[SOLVED] What are some factors that could explain

> On January 2, 2018, Miller Properties paid $19 million for 1 million shares of Marlon Company’s 6 million outstanding common shares. Miller’s CEO became a member of Marlon’s board of directors during the first quarter of 2018. The carrying amount of Marl

> Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2018, for $400

> Companies can choose the fair value option for investments that otherwise would be accounted for under the equity method. If the fair value option is chosen, the investment is shown at fair value in the balance sheet, and unrealized holding gains and los

> Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2018 is available: Aug. 1 Inventory on hand—2,000 units; cost $6.10 each. 8 Purchased 10,000 units for $5.50 ea

> Askew Company uses a periodic inventory system. The June 30, 2018, year-end trial balance for the company contained the following information: In addition, you determine that the June 30, 2018, inventory balance is $40,000. Required: 1. Calculate the

> On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lav

> Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activiti

> GlaxoSmithKline is a global pharmaceutical and consumer health-related products company located in the United Kingdom. The company prepares its financial statements in accordance with International Financial Reporting Standards. Required: 1. How does th

> American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2018, gains from selling trading securities totaled $8 million, losses were $11 million, and the company had e

> On February 18, 2018, Union Corporation purchased 10,000 shares of IBM bonds as a long-term investment for $600,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2018, and December 31, 2

> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semiannually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2018, the Jackson bonds had

> Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $58,500. The following information for the

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. 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

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company wil

> Refer to the situation described in BE 11–10. Assume that instead of changing the useful life and residual value, in 2018 the company switched to the double-declining-balance depreciation method. How should Robotics account for the change? What is deprec

> Loreal-American Corporation purchased several marketable securities during 2018. At December 31, 2018, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2017, and all are considered securities a

> Access the FASB’s Codification Research System at the FASB website www.fasb.org. Required: Determine the specific citation for accounting for each of the following items: 1. Unrealized holding gains for trading securities should be included in earnings.

> John’s Specialty Store uses a periodic inventory system. The following are some inventory transactions for the month of May 2018: 1. John’s purchased merchandise on account for $5,000. Freight charges of $300 were paid in cash. 2. John’s returned some of

> Explain the similarities in and differences among depreciation, depletion, and amortization.

> Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred durin

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. 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

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company wil

> The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. What is the specific citation that describes examples of circumstances under which an investment in debt

> 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 2018. At November 1,

> A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2018. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2018 …………………….. $1,900,000 Purchases to date ……………………………………………………….. 5,800,000 Freight-in ……

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. 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

> At the beginning of 2016, Robotics Inc. acquired a manufacturing facility for $12 million. $9 million of the purchase price was allocated to the building. Depreciation for 2016 and 2017 was calculated using the straight-line method, a 25-year useful life

> Explain the accounting treatment required when a change is made to the estimated service life of a machine.

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds

> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C

> 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 their Taylor investment as AFS. In E 12–30 Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds at par with the intent and ability to hold the b

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

> John’s Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2018: 1. John’s purchased merchandise on account for $5,000. Freight charges of $300 were paid in cash. 2. John’s returned some o

> 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.

> 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 2018 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. The company real

> Colah Company purchased $1 million of Jackson, Inc. 5% bonds at par on July 1, 2018, with interest paid semiannually. When the bonds were acquired Colah decided to elect the fair value option for accounting for its investment. At December 31, 2018, the J

> On November 21, 2018, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $12,000. The following information was available from the records of Hodg

> On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $4 million, patent; $3 million, developed technology; $2 million, in-process research and development; $5 mill

> The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronological order of acquisition: 12,000 units at a cost of $8.

> Briefly explain the differences between U.S. GAAP and IFRS in the measurement of an impairment loss for goodwill.

> During 2018, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect

> What are some of the simplifying conventions a company can use to calculate depreciation for partial years?

> Compare and contrast amortization of intangible assets with depreciation and depletion.

> Briefly explain the differences and similarities between the group approach and composite approach to depreciating aggregate assets.

> Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2018. The units have a list price of $500 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Thomas uses a periodic i

> When an item of property, plant, and equipment is disposed of, how is gain or loss on disposal computed?

> Why are time-based depreciation methods used more frequently than activity-based methods?

> Briefly differentiate between the straight-line depreciation method and accelerated depreciation methods.

> Briefly differentiate between activity-based and time-based allocation methods.

> What is meant by depreciable base? How is it determined?

> Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2018. The following schedule shows year-end invent

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended January 30, 2016, are available in Connect. This material is also available under the Investor Relations li

> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2015, are available in Connect. This m

> Norfolk Southern Corporation, one of the nationâs premier transportation companies, reported the following amounts in the asset section of its balance sheets for the years ended December 31, 2015 and 2014: In addition, information fro

> Accounting for acquired goodwill has been a controversial issue for many years. In the United States, the amount of acquired goodwill is capitalized and not amortized. Globally, the treatment of goodwill varies significantly, with some countries not reco

> Litton Industries uses a perpetual inventory system. The company began its fiscal year with inventory of $267,000. Purchases of merchandise on account during the year totaled $845,000. Merchandise costing $902,000 was sold on account for $1,420,000. Prep

> GAAP provides guidelines for the inclusion of interest in the initial cost of a self-constructed asset. Required: 1. What assets qualify for interest capitalization? What assets do not qualify for interest capitalization? 2. Over what period should inte

> Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, the company purchased equipment used in manufacturing from an outside vendor. In March 2018, Chilton decided to design and build equipment to repla

> Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a coal mine in West Virginia for $15 million. Hazelton incurred development costs of $6 million in preparing the mine for extraction, which began on July 1,

> A company may acquire property, plant, and equipment and intangible assets for cash, in exchange for a deferred payment contract, by exchanging other assets, or by a combination of these methods. Required: 1. Identify six types of costs that should be c

> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C

> In 2018, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2017, CPS’s inventories were $32 million (FIFO). CPS’s records indicated that the inventories would have totaled $23.8 million a

> The Elegant Software Company recently completed the development and testing of a new software program that provides the ability to transfer data from among a variety of operating systems. The company believes this product will be quite successful and cap

> Pier 1 Imports, Inc., is a leading retailer of domestic merchandise and home furnishings. The company’s 2016 fixed-asset turnover ratio, using the average book value of property, plant, and equipment (PP&E) as the denominator, was approximately 8.97. Add

> Siemens AG, a German company, is Europe’s largest engineering and electronics company. The company prepares its financial statements according to IFRS. Required: How does the company account for research and development expenditures? Does this policy di

> Mayer Biotechnical, Inc., develops, manufactures, and sells pharmaceuticals. Significant research and development (R&D) expenditures are made for the development of new drugs and the improvement of existing drugs. During 2018, $220 million was spent on R

> Thomas Plastics is in the process of developing a revolutionary new plastic valve. A new division of the company was formed to develop, manufacture, and market this new product. As of year-end (December 31, 2018), the new product has not been manufacture

> A company began its fiscal year with inventory of $186,000. Purchases and cost of goods sold for the year were $945,000 and $982,000, respectively. What was the amount of ending inventory?

> Clonal, Inc., a biotechnology company, developed and patented a diagnostic product called Trouver. Clonal purchased some research equipment to be used exclusively for Trouver and subsequent research projects. Clonal defeated a legal challenge to its Trou

> Prior to 1974, accepted practice was for companies to either expense or capitalize R&D costs. In 1974, the FASB issued a Standard that requires all research and development costs to be charged to expense when incurred. This was a controversial standard,

> Athena Paper Corporation acquired for cash 100% of the outstanding common stock of Georgia, Inc., a supplier of wood pulp. The $4,500,000 amount paid was significantly higher than the book value of Georgia’s net assets (assets less liabilities) of $2,800

> Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $12,000 during the year for experimental purposes in connection with the development of a new product. 2. In April, the Marshall Company lost

> Bosco Company adopted the dollar-value LIFO retail method at the beginning of 2018. Information for 2018 and 2019 is as follows, with certain data intentionally omitted: Required: Determine the missing data. Inventory Retail Price Cost-to-Retail Da

> The Horstmeyer Corporation commenced operations early in 2018. A number of expenditures were made during 2018 that were debited to one account called intangible asset. A recap of the $144,000 balance in this account at the end of 2018 is as follows: Re

> The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017: Transactions during 2018 were as follows: a. On January 2, 2018, machinery and equipment were purchased at a total invoice cost o

> On January 1, 2018, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate broker’s commission of $36,000, legal fees of $6,000, and title insurance of $18,000. The

> Tristar Production Company began operations on September 1, 2018. Listed below are a number of transactions that occurred during its first four months of operations. 1. On September 1, the company acquired five acres of land with a building that will be

> Early in its fiscal year ending December 31, 2018, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building we

> In 2018, Starsearch Corporation began work on three research and development projects. One of the projects was completed and commercial production of the developed product began in December. The company’s fiscal yearend is December 31. All of the followi

> At the beginning of 2018, 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 2018 ending inventory valued at year-end costs was $1,664,000 and the year-end cost index was

> [This is a variation of the previous problem, modified to focus on the weighted-average interest method.] Previous Problem On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The bu

> On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 ………………………… $1,000,0

> Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000 (original cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid $20,000 cash to complete the exchange

> Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information: Related retail price indexes are as follows: January 1, 2018 â¦â&#1

> On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows: To equalize the exchange, Phifer paid Robers $5,000 in cash. Required: Record the exchange for both Robers and Phifer. The

> Southern Company owns a building that it leases to others. The building’s fair value is $1,400,000 and its book value is $800,000 (original cost of $2,000,000 less accumulated depreciation of $1,200,000). Southern exchanges this for a building owned by t

> Teradene Corporation purchased land as a factory site and contracted with Maxtor Construction to construct a factory. Teradene made the following expenditures related to the acquisition of the land, building, and equipment for the factory: Purchase price

> On January 1, 2018, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterest-bearing note requiring $25,000 to be paid on December 31, 2020. The fair value of the tractor is not determinable. An interest rate of 10% properl

> Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $900,000. According to independent appraisals, the fair values were $450,000 (building A) and $250,000 (building B) for the buildings and $300,000 for the lan

> Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smithâs net assets (assets minus liabilities) was $7,800,000. The fair values of all of Smithâ&

> On March 31, 2018, 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 Barneyâs assets and liabilities were as follows: Required: Calculate

> Selected financial statement data for Schmitzer Inc. is shown below: What was the amount of net sales for 2018? 2018 2017 Balance sheet: Inventories 60,000 48,000 Ratios: Gross profit ratio for 2018 Inventory turnover ratio for 2018 40%

> In 2018, Bratten Fitness Company made the following cash purchases: 1. The exclusive right to manufacture and sell the X-Core workout machine from Symmetry Corporation for $200,000. Symmetry created the unique design for the machine. Bratten also paid an

> Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2018 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

> Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2018. On that date, the cost of the inventory on hand was $15,000 and its retail value was $18,750. Information for 2018 and 2019 is as follows: Required: 1. What is the cost-

> Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance …………………………………………………………………………. $16,000 L

> Oaktree Company purchased new equipment and made the following expenditures: Purchase price …………………………………………………………. $45,000 Sales tax ……………………………………………………………………… 2,200 Freight charges for shipment of equipment ……………………… 700 Insurance on the equipment for

Question: What are some factors that could explain