All Related Questions of Book Value

Q: The balance sheet of Kishwaukee Corporation as of December 31, 2014

The balance sheet of Kishwaukee Corporation as of December 31, 2014, is as follows. Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The excess...

Q: Killroy Company owns a trade name that was purchased in an acquisition

Killroy Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an a...

Q: Indicate where the following items would ordinarily appear on the financial statements

Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2014. (a) The service life of certain equipment was changed from 8 to 5 years. If...

Q: Schwartzkopf Co. purchased for $2,200,000 property

Schwartzkopf Co. purchased for $2,200,000 property that included both land and a building to be used in operations. The seller’s book value was $300,000 for the land and $900,000 for the buildin...

Q: Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of

Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of $10,000. Presented below are three independent cases related to the equipment. (a) Geddes paid cash for the equ...

Q: Dana Ashbrook Inc. has negotiated the purchase of a new piece

Dana Ashbrook Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $8,000 plus trade-in, f.o.b. factory. Dana Ashbrook Inc. paid $8,000 cash and traded in used equipmen...

Q: King Donovan Resources Group has been in its plant facility for 15

King Donovan Resources Group has been in its plant facility for 15 years. Although the plant is quite functional, numerous repair costs are incurred to maintain it in sound working order. The company&...

Q: On December 31, 2014, Travis Tritt Inc. has a

On December 31, 2014, Travis Tritt Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows. Depreciation is computed at...

Q: Tonkawa Company purchased land for use as its corporate headquarters. A

Tonkawa Company purchased land for use as its corporate headquarters. A small factory that was on the land when it was purchased was torn down before construction of the office building began. Further...

Q: Conan O’Brien Logging and Lumber Company owns 3,000 acres of

Conan O’Brien Logging and Lumber Company owns 3,000 acres of timberland on the north side of Mount Leno, which was purchased in 2002 at a cost of $550 per acre. In 2014, O’Brien began sele...

Q: Darby Sporting Goods Inc. has been experiencing growth in the demand

Darby Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the...

Q: Conan O’Brien Logging and Lumber Company owns 3,000 acres of

Conan O’Brien Logging and Lumber Company owns 3,000 acres of timberland on the north side of Mount Leno, which was purchased in 2002 at a cost of $550 per acre. In 2014, O’Brien began selectively logg...

Q: Darby Sporting Goods Inc. has been experiencing growth in the demand

Darby Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the...

Q: Nieland Industries had one patent recorded on its books as of January

Nieland Industries had one patent recorded on its books as of January 1, 2014. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2014, Nieland incurred research...

Q: In early January 2013, Outkast Corporation applied for a trade name

In early January 2013, Outkast Corporation applied for a trade name, incurring legal costs of $16,000. In January 2014, Outkast incurred $7,800 of legal fees in a successful defense of its trade nam...

Q: Gottlieb Co. owes $199,800 to Ceballos Inc.

Gottlieb Co. owes $199,800 to Ceballos Inc. The debt is a 10-year, 11% note. Because Gottlieb Co. is in financial trouble, Ceballos Inc. agrees to accept some property and cancel the entire debt. Th...

Q: Halvor Corporation is having financial difficulty and therefore has asked Frontenac National

Halvor Corporation is having financial difficulty and therefore has asked Frontenac National Bank to restructure its $5 million note outstanding. The present note has 3 years remaining and pays a cu...

Q: Volker Inc. issued $2,500,000 of convertible

Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2014. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue...

Q: Vargo Company has bonds payable outstanding in the amount of $500

Vargo Company has bonds payable outstanding in the amount of $500,000, and the Premium on Bonds Payable account has a balance of $7,500. Each $1,000 bond is convertible into 20 shares of preferred s...

Q: Petrenko Corporation has outstanding 2,000 $1,000 bonds

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10par value common stock. The bonds are converted on December 31, 2014, when the unamortized discount is...

Q: For each of the unrelated transactions described below, present the entry

For each of the unrelated transactions described below, present the entry(ies) required to record each transaction. 1. Grand Corp. issued $20,000,000 par value 10% convertible bonds at 99. If the bond...

Q: Vargo Company has bonds payable outstanding in the amount of $500

Vargo Company has bonds payable outstanding in the amount of $500,000, and the Premium on Bonds Payable account has a balance of $7,500. Each $1,000 bond is convertible into 20 shares of preferred sto...

Q: On January 1, 2013, when its $30 par value

On January 1, 2013, when its $30 par value common stock was selling for $80 per share, Plato Corp. issued $10,000,000 of 8% convertible debentures due in 20 years. The conversion option allowed the ho...

Q: The December 31, 2014, balance sheet of Kepler Corp.

The December 31, 2014, balance sheet of Kepler Corp. is as follows. On March 5, 2015, Kepler Corp. called all of the bonds as of April 30 for the principal plus interest through April 30. By April 30,...

Q: On January 1, 2014, Gottlieb Corporation issued $4,

On January 1, 2014, Gottlieb Corporation issued $4,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be co...

Q: The balance sheet data of Brown Company at the end of 2014

The balance sheet data of Brown Company at the end of 2014 and 2013 follow. Land was acquired for $30,000 in exchange for common stock, par $30,000, during the year; all equipment purchased was for ca...

Q: The transactions listed below relate to Wainwright Inc. You are to

The transactions listed below relate to Wainwright Inc. You are to assume that on the date on which each of the transactions occurred, the corporation’s accounts showed only common stock ($100 par) ou...

Q: Four years after issue, debentures with a face value of $

Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 ordinary shares immediately after an interest payment date. At tha...

Q: Four years after issue, debentures with a face value of $

Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 shares of common stock immediately after an interest payment date....

Q: On January 1, 2014, Beyonce Co. purchased 25,

On January 1, 2014, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were...

Q: Petrenko Corporation has outstanding 2,000 $1,000 bonds

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value ordinary shares. The bonds are converted on December 31, 2014. The bonds payable has a carryin...

Q: On January 1, 2014, Millay Inc. paid $700

On January 1, 2014, Millay Inc. paid $700,000 for 10,000 shares of Genso Company’s voting common stock, which was a 10% interest in Genso. At that date, the net assets of Genso totaled $6,000,000. The...

Q: On January 3, 2013, Martin Company purchased for $500

On January 3, 2013, Martin Company purchased for $500,000 cash a 10% interest in Renner Corp. On that date, the net assets of Renner had a book value of $3,700,000. The excess of cost over the underly...

Q: Volker Inc. issued $2,500,000 of convertible

Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2014. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue w...

Q: Choose the best answer. 1. Which of the following

Choose the best answer. 1. Which of the following fund type(s) uses the accrual basis of accounting? a. Special revenue. b. Internal service. c. Pension trust. d. Both b and c. 2. Which of the followi...

Q: You have been provided with the following information concerning operating activity for

You have been provided with the following information concerning operating activity for Leesburg County. For the year ended June 30, 2011, the net change in total governmental fund balances was $131,7...

Q: During 2011, the following selected events and transactions were recorded by

During 2011, the following selected events and transactions were recorded by Nichols County Hospital. 1. Gross charges for hospital services, all charged to accounts and notes receivable, were as foll...

Q: You are planning to use nonstatistical sampling to evaluate the results of

You are planning to use nonstatistical sampling to evaluate the results of accounts receivable confirmation for the Meridian Company. You have already performed tests of controls for sales, sales retu...

Q: In auditing the valuation of inventory, the auditor, Claire Butler

In auditing the valuation of inventory, the auditor, Claire Butler, decided to use difference estimation. She decided to select an unrestricted random sample of 80 inventory items from a population of...

Q: Marjorie Jorgenson, CPA, is verifying the accuracy of outstanding accounts

Marjorie Jorgenson, CPA, is verifying the accuracy of outstanding accounts payable for Marygold Hardware, a large, single-location retail hardware store. There are 650 vendors listed on the outstandin...

Q: For the firm in the previous problem, suppose the book value

For the firm in the previous problem, suppose the book value of the debt issue is $70 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 12 years left to...

Q: Filer Manufacturing has 8.3 million shares of common stock outstanding

Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is $53, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. Th...

Q: McConnell Corp. has a book value of equity of $13

McConnell Corp. has a book value of equity of $13,205. Long-term debt is $8,200. Net working capital, other than cash, is $2,205. Fixed assets are $18,380. How much cash does the company have? If curr...

Q: Bolero, Inc., has compiled the following information on its financing

Bolero, Inc., has compiled the following information on its financing costs: The company is in the 35 percent tax bracket and has a target debt–equity ratio of 60 percent. The targ...

Q: Automobiles are often leased, and there are several terms unique to

Automobiles are often leased, and there are several terms unique to auto leases. Suppose you are considering leasing a car. The price you and the dealer agree on for the car is $36,000. This is the ba...

Q: A firm is considering an investment in a new machine with a

A firm is considering an investment in a new machine with a price of $18 million to replace its existing machine. The current machine has a book value of $6 million and a market value of $4.5 million....

Q: Pilot Plus Pens is deciding when to replace its old machine.

Pilot Plus Pens is deciding when to replace its old machine. The machine’s current salvage value is $2.2 million. Its current book value is $1.4 million. If not sold, the old machine will require main...

Q: In the previous problem, suppose the fair market value of James’s

In the previous problem, suppose the fair market value of James’s fixed assets is $15,000 versus the $8,900 book value shown. Jurion pays $23,000 for James and raises the needed fund...

Q: Klingon Cruisers, Inc., purchased new cloaking machinery three years ago

Klingon Cruisers, Inc., purchased new cloaking machinery three years ago for $9.5 million. The machinery can be sold to the Romulans today for $6.5 million. Klingon’s current balance sheet shows net f...

Q: Transactions from Lucky Bamboo, Inc.'s current year follow.

Transactions from Lucky Bamboo, Inc.'s current year follow. 1. Lucky Bamboo, Inc. thinks it should dispose of its excess land. VVhile the book value is $50,000, current market prices are depressed and...

Q: The ethical accountant for Khouri Industries, is trying to decide how

The ethical accountant for Khouri Industries, is trying to decide how to present property, plant, and equipment in the notes to the balance sheet. She realizes that the statement of cash flows will sh...

Q: On November I, 2013, Campbell Corporation management decided to discontinue

On November I, 2013, Campbell Corporation management decided to discontinue operation of its Rocketeer Division and approved a formal plan to dispose of the division. Campbell is a successful corporat...

Q: Anikan Limited has approved a formal plan to sell its head office

Anikan Limited has approved a formal plan to sell its head office tower to an outside party. A detailed plan has been approved by the board of directors. The building is on the books at $50 million (n...

Q: At the end of 2013, Perez Corporation has accounts receivable of

At the end of 2013, Perez Corporation has accounts receivable of $1.2 million and an allowance for doubtful accounts of $80,000. On January 16, 2014, Perez determined that its $ 16,000 receivable from...

Q: Rotterdam Corporation's pre-tax accounting income of $725,000

Rotterdam Corporation's pre-tax accounting income of $725,000 for the year 2014 included the following items: Amortization of identifiable intangibles $147,000 Depreciation of building 115...

Q: Beckett Corp. is facing a decision of whether to purchase 40

Beckett Corp. is facing a decision of whether to purchase 40% of Kyla Corp.'s shares for $1.6 million cash, giving Beckett significant influence over the investee company, or 60% of Kyla's shares for...

Q: Holmes, Inc. purchased 30% of Nadal Corporation's 30,

Holmes, Inc. purchased 30% of Nadal Corporation's 30,000 outstanding common shares at a cost of515 per share on January 3, 2014. The purchase price of515 per share was based solely on the book value o...

Q: Fellows Inc., a publicly traded manufacturing company in the technology industry

Fellows Inc., a publicly traded manufacturing company in the technology industry, has a November 30 fiscal year end. The company grew rapidly during its first 10 years and made three public offerings...

Q: Bountiful Industries Ltd. had one patent recorded on its books as

Bountiful Industries Ltd. had one patent recorded on its books as at January 1, 2014. This patent had a book value of $365,000 and a remaining useful life of eight years. During 2014, Bountiful incurr...

Q: The following is net asset information for the Dhillon Division of Klaus

The following is net asset information for the Dhillon Division of Klaus, Inc.: The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclea...

Q: Prophet Manufacturing Limited was organized on January 1, 2014. During

Prophet Manufacturing Limited was organized on January 1, 2014. During 2014, it used the straight-line method of amortizing its plant assets in its reports to management. As the company's controller,...

Q: D’Leon Inc., a regional snack foods producer, after an expansion

D’Leon Inc., a regional snack foods producer, after an expansion program. D’Leon had increased plant capacity and undertaken a major marketing campaign in an attemp...

Q: Donna Jamison, a 2003 graduate of the University of Florida with

Donna Jamison, a 2003 graduate of the University of Florida with 4 years of banking experience, was recently brought in as assistant to the chairperson of the board of D’Leon Inc., a...

Q: The Bigbee Bottling Company is contemplating the replacement of one of its

The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $600,000 and a remaining useful li...

Q: The Chang Company is considering the purchase of a new machine to

The Chang Company is considering the purchase of a new machine to replace an obsolete one. The machine being used for the operation has a book value and a market value of zero. However, the machine is...

Q: The Dauten Toy Corporation uses an injection molding machine that was purchased

The Dauten Toy Corporation uses an injection molding machine that was purchased 2 years ago. This machine is being depreciated on a straight-line basis, and it has 6 years of remaining life. Its curre...

Q: Bankers’ Services Inc. (BSI) is considering a project that

Bankers’ Services Inc. (BSI) is considering a project that has a cost of $10 million and an expected life of 3 years. There is a 30% probability of good conditions, in which case the project will prov...

Q: Use the spreadsheet model to rework Parts a and b of Problem

Use the spreadsheet model to rework Parts a and b of Problem 20-8. Then answer the following question. c. Accepting that the corporate WACC should be used equally to discount all anticipated cash flow...

Q: As part of its overall plant modernization and cost reduction program,

As part of its overall plant modernization and cost reduction program, the management of Tanner-Woods Textile Mills has decided to install a new automated weaving loom. In the capital budgeting analys...

Q: Rubenstein Bros. Clothing is expecting to pay an annual dividend per

Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $0.75 out of annual earnings per share of $2.25. Currently, Rubenstein Bros.’ stock is selling for $12.50 per share. Adher...

Q: Consider a retail firm with a net profit margin of 3.

Consider a retail firm with a net profit margin of 3.5%, a total asset turnover of 1.8, total assets of $44 million, and a book value of equity of $18 million. a. What is the firm’s current ROE? b. If...

Q: The balance sheet information for Clorox Co. (CLX) in

The balance sheet information for Clorox Co. (CLX) in 2004–2005 is shown here (all values in thousands of dollars) a. What change in the book value of Clorox’s e...

Q: Ladders, Inc. has a net profit margin of 5%

Ladders, Inc. has a net profit margin of 5% on sales of $50 million. It has book value of equity of $40 million and total liabilities with a book value of $30 million. What is Ladders’ ROE? ROA?

Q: Consider the following potential events that might have occurred to Global on

Consider the following potential events that might have occurred to Global on December 30, 2010. For each one, indicate which line items in Global’s balance sheet would be affected and by how much. Al...

Q: In June 2007, General Electric (GE) had a book

In June 2007, General Electric (GE) had a book value of equity of $117 billion, 10.3 billion shares outstanding, and a market price of $38.00 per share. GE also had cash of $16 billion, and total debt...

Q: MV Corporation has debt with market value of $100 million,

MV Corporation has debt with market value of $100 million, common equity with a book value of $100 million, and preferred stock worth $20 million outstanding. Its common equity trades at $50 per share...

Q: The Jones Company has just completed the third year of a five

The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $300,000. a. What is the book value of the equipment? b. I...

Q: Growth Company’s current share price is $20 and it is expected

Growth Company’s current share price is $20 and it is expected to pay a $1 dividend per share next year. After that, the firm’s dividends are expected to grow at a rate of 4% per year. a. What is an e...

Q: Suppose that in May 2010, Nike had EPS of $3

Suppose that in May 2010, Nike had EPS of $3.51 and a book value of equity of $18.92 per share. a. Using the average P/E multiple in Table 10.1, estimate Nike’s share price. b. What...

Q: Under what circumstances would market to book value ratios be misleading?

Under what circumstances would market to book value ratios be misleading? Explain.

Q: Compare and contrast the book value and liquidation value per share for

Compare and contrast the book value and liquidation value per share for common stock. Is one method more reliable? Explain.

Q: On December 31, 2018, the end of the fiscal year

On December 31, 2018, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $10 million. The business segment qualifies as a component of th...

Q: Refer to the situation described in BE 4–7. Assume

Refer to the situation described in BE 4–7. Assume that the semiconductor segment was not sold during 2018 but was held for sale at year-end. The estimated fair value of the segment’s assets, less cos...

Q: Refer to the situation described in BE 4–8. Assume

Refer to the situation described in BE 4–8. Assume instead that the estimated fair value of the segment’s assets, less costs to sell, on December 31 was $7 million rather than $10 million. Prepare the...

Q: On December 31, 2018, the end of the fiscal year

On December 31, 2018, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $9 million. The business segment qualifies as a component of the entity accor...

Q: Chance Company had two operating divisions, one manufacturing farm equipment and

Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accountin...

Q: Kandon Enterprises, Inc., has two operating divisions; one manufactures

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accep...

Q: On September 17, 2018, Ziltech, Inc., entered into

On September 17, 2018, Ziltech, Inc., entered into an agreement to sell one of its divisions that qualifies as a component of the entity according to generally accepted accounting principles. By Decem...

Q: Presented below are the 2018 income statement and comparative balance sheets for

Presented below are the 2018 income statement and comparative balance sheets for Santana Industries. Additional information for the 2018 fiscal year ($ in thousands): 1. Cash dividends of $1,000 wer...

Q: The following condensed income statements of the Jackson Holding Company are presented

The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2018 and 2017: On October 15, 2018, Jackson entered into a tentative agree...

Q: For the year ending December 31, 2018, Micron Corporation had

For the year ending December 31, 2018, Micron Corporation had income from continuing operations before taxes of $1,200,000 before considering the following transactions and events. All of the items de...

Q: On April 1, 2018, the Apex Corporation sold a parcel

On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate Construction Company for $2,400,000. The book value of the land on Apex’s books was $480,000. Terms of the...

Q: On August 31, 2018, the Silva Company sold merchandise to

On August 31, 2018, the Silva Company sold merchandise to the Bendix Corporation for $500,000. Terms of the sale called for a down payment of $100,000 and four annual installments of $100,000 due on e...

