,

> FedEx Corporation, a world leader in express mail services, reported the following in its May 31, 2019, financial statements (dollars in millions): The company's long-term debt contains restrictive covenants that require the maintenance of certain financ

> A few years ago, Kellogg, a maker of cereals and foods, hit its targeted earnings-per-share growth of 11 percent, and its stock price was up 25 percent. In the fourth quarter of that year, the company took a significant "one-time" charge against earnings

> The statement of cash flow for Facebook contained the following numbers ( dollars in millions): a. Explain how profit could decrease while cash from operations increased over the same time period. b. Analyze Facebook's cash management activities in 2018

> Tracy Sellers, a retired musical artist, and his two brothers own a substantial amount of outstanding common stock of Avery Corporation, a young and fast-growing manufacturer of cartons, containers, and a wide variety of packaging materials. The company&

> U.S. accounting standards at one time contained a requirement that certain large companies disclose current fair market values for inventories and property, plant, and equipment assets. Such disclosure included dollar amounts for cost of goods sold and d

> After being asked how General Electric has maintained such consistent earnings growth over the past decade, Dennis Dammerman, the company's chief financial officer, said, "We're the best company in the world." However, the Wall Street Journal offered ano

> The footnotes to the 2019 financial statements of McDonald's Corporation contain the following statement: Long-lived assets are reviewed for impairment annually ... and ... if an individual restaurant is determined to be impaired, the loss is measured by

> The Wall Street Journal once reported that hospitals plan to boost the amount of money spent on new property, plant, and equipment to meet increased demand from the aging demographics of the United States. The article stated that the increased capital sp