Q: Refer to the situation described in BE 5–35. How

Refer to the situation described in BE 5–35. How much gross profit will Apache recognize in both 2018 and 2019 applying the cost recovery method? In BE 5–35 On July 1, 2018, Apache Company sold a par...

Q: On July 1, 2018, Apache Company sold a parcel of

On July 1, 2018, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000. The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a do...

Q: Refer to the situation described in BE 5–35. What

Refer to the situation described in BE 5–35. What should be the balance in the deferred gross profit account at the end of 2019 applying the installment sales method? In BE 5–35 On July 1, 2018, Apac...

Q: On July 1, 2018, Apache Company, a real estate

On July 1, 2018, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,000,000. The book value of the land on Apache’s books was $1,200,000. Terms of the sale...

Q: Refer to the situation described in BE 10–4. What

Refer to the situation described in BE 10–4. What is the book value of the asset retirement liability at the end of one year? Assuming that the actual restoration costs incurred after extraction is co...

Q: Pro-tech Software acquired all of the outstanding stock of Reliable

Pro-tech Software acquired all of the outstanding stock of Reliable Software for $14 million. The book value of Reliable’s net assets (assets minus liabilities) was $8.3 million. The fair values of Re...

Q: Cedric Company recently traded in an older model computer for a new

Cedric Company recently traded in an older model computer for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair va...

Q: [This is a variation of the previous exercise.]

[This is a variation of the previous exercise.] Previous Exercise Cedric Company recently traded in an older model computer for a new model. The old model’s book value was $180,000 (original cost of...

Q: The Bronco Corporation exchanged land for equipment. The land had a

The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco paid the owner of the equipment $10,000 to complete the exchange which h...

Q: [This is a variation of the previous exercise.]

[This is a variation of the previous exercise.] Previous Exercise The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco paid...

Q: Connors Corporation acquired manufacturing equipment for use in its assembly line.

Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on...

Q: On January 1, 2018, the Shagri Company began construction on

On January 1, 2018, the Shagri Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The only interest-bearing debt the company had outstandin...

Q: On March 31, 2018, Wolfson Corporation acquired all of the

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 Barney’s assets...

Q: Johnson Corporation acquired all of the outstanding common stock of Smith Corporation

Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $7,...

Q: Southern Company owns a building that it leases to others. 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 $1,200,0...

Q: Case A. Kapono Farms exchanged an old tractor for a newer

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,...

Q: Consider each of the transactions below. All of the expenditures were

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...

Q: Athena Paper Corporation acquired for cash 100% of the outstanding common

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 Ge...

Q: Pier 1 Imports, Inc., is a leading retailer of domestic

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...

Q: Norfolk Southern Corporation, one of the nation’s premier transportation companies,

Norfolk Southern Corporation, one of the nation’s premier transportation companies, reported the following amounts in the asset section of its balance sheets for the years ended Dece...

Q: As a long-term investment at the beginning of the 2018

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 t...

Q: On January 4, 2018, Runyan Bakery paid $324 million

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...

Q: On January 4, 2018, Runyan Bakery paid $324 million

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...

Q: Companies can choose the fair value option for investments that otherwise would

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 t...

Q: Northwest Paperboard Company, a paper and allied products manufacturer, was

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...

Q: Refer to the situation described in BE 11–13. Assume

Refer to the situation described in BE 11–13. Assume that the sum of estimated future cash flows is $24 million instead of $28 million. What amount of impairment loss should C&R recognize? In BE 11–1...

Q: Refer to the situation described in BE 11–13. Assume

Refer to the situation described in BE 11–13. Assume that the present value of the estimated future cash flows generated from the division’s assets is $22 million and that their fair value approximate...

Q: WebHelper Inc. acquired 100% of the outstanding stock of Silicon

WebHelper Inc. acquired 100% of the outstanding stock of Silicon Chips Corporation (SCC) for $45 million, of which $15 million was allocated to goodwill. At the end of the current fiscal year, an impa...

Q: On July 15, 2018, Cottonwood Industries sold a patent and

On July 15, 2018, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $750,000 and $325,000, respectively. The book value of the patent and equipment on the date of sale wer...

Q: Refer to the situation described in BE 11–16. Assume

Refer to the situation described in BE 11–16. Assume that SCC’s fair value of $40 million approximates fair value less costs to sell and that the present value of SCC’s estimated future cash flows is...

Q: The fair value of depreciable assets of Penner Packaging Company exceeds their

The fair value of depreciable assets of Penner Packaging Company exceeds their book value by $12 million. The assets’ average remaining useful life is 10 years. They are being depreciated by the strai...

Q: Calaveras Tire exchanged equipment for two pickup trucks. The book value

Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, r...

Q: Refer to the situation described in BE 10–11. Answer

Refer to the situation described in BE 10–11. Answer the questions assuming that the fair value of the equipment was $24,000, instead of $17,000. In BE 10–11 Calaveras Tire exchanged equipment for tw...

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Q: Equipment acquired on January 6 at a cost of $375,

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Q: Assume the same facts as in Exercise 9-27, except

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Q: Equipment acquired on January 8 at a cost of $168,

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Q: Equipment acquired on January 6 at a cost of $375,

Equipment acquired on January 6 at a cost of $375,000 has an estimated useful life of 20 years and an estimated residual value of $25,000. a. What was the annual amount of depreciation for the Years 1...

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Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $312,000, which gives Belden the ability to significantly influence Sheffield. Sheffield ha...

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Q: On July 1, 2016, Killearn Company acquired 88,000

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Q: On January 1, 2017, Fisher Corporation purchased 40 percent (

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In January 2017, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $700,000. This investment gave Domingo the ability to exercise significant influence over Marte...

Q: Franklin purchases 40 percent of Johnson Company on January 1 for $

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Evan Company reports net income of $140,000 each year and declares an annual cash dividend of $50,000. The company holds net assets of $1,200,000 on January 1, 2017. On that date, Shalina purchases 40...

Q: Alex, Inc., buys 40 percent of Steinbart Company on January

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Q: On January 3, 2018, Matteson Corporation acquired 40 percent of

On January 3, 2018, Matteson Corporation acquired 40 percent of the outstanding common stock of O’Toole Company for $1,160,000. This acquisition gave Matteson the ability to exercise significant influ...

Q: On January 1, 2018, Fisher Corporation paid $2,

On January 1, 2018, Fisher Corporation paid $2,290,000 for 35 percent of the outstanding voting stock of Steel, Inc., and appropriately applies the equity method for its investment. Any excess of cost...

Q: On January 1, 2017, Alison, Inc., paid $

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On January 1, 2018, Alamar Corporation acquired a 40 percent interest in Burks, Inc., for $210,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $360,000...

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Q: The following book and fair values were available for Westmont Company as

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Q: On January 1, 2018, Marshall Company acquired 100 percent of

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Q: Suppose you sell a fixed asset for $109,000 when

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Q: Your company, Dawgs “R” Us, is evaluating a

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Q: No Nuns Cos. has a 25 percent tax rate and has

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Q: GTB, Inc., has a 34 percent tax rate and has

GTB, Inc., has a 34 percent tax rate and has $100 million in assets, currently financed entirely with equity. Equity is worth $7 per share, and book value of equity is equal to market value of equity....

Q: NoNuns Cos. has a 25 percent tax rate and has $

NoNuns Cos. has a 25 percent tax rate and has $350 million in assets, currently financed entirely with equity. Equity is worth $37 per share, and book value of equity is equal to market value of equit...

Q: GTB, Inc., has a 34 percent tax rate and has

GTB, Inc., has a 34 percent tax rate and has $100 million in assets, currently financed entirely with equity. Equity is worth $7 per share, and book value of equity is equal to market value of equity....

Q: NoNuns Cos. has a 25 percent tax rate and has $

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Q: GTB, Inc., has a 34 percent tax rate and has

GTB, Inc., has a 34 percent tax rate and has $100 million in assets, currently financed entirely with equity. Equity is worth $7 per share, and book value of equity is equal to market value of equity....

Q: HiLo, Inc., doesn’t face any taxes and has $150

HiLo, Inc., doesn’t face any taxes and has $150 million in assets, currently financed entirely with equity. Equity is worth $7 per share, and book value of equity is equal to market...

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Q: Daddi Mac, Inc., doesn’t face any taxes and has $

Daddi Mac, Inc., doesn’t face any taxes and has $350 million in assets, currently financed entirely with equity. Equity is worth $37 per share, and book value of equity is equal to m...

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Value Ava’s Spin Ball Corp. lists fixed assets of $12 million on its balance sheet. The firm’s fixed assets have recently been appraised at $16 million. Ava’s Spin Ball Corp.’s balance sheet also list...

Q: Why can the book value and market value of a firm differ

Why can the book value and market value of a firm differ?

Q: From a firm manager’s or investor’s point of view, which is

From a firm manager’s or investor’s point of view, which is more important―the book value of a firm or the market value of the firm?

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If a firm has retained earnings of $23 million, a common shares account of $275 million, and additional paid-in-capital of $100 million, how would these accounts change in response to a 20 percent sto...

Q: If a firm has retained earnings of $3 million, a

If a firm has retained earnings of $3 million, a common shares account of $5 million, and additional paid-in-capital of $10 million, how would these accounts change in response to a 10 percent stock d...

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HiLo, Inc., doesn’t face any taxes and has $100 million in assets, currently financed entirely with equity. Equity is worth $7 per share, and book value of equity is equal to market...

Q: Daddi Mac, Inc., doesn’t face any taxes and has $

Daddi Mac, Inc., doesn’t face any taxes and has $290 million in assets, currently financed entirely with equity. Equity is worth $37 per share, and book value of equity is equal to m...

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The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; boo...

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The following data were taken from the balance sheet accounts of Wickham Corporation on December 31, 2012. Current assets …………………………………………………………….. $540,000 Debt investments ………………………………………………………….. 6...

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Seles Corporation’s charter authorized issuance of 100,000 shares of $10 par value common stock and 50,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of...

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Polska Corporation, in preparation of its December 31, 2012, financial statements, is attempting to determine the proper accounting treatment for each of the following situations. 1. As a result of un...

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Q: In this simulation, you are asked to address questions related to

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Case 1 Kellogg Company Kellogg Company is the world’s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its p...

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Johnstone Inc. began operations in January 2011 and reported the following results for each of its 3 years of operations. 2011 …………………………….. $260,000 net loss 2012 ……………………………… $40,000 net loss 2013 …...

Q: In this simulation, you are asked to address questions related to

In this simulation, you are asked to address questions related to the accounting for stockholders, equity. Prepare responses to all parts.

Q: Case 1 Kellogg Company Kellogg Company is the world’s leading producer

Case 1 Kellogg Company Kellogg Company is the world’s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its p...

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Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2012, when the unamortized discount is $...

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Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 shares of common stock immediately after an interest payment date....

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Polska Corporation, in preparation of its December 31, 2012, financial statements, is attempting to determine the proper accounting treatment for each of the following situations. 1. As a result of un...

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Schuss Inc. issued $3,000,000 of 10%, 10-year convertible bonds on June 1, 2012, at 98 plus accrued interest. The bonds were dated April 1, 2012, with interest payable April 1 and October 1. Bond disc...

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Gabel Company has bonds payable outstanding in the amount of $400,000, and the Premium on Bonds Payable account has a balance of $6,000. Each $1,000 bond is convertible into 20 shares of preferred sto...

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On January 1, 2012, when its $30 par value common stock was selling for $80 per share, Bartz Corp. issued $10,000,000 of 8% convertible debentures due in 20 years. The conversion option allowed the ho...

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The December 31, 2012, balance sheet of Osygus Corp. is as follows. On March 5, 2013, Osygus Corp. called all of the bonds as of April 30, for the principal plus interest through April 30. By April...

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On January 1, 2011, Trillini Corporation issued $3,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be co...

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Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2012. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue w...

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Chorkina Corporation, a new audit client of yours, has not reported earnings per share data in its annual reports to stockholders in the past. The treasurer, Beth Botsford, requested that you furnish...

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The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; boo...

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The following data were taken from the balance sheet accounts of Wickham Corporation on December 31, 2012. Current assets …………………………………………………………….. $540,000 Debt investments ………………………………………………………….. 6...

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Shown below is the liabilities and stockholders’ equity section of the balance sheet for Ingalls Company and Wilder Company. Each has assets totaling $4,200,000. For the year, each...

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Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value ordinary shares. The bonds are converted on December 31, 2012. The bonds payable has a carryin...

Q: Seles Corporation’s charter authorized issuance of 100,000 shares of $

Seles Corporation’s charter authorized issuance of 100,000 shares of $10 par value common stock and 50,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of...

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Ray and Carin are partners in an accounting firm. The partners have entered into an arm’s length agreement requiring Ray to purchase Carin’s partnership interest from Carin’s estate if she dies before...

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The following describes Japanese accounting before the Big Bang: The preparation of consolidated financial statements is based on the Securities and Exchange Law. Individual-company accounts are the...

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On January 1, 2018, Primair Corporation loaned Vista Company $300,000 and agreed to guarantee all of Vista’s long-term debt in exchange for (1) decision-making authority over all of...

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Q: AB is a private not-for-profit entity. It

AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition value is $1 million. YZ has net assets with a book value of $600,000 but a fair value of $...

Q: BC and OP are both private not-for-profit entities

BC and OP are both private not-for-profit entities. They are combined to create MN, a private not-for-profit with an entirely new board of directors. BC has land with a book value of $300,000 and a fa...

Q: Southwest is a private not-for-profit entity. It

Southwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment with a...

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Redfield Company reports current earnings of $420,000 while declaring $52,000 in cash dividends. Snedeker Company earns $147,000 in net income and declares $13,000 in dividends. Redfield has held a 70...

Q: On January 1, Coldwater Company has a net book value of

On January 1, Coldwater Company has a net book value of $2,174,000 as follows: 2,000 shares of preferred stock; par value $100 per share; cumulative, nonparticipating, nonvoting; call value $108 per s...

Q: On June 30, 2018, Plaster, Inc., paid $

On June 30, 2018, Plaster, Inc., paid $916,000 for 80 percent of Stucco Company’s outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling...

Q: On January 1, 2016, Aronsen Company acquired 90 percent of

On January 1, 2016, Aronsen Company acquired 90 percent of Siedel Company’s outstanding shares. Siedel had a net book value on that date of $480,000: common stock ($10 par value) of $200,000 and retai...

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The following information has been taken from the consolidation worksheet of Peak and its 90 percent–owned subsidiary, Valley: ∙ Peak reports a $12,000 gain on the sale of a building. The building had...

Q: The Walston Company is to be liquidated and has the following liabilities

The Walston Company is to be liquidated and has the following liabilities: Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000 Notes pa...

Q: Abacab Company’s shares are listed on the New Market Stock Exchange,

Abacab Company’s shares are listed on the New Market Stock Exchange, which allows the use of either International Financial Reporting Standards (IFRS) or U.S. GAAP. On January 1, Year 1, Abacab Compan...

Q: On January 1, 2016, Parker, Inc., a U

On January 1, 2016, Parker, Inc., a U.S.-based firm, acquired 100 percent of Suffolk PLC located in Great Britain for consideration paid of 52,000,000 British pounds ($), which was equal to fair value...

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The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company: Additional Information ∙ Amortization expense...

Q: A company preparing for a Chapter 7 liquidation has the following liabilities

A company preparing for a Chapter 7 liquidation has the following liabilities: ∙ Note payable A of $90,000 secured by land having a book value of $50,000 and a fair value of $70,000. ∙ Note payable B...

Q: On January 1, 2017, Mona, Inc., acquired 80

On January 1, 2017, Mona, Inc., acquired 80 percent of Lisa Company’s common stock as well as 60 percent of its preferred shares. Mona paid $65,000 in cash for the preferred stock, w...

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Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 20...

Q: The Larisa Company is exiting bankruptcy reorganization with the following accounts:

The Larisa Company is exiting bankruptcy reorganization with the following accounts: The company’s assets have a $760,000 reorganization value. As part of the reorganization, the c...

Q: Kansas City Corporation holds three assets when it comes out of Chapter

Kansas City Corporation holds three assets when it comes out of Chapter 11 bankruptcy: The company has a reorganization value of $600,000. a. Describe the rules to determine whether to apply fresh s...

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Jaez Corporation is in the process of going through a reorganization. As of December 31, 2017, the company’s accountant has determined the following information although the company...

Q: Ristoni Company is in the process of emerging from a Chapter 11

Ristoni Company is in the process of emerging from a Chapter 11 bankruptcy. It will apply fresh start accounting as of December 31, 2017. The company currently has 30,000 shares of common stock outsta...

Q: Smith Corporation has gone through bankruptcy and is ready to emerge as

Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2017. On this date, the company has the following assets (fair value is based on discountin...

Q: Ambrose Corporation reports the following information: /

Ambrose Corporation reports the following information: In liquidation, what amount of cash should each class of liabilities expect to collect?

Q: Creditors of Jones Corporation are considering petitioning the courts to force the

Creditors of Jones Corporation are considering petitioning the courts to force the company into Chapter 7 bankruptcy. The following information has been determined. Administrative expenses in connecti...

Q: Holmes Corporation has filed a voluntary petition with the bankruptcy court in

Holmes Corporation has filed a voluntary petition with the bankruptcy court in hopes of reorganizing. A statement of financial affairs has been prepared for the company showing these debts: Liabilitie...

Q: Through the payment of $10,468,000 in cash

Through the payment of $10,468,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 percent of the subsidiary’s 100,000 outstanding common shares ($40 par...

Q: Prairie Corporation is a primary beneficiary for Vintage Company, a variable

Prairie Corporation is a primary beneficiary for Vintage Company, a variable interest entity. When Prairie obtained financial control over Vintage, any excess fair value over Prairie’s book value was...

Q: Helping Hand NFP is a private not-for-profit entity

Helping Hand NFP is a private not-for-profit entity that has equipment with a net book value of $1.1 million but a fair value of $1.4 million. Fancy Fingers is a private not-for-profit entity that has...

Q: When a partner withdraws from a partnership, why is the final

When a partner withdraws from a partnership, why is the final distribution often based on theappraised value of the business rather than on the book value of the capital account balance?

Q: The partnership of Matteson, Richton, and O’Toole has existed for

The partnership of Matteson, Richton, and O’Toole has existed for a number of years. At the presenttime the partners have the following capital balances and profit and loss sharing p...

Q: Assume that Charity A and Charity B are alike in every way

Assume that Charity A and Charity B are alike in every way except as described below. Assume that each of these questions is independent from all other questions. a. Each charity suffers significant d...

Q: Boswell and Johnson form a partnership on May 1, 2016.

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $50,000;Johnson conveys title to the following properties to the partnership: The partners agree to start their par...

Q: Gray, Stone, and Lawson open an accounting practice on January

Gray, Stone, and Lawson open an accounting practice on January 1, 2016, in San Diego, California,to be operated as a partnership. Gray and Stone will serve as the senior partners because oftheir years...

Q: Pat, Jean Lou, and Diane are partners with capital balances

Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively.These three partners share profits and losses equally. For an investment of $50,000 cash (pai...

Q: The partnership of Frick, Wilson, and Clarke has elected to

The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate itsbusiness property. A balance sheet drawn up at this time shows the following account balances: Part...

Q: JJ Company owns a building. Which of the following statements regarding

JJ Company owns a building. Which of the following statements regarding depreciation as used by accountants is false? a. As depreciation is recorded, stockholders’ equity is reduced. b. As depreciat...

Q: TangoCo is developing its annual financial statements for 2012. The following

TangoCo is developing its annual financial statements for 2012. The following amounts were correct at December 31, 2012: cash, $48,800; investment in stock of PIL Corporation (long-term), $36,400; sto...

Q: Following are terms related to the balance sheet that were discussed in

Following are terms related to the balance sheet that were discussed in Chapters 2 through 5. Match each definition with its related term by entering the appropriate letter in the space provided.

Q: Exquisite Jewelers is developing its annual financial statements for 2012. The

Exquisite Jewelers is developing its annual financial statements for 2012. The following amounts were correct at December 31, 2012: cash, $58,000; accounts receivable, $71,000; merchandise inventory,...

Q: A recent annual report for AMERCO, the holding company for U

A recent annual report for AMERCO, the holding company for U-Haul International, Inc., included the following note: AMERCO subsidiaries own property, plant, and equipment that are utilized in the ma...

Q: Carey Corporation has five different intangible assets to be accounted for and

Carey Corporation has five different intangible assets to be accounted for and reported on the financial statements. The management is concerned about the amortization of the cost of each of these int...

Q: K-Delta Company bought a building for $71,000

K-Delta Company bought a building for $71,000 cash and the land on which it was located for $107,000 cash. The company paid transfer costs of $9,000 ($3,000 for the building and $6,000 for the land)....

Q: Ashkar Company ordered a machine on January 1, 2012, at

Ashkar Company ordered a machine on January 1, 2012, at an invoice price of $21,000. On the date of delivery, January 2, 2012, the company paid $6,000 on the machine, with the balance on credit at 10...

Q: Purity Ice Cream Company bought a new ice cream maker at the

Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of $10,000. The estimated useful life was four years, and the residual value was $1,000. Assume that the es...

Q: Sterling Steel Inc. purchased a new stamping machine at the beginning

Sterling Steel Inc. purchased a new stamping machine at the beginning of the year at a cost of $580,000. The estimated residual value was $60,000. Assume that the estimated useful life was five years,...

Q: Schrade Company bought a machine for $96,000 cash.

Schrade Company bought a machine for $96,000 cash. The estimated useful life was four years, and the estimated residual value was $6,000. Assume that the estimated useful life in productive units is 1...

Q: Freeport-McMoRan Copper & Gold Inc., headquartered in Phoenix,

Freeport-McMoRan Copper & Gold Inc., headquartered in Phoenix, Arizona, is one of the world’s largest copper, gold, and molybdenum mining and production companies, with its principal asset in natural...

Q: Calculate the book value of a three-year-old machine

Calculate the book value of a three-year-old machine that has a cost of $31,000, an estimated residual value of $1,000, and an estimated useful life of five years. The company uses straight-line depre...

Q: Calculate the book value of a three-year-old machine

Calculate the book value of a three-year-old machine that has a cost of $45,000, an estimated residual value of $5,000, and an estimated useful life of four years. The company uses double-declining-ba...

Q: Calculate the book value of a three-year-old machine

Calculate the book value of a three-year-old machine that has a cost of $21,000, has an estimated residual value of $1,000 and an estimated useful life of 40,000 machine hours. The company uses units-...

Q: Elizabeth Pie Company has been in business for 50 years and has

Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $5,000,000....

Q: Miga Company and Porter Company both bought a new delivery truck on

Miga Company and Porter Company both bought a new delivery truck on January 1, 2008. Both companies paid exactly the same cost, $30,000, for their respective vehicles. As of December 31, 2011, the net...

Q: Under what method(s) of depreciation is an asset’s net

Under what method(s) of depreciation is an asset’s net book value the depreciable base (the amount to be depreciated)? a. Straight-line method b. Declining-balance method c. Units-of-production m...

Q: A recent annual report for FedEx included the following note:

A recent annual report for FedEx included the following note: Assume that FedEx made extensive repairs on an existing building and added a new wing. The building is a garage and repair facility for...

Q: You are a financial analyst for Ford Motor Company and have been

You are a financial analyst for Ford Motor Company and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a...

Q: The notes to a recent annual report from Weebok Corporation included the

The notes to a recent annual report from Weebok Corporation included the following: Business Acquisitions During the current year, the Company acquired the assets of Sport Shoes, Inc. . ....

Q: Starn Tool Company has five different intangible assets to be accounted for

Starn Tool Company has five different intangible assets to be accounted for and reported on the financial statements. The management is concerned about the amortization of the cost of each of these in...

Q: Rungano Corporation is a global publisher of magazines, books, and

Rungano Corporation is a global publisher of magazines, books, and music and video collections and is a leading direct mail marketer. Many direct mail marketers use high-speed Didde press equipment to...

Q: Terbish Company started operations on January 1, 2012. It is

Terbish Company started operations on January 1, 2012. It is now December 31, 2012, the end of the annual accounting period. The part-time bookkeeper needs your help to analyze the following three tra...

Q: Rory Company has a machine with a book value of $75

Rory Company has a machine with a book value of $75,000 and a remaining five-year useful life. A new machine is available at a cost of $112,500, and Rory can also receive $60,000 for trading in its ol...

Q: Xinhong Company is considering replacing one of its manufacturing machines. The

Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of 5 years, at which time its salvage value will be zero...

Q: How is book value calculated, and what does it represent?

How is book value calculated, and what does it represent?

Q: On October 1, Orlando Gold Exchange paid cash of $57

On October 1, Orlando Gold Exchange paid cash of $57,600 for computers that are expected to remain useful for three years. At the end of three years, the value of the computers is expected to be zero....

Q: iHeartMedia, Inc. in their annual report for the year ending

iHeartMedia, Inc. in their annual report for the year ending December 31, 2015, state that the plant assets reported on its balance sheet includes the following: Plant Asset …………………………………………………………………...

Q: This case, based on the balance sheet of Target Corporation,

This case, based on the balance sheet of Target Corporation, will familiarize you with some of the assets and liabilities of that company. Visit http://www.pearsonhighered.com/Horngren to view a link...

Q: Match the ratio to the building block of financial statement analysis to

Match the ratio to the building block of financial statement analysis to which it best relates. A. Liquidity and efficiency B. Solvency C. Profitability D. Market prospects 1. Equity...

Q: Use the following information to determine this company’s cash flows from investing

Use the following information to determine this company’s cash flows from investing activities. a. Equipment with a book value of $65,300 and an original cost of $133,000 was sold at a loss of $14,000...

Q: Refer to the data in QS 12-6. Furniture costing

Refer to the data in QS 12-6. Furniture costing $55,000 is sold at its book value in 2013. Acquisitions of furniture total $45,000 cash, on which no depreciation is necessary because it is acquired at...

Q: Describe the directional effect (increase, decrease, or no effect

Describe the directional effect (increase, decrease, or no effect) of each transaction on the components of the book value of common shareholders’ equity shown in the chart below. a....

Q: Following is the shareholders’ equity section of All-Wood Doors on

Following is the shareholders’ equity section of All-Wood Doors on a day its common stock is trading at $130 per share. Common stock ($2 par value, 40,000 shares issued and outstandi...

Q: Lexington Corporation acquired all of the outstanding common stock of Chalfont,

Lexington Corporation acquired all of the outstanding common stock of Chalfont, Inc., on January 1, 2013. Lexington gave shares of its no par common stock with a market value of $504 million in exchan...

Q: Ormond Co. acquired all of the outstanding common stock of Daytona

Ormond Co. acquired all of the outstanding common stock of Daytona Co. on January 1, 2014. Ormond Co. gave shares of its common stock with a fair value of $312 million in exchange for 100% of the Dayt...

Q: Exhibit 8.29 presents the separate financial statements at December 31

Exhibit 8.29 presents the separate financial statements at December 31, 2015, of Prestige Resorts and its 80%-owned subsidiary Booking, Inc. Two years earlier on January 1, 2014, Prestige acquired 80%...

Q: Refer to the financial statement forecasts for Massachusetts Stove Company (MSC

Refer to the financial statement forecasts for Massachusetts Stove Company (MSC) prepared for Case 10.2. The management of MSC wants to know the equity valuation implications of adding gas stoves unde...

Q: Whirlpool manufactures and sells home appliances under various brand names. IBM

Whirlpool manufactures and sells home appliances under various brand names. IBM develops and manufactures computer hardware and offers related technology services. Target operates a chain of general m...

Q: May Department Stores Company (May) operates retail department store chains

May Department Stores Company (May) operates retail department store chains throughout the United States. Assume that at the end of Year 2, May’s balance sheet reports debt of $4,658 million and commo...

Q: At the end of Year 5, Experian Information Solutions, Inc

At the end of Year 5, Experian Information Solutions, Inc. (Experian) has total assets of $555,443, long-term debt of $1,839, and common equity at book value of $402,759 (amounts in thousands). Suppos...

Q: Most economists describe three determinants of the interest rates on a borrower’s

Most economists describe three determinants of the interest rates on a borrower’s debt: a real interest rate, which is a charge for using capital; an adjustment for expected inflation to insure that d...

Q: Suppose the following hypothetical data represent total assets, book value,

Suppose the following hypothetical data represent total assets, book value, and market value of common shareholders’ equity (dollar amounts in millions) for three firms. Each of thes...

Q: Suppose the following hypothetical data represent total assets, book value,

Suppose the following hypothetical data represent total assets, book value, and market value of common shareholders’ equity (dollar amounts in millions) for Abbott Labs, IBM, and Tar...

Q: Explain the two roles of book value of common shareholders’ equity in

Explain the two roles of book value of common shareholders’ equity in the residual income valuation approach.

Q: Suppose the following hypothetical data represent total assets, book value,

Suppose the following hypothetical data represent total assets, book value, and market value of common shareholders’ equity (dollar amounts in millions) for Microsoft, Intel, and Del...

Q: The Coca-Cola Company is a global soft drink beverage company

The Coca-Cola Company is a global soft drink beverage company (ticker: KO) that is a primary and direct competitor with PepsiCo. The data in Chapter 12’s Exhibits 12.14, 12.15, and 1...

Q: In Problem 10.16, we projected financial statements for Walmart

In Problem 10.16, we projected financial statements for Walmart Stores, Inc. (Walmart) for Years +1 through +5. The data in Chapter 12’s Exhibits 12.17, 12.18, and 12.19 include the...

Q: Amber and Zack Wilson are continuing to review business practices. Currently

Amber and Zack Wilson are continuing to review business practices. Currently, they are reviewing the company’s property, plant, and equipment and have gathered the following informat...

Q: Princeton has acquired several other companies. Assume that Princeton purchased Kelleher

Princeton has acquired several other companies. Assume that Princeton purchased Kelleher for $9,000,000 cash. The book value of Kelleher’s assets is $19,000,000 (market value, $20,000,000), and it has...

Q: Wimot Trucking Corporation uses the units-of-production depreciation method

Wimot Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the comp...

Q: Crispy Fried Chicken bought equipment on January 2, 2018, for

Crispy Fried Chicken bought equipment on January 2, 2018, for $33,000. The equipment was expected to remain in service for four years and to operate for 6,750 hours. At the end of the equipment’s usef...

Q: View a link toTarget Corporation’s Fiscal 2015 annual report at http://

View a link toTarget Corporation’s Fiscal 2015 annual report at http://www.pearsonhighered.com/Horngren. Refer to the Target Corporation financial statements, including Notes 14 and 15. Answer the fol...

Q: Midland States Telecom provides communication services in Iowa, Nebraska, the

Midland States Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Midland States Telecom purchased goodwill as part of the acquisition of Sheldon Wireless Enterprises...

Q: During 2018, Mora Corporation completed the following transactions:

During 2018, Mora Corporation completed the following transactions: Record the transactions in the journal of Mora Corporation.

Q: Core Telecom provides communication services in Iowa, Nebraska, the Dakotas

Core Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Core purchased goodwill as part of the acquisition of Surety Wireless Company, which had the following figures...

Q: During 2018, Lora Company completed the following transactions:

During 2018, Lora Company completed the following transactions: Record the transactions in the journal of Lora Company.

Q: On January 1, 2018, Air Canadians purchased a used airplane

On January 1, 2018, Air Canadians purchased a used airplane for $37,000,000. Air Canadians expects the plane to remain useful for five years (4,000,000 miles) and to have a residual value of $5,000,00...

Q: McDonald’s Corporation is the world’s leading global food service retailer with more

McDonald’s Corporation is the world’s leading global food service retailer with more than 36,000 locations worldwide in more than 100 countries. The corporation operates and franchises McDonald’s rest...

Q: Accountants for Morganson, Inc. have assembled the following data for

Accountants for Morganson, Inc. have assembled the following data for the year ended December 31, 2018: Prepare Morganson’s statement of cash flows using the indirect method. Incl...

Q: The 2018 comparative balance sheet and income statement of Appleton Group,

The 2018 comparative balance sheet and income statement of Appleton Group, Inc. follow. Appleton disposed of a plant asset at book value during 2018. Prepare the spreadsheet for the 2018 statement...

Q: Accountants for Benson, Inc. have assembled the following data for

Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018: Prepare Benson’s statement of cash flows using the indirect method. Include an...

Q: The 2018 comparative balance sheet and income statement of Attleboro Group,

The 2018 comparative balance sheet and income statement of Attleboro Group, Inc. follow. Attleboro disposed of a plant asset at book value in 2018. Prepare the spreadsheet for the 2018 statement of...

Q: Selected account balances for Maria’s Mocha at the end of the month

Selected account balances for Maria’s Mocha at the end of the month are listed below in random order:
Identify or compute the following amounts for Maria’s Mocha: a. Total current assets b. Total...

Q: On January 1, 2011, Trucks R Us Corporation issued $

On January 1, 2011, Trucks R Us Corporation issued $2,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 10 percent and pay interest on June 30 and December 31 each y...

Q: Assume that you are a financial analyst for a large investment banking

Assume that you are a financial analyst for a large investment banking firm. You are responsible for analyzing companies in the retail sales industry. You have just learned that a large West Coast ret...

Q: The notes to recent financial statements of Colgate-Palmolive contained the

The notes to recent financial statements of Colgate-Palmolive contained the following information(dollar amounts in millions): Assume that Colgate-Palmolive acquired 100 percent of the fair value of...

Q: England Textile Company acquired Belgium Fabric Company for $660,000

England Textile Company acquired Belgium Fabric Company for $660,000 cash when Belgium’s only assets, property and equipment, had a book value of $660,000 and a fair value of $750,000. England also as...

Q: The Mira Vista Company issued $500,000 in bonds at

The Mira Vista Company issued $500,000 in bonds at a discount five years ago. The current book value of the bonds is $475,000. The company now has excess cash on hand and plans to retire the bonds. Th...

Q: During the period, Wong Company sold some excess equipment at a

During the period, Wong Company sold some excess equipment at a loss. The following information was collected from the company’s accounting records: From the Income Statement Depreciation expense.......

Q: An analysis of Courtney Corporation’s operational asset accounts provided the following information

An analysis of Courtney Corporation’s operational asset accounts provided the following information: a. Acquired a large machine that cost $36,000, paying for it by giving a $15,000, 12 percent intere...

Q: On January 1, 2011, Kennedy Corporation issued $1,

On January 1, 2011, Kennedy Corporation issued $1,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 7 percent and pay interest on December 31 each year. When the bon...

Q: On January 1, 2011, Avaya Corporation issued $2,

On January 1, 2011, Avaya Corporation issued $2,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 6 percent and pay interest on December 31 each year. When the bonds...

Q: On January 1, 2011, Grand Isle Corporation issued $900

On January 1, 2011, Grand Isle Corporation issued $900,000 in bonds that mature in five years. The bonds have a stated interest rate of 10 percent and pay interest on December 31 each year. When the b...

Q: When using the effective-interest method of amortization, the book

When using the effective-interest method of amortization, the book value of the bonds changes by what amount on each interest payment date? a. Interest expense b. Cash interest payment c. Amortizati...

Q: On January 1, 2011, Thomas Insurance Corporation issued $4

On January 1, 2011, Thomas Insurance Corporation issued $4,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 9 percent and pay interest on December 31 each year. Whe...

Q: On January 1, 2011, TCU Utilities issued $1,

On January 1, 2011, TCU Utilities issued $1,000,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 10 percent and pay interest on June 30 and December 31 each year. When th...

Q: On January 1, 2011, Vigeland Corporation issued $2,

On January 1, 2011, Vigeland Corporation issued $2,000,000 in bonds that mature in 10 years. The bonds havea stated interest rate of 10 percent and pay interest on June 30 and December 31 each year. W...

Q: On January 1, 2011, Cron Corporation issued $700,

On January 1, 2011, Cron Corporation issued $700,000 in bonds that mature in five years. The bonds have a stated interest rate of 13 percent and pay interest on June 30 and December 31 each year. When...

Q: On January 1, 2011, Nowell Company issued $300,

On January 1, 2011, Nowell Company issued $300,000 in bonds that mature in five years. The bondshave a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When the...

Q: AMC Entertainment, Inc., owns and operates 243 movie theaters with

AMC Entertainment, Inc., owns and operates 243 movie theaters with 1,617 screens in 22 states. The company sold 11 7/8 percent bonds in the amount of $52,720,000 and used the cash proceeds to retire b...

Q: On January 1, 2011, Antonio Company issued $700,

On January 1, 2011, Antonio Company issued $700,000 in bonds that mature in 10 years. The bondshave a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When theb...

Q: What is the book value of a bond payable?

What is the book value of a bond payable?

Q: LaGarde Company has a machine that it purchased for $125,

LaGarde Company has a machine that it purchased for $125,000 on January 1. Annual depreciation on the machine is estimated to be $14,500. Required: 1. Prepare the adjusting entry needed at the end of...

Q: In Integrative Case 10.1, we projected financial statements for

In Integrative Case 10.1, we projected financial statements for Starbucks for Years +1 through +5. In this portion of the Starbucks Integrative Case, we use the projected financial statements from Int...

Q: In 2000, Enron enjoyed remarkable success in the capital markets.

In 2000, Enron enjoyed remarkable success in the capital markets. During that year, Enron’s shares increased in value by 89%, while the S&P 500 index fell by 9%. At the end of 2000, Enron’s shares wer...

Q: The Coca-Cola Company is a global soft-drink beverage

The Coca-Cola Company is a global soft-drink beverage company that is a primary and direct competitor with PepsiCo. The data in Chapter 12 Exhibits 12.14–12.16 include the actual amo...

Q: In this chapter, we evaluated shares of common equity in PepsiCo

In this chapter, we evaluated shares of common equity in PepsiCo using the value-to-book approach, market multiples, price differentials, and reverse engineering. The Coca-Cola Company competes direct...

Q: We projected financial statements for Walmart Stores for Years þ1 through +

We projected financial statements for Walmart Stores for Years þ1 through +5. The data in Chapter 12 Exhibits 12.17–12.19 include the actual amounts for 2012 and the p...

Q: Create, Inc., produces inventory in its foreign manufacturing plants for

Create, Inc., produces inventory in its foreign manufacturing plants for sale in the United States. Its foreign manufacturing assets have a tax book value of $5 million and a fair market value of $15...

Q: USCo incurred $100,000 in interest expense for the current

USCo incurred $100,000 in interest expense for the current year. The tax book value of USCo’s assets generating foreign-source income is $5 million. The tax book value of USCo’s assets generating U.S....

Q: USCo incurred $100,000 in interest expense for the current

USCo incurred $100,000 in interest expense for the current year. The tax book value of USCo’s assets generating foreign-source income is $5 million. The tax book value of USCo’s assets generating U.S....

Q: Overland Steel operates a coal-burning steel mill in New York

Overland Steel operates a coal-burning steel mill in New York state. Changes in the state’s air quality control laws will result in this mill’s incurring a $1,000 per day fine (which will be paid at t...

Q: Hochstedt is a German firm with a wholly owned U.S

Hochstedt is a German firm with a wholly owned U.S. subsidiary. The parent firm manufactures and exports products from Germany to its U.S. subsidiary for sale in the United States. Hochstedt also has...

Q: Eastern Educational Services is considering the following proposal to sell its teaching

Eastern Educational Services is considering the following proposal to sell its teaching machine and purchase a new, improved machine. The following data are presented by the department head: Additiona...

Q: A punch press currently in use has a book value of $

A punch press currently in use has a book value of $1,800 and needs design modifications totaling $16,200, which would be capitalized at the present time and depreciated. The press can be sold for $2,...

Q: Your firm uses return on assets (ROA) to evaluate investment

Your firm uses return on assets (ROA) to evaluate investment centers and is considering changing the valuation basis of assets from historical cost to current value. When the historical cost of the as...

Q: Pam Corporation acquired an 80 percent interest in Sun Corporation on January

Pam Corporation acquired an 80 percent interest in Sun Corporation on January 1, 2016, for $108,000 cash, when Sun’s capital stock was $100,000 and retained earnings were $10,000. Th...

Q: Financial statements for Pam and Sun Corporations for 2016 are as follows

Financial statements for Pam and Sun Corporations for 2016 are as follows (in thousands): ADDITIONAL INFORMATION: 1. Pam acquired an 80 percent interest in Sun on January 2, 2014, for $290,000, when...

Q: Pop Company paid $198,000 for a 90 percent interest

Pop Company paid $198,000 for a 90 percent interest in Son on January 5, 2016, when Son’s capital stock was $120,000 and its retained earnings $40,000. Trial balances for the compani...

Q: 1. Which of the following is not a characteristic of a

1. Which of the following is not a characteristic of a constructive retirement of bonds from an intercompany bond transaction? a Bonds are retired for consolidated statement purposes only. b The recip...

Q: Pop Company acquired an 80 percent interest in Son Company on January

Pop Company acquired an 80 percent interest in Son Company on January 1, 2016, for $1,600,000 in excess of book value and fair value. On January 1, 2019, Pop had $4,000,000 par, 8 percent bonds outsta...

Q: Comparative income statements for Pam Corporation and its 100 percent–owned

Comparative income statements for Pam Corporation and its 100 percent–owned subsidiary, Sun Corporation, for the year ended December 31, 2024, are summarized as follows: Pam purcha...

Q: Pop Corporation owns a 70 percent interest in Son Corporation acquired several

Pop Corporation owns a 70 percent interest in Son Corporation acquired several years ago at book value equal to fair value. On January 1, 2016, Son had outstanding $1,000,000 of 9 percent bonds with a...

Q: The balance sheets of Pam and Sun Corporations, an 80 percent

The balance sheets of Pam and Sun Corporations, an 80 percent–owned subsidiary of Pam, at December 31, 2016, are as follows (in thousands): The book value of Pam’...

Q: Pop Corporation has $8,000,000 of 12 percent

Pop Corporation has $8,000,000 of 12 percent bonds outstanding on December 31, 2016, with unamortized premium of $240,000. These bonds pay interest semiannually on July 1 and January 1 and mature on J...

Q: Comparative income statements for Pam Corporation and its 80 percent–owned

Comparative income statements for Pam Corporation and its 80 percent–owned subsidiary, Sun Corporation, for the year ended December 31, 2017, are summarized as follows: Pam purchas...

Q: Pop Corporation acquired an 80 percent interest in Son Corporation at book

Pop Corporation acquired an 80 percent interest in Son Corporation at book value equal to fair value on January 1, 2017, at which time Son’s capital stock and retained earnings were $200,000 and $80,0...

Q: Intercompany transactions between Pop Corporation and Son Corporation, its 80 percent

Intercompany transactions between Pop Corporation and Son Corporation, its 80 percent–owned subsidiary, from January 2016, when Pop acquired its controlling interest, to December 31,...

Q: Financial statements for Pam Corporation and its 75 percent–owned subsidiary

Financial statements for Pam Corporation and its 75 percent–owned subsidiary, Sun Corporation, for 2016 are summarized as follows (in thousands): Pam acquired its interest in Sun a...

Q: Selected amounts from the separate unconsolidated financial statements of Pam Corporation and

Selected amounts from the separate unconsolidated financial statements of Pam Corporation and its 90 percent–owned subsidiary, Sun Company, at December 31, 2016, are as follows (in t...

Q: Financial statements for Pop Corporation and its 75 percent–owned subsidiary

Financial statements for Pop Corporation and its 75 percent–owned subsidiary, Son Corporation, for 2017 are summarized as follows (in thousands): Pop Corporation acquired its inter...

Q: A company has a $1,000,000 bond issue

A company has a $1,000,000 bond issue outstanding with unamortized premium of $10,000 and unamortized issuance cost of $5,300. What is the book value of its liability? If an affiliate purchases half t...

Q: On January 1, 2016, Pam Corporation purchased a 40 percent

On January 1, 2016, Pam Corporation purchased a 40 percent interest in Sun Corporation for $1,600,000, when Sun’s stockholders’ equity consisted of $2,000,000 capital stock and $2,000,000 retained ear...

Q: Pam Corporation owns two-thirds (600,000 shares)

Pam Corporation owns two-thirds (600,000 shares) of the outstanding $1 par common stock of Sun Company on January 1, 2016. In order to raise cash to finance an expansion program, Sun issues an additio...

Q: Cite the conditions under which you would expect the balance of an

Cite the conditions under which you would expect the balance of an equity investment account on a balance sheet date subsequent to acquisition to be equal to the underlying book value represented by t...

Q: Comparative income statements of Pop Corporation and Son Corporation for the year

Comparative income statements of Pop Corporation and Son Corporation for the year ended December 31, 2018, are as follows (in thousands): ADDITIONAL INFORMATION: 1. Son is a 90 percentâ€&...

Q: 1. A 75 percent–owned subsidiary should not be consolidated

1. A 75 percent–owned subsidiary should not be consolidated when: a Its operations are dissimilar from those of the parent company b Control of the subsidiary does not lie with the parent company c Th...

Q: Pop Corporation paid $3,600,000 for a 90

Pop Corporation paid $3,600,000 for a 90 percent interest in Son Corporation on January 1, 2016; Son’s total book value was $3,600,000. The excess was allocated as follows: $120,000...

Q: Book values and fair values of Son Corporation’s assets and liabilities on

Book values and fair values of Son Corporation’s assets and liabilities on December 31, 2015, are as follows (in thousands): On January 1, 2016, Pop Corporation acquires all of Son...

Q: Summary income statement information for Pam Corporation and its 70 percent–

Summary income statement information for Pam Corporation and its 70 percent–owned subsidiary, Sun, for the year 2017 is as follows (in thousands): REQUIRED: 1. Assume that Pam acqu...

Q: Pam Corporation owns 90 percent of the voting stock of Sun Corporation

Pam Corporation owns 90 percent of the voting stock of Sun Corporation and 25 percent of the voting stock of Ell Corporation. The 90 percent interest in Sun was acquired for $36,000 cash on January 1,...

Q: Pop Corporation acquired 70 percent of the outstanding common stock of Son

Pop Corporation acquired 70 percent of the outstanding common stock of Son Corporation on January 1, 2016, for $350,000 cash. Immediately after this acquisition the balance sheet informati...

Q: Pam Corporation pays $10,800,000 for an 80

Pam Corporation pays $10,800,000 for an 80 percent interest in Sun Corporation on January 1, 2016, at which time the book value and fair value of Sun’s net assets are as follows (in...

Q: Pop Corporation acquired a 70 percent interest in Son Corporation on January

Pop Corporation acquired a 70 percent interest in Son Corporation on January 1, 2016, for $2,800,000, when Son’s stockholders’ equity consisted of $2,000,000 capita...

Q: In allocating the excess of investment fair value over book value of

In allocating the excess of investment fair value over book value of a subsidiary, are the amounts assigned to identifiable assets and liabilities (land and notes payable, for example) recorded separa...

Q: If the fair value of a subsidiary’s land was $100,

If the fair value of a subsidiary’s land was $100,000 and its book value was $90,000 when the parent acquired its 100 percent interest for cash, at what amount would the land be included in the consol...

Q: Pop Corporation acquired a 70 percent interest in Son Corporation on January

Pop Corporation acquired a 70 percent interest in Son Corporation on January 1, 2016, for $420,000 cash, when Son’s equity consisted of $300,000 capital stock and $200,000 retained e...

Q: Pam Corporation acquired a 70 percent interest in Sun Corporation’s outstanding voting

Pam Corporation acquired a 70 percent interest in Sun Corporation’s outstanding voting common stock on January 1, 2016, for $980,000 cash. The stockholders’ equity...

Q: If a parent uses the equity method but does not amortize the

If a parent uses the equity method but does not amortize the difference between fair value and book value on its separate books, its net income and retained earnings will not equal its share of consol...

Q: 1. The separate incomes of Pop Corporation and Son Corporation,

1. The separate incomes of Pop Corporation and Son Corporation, a 100 percent–owned subsidiary of Pop, for 2017 are $2,000 and $1,000, respectively. Pop sells all of its output to So...

Q: Pam Corporation pays $300,000 for a 30 percent interest

Pam Corporation pays $300,000 for a 30 percent interest in Sun Corporation on July 1, 2016, when the book value of Sun’s identifiable net assets equals fair value. Information relati...

Q: A summary of changes in the stockholders’ equity of Sun Corporation from

A summary of changes in the stockholders’ equity of Sun Corporation from January 1, 2016, to December 31, 2017, appears as follows (in thousands): Pam Corporation purchases 40,000...

Q: 1. GAAP provides indicators of an investor’s inability to exercise significant

1. GAAP provides indicators of an investor’s inability to exercise significant influence over an investee. Which of the following is not included among those indicators? a Surrender of significant sto...

Q: 1. Pam Company owns 25 percent of Sun Corporation. During

1. Pam Company owns 25 percent of Sun Corporation. During the year, Sun had net earnings of $450,000 and paid dividends of $28,000. Pam mistakenly recorded these transactions using the cost method rat...

Q: 1. Intercompany profit elimination entries in consolidation workpapers are prepared in

1. Intercompany profit elimination entries in consolidation workpapers are prepared in order to: a Nullify the effect of intercompany transactions on consolidated statements b Defer intercompany profi...

Q: Pop Company acquired a 30 percent interest in Son on January 1

Pop Company acquired a 30 percent interest in Son on January 1 for $500,000 cash. Assume the cost of the investment equals the fair value of Son’s net assets. Pop assigned the $125,000 excess of fair...

Q: Pop Corporation purchased 480,000 shares of Son Corporation’s common stock

Pop Corporation purchased 480,000 shares of Son Corporation’s common stock (an 80 percent interest) for $10,600,000 on January 1, 2016. The $1,000,000 excess of investment fair value...

Q: Pop Corporation acquired a 90 percent interest in Son Corporation at book

Pop Corporation acquired a 90 percent interest in Son Corporation at book value on January 1, 2016. Intercompany purchases and sales and inventory data for 2016, 2017, and 2018, are as follows: Sele...

Q: Pop Corporation paid $686,000 for a 30 percent interest

Pop Corporation paid $686,000 for a 30 percent interest in Son Corporation’s outstanding voting stock on April 1, 2016. At December 31, 2015, Son had net assets of $2,000,000 and only common stock out...

Q: Pam Company paid $440,000 for an 80 percent interest

Pam Company paid $440,000 for an 80 percent interest in Sun Company on July 1, 2016, when Sun had total equity of $220,000. Sun Company reported earnings of $20,000 for 2016 and declared dividends of...

Q: Pop Corporation paid $1,680,000 for a 30

Pop Corporation paid $1,680,000 for a 30 percent interest in Son Corporation’s outstanding voting stock on January 1, 2016. The book values and fair values of Son’s...

Q: Pam Corporation purchased for cash 6,000 shares of voting common

Pam Corporation purchased for cash 6,000 shares of voting common stock of Sun Corporation at $16 per share on July 1, 2016. On this date, Sun’s equity consisted of $100,000 of $10 par capital stock, $...

Q: Pop Corporation acquired 30 percent of the voting stock of Son Company

Pop Corporation acquired 30 percent of the voting stock of Son Company at book value on July 1, 2016. During 2018, Son paid dividends of $160,000 and reported income of $500,000 as follows: Income fr...

Q: Pam Company owns controlling interests in Sun and Toy Corporations, having

Pam Company owns controlling interests in Sun and Toy Corporations, having acquired an 80 percent interest in Sun in 2016, and a 90 percent interest in Toy on January 1, 2017. Pam’s...

Q: Pop Corporation exchanged 40,000 previously unissued no par common shares

Pop Corporation exchanged 40,000 previously unissued no par common shares for a 40 percent interest in Son Corporation on January 1, 2016. The assets and liabilities of Son on that date (after the exc...

Q: Pam Corporation made three investments in Sun during 2016 and 2017,

Pam Corporation made three investments in Sun during 2016 and 2017, as follows: Sun’s stockholders’ equity on January 1, 2016, consisted of 20,000 shares of $10 p...

Q: Pam Corporation purchased 40 percent of the voting stock of Sun Corporation

Pam Corporation purchased 40 percent of the voting stock of Sun Corporation on July 1, 2016, for $600,000. On that date, Sun’s stockholders’ equity consisted of cap...

Q: Pop Corporation acquired a 70 percent interest in Son Corporation on April

Pop Corporation acquired a 70 percent interest in Son Corporation on April 1, 2016, when it purchased 14,000 of Son’s 20,000 outstanding shares in the open market at $13 per share. A...

Q: Pop Corporation acquired an 80 percent interest in Son Corporation for $

Pop Corporation acquired an 80 percent interest in Son Corporation for $240,000 on January 1, 2016, when Son’s stockholders’ equity consisted of $200,000 capital st...

Q: Pam Corporation purchased a 90 percent interest in Sun Corporation on December

Pam Corporation purchased a 90 percent interest in Sun Corporation on December 31, 2015, for $2,700,000 cash, when Sun had capital stock of $2,000,000 and retained earnings of $500,000. All Sunâ...

Q: Pop Corporation purchased a 90 percent interest in Son Corporation on December

Pop Corporation purchased a 90 percent interest in Son Corporation on December 31, 2016, for $5,400,000 cash, when Son had capital stock of $4,000,000 and retained earnings of $1,000,000. All Son&acir...

Q: Pam Corporation acquired its 90 percent interest in Sun Corporation at its

Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000 on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1,000,000. Th...

Q: 1. Pam Corporation owns 70 percent of Sun Company’s common stock

1. Pam Corporation owns 70 percent of Sun Company’s common stock, acquired January 1, 2017. Patents from the investment are being amortized at a rate of $20,000 per year. Sun regular...

Q: Pop Corporation purchased a 75 percent interest in Son Corporation in the

Pop Corporation purchased a 75 percent interest in Son Corporation in the open market on January 1, 2017, for $690,000. A summary of Son’s stockholders’ equity on D...

Q: Pop Company sells land with a book value of $5,

Pop Company sells land with a book value of $5,000 to Son Company for $6,000 in 2016. Son is a wholly owned subsidiary of Pop. Son Company holds the land during 2017. Son Company sells the land for $8...

Q: Son Company is a 90 percent–owned subsidiary of Pop Corporation

Son Company is a 90 percent–owned subsidiary of Pop Corporation, acquired several years ago at book value equal to fair value. For 2016 and 2017, Pop and Son report the following:...

Q: Sun is a 90 percent–owned subsidiary of Pam Corporation,

Sun is a 90 percent–owned subsidiary of Pam Corporation, acquired at book value several years ago. Comparative separate-company income statements for the affiliates for 2016 are as f...

Q: 1. Son Corporation is an 80 percent–owned subsidiary of

1. Son Corporation is an 80 percent–owned subsidiary of Pop Corporation. In 2016, Son sold land that cost $15,000 to Pop for $25,000. Pop held the land for eight years before reselling it in 2024 to R...

Q: A summary of the separate income of Pam Corporation and the net

A summary of the separate income of Pam Corporation and the net income of its 75 percent–owned subsidiary, Sun Corporation, for 2016 is as follows: Sun Corporation sold machinery w...

Q: Pop Corporation owns 40 percent of the outstanding voting stock of Son

Pop Corporation owns 40 percent of the outstanding voting stock of Son Corporation, acquired for $200,000 on July 1, 2016, when Son’s common stockholders’ equity was $400,000. The excess of investment...

Q: Pam Corporation has an 80 percent interest in Sun Corporation, its

Pam Corporation has an 80 percent interest in Sun Corporation, its only subsidiary. The 80 percent interest was acquired on July 1, 2016, for $800, at which time Sun’s equity consist...

Q: Income data from the records of Pam Corporation and Sun Corporation,

Income data from the records of Pam Corporation and Sun Corporation, Pam’s 80 percent–owned subsidiary, for 2016 through 2019 follow (in thousands): Pam acquired...

Q: On January 2, 2016, Pop Corporation enters into a business

On January 2, 2016, Pop Corporation enters into a business combination with Son Corporation in which Son is dissolved. Pop pays $1,650,000 for Son, the consideration consisting of 66,000 shares of Pop...

Q: Son Corporation, a 90 percent–owned subsidiary of Pop Corporation

Son Corporation, a 90 percent–owned subsidiary of Pop Corporation, was acquired on January 1, 2016, at a price of $90,000 in excess of underlying book value. The excess was due to go...

Q: Pam Corporation acquired a 90 percent interest in Sun Corporation on January

Pam Corporation acquired a 90 percent interest in Sun Corporation on January 1, 2016, for $540,000, at which time Sun’s capital stock and retained earnings were $300,000 and $180,000...

Q: Pop Corporation acquired a 90 percent interest in Son Corporation’s outstanding voting

Pop Corporation acquired a 90 percent interest in Son Corporation’s outstanding voting common stock on January 1, 2016, for $630,000 cash. The stockholders’ equity...

Q: Pam Corporation acquired a 90 percent interest in Sun Corporation on January

Pam Corporation acquired a 90 percent interest in Sun Corporation on January 1, 2016, for $2,700,000, at which time Sun’s capital stock and retained earnings were $1,500,000 and $900...

Q: Financial statements for Pop and Son Corporations for 2016 are as follows

Financial statements for Pop and Son Corporations for 2016 are as follows (in thousands): ADDITIONAL INFORMATION: 1. Pop acquired an 80 percent interest in Son on January 2, 2014, for $580,000, when...

Q: Pam Corporation acquired all the outstanding stock of Sun Corporation on April

Pam Corporation acquired all the outstanding stock of Sun Corporation on April 1, 2016, for $15,000,000, when Sun’s stockholders’ equity consisted of $5,000,000 cap...

Q: Pop Corporation purchased an 80 percent interest in Son Corporation for $

Pop Corporation purchased an 80 percent interest in Son Corporation for $1,200,000 on January 1, 2017, at which time Son’s stockholders’ equity consisted of $1,000,...

Q: Pam Corporation’s Investment in Sun Company account had a balance of $

Pam Corporation’s Investment in Sun Company account had a balance of $475,000 at December 31, 2016. This balance consisted of goodwill of $35,000 and 80 percent of Sun’s $550,000 stockholders’ equity....

Q: The balance sheets of Pop Corporation and Son Corporation at December 31

The balance sheets of Pop Corporation and Son Corporation at December 31, 2015, are summarized with fair-value information as follows (in thousands): On January 1, 2016, Pop Corporation acquired all...

Q: 1. Pop Corporation paid $100,000 cash for the

1. Pop Corporation paid $100,000 cash for the net assets of Son Company, which consisted of the following: Assume Son Company is dissolved. The plant and equipment acquired in this business combinat...

Q: Pam Company issued 480,000 shares of $10 par common

Pam Company issued 480,000 shares of $10 par common stock with a fair value of $10,200,000 for all the voting common stock of Sun Company. In addition, Pam incurred the following costs: Legal fees to...

Q: On January 1, Pop Corporation pays $400,000 cash

On January 1, Pop Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a market value of $660,000 for all the outstanding common shares of Son Corporation. In addi...

Q: Pam Corporation acquired a 70 percent interest in Sun Corporation’s outstanding voting

Pam Corporation acquired a 70 percent interest in Sun Corporation’s outstanding voting common stock on January 1, 2016, for $490,000 cash. The stockholders’ equity...

Q: On January 1, 2009, Pam Corporation acquired 60 percent of

On January 1, 2009, Pam Corporation acquired 60 percent of the voting common shares of Sun Corporation at an excess of fair value over book value of $1,000,000. This excess was attributed to plant ass...

Q: OP company issued 120,000 shares of $10 par common

OP company issued 120,000 shares of $10 par common stock with a fair value of $2,550,000 for all the voting common stock of Son Company. In addition, Pop incurred the following additional costs: Lega...

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Pop Corporation paid $1,800,000 for 90,000 shares of Son Company’s 100,000 outstanding shares on January 1, 2016, when Son’s equity consisted of $1,000,000 of $10 p...

Q: Pam Corporation paid $10,000,000 for Sun Corporation’s

Pam Corporation paid $10,000,000 for Sun Corporation’s voting common stock on January 2, 2016, and Sun was dissolved. The purchase price consisted of 200,000 shares of Pamâ...

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Vegetron’s chief financial officer (CFO) is wondering how to analyze a proposed $1 million investment in a new venture code-named project X. He asks what you think. Your response sho...

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One measure of the effective tax rate is the difference between the IRRs of pretax and after-tax cash flows, divided by the pretax IRR. Consider, for example, an investment I generating a perpetual st...

Q: New Economy Transport (A) The New Economy Transport Company

New Economy Transport (A) The New Economy Transport Company (NETCO) was formed in 1959 to carry cargo and passengers between ports in the Pacific Northwest and Alaska. By 2015 its fleet had grown to f...

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Company Q’s current return on equity (ROE) is 14%. It pays out one-half of earnings as cash dividends (pay-out ratio = .5). Current book value per share is $50. Book value per share will grow as Q rei...

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Ten years ago, in 2007, George Reeby founded a small mail-order company selling high-quality sports equipment. Since those early days Reeby Sports has grown steadily and been consistently profitable....

Q: Calculate the weighted-average cost of capital (WACC) for

Calculate the weighted-average cost of capital (WACC) for Federated Junkyards of America, using the following information: Debt: $75,000,000 book value outstanding. The debt is trading at 90% of book...

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Here is recent financial data on Pisa Construction, Inc. Pisa has not performed spectacularly to date. However, it wishes to issue new shares to obtain $80,000 to finance expansion into a promising m...

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Emmick was a director and shareholder of Colonial Manors, Inc. (CM). He organized another corporation named Oahe Enterprises, Inc. To obtain shares of the Oahe stock, Emmick transferred CM shares arbi...

Q: Parente, Randolph, Orlando & Associates (Parente) is an

Parente, Randolph, Orlando & Associates (Parente) is an accounting firm that had done auditing work for Sparkomatic for nearly 20 years. On June 14, 1993, Sparkomatic entered into a Memorandum of Inte...

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Describe why book value per share of common stock may not be useful for investment analysis.

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A and B Companies have been operating separately for five years. Each company has a minimal amount of liabilities and a simple capital structure consisting solely of voting common stock. In exchange f...

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Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equa...

Q: Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for

Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equa...

Q: Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for

Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equa...

Q: Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for

Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equ...

Q: Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for

Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equ...

Q: Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for

Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equ...

Q: Quoton Corporation acquired 80 percent of Tempro Company’s common stock on December

Quoton Corporation acquired 80 percent of Tempro Company’s common stock on December 31, 20X5, at underlying book value. The book values and fair values of Tempro’s...

Q: Tear Company, a newly established subsidiary of Stern Corporation, received

Tear Company, a newly established subsidiary of Stern Corporation, received assets with an original cost of $260,000, a fair value of $200,000, and a book value of $140,000 from the parent in exchange...

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Lester Company transferred the following assets to a newly created subsidiary, Mumby Corporation, in exchange for 40,000 shares of its $3 par value stock: Required a. Give the journal entry in whic...

Q: Lester Company transferred the following assets to a newly created subsidiary,

Lester Company transferred the following assets to a newly created subsidiary, Mumby Corporation, in exchange for 40,000 shares of its $3 par value stock: Required a. Give the journal entry in whic...

Q: Sun Corporation concluded the fair value of Tender Company was $60

Sun Corporation concluded the fair value of Tender Company was $60,000 and paid that amount to acquire its net assets. Tender reported assets with a book value of $55,000 and fair value of $71,000 and...

Q: Samper Company reported the book value of its net assets at $

Samper Company reported the book value of its net assets at $160,000 when Public Corporation acquired 100 percent of its voting stock for cash. The fair value of Samper’s net assets was determined to...

Q: Elm Corporation and Maple Company have announced terms of an exchange agreement

Elm Corporation and Maple Company have announced terms of an exchange agreement under which Elm will issue 8,000 shares of its $10 par value common stock to acquire all of Maple Companyâ€&#...

Q: Grant Company acquired all of Bedford Corporation’s assets and liabilities on January

Grant Company acquired all of Bedford Corporation’s assets and liabilities on January 1, 20X2, in a business combination. At that date, Bedford reported assets with a book value of $624,000 and liabil...

Q: The following balance sheets were prepared for Adam Corporation and Best Company

The following balance sheets were prepared for Adam Corporation and Best Company on January 1, 20X2, just before they entered into a business combination: Adam acquired all of Best Companyâ
...

Q: Lead Corporation established a new subsidiary and transferred to it assets with

Lead Corporation established a new subsidiary and transferred to it assets with a cost of $90,000 and a book value of $75,000. The assets had a fair value of $100,000 at the time of transfer. The tran...

Q: Port Company purchased 30,000 of the 100,000 outstanding

Port Company purchased 30,000 of the 100,000 outstanding shares of Sund Company common stock on January 1, 20X2, for $180,000. The purchase price was equal to the book value of the shares purchased. S...

Q: Reden Corporation purchased 45 percent of Montgomery Company’s common stock on January

Reden Corporation purchased 45 percent of Montgomery Company’s common stock on January 1, 20X9, at underlying book value of $288,000. Montgomery’s balance sheet contained the following stockholders’ e...

Q: Fineline Pencil Company acquired 80 percent of Smudge Eraser Corporation’s stock on

Fineline Pencil Company acquired 80 percent of Smudge Eraser Corporation’s stock on January 2, 20X3, for $72,000 cash. Summarized balance sheet data for the companies on December 31,...

Q: Byte Computer Corporation acquired 75 percent of Nofail Software Company’s stock on

Byte Computer Corporation acquired 75 percent of Nofail Software Company’s stock on January 2, 20X3, by issuing bonds with a par value of $50,000 and a fair value of $67,500 in excha...

Q: Byte Computer Corporation acquired 90 percent of Nofail Software Company’s common stock

Byte Computer Corporation acquired 90 percent of Nofail Software Company’s common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market v...

Q: Belchfire Motors’ accountant was called away after completing only half of the

Belchfire Motors’ accountant was called away after completing only half of the consolidated statements at the end of 20X4. The data left behind included the following: Required a....

Q: Sanderson Corporation acquired 70 percent of Kline Corporation’s common stock on January

Sanderson Corporation acquired 70 percent of Kline Corporation’s common stock on January 1, 20X7, for $294,000 in cash. At the acquisition date, the book values and fair values of Kl...

Q: Ambrose Corporation owns 75 percent of Kroop Company’s common stock, acquired

Ambrose Corporation owns 75 percent of Kroop Company’s common stock, acquired at underlying book value on January 1, 20X4. At the acquisition date, the book values and fair values of...

Q: Tall Corporation acquired 75 percent of Light Corporation’s voting common stock on

Tall Corporation acquired 75 percent of Light Corporation’s voting common stock on January 1, 20X2, at underlying book value. At the acquisition date, the book values and fair values of Light’s assets...

Q: Lang Company reports net assets with a book value and fair value

Lang Company reports net assets with a book value and fair value of $200,000. Pace Corporation acquires 75 percent ownership for $150,000. Pace reports net assets with a book value of $520,000 and a f...

Q: Idle Corporation has been acquiring shares of Fast Track Enterprises at book

Idle Corporation has been acquiring shares of Fast Track Enterprises at book value for the last several years. Fast Track provided data including the following: Fast Track declares and pays its annu...

Q: Dewey Corporation owns 30 percent of the common stock of Jimm Company

Dewey Corporation owns 30 percent of the common stock of Jimm Company, which it purchased at underlying book value on January 1, 20X5. Dewey reported a balance of $245,000 for its investment in Jimm C...

Q: Wealthy Manufacturing Company purchased 40 percent of the voting shares of Diversified

Wealthy Manufacturing Company purchased 40 percent of the voting shares of Diversified Products Corporation on March 23, 20X4. On December 31, 20X8, Wealthy Manufacturing’s controlle...

Q: Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equ...

Q: Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equ...

Q: Paper Company acquired 100 percent of Scissor Company’s outstanding common stock for

Paper Company acquired 100 percent of Scissor Company’s outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor’s net assets was eq...

Q: Paper Company acquired 100 percent of Scissor Company’s outstanding common stock for

Paper Company acquired 100 percent of Scissor Company’s outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor’s net assets was eq...

Q: Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equ...

Q: Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equ...

Q: Action Corporation issued nonvoting preferred stock with a fair market value of

Action Corporation issued nonvoting preferred stock with a fair market value of $4,000,000 in exchange for all the outstanding common stock of Master Corporation. On the date of the exchange, Master h...

Q: Anchor Corporation paid cash of $178,000 to acquire Zink

Anchor Corporation paid cash of $178,000 to acquire Zink Company’s net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Zink im...

Q: Bower Company purchased Lark Corporation’s net assets on January 3, 20X2

Bower Company purchased Lark Corporation’s net assets on January 3, 20X2, for $625,000 cash. In addition, Bower incurred $5,000 of direct costs in consummating the combination. At th...

Q: On January 1, 20X3, PURE Products Corporation issued 12,

On January 1, 20X3, PURE Products Corporation issued 12,000 shares of its $10 par value stock to acquire the net assets of Light Steel Company. Underlying book value and fair value information for the...

Q: Ramrod Manufacturing acquired all the assets and liabilities of Stafford Industries on

Ramrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Ramrod’s $20 par value common stock. Balance s...

Q: Bilge Pumpworks and Seaworthy Rope Company agreed to merge on January 1

Bilge Pumpworks and Seaworthy Rope Company agreed to merge on January 1, 20X3. On the date of the merger agreement, the companies reported the following data: Bilge Pumpworks has 10,000 shares of it...

Q: On January 1, 20X2, End Corporation acquired all of Cork

On January 1, 20X2, End Corporation acquired all of Cork Corporation’s assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prio...

Q: On January 1, 20X1, Alpha Corporation acquired all of Bravo

On January 1, 20X1, Alpha Corporation acquired all of Bravo Company’s assets and liabilities by issuing shares of its $3 par value stock to the owners of Bravo Company in a business...

Q: Tab Corporation decided to establish Collon Company as a wholly owned subsidiary

Tab Corporation decided to establish Collon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Collon issued Tab 30,000 sh...

Q: Eagle Corporation established a subsidiary to enter into a new line of

Eagle Corporation established a subsidiary to enter into a new line of business considered to be substantially more risky than Eagle’s current business. Eagle transferred the followi...

Q: Thumb Company created New Company as a wholly owned subsidiary by transferring

Thumb Company created New Company as a wholly owned subsidiary by transferring assets and accounts payable to New in exchange for its common stock. New recorded the following entry when it received th...

Q: Which of the following is the appropriate basis for valuing fixed assets

Which of the following is the appropriate basis for valuing fixed assets acquired in a business combination carried out by exchanging cash for common stock? a. Historical cost. b. Book value. c. Cost...

Q: A corporation exercises significant influence over an affiliate in which it holds

A corporation exercises significant influence over an affiliate in which it holds a 40 percent common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how wou...

Q: On January 1, 2016, Pop Corporation purchased a 60 percent

On January 1, 2016, Pop Corporation purchased a 60 percent interest in Son Corporation at book value (equal to fair value). At that time, Son owned a 60 percent interest in Tip Corporation (acquired a...

Q: 1. The classification of noncontrolling interest share as an expense and

1. The classification of noncontrolling interest share as an expense and noncontrolling interest as a liability is preferred under: a Parent-company theory b Entity theory c Traditional theory d None...

Q: 1. Pet Company pays $1,440,000 for

1. Pet Company pays $1,440,000 for an 80 percent interest in Sit Corporation on December 31, 2016, when Sit’s net assets at book value and fair value are $1,600,000. Under entity theory, the noncontro...

Q: Pam Corporation paid $960,000 cash for a 100 percent

Pam Corporation paid $960,000 cash for a 100 percent interest in Sun Corporation on January 1, 2017, when Sun’s stockholders’ equity consisted of $400,000 capital s...

Q: Pop Corporation paid $3,000,000 for an 80

Pop Corporation paid $3,000,000 for an 80 percent interest in Son Corporation on January 1, 2016, when the book values and fair values of Son’s assets and liabilities were as follows...

Q: Pam Corporation paid $180,000 cash for a 90 percent

Pam Corporation paid $180,000 cash for a 90 percent interest in Sun Corporation on January 1, 2017, when Sun’s stockholders’ equity consisted of $100,000 capital st...

Q: Use the information and assumptions from Problem P 11-9 for

Use the information and assumptions from Problem P 11-9 for this problem. The accompanying financial statements are for Pam and Sun Corporations, one year after the acquisition. Note that Sunâ&#...

Q: Comparative financial statements for Pen Corporation and its subsidiaries, Sir and

Comparative financial statements for Pen Corporation and its subsidiaries, Sir and Tip Corporations, for the year ended December 31, 2016, are as follows (in thousands): ADDITIONAL INFORMATION: 1. P...

Q: A schedule of intercompany investment interests and separate earnings for Par Corporation

A schedule of intercompany investment interests and separate earnings for Par Corporation, Sit Corporation, and Tot Corporation is presented as follows: REQUIRED: 1. Compute controlling interest sha...

Q: Pin Corporation acquired a 90 percent interest in Sun Corporation for $

Pin Corporation acquired a 90 percent interest in Sun Corporation for $360,000 cash on January 2, 2014, when Sun had capital stock of $200,000 and retained earnings of $150,000. Sun purchased its 10 p...

Q: Par Corporation acquired an 80 percent interest in Sip Corporation for $

Par Corporation acquired an 80 percent interest in Sip Corporation for $180,000 cash on January 1, 2016, when Sip had capital stock of $50,000 and retained earnings of $150,000. The excess of fair val...

Q: Pop Corporation purchased an 80 percent interest in Son Corporation for $

Pop Corporation purchased an 80 percent interest in Son Corporation for $170,000 on January 1, 2016, when Son’s stockholders’ equity was $200,000. The excess of fai...

Q: On January 1, 2016, Pan acquired all the stock of

On January 1, 2016, Pan acquired all the stock of Sim of Belgium for $1,200,000, when Sim had 20,000,000 euros (Eu) capital stock and 15,000,000 euros (Eu) retained earnings. Sim’s net assets were fai...

Q: The affiliation structure for Pad Corporation and its subsidiaries is diagrammed as

The affiliation structure for Pad Corporation and its subsidiaries is diagrammed as follows: The incomes and dividends for the affiliates for 2016 are (in thousands): ADDITIONAL INFORMATION: 1. Ax...

Q: Phi, a U.S. firm, acquired 100 percent

Phi, a U.S. firm, acquired 100 percent of Stu’s outstanding stock at book value on January 1, 2016, for $112,000. Stu is a New Zealand–based company, and its functional currency is the U.S. dollar. Th...

Q: San is a 90 percent–owned foreign subsidiary of Par,

San is a 90 percent–owned foreign subsidiary of Par, acquired by Par on January 1, 2016, at book value equal to fair value, when the exchange rate for LCUs of San’s...

Q: Pak purchased a 40 percent interest in Sco of Germany for $

Pak purchased a 40 percent interest in Sco of Germany for $1,080,000 on January 1, 2016. The excess cost over book value is due to a patent with a 10-year amortization period. A summary of Scoâ&...

Q: A summary of the assets and equities of Pot Corporation and its

A summary of the assets and equities of Pot Corporation and its 80 percent–owned subsidiary, Sea Corporation, at December 31, 2016, is given as follows (in thousands): On January 2...

Q: The capital accounts of the Fax and Bel partnership on September 30

The capital accounts of the Fax and Bel partnership on September 30, 2016, were: Fax capital (75% profit)..................... $140,000 Bel capital (25% profit).......................... 60,000 Total...

Q: The capital balances and profits- and loss-sharing percentages for

The capital balances and profits- and loss-sharing percentages for the Sip, Jog, and Run partnership at December 31, 2016, are as follows: Sip capital (30%)............................ $160,000 Jog c...

Q: The capital account balances and profit- and loss-sharing ratios

The capital account balances and profit- and loss-sharing ratios of the Byd, Box, Dar, and Fus partnership on December 31, 2016, after closing entries are as follows: Byd (30%)..........................

Q: The partnership of Add and Bal is adding a new partner,

The partnership of Add and Bal is adding a new partner, Cat, and its assets and equities at book value and fair value just prior to her admission to the partnership on January 1, 2016, are as follows:...

Q: The partnership of Mor and Osc is being dissolved, and the

The partnership of Mor and Osc is being dissolved, and the assets and equities at book value and fair value and the profit- and loss-sharing ratios at January 1, 2016, are as follows: Mor and Osc ag...

Q: A condensed balance sheet with profit-sharing percentages for the Eve

A condensed balance sheet with profit-sharing percentages for the Eve, Fae, and Gia partnership on January 1, 2016, shows the following: On January 2, 2016, the partners decide to liquidate the busi...

Q: Account balances for the Rob, Tom, and Val partnership on

Account balances for the Rob, Tom, and Val partnership on October 1, 2016, are as follows: The partners have decided to liquidate the business. Activities for October and November are as follows: O...

Q: The after-closing trial balances of the Bea, Pat,

The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2016, included the following accounts and balances: Cash............................................................

Q: Eli, Joe, and Ned agree to liquidate their consulting practice

Eli, Joe, and Ned agree to liquidate their consulting practice as soon as possible after the close of business on July 31, 2016. The trial balance on that date shows the following account balances:...

Q: The following information is available regarding Pam Corporation and its 80 percent

The following information is available regarding Pam Corporation and its 80 percent–owned subsidiary, Sun Corporation, at and for the year ended December 31, 2016: REQUIRED: Determ...

Q: 1. When Pop Corporation acquired its 100 percent interest in Son

1. When Pop Corporation acquired its 100 percent interest in Son Corporation in a tax-free reorganization, Son’s equipment had a fair value of $12,000,000 and a book value and tax basis of $8,000,000....

Q: Son Corporation, an 80 percent–owned subsidiary of Pop Corporation

Son Corporation, an 80 percent–owned subsidiary of Pop Corporation, sold equipment with a book value of $600,000 to Pop for $1,000,000 at December 31, 2016. Separate income tax returns are filed, and...

Q: The stockholders’ equity of Sun Corporation at December 31, 2016,

The stockholders’ equity of Sun Corporation at December 31, 2016, was as follows (in thousands): 10% cumulative preferred stock, $100 par, callable at $105,..................... $2,000 20,000 shares...

Q: Pam Corporation owns 80 percent of Sun Corporation’s common stock, having

Pam Corporation owns 80 percent of Sun Corporation’s common stock, having acquired the interest at a fair value equal to book value on December 31, 2016. During 2017, Pamâ€...

Q: Pam Corporation owns 80 percent of Sun Corporation’s outstanding common stock.

Pam Corporation owns 80 percent of Sun Corporation’s outstanding common stock. The 80 percent interest was acquired in 2016 at $40,000 in excess of book value due to undervalued equi...

Q: Pet Company owns 90 percent of the stock of Man Corporation and

Pet Company owns 90 percent of the stock of Man Corporation and 70 percent of the stock of Nun Company. Man owns 70 percent of the stock of Oak Corporation and 10 percent of the stock of Nun Company....

Q: Taxable incomes for Pop Corporation and Son Corporation, its 70 percent

Taxable incomes for Pop Corporation and Son Corporation, its 70 percent–owned subsidiary, for 2016 are as follows (in thousands): ADDITIONAL INFORMATION: 1. Pop acquired its intere...

Q: Pam Corporation acquired a 90 percent interest in Sun Corporation in a

Pam Corporation acquired a 90 percent interest in Sun Corporation in a taxable transaction on January 1, 2016, for $900,000, when Sun had $500,000 capital stock and $400,000 retained earnings. The $10...

Q: Pop Corporation acquired all the stock of Son Corporation on January 1

Pop Corporation acquired all the stock of Son Corporation on January 1, 2016, for $280,000 cash, when the book values and fair values of Son’s assets and liabilities were as follows...

Q: On January 3, 2016, Pam Corporation purchased a 90%

On January 3, 2016, Pam Corporation purchased a 90% interest in Sun Corporation at a price $120,000 in excess of book value and fair value. The excess is goodwill. During 2016, Pam sold inventory item...

Q: Pam Corporation paid $7,200,000 for 360,

Pam Corporation paid $7,200,000 for 360,000 shares of Sun Corporation’s outstanding voting common stock on January 1, 2016, when the stockholders’ equity of Sun consisted of (in thousands): 10% cumul...

Q: The affiliation structure for a group of interrelated companies is diagrammed as

The affiliation structure for a group of interrelated companies is diagrammed as follows: The investments were acquired at fair value equal to book value in 2016, and there are no unrealized or cons...

Q: Son Corporation has 100,000 outstanding shares of $10 par

Son Corporation has 100,000 outstanding shares of $10 par common stock and 5,000 outstanding shares of $100 par, cumulative, 10 percent preferred stock. Son’s net income for the year is $300,000, and...

Q: Balance sheet information of Pop and Son Corporations at December 31,

Balance sheet information of Pop and Son Corporations at December 31, 2015, is summarized as follows (in thousands): On January 2, 2016, Pop purchases 80 percent of Son’s outstandi...

Q: On January 1, 2017, Pam Corporation pays $600,

On January 1, 2017, Pam Corporation pays $600,000 for an 80 percent interest in Sun Company, when Sun’s net assets have a book value of $550,000 and a fair value of $700,000. The $150,000 excess fair...

Q: Pam Company acquired an 80 percent interest in Sun Corporation at book

Pam Company acquired an 80 percent interest in Sun Corporation at book value equal to fair value on January 1, 2016. During the year, Sun sold $50,000 inventory items to Pam, and at December 31, 2016,...

Q: Pop Corporation acquired an 80 percent interest in Son Company at book

Pop Corporation acquired an 80 percent interest in Son Company at book value a number of years ago. Separate incomes of Pop and Son for 2016 were $120,000 and $60,000, respectively. The only transacti...

Q: On January 1, 2016, Pam Corporation acquired a 90 percent

On January 1, 2016, Pam Corporation acquired a 90 percent interest in Sun Corporation for $1,260,000. The book values and fair values of Sun’s assets and equities on this date are as...

Q: What impact does the use of gross book value or net book

What impact does the use of gross book value or net book value in the investment base have on the computation of ROI?

Q: A division is considering the acquisition of a new asset that will

A division is considering the acquisition of a new asset that will cost $720,000 and have a cash flow of $252,000 per year for each of the four years of its life. Depreciation is computed on a straigh...

Q: Noonan Division has total assets (net of accumulated depreciation) of

Noonan Division has total assets (net of accumulated depreciation) of $3,300,000 at the beginning of year 1. One of the assets is a machine that has a net book value of $300,000. Expected divisional i...

Q: Refer to the facts in Exercise 14-28, but assume

Refer to the facts in Exercise 14-28, but assume that Noonan has been leasing the machine for $60,000 annually. Assume also that the machine generates income of $42,000 annually after the lease paymen...

Q: The Caribbean Division of Mega-Entertainment Corporation just started operations.

The Caribbean Division of Mega-Entertainment Corporation just started operations. It purchased depreciable assets costing $30 million and having a four-year expected life, after which the assets can b...

Q: Refer to the information in Exercise 14-30. In computing

Refer to the information in Exercise 14-30. In computing ROI, this division uses end-of-year asset values. Assume that all cash flows increase 10 percent at the end of each year. This has the followin...

Q: Several years ago, Seville Company acquired Salvador Components. Prior to

Several years ago, Seville Company acquired Salvador Components. Prior to the acquisition, Salvador manufactured and sold automotive components to third-party customers. Since becoming a division of S...

Q: Ball Corporation’s owners recently offered to sell 100 percent of their ownership

Ball Corporation’s owners recently offered to sell 100 percent of their ownership to Timber Corporation for $450,000. Timber’s business manager was told that Ball’s book value was $300,000, and she es...

Q: What portion of the book value of the net assets held by

What portion of the book value of the net assets held by a subsidiary at acquisition is included in the consolidated balance sheet?

Q: Although Sloan Company had good earnings reports in 20X5 and 20X6,

Although Sloan Company had good earnings reports in 20X5 and 20X6, it had a negative retained earnings balance on December 31, 20X6. Jacobs Corporation purchased 100 percent of Sloan’s common stock on...

Q: Roller Corporation purchased 100 percent ownership of Steam Company on January 1

Roller Corporation purchased 100 percent ownership of Steam Company on January 1, 20X5, for $270,000. On that date, the book value of Steam’s reported net assets was $200,000. The ex...

Q: Power Corporation purchased 100 percent of the common stock of Snow Corporation

Power Corporation purchased 100 percent of the common stock of Snow Corporation on January 1, 20X2, by issuing 45,000 shares of its $6 par value common stock. The market price of Power’s shares at the...

Q: Turner Corporation reported the following balances at January 1, 20X9:

Turner Corporation reported the following balances at January 1, 20X9: On January 1, 20X9, Gross Corporation purchased 100 percent of Turner’s stock. All tangible assets had a rema...

Q: On June 10, 20X8, Tower Corporation acquired 100 percent of

On June 10, 20X8, Tower Corporation acquired 100 percent of Brown Company’s common stock. Summarized balance sheet data for the two companies immediately after the stock acquisition...

Q: Road Corporation acquired all of Conger Corporation’s voting shares on January 1

Road Corporation acquired all of Conger Corporation’s voting shares on January 1, 20X2, for $470,000. At that time Conger reported common stock outstanding of $80,000 and retained earnings of $130,000...

Q: Select the most appropriate answer for each of the following questions.

Select the most appropriate answer for each of the following questions. 1. Goodwill is a. Seldom reported because it is too difficult to measure. b. Reported when more than book value is paid in purch...

Q: At the end of 2016, Crawford Corp., had total assets

At the end of 2016, Crawford Corp., had total assets of $321,800 and total liabilities of $183,400. Included in the assets were property, plant, and equipment with a cost of $242,000 and accumulated d...

Q: At the end of 2016, Zepher Corp., had total assets

At the end of 2016, Zepher Corp., had total assets of $331,500 and total liabilities of $164,300. Included in the assets were property, plant, and equipment with a cost of $237,600 and accumulated dep...

Q: On January 3, 2016, Grey Enterprises, Inc., paid

On January 3, 2016, Grey Enterprises, Inc., paid $280,600 for equipment used in manufacturing automotive supplies. In addition to the basic purchase price, the company paid $500 transportation charges...

Q: On January 4, 2016, Crux Systems, Inc., paid

On January 4, 2016, Crux Systems, Inc., paid $281,200 for equipment used in manufacturing automotive supplies. In addition to the basic purchase price, the company paid $2,800 transportation charges;...

Q: On January 1, Titan Trucking purchased a used Kenworth truck at

On January 1, Titan Trucking purchased a used Kenworth truck at a cost of $48,000. Titan Trucking expects the truck to remain useful for four years (800,000 miles) and to have a residual value of $8,0...

Q: What is the book value of an asset? How is gain

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Q: Refer to the data for S8-7. Compute second-

Refer to the data for S8-7. Compute second-year depreciation expense on the truck using the following methods: First-year depreciation: Straight-line: ($48,000 - $8,000) / 4 years = $10,000 Units-of...

Q: 1. Bankruptcy Insolvency means: a Book value of assets

1. Bankruptcy Insolvency means: a Book value of assets is greater than liabilities b Fair value of assets is less than liabilities c Inability to meet financial obligations as they come due d Liabilit...

Q: Caleb County had a beginning cash balance in its enterprise fund of

Caleb County had a beginning cash balance in its enterprise fund of $714,525. During the year, the following transactions affecting cash flows occurred: 1. Acquired equity investments totaling $165,00...

Q: The City of Thomasville established an internal service fund to provide printing

The City of Thomasville established an internal service fund to provide printing services to all city offices and departments. The following transactions related to the fund took place in 2016: 1. On...

Q: Hal Company filed for protection from creditors under Chapter 11 of the

Hal Company filed for protection from creditors under Chapter 11 of the bankruptcy act on July 1, 2016. Hal had the following liabilities at the time of filing: 10% mortgage bonds payable, secured by...

Q: K.T. Tim has been appointed to serve as executor

K.T. Tim has been appointed to serve as executor for the estate of Ms. Lisa Triciao, who passed away on August 15, 2015. Ms. Triciao’s assets consisted of the following: The probat...

Q: Although you printed the trial balance and financial statements to get an

Although you printed the trial balance and financial statements to get an idea of how All About You Spa is doing financially, some accounts are not accurate. You need to make adjusting entries to prov...

Q: On January 1 of the current year, Palm Corporation purchases the

On January 1 of the current year, Palm Corporation purchases the net assets of Vicki’s unincorporated business for $600,000. The tangible net assets have a $300,000 book value and a $400,000 FMV. The...

Q: Assume that a company chooses an accelerated method of calculating depreciation expense

Assume that a company chooses an accelerated method of calculating depreciation expense for financial statement reporting purposes for an asset with a five-year life. Required: State the effect (high...

Q: Millco, Inc., acquired a machine that cost $240,

Millco, Inc., acquired a machine that cost $240,000 early in 2010. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $24,000. Required: a. Usi...

Q: Kleener Co. acquired a new delivery truck at the beginning of

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $26,000 and has an estimated useful life of four years and an estimated salvage value of $4,000....

Q: Crow Co. purchased some of the machinery of Hare, Inc

Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $33,600. Crow’s cost of moving and installing the machinery t...

Q: Grove Co. acquired a production machine on January 1, 2010

Grove Co. acquired a production machine on January 1, 2010, at a cost of $240,000. The machine is expected to have a four year useful life, with a salvage value of $40,000. The machine is capable of p...

Q: Freedom Co. purchased a new machine on July 2, 2010

Freedom Co. purchased a new machine on July 2, 2010, at a total installed cost of $44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000. Required: a. Calcu...

Q: Porter, Inc., acquired a machine that cost $720,

Porter, Inc., acquired a machine that cost $720,000 on October 1, 2010. The machine is expected to have a four-year useful life and an estimated salvage value of $80,000 at the end of its life. Porter...

Q: William County opted to account for its duplication service center in an

William County opted to account for its duplication service center in an internal service fund. Previously the center had been accounted for in the county’s general fund. During the first month in whi...

Q: See the following balance sheet for the town of Paris governmental funds

See the following balance sheet for the town of Paris governmental funds. In addition, you learn from other records that the town has capital assets with a book value (net of depreciation) of $1,450 m...

Q: / A city included the schedule above in its financial statements

A city included the schedule above in its financial statements. 1. Prepare entries to reflect the activity relating to improvements and equipment in both the general-fund and the government-wide state...

Q: Ray and Carin are partners in an accounting firm. The partners

Ray and Carin are partners in an accounting firm. The partners have entered into an arm’s length agreement requiring Ray to purchase Carin’s partnership interest from Carin’s estate if she dies before...

Q: Green Company has prepared the following information for three of its divisions

Green Company has prepared the following information for three of its divisions: Required (a) Compute each division’s return on investment and residual income, assuming a 10% cost o...

Q: Strathcona Paper rewards its managers on the basis of the after-

Strathcona Paper rewards its managers on the basis of the after-tax return on investment of the assets that they manage—the higher the reported return on investment, the higher the reward. The company...

Q: You are the controller of a chain of dry-cleaning establishments

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Q: The Newburg Flyers operate a major sports franchise from a building in

The Newburg Flyers operate a major sports franchise from a building in downtown Newburg. The building was built in 1940 at a cost of $5,000,000 and is fully depreciated so that it is shown on the comp...

Q: Jewel Pix currently uses a six-year-old molding machine

Jewel Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $85,000 for the machine, which was state of the art at the time of purchase. Although the...

Q: Mims Corporation recently announced a bonus plan to reward the manager of

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Q: Suzanne and Bob form the SB General Partnership as equal partners.

Suzanne and Bob form the SB General Partnership as equal partners. They make the following contributions: The SB Partnership assumes the $80,000 recourse mortgage on the building that Bob contributes...

Q: On May 31, six brothers decided to form the Grimm Brothers

On May 31, six brothers decided to form the Grimm Brothers Partnership to publish and print children’s stories. The contributions of the brothers and their partnership interests are...

Q: On January 1, Julie, Kay, and Susan formed a

On January 1, Julie, Kay, and Susan formed a partnership. The contributions of the three individuals are listed below. Julie received a 30% partnership interest, Kay received a 60% partnership interes...

Q: Jackson Corporation prepared the following book income statement for its year ended

Jackson Corporation prepared the following book income statement for its year ended December 31, 2017: • For tax: Seven-year MACRS property for which the corporation made no Sec....

Q: Refer to Exhibit 13–3 . Assume that you are a

Refer to Exhibit 13–3 . Assume that you are a consultant who has been hired by Suncoast Food Centers. Exhibit 13–3: Required: Write a memorandum to the company pr...

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Q: Prepare a table similar to Exhibit 13–3, which focuses

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Q: Maple Leaf Industries, headquartered in Toronto, is a multiproduct company

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Q: Why do some companies use gross book value instead of net book

Why do some companies use gross book value instead of net book value to measure a division’s invested capital?

Q: Global Chemical Company, located in Buenos Aires, Argentina, recently

Global Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity, management is cons...

Q: Global’s special order also requires 1,000 kilograms of genatope,

Global’s special order also requires 1,000 kilograms of genatope, a solid chemical regularly used in the company’s products. The current stock of genatope is 8,000 kilograms at a book value of 12.15 p...

Q: Is the book value of inventory on hand a relevant cost?

Is the book value of inventory on hand a relevant cost? Why?

Q: Explain why the book value of equipment is not a relevant cost

Explain why the book value of equipment is not a relevant cost.

Q: The transactions listed below relate to Rice Inc. You are to

The transactions listed below relate to Rice Inc. You are to assume that on the date on which each of the transactions occurred, the corporation's accounts showed only common stock ($100 par) outstand...

Q: Progresso Corporation, one of your new audit clients, has not

Progresso Corporation, one of your new audit clients, has not reported EPS data in its annual reports to stockholders in the past. The president requested that you furnish information about the report...

Q: George Company purchased land for use as its corporate headquarters. A

George Company purchased land for use as its corporate headquarters. A small factory that was on the land when it was purchased was torn down, and before the new building’s foundation could be constru...

Q: Explain how purchase accounting is implemented in a merger. Does the

Explain how purchase accounting is implemented in a merger. Does the accounting profession now require this method? How is any premium that the acquiring firm paid over the acquired firm’s book value...

Q: The first part of the case, presented in Chapter 6

The first part of the case, presented in Chapter 6, discussed the situation of Computron Industries after an expansion program. A large loss occurred in 2015, rather than the expected profit. As a re...

Q: Define each of the following terms: a. Liquidity ratios:

Define each of the following terms: a. Liquidity ratios: current ratio; quick, or acid test, ratio b. Asset management ratios: inventory turnover ratio; days sales outstanding (DSO); fixed assets turn...

Q: Arnie, Becky, and Clay are equal partners in the ABC

Arnie, Becky, and Clay are equal partners in the ABC General Partnership. The three individuals each have a $120,000 tax basis in their partnership interest. For business reasons, the partnership need...

Q: Porter, Inc., acquired a machine that cost $720,

Porter, Inc., acquired a machine that cost $720,000 on October 1, 2010. The machine is expected to have a four-year useful life and an estimated salvage value of $80,000 at the end of its life. Porter...

Q: Grove Co. acquired a production machine on January 1, 2010

Grove Co. acquired a production machine on January 1, 2010, at a cost of $240,000. The machine is expected to have a four year useful life, with a salvage value of $40,000. The machine is capable of p...

Q: For each of the following items, calculate the cash sources or

For each of the following items, calculate the cash sources or cash uses that should be recognized on the statement of cash flows for Baldin Co. for the year ended December 31, 2010: a. Sales on acco...

Q: For each of the following items, calculate the amount of revenue

For each of the following items, calculate the amount of revenue or expense that should be recognized on the income statement for Pelkey Co. for the year ended December 31, 2010: a. Cash collected fr...

Q: Crow Co. purchased some of the machinery of Hare, Inc

Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $33,600. Crow’s cost of moving and installing the machinery t...

Q: Assume that a company chooses an accelerated method of calculating depreciation expense

Assume that a company chooses an accelerated method of calculating depreciation expense for financial statement reporting purposes for an asset with a five-year life. Required: State the effect (high...

Q: Millco, Inc., acquired a machine that cost $240,

Millco, Inc., acquired a machine that cost $240,000 early in 2010. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $24,000. Required: a. Usi...

Q: Kleener Co. acquired a new delivery truck at the beginning of

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $26,000 and has an estimated useful life of four years and an estimated salvage value of $4,000....

Q: Freedom Co. purchased a new machine on July 2, 2010

Freedom Co. purchased a new machine on July 2, 2010, at a total installed cost of $44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000. Required: a. Calcu...

Q: Indicate the effect that each transaction/event listed here will have

Indicate the effect that each transaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use + for increase, - for decrease, and (NE...

Q: Kimber Co. is in the process of liquidating and going out

Kimber Co. is in the process of liquidating and going out of business. The firm’s accountant has provided the following balance sheet and additional information: It is estimated th...

Q: Why is book value often meaningless? What improvements to financial statements

Why is book value often meaningless? What improvements to financial statements would make it more meaningful?

Q: Explain why the book value of equipment is not a relevant cost

Explain why the book value of equipment is not a relevant cost.

Q: Yankay Specialty Metals Corporation is reviewing an investment proposal. The initial

Yankay Specialty Metals Corporation is reviewing an investment proposal. The initial cost as well as the estimate of the book value of the investment at the end of each year, the net after-tax cash fl...

Q: Instant Dinners, Inc. (IDI), is an established manufacturer

Instant Dinners, Inc. (IDI), is an established manufacturer of microwavable frozen foods. L eland Forrest is a member of the planning and analysis staff. Forrest has been asked by Bill Rolland, chief...

Q: Global Chemical Company, located in Buenos Aires, Argentina, recently

Global Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity, management is cons...

Q: Global’s special order also requires 1,000 kilograms of genatope,

Global’s special order also requires 1,000 kilograms of genatope, a solid chemical regularly used in the company’s products. The current stock of genatope is 8,000 kilograms at a book value of 12.15 p...

Q: Is the book value of inventory on hand a relevant cost?

Is the book value of inventory on hand a relevant cost? Why?

Q: In December of 20x4, Memphis Plastics sold a forklift for $

In December of 20x4, Memphis Plastics sold a forklift for $9,255. The machine was purchased in 20x1 for $50,000. Since then $38,845 in depreciation has been recorded on the forklift. Required: 1. Wha...

Q: JJ Company owns a building. Which of the following statements regarding

JJ Company owns a building. Which of the following statements regarding depreciation as used by accountants is false? a. As depreciation is recorded, stockholders’ equity is reduced. b. Depreciation i...

Q: Daniel Company started operations on January 1 of the current year.

Daniel Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the foll...

Q: Following are terms related to the balance sheet that were discussed in

Following are terms related to the balance sheet that were discussed in Chapters 2 through 5. Match each definition with its related term by entering the appropriate letter in the space provided.

Q: Exquisite Jewelers is developing its annual financial statements for the current year

Exquisite Jewelers is developing its annual financial statements for the current year. The following amounts were correct at December 31, current year: cash, $58,000; accounts receivable, $71,000; mer...

Q: TangoCo is developing its annual financial statements for the current year.

TangoCo is developing its annual financial statements for the current year. The following amounts were correct at December 31, current year: cash, $48,800; investment in stock of PIL Corporation (long...

Q: Klingon Widgets, Inc., purchased new cloaking machinery three years ago

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Q: What is Tobin’s Q for Smolira Golf? What assumptions are you

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Q: Bach Corp. had additions to retained earnings for the year just

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Q: USCo incurred $100,000 in interest expense for the current

USCo incurred $100,000 in interest expense for the current year. The tax book value of USCo’s assets generating foreign-source income is $5 million. The tax book value of USCo’s assets generating U.S....

Q: Create, Inc., produces inventory in its foreign manufacturing plants for

Create, Inc., produces inventory in its foreign manufacturing plants for sale in the United States. Its foreign manufacturing assets have a tax book value of $5 million and a fair market value of $15...

Q: Sea Green Enterprises reports the following assets and liabilities on its balance

Sea Green Enterprises reports the following assets and liabilities on its balance sheet. Sea Green has just lost a product liability suit with damages of $10 million being awarded to the plaintiff. A...

Q: Ray and Carin are partners in an accounting firm. The partners

Ray and Carin are partners in an accounting firm. The partners have entered into an arm’s length agreement requiring Ray to purchase Carin’s partnership interest from Carin’s estate if she dies before...

Q: A machine with a book value of $250,000 has

A machine with a book value of $250,000 has an estimated six-year life. A proposal is offered to sell the old machine for $320,000 and replace it with a new machine at a cost of $390,000. The new mach...

Q: A machine with a book value of $80,000 has

A machine with a book value of $80,000 has an estimated five-year life. A proposal is offered to sell the old machine for $50,500 and replace it with a new machine at a cost of $75,000. The new machin...

Q: Matrix Construction Company is considering selling excess machinery with a book value

Matrix Construction Company is considering selling excess machinery with a book value of $75,000 (original cost of $200,000 less accumulated depreciation of $125,000) for $60,000 less a 5% brokerage c...

Q: A condensed income statement for the Commercial Division of Maxell Manufacturing Inc

A condensed income statement for the Commercial Division of Maxell Manufacturing Inc. for the year ended December 31 is as follows: Assume that the Commercial Division received no charges from servic...

Q: During the year, Blaylock Company sold equipment with a book value

During the year, Blaylock Company sold equipment with a book value of $280,000 for $380,000 (original purchase cost of $480,000). New equipment was purchased. Blaylock provided the following comparati...

Q: The basis of the property received as a dividend by a shareholder

The basis of the property received as a dividend by a shareholder of a corporation is a. The book value at the date of distribution. b. The original cost at the date of purchase. c. The accounting va...

Q: You are in the market for a used car. At a

You are in the market for a used car. At a used car lot, you know that the blue book value for the cars you are looking at is between $20,000 and $24,000. If you believe the dealer knows as much about...

Q: Darwin Company holds assets with a fair value of $120,

Darwin Company holds assets with a fair value of $120,000 and a book value of $90,000 and liabilities with a book value and fair value of $25,000. Required Compute the following amounts if Brad Corp...

Q: Select the most appropriate answer for each of the following questions.

Select the most appropriate answer for each of the following questions. 1. If A Company acquires 80 percent of the stock of B Company on January 1, 20X2, immediately after the acquisition, which of th...

Q: On June 10, 20X8, Game Corporation acquired 60 percent of

On June 10, 20X8, Game Corporation acquired 60 percent of Amber Company’s common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized balance she...

Q: Slim Corporation’s balance sheet at January 1, 20X7, reflected the

Slim Corporation’s balance sheet at January 1, 20X7, reflected the following balances: Ford Corporation entered into an active acquisition program and acquired 80 percent of Slim&a...

Q: Power Company owns 90 percent of Pleasantdale Dairy’s stock. The balance

Power Company owns 90 percent of Pleasantdale Dairy’s stock. The balance sheets of the two companies immediately after the Pleasantdale acquisition showed the following amounts: Th...

Q: Canton Corporation is a majority-owned subsidiary of West Corporation.

Canton Corporation is a majority-owned subsidiary of West Corporation. West acquired 75 percent ownership on January 1, 20X3, for $133,500. At that date, Canton reported common stock outstanding of $6...

Q: Major Corporation acquired 90 percent of Lancaster Company’s voting common stock on

Major Corporation acquired 90 percent of Lancaster Company’s voting common stock on January 1, 20X1, for $486,000. At the time of the combination, Lancaster reported common stock outstanding of $120,0...

Q: Knox Corporation purchased 60 percent of Conway Company ownership on January 1

Knox Corporation purchased 60 percent of Conway Company ownership on January 1, 20X7, for $277,500. Conway reported the following net income and dividend payments: On January 1, 20X7, Conway had $25...

Q: Proud Corporation acquired 80 percent of Stergis Company’s voting stock on January

Proud Corporation acquired 80 percent of Stergis Company’s voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 pe...

Q: This exercise is a continuation of E5-13. Proud Corporation

This exercise is a continuation of E5-13. Proud Corporation acquired 80 percent of Stergis C ompany’s voting stock on January 1, 20X3, at underlying book value. The fair value of the...

Q: Broadmore Corporation acquired 75 percent of Stem Corporation’s common stock on January

Broadmore Corporation acquired 75 percent of Stem Corporation’s common stock on January 1, 20X8, for $435,000. At that date, Stem reported common stock outstanding of $300,000 and re...

Q: Palmer Corporation acquired 70 percent of Krown Corporation’s ownership on January 1

Palmer Corporation acquired 70 percent of Krown Corporation’s ownership on January 1, 20X8, for $140,000. At that date, Krown reported capital stock outstanding of $120,000 and retained earnings of $8...

Q: Select the correct answer for each of the following questions. 1

Select the correct answer for each of the following questions. 1. On July 1, 20X3, Barker Company purchased 20 percent of Acme Company’s outstanding common stock for $400,000 when th...

Q: Ball Corporation purchased 30 percent of Krown Company’s common stock on January

Ball Corporation purchased 30 percent of Krown Company’s common stock on January 1, 20X5, by issuing preferred stock with a par value of $50,000 and a market price of $120,000. The f...

Q: Essex Company issued common shares with a par value of $50

Essex Company issued common shares with a par value of $50,000 and a market value of $165,000 in exchange for 30 percent ownership of Tolliver Corporation on January 1, 20X2. Tolliver reported the fol...

Q: On January 1, 20X0, Hunter Corporation issued 6,000

On January 1, 20X0, Hunter Corporation issued 6,000 of its $10 par value shares to acquire 45 percent of the shares of Arrow Manufacturing. Arrow Manufacturing’s balance sheet immedi...

Q: Ennis Corporation acquired 35 percent of Jackson Corporation’s stock on January 1

Ennis Corporation acquired 35 percent of Jackson Corporation’s stock on January 1, 20X8, by issuing 25,000 shares of its $2 par value common stock. Jackson Corporationâ€&#...

Q: Balance sheet, income, and dividend data for Amber Corporation,

Balance sheet, income, and dividend data for Amber Corporation, Blair Corporation, and Carmen Corporation at January 1, 20X3, were as follows: On January 1, 20X3, Amber Corporation purchased 40 perc...

Q: Hill Company paid $164,000 to acquire 40 percent ownership

Hill Company paid $164,000 to acquire 40 percent ownership of Dale Company on January 1, 20X2. Net book value of Dale’s assets on that date was $300,000. Book values and fair values...

Q: On January 2, 20X8, Total Corporation acquired 75 percent of

On January 2, 20X8, Total Corporation acquired 75 percent of Ticken Tie Company’s outstanding common stock. In exchange for Ticken Tie’s stock, Total issued bonds p...

Q: Quill Corporation acquired 70 percent of North Company’s stock on January 1

Quill Corporation acquired 70 percent of North Company’s stock on January 1, 20X9, for $105,000. At that date, the fair value of the noncontrolling interest was equal to 30 percent o...

Q: Power Corporation acquired 75 percent of Best Company’s ownership on January 1

Power Corporation acquired 75 percent of Best Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book v...

Q: This problem is a continuation of P5-33. Power Corporation

This problem is a continuation of P5-33. Power Corporation acquired 75 percent of Best Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncon...

Q: Mortar Corporation acquired 80 percent ownership of Granite Company on January 1

Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for th...

Q: This problem is a continuation of P5-35. Mortar Corporation

This problem is a continuation of P5-35. Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling intere...

Q: Amber Corporation acquired 60 percent ownership of Sparta Company on January 1

Amber Corporation acquired 60 percent ownership of Sparta Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of t...

Q: Amber Corporation acquired 60 percent ownership of Sparta Company on January 1

Amber Corporation acquired 60 percent ownership of Sparta Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of t...

Q: Clean Air Products owns 80 percent of the stock of Superior

Clean Air Products owns 80 percent of the stock of Superior Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest...

Q: Ajax Corporation purchased at book value 70 percent of Beta Corporation’s ownership

Ajax Corporation purchased at book value 70 percent of Beta Corporation’s ownership and 90 percent of Cole Corporation’s ownership in 20X5. At the dates the ownersh...

Q: Crow Corporation purchased 70 percent of West Company’s voting common stock on

Crow Corporation purchased 70 percent of West Company’s voting common stock on January 1, 20X5, for $291,200. On that date, the noncontrolling interest had a fair value of $124,800 a...

Q: Pine Corporation acquired 70 percent of Bock Company’s voting common shares on

Pine Corporation acquired 70 percent of Bock Company’s voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 an...

Q: The December 31, 20X6, condensed balance sheets of Pine Corporation

The December 31, 20X6, condensed balance sheets of Pine Corporation and its 90 percent–owned subsidiary, Slim Corporation, are presented in the accompanying worksheet. Additional...

Q: Fran Corporation acquired all outstanding $10 par value voting common stock

Fran Corporation acquired all outstanding $10 par value voting common stock of Brey Inc. on January 1, 20X9, in exchange for 25,000 shares of its $20 par value voting common stock. On December 31, 20X...

Q: Bold Corporation acquired 75 percent of Toll Corporation’s voting common stock on

Bold Corporation acquired 75 percent of Toll Corporation’s voting common stock on January 1, 20X4, for $348,000, when the fair value of its net identifiable assets was $464,000 and the fair value of t...

Q: In its 20X7 consolidated income statement, Bower Development Company reported

In its 20X7 consolidated income statement, Bower Development Company reported consolidated net income of $961,000 and $39,000 of income assigned to the 30 percent noncontrolling interest in its only...

Q: Lofton Company owns 60 percent of Temple Corporation’s voting shares, purchased

Lofton Company owns 60 percent of Temple Corporation’s voting shares, purchased on May 17, 20X1, at book value. At that date, the fair value of the noncontrolling interest was equal...

Q: Topp Corporation acquired 70 percent of Morris Company’s voting common stock on

Topp Corporation acquired 70 percent of Morris Company’s voting common stock on January 1, 20X3, for $158,900. Morris reported common stock outstanding of $100,000 and retained earni...

Q: Pastel Corporation acquired a controlling interest in Somber Corporation in 20X5 for

Pastel Corporation acquired a controlling interest in Somber Corporation in 20X5 for an amount equal to its underlying book value. At the date of acquisition, the fair value of the noncontrolling inte...

Q: Verry Corporation owns 75 percent of Spawn Corporation’s voting common stock.

Verry Corporation owns 75 percent of Spawn Corporation’s voting common stock. Verry reported income from its separate operations of $90,000 and $110,000 in 20X4 and 20X5, respectively. Spawn reported...

Q: Grand Delivery Service acquired at book value 80 percent of the voting

Grand Delivery Service acquired at book value 80 percent of the voting shares of Acme Real Estate Company. On that date, the fair value of the noncontrolling interest was equal to 20 percent of Acme’s...

Q: Newtime Products purchased 65 percent of TV Sales Company’s stock at underlying

Newtime Products purchased 65 percent of TV Sales Company’s stock at underlying book value on January 1, 20X3. At that date, the fair value of the noncontrolling interest was equal to 35 percent of th...

Q: Turner Company purchased 70 percent of Split Company’s stock approximately 20 years

Turner Company purchased 70 percent of Split Company’s stock approximately 20 years ago. On December 31, 20X8, Turner purchased a building from Split for $300,000. Split had purchased the building on...

Q: The Schrödinger Science Store operates a retail store in a local shopping

The Schrödinger Science Store operates a retail store in a local shopping mall. The results of operations for the fourth quarter of 2017 are as follows: Sales………………………………………………………………………………. $350,000...

Q: The World Restaurant is situated in a local shopping center and serves

The World Restaurant is situated in a local shopping center and serves food of many different cultures. It also caters private functions for companies. The results of operations for the fourth quarter...

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During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the company’s accounting records: From the Income Statement Depreciation expense …...

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An analysis of Courtney Corporation’s operational asset accounts provided the following information: a. Acquired a large machine that cost $36,000. Courtney paid for it by giving a $15,000, 12 percent...

Q: Assume that you are a financial analyst for a large investment banking

Assume that you are a financial analyst for a large investment banking firm. You are responsible for analyzing companies in the retail sales industry. You have just learned that a large West Coast ret...

Q: Indicate with an X whether each of the following would appear on

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Q: Sally Omar is the manager of the office products division of Wallace

Sally Omar is the manager of the office products division of Wallace Enterprises. In this position, her annual bonus is based on an appraisal of return on investment (ROI) measured as Division income...

Q: Kingsley Products, Ltd., is using a model 400 shaping machine

Kingsley Products, Ltd., is using a model 400 shaping machine to make one of its products. The company is expecting to have a large increase in demand for the product and is anxious to expand its prod...

Q: Comparative financial statements for Weller Corporation for the fiscal year ending December

Comparative financial statements for Weller Corporation for the fiscal year ending December 31 appear below. The company did not issue any new common or preferred stock during the year. A total of 800...

Q: The financial statements for Castile Products, Inc., are given below

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash .......................................................

Q: Refer to the financial statements and other data in Problem 14–

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Q: You have just been hired as a loan officer at Slippery Rock

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Q: In the right-hand column below, certain financial ratios are

In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company (each transactio...

Q: Venice InLine, Inc., was founded by Russ Perez to produce

Venice InLine, Inc., was founded by Russ Perez to produce a specialized in-line skate he had designed for doing aerial tricks. Up to this point, Russ has financed the company with his own savings and...

Q: The questions in this exercise are based on Target Corporation. To

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Q: Bilboa Freightlines, S.A., of Panama, has a

Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembl...

Q: The questions listed below are independent of one another. Instructions

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Q: The financial statements of Apple Inc. are presented in Appendix A

The financial statements of Apple Inc. are presented in Appendix A. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also...

Q: a. PK Photography reported net income of $100,000

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Q: The following information is available for Stamos Corporation for the year ended

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Q: The comparative balance sheets for Spicer Company as of December 31 are

The comparative balance sheets for Spicer Company as of December 31 are presented below. Additional information: 1. Operating expenses include depreciation expense of $42,000. 2. Land was sold for ca...

Q: Alysha Monet has prepared the following list of statements about depreciation.

Alysha Monet has prepared the following list of statements about depreciation. 1. Depreciation is a process of asset valuation, not cost allocation. 2. Depreciation provides for the proper matching of...

Q: The following situations are independent of one another. 1.

The following situations are independent of one another. 1. An accounting student recently employed by a small company doesn’t understand why the company is only depreciating its buildings and equipme...

Q: Musical Corporation acquires 80 percent of Dustin Corporation’s common shares on January

Musical Corporation acquires 80 percent of Dustin Corporation’s common shares on January 1, 20X2. On January 2, 20X2, Dustin acquires 60 percent of Rustic Corporationâ€
...

Q: A subsidiary sells additional shares of its common stock to a nonaffiliate

A subsidiary sells additional shares of its common stock to a nonaffiliate at a price that is higher than the previous book value per share. How does the sale benefit the existing shareholders?

Q: Book Corporation purchased 90,000 shares of Lance Company at underlying

Book Corporation purchased 90,000 shares of Lance Company at underlying book value of $3 per share on June 30, 20X1. On January 1, 20X5, Lance reported its net book value as $400,000 and continued to...

Q: Hardcore Mining Company acquired 88 percent of the common stock of Mountain

Hardcore Mining Company acquired 88 percent of the common stock of Mountain Trucking Company on January 1, 20X2, at a cost of $30 per share. On December 31, 20X7, when the book value of Mountain Truck...

Q: Blatant Advertising Corporation acquired 60 percent of Quinn Manufacturing Company’s shares on

Blatant Advertising Corporation acquired 60 percent of Quinn Manufacturing Company’s shares on December 31, 20X1, at underlying book value of $180,000. At that date, the fair value o...

Q: Assume the same facts as in E8-15 except for the

Assume the same facts as in E8-15 except for the changes in the trial balances, but prepare entries using straight-line amortization of bond discount or premium. Required: Record the journal e...

Q: Mega Corporation purchased 90 percent of Tarp Company’s voting common shares on

Mega Corporation purchased 90 percent of Tarp Company’s voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest...

Q: Browne Corporation purchased 11,000 shares of Schroeder Corporation on January

Browne Corporation purchased 11,000 shares of Schroeder Corporation on January 1, 20X3, at book value. At that date, the fair value of the noncontrolling interest was equal to 26.6 percent of Schroede...

Q: On January 1, 20X1, Fern Corporation paid Morton Advertising $

On January 1, 20X1, Fern Corporation paid Morton Advertising $116,200 to acquire 70 percent of Vincent Company’s stock. Fern also paid $45,000 to acquire $50,000 par value 8 percent,...

Q: On January 1, 20X1, Fern Corporation paid Morton Advertising $

On January 1, 20X1, Fern Corporation paid Morton Advertising $116,200 to acquire 70 percent of Vincent Company’s stock. Fern also paid $45,000 to acquire $50,000 par value 8 percent,...

Q: Lake Company reported the following summarized balance sheet data as of December

Lake Company reported the following summarized balance sheet data as of December 31, 20X2: Lake issues 4,000 additional shares of its $10 par value stock to its shareholders as a stock div...

Q: Brown Company owns 90 percent of the common stock and 60 percent

Brown Company owns 90 percent of the common stock and 60 percent of the preferred stock of White Corporation, both acquired at underlying book value on January 1, 20X1. At that date, the fair value of...

Q: On January 1, 20X2, Fischer Corporation purchased 90 percent of

On January 1, 20X2, Fischer Corporation purchased 90 percent of Culbertson Company common shares and 60 percent of its preferred shares at underlying book value. At that date, the fair value of the no...

Q: Tyler Manufacturing purchased 60 percent of the ownership of Brown Corporation stock

Tyler Manufacturing purchased 60 percent of the ownership of Brown Corporation stock on J anuary 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equa...

Q: Tyler Manufacturing purchased 60 percent of the ownership of Brown Corporation stock

Tyler Manufacturing purchased 60 percent of the ownership of Brown Corporation stock on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal...

Q: Bennett Corporation owns 60 percent of the stock of Stone Container Company

Bennett Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book value in 20X1. At that date, the fair value of the noncontrolling interest was equal to 40 percen...

Q: Bennett Corporation owns 60 percent of the stock of Stone Container Company

Bennett Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book value in 20X1. At that date, the fair value of the noncontrolling interest was equal to 40 percen...

Q: Lance Corporation purchased 75 percent of Avery Company’s common stock at underlying

Lance Corporation purchased 75 percent of Avery Company’s common stock at underlying book value on January 1, 20X3. At that date, the fair value of the noncontrolling interest was eq...

Q: Lance Corporation purchased 75 percent of Avery Company’s common stock at underlying

Lance Corporation purchased 75 percent of Avery Company’s common stock at underlying book value on January 1, 20X3. At that date, the fair value of the noncontrolling interest was eq...

Q: Panther Enterprises owns 80 percent of Grange Corporation’s voting stock. Panther

Panther Enterprises owns 80 percent of Grange Corporation’s voting stock. Panther acquired the shares on January 1, 20X4, for $234,500. On that date, the fair value of the noncontrol...

Q: First Boston Corporation acquired 80 percent of Gulfside Corporation common stock on

First Boston Corporation acquired 80 percent of Gulfside Corporation common stock on J anuary 1, 20X5. Gulfside holds 60 percent of the voting shares of Paddock Company, and Paddock owns 10 percent of...

Q: Stacey Corporation owns 80 percent of the common shares and 70 percent

Stacey Corporation owns 80 percent of the common shares and 70 percent of the preferred shares of Upland Company, all purchased at underlying book value on January 1, 20X2. At that date, the fair valu...

Q: The trial balance data presented in P8–24 can be converted

The trial balance data presented in P8–24 can be converted to reflect use of the cost method by inserting the following amounts in place of those presented for Bennett Corporation: St...

Q: Emerald Corporation acquired 10,500 shares of the common stock and

Emerald Corporation acquired 10,500 shares of the common stock and 800 shares of the 8 percent preferred stock of Pert Company on December 31, 20X4, at the book value of the underlying stock interests...

Q: Presley Pools Inc. acquired 60 percent of the common stock of

Presley Pools Inc. acquired 60 percent of the common stock of Jacobs Jacuzzi Company on December 31, 20X6, for $1,800,000. At that date, the fair value of the noncontrolling interest was $1,200,000. T...

Q: Apex Corporation acquired 75 percent of Beta Company’s common stock on May

Apex Corporation acquired 75 percent of Beta Company’s common stock on May 15, 20X3, at underlying book value. Beta’s balance sheet on December 31, 20X6, contained...

Q: Penn Corporation purchased 80 percent ownership of ENC Company on January 1

Penn Corporation purchased 80 percent ownership of ENC Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the...

Q: Craft Corporation held 80 percent of Delta Corporation’s outstanding common shares on

Craft Corporation held 80 percent of Delta Corporation’s outstanding common shares on December 31, 20X2, which it had acquired at underlying book value. When the shares were acquired...

Q: Block Corporation was created on January 1, 20X0, to develop

Block Corporation was created on January 1, 20X0, to develop computer software. On January 1, 20X5, Foster Company acquired 90 percent of Block’s common stock at its underlying book...

Q: Great Company acquired 80 percent of Meager Corporation’s common stock on January

Great Company acquired 80 percent of Meager Corporation’s common stock on January 1, 20X4, for $280,000. The fair value of the noncontrolling interest was $70,000 at the date of acquisition. Great’s c...

Q: Mist Company acquired 65 percent of Blank Corporation’s voting common stock on

Mist Company acquired 65 percent of Blank Corporation’s voting common stock on June 20, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest wa...

Q: The summarized balance sheet of Separate Company on January 1, 20X3

The summarized balance sheet of Separate Company on January 1, 20X3, contained the following amounts: On January 1, 20X3, Joint Corporation acquired 70 percent of the common shares and 60...

Q: On January 1 of this year, Thomas Insurance Corporation issued bonds

On January 1 of this year, Thomas Insurance Corporation issued bonds with a face value of $4,000,000 and a coupon rate of 9 percent. The bonds mature in five years and pay interest annually every Dece...

Q: The notes to a recent annual report from Weebok Corporation indicated that

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Q: Starn Tool Company has five different intangible assets to be accounted for

Starn Tool Company has five different intangible assets to be accounted for and reported on the financial statements. The management is concerned about the amortization of the cost of each of these in...

Q: Rungano Corporation is a global publisher of magazines, books, and

Rungano Corporation is a global publisher of magazines, books, and music and video collections and is a leading direct mail marketer. Many direct mail marketers use high-speed Didde press equipment to...

Q: On January 1 of this year, Nowell Company issued bonds with

On January 1 of this year, Nowell Company issued bonds with a face value of $100,000 and a coupon rate of 8 percent. The bonds mature in five years and pay interest semiannually every June 30 and Dece...

Q: PowerTap Utilities is planning to issue bonds with a face value of

PowerTap Utilities is planning to issue bonds with a face value of $1,000,000 and a coupon rate of 10 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31....

Q: Cron Corporation is planning to issue bonds with a face value of

Cron Corporation is planning to issue bonds with a face value of $700,000 and a coupon rate of 13 percent. The bonds mature in five years and pay interest semiannually every June 30 and December 31. A...

Q: Pool Corporation, Inc., is the world’s largest wholesale distributor of

Pool Corporation, Inc., is the world’s largest wholesale distributor of swimming pool supplies and equipment. It is a publicly traded corporation that trades on the NASDAQ exchange. The majority of Po...

Q: Miga Company and Porter Company both bought a new delivery truck on

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Q: Under what method(s) of depreciation is an asset’s net

Under what method(s) of depreciation is an asset’s net book value the depreciable base (the amount to be depreciated)? a. Straight-line method b. Declining-balance method c. Units-of-production meth...

Q: When using the effective-interest method of amortization, the book

When using the effective-interest method of amortization, the book value of a bond changes by what amount on each interest payment date? a. Interest expense b. Cash interest payment c. The difference...

Q: What is the book value of a bond?

What is the book value of a bond?

Q: A recent annual report for AMERCO, the holding company for U

A recent annual report for AMERCO, the holding company for U-Haul International, Inc., included the following note: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3. Accounting Policies Property, Pla...

Q: Carey Corporation has five different intangible assets to be accounted for and

Carey Corporation has five different intangible assets to be accounted for and reported on the financial statements. The management is concerned about the amortization of the cost of each of these int...

Q: On January 1 of this year, Trucks R Us Corporation issued

On January 1 of this year, Trucks R Us Corporation issued bonds with a face value of $2,000,000 and a coupon rate of 10 percent. The bonds mature in five years and pay interest semiannually every June...

Q: On January 1 of this year, Avaya Corporation issued bonds with

On January 1 of this year, Avaya Corporation issued bonds with a face value of $2,000,000 and a coupon rate of 6 percent. The bonds mature in five years and pay interest annually on December 31. When...

Q: Shahia Company bought a building for $82,000 cash and

Shahia Company bought a building for $82,000 cash and the land on which it was located for $107,000 cash. The company paid transfer costs of $9,000 ($3,000 for the building and $6,000 for the land). R...

Q: During Year 1, Ashkar Company ordered a machine on January 1

During Year 1, Ashkar Company ordered a machine on January 1 at an invoice price of $21,000. On the date of delivery, January 2, the company paid $6,000 on the machine, with the balance on creditat 10...

Q: Steve’s Outdoor Company purchased a new delivery van on January 1 for

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Q: Strong Metals Inc. purchased a new stamping machine at the beginning

Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years a...

Q: At the beginning of the year, Palermo Brothers, Inc.,

At the beginning of the year, Palermo Brothers, Inc., purchased a new plastic water bottle making machine at a cost of $45,000. The estimated residual value was $5,000. Assume that the estimated usefu...

Q: Schrade Company bought a machine for $96,000 cash.

Schrade Company bought a machine for $96,000 cash. The estimated useful life was four years and the estimated residual value was $6,000. Assume that the estimated useful life in productive units is 12...

Q: Freeport-McMoRan Copper & Gold Inc., headquartered in Phoenix,

Freeport-McMoRan Copper & Gold Inc., headquartered in Phoenix, Arizona, is “a premier U.S.- based natural resource company with an industry leading global portfolio of mineral assets, significant oil...

Q: Calculate the book value of a three-year-old machine

Calculate the book value of a three-year-old machine that has a cost of $55,000, an estimated residual value of $5,000, and an estimated useful life of five years. The company uses double-declining-ba...

Q: Calculate the book value of a three-year-old machine

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Q: A recent annual report for FedEx included the following note:

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Q: You are a financial analyst for Ford Motor Company and have been

You are a financial analyst for Ford Motor Company and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a...

Q: Several years ago, Nicole Company issued bonds with a face value

Several years ago, Nicole Company issued bonds with a face value of $1,000,000 for $945,000. As a result of declining interest rates, the company has decided to call the bond at a call premium of 5 pe...

Q: Several years ago, Nicole Company issued bonds with a face value

Several years ago, Nicole Company issued bonds with a face value of $1,000,000 for $945,000. As a result of declining interest rates, the company has decided to call the bond at a call premium of 5 pe...

Q: Calculate the book value of a three-year-old machine

Calculate the book value of a three-year-old machine that has a cost of $31,000, an estimated residual value of $1,000, and an estimated useful life of five years. The company uses straight-line depre...

Q: Several years ago, Cyclop Company issued bonds with a face value

Several years ago, Cyclop Company issued bonds with a face value of $1,000,000 for $1,045,000. As a result of declining interest rates, the company has decided to call the bonds at a call premium of 5...

Q: Several years ago, Cyclop Company issued bonds with a face value

Several years ago, Cyclop Company issued bonds with a face value of $1,000,000 for $1,045,000. As a result of declining interest rates, the company has decided to call the bonds at a call premium of 5...

Q: DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses

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What weights should be used when you calculate the WACC? Discuss the choice between book value and market value weights, and the role of the “target” capital structure for a firm whose actual capital...

Q: Should firms focus on book value or market value capital structures?

Should firms focus on book value or market value capital structures? How would the calculated WACC be affected by the use of book weights rather than market weights?

Q: The Gilbert Instrument Corporation is considering replacing the wood steamer it currently

The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have deprecia...

Q: Suppose the Schoof Company has this book value balance sheet:

Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are no...

Q: Presented below and on the next page is the balance sheet of

Presented below and on the next page is the balance sheet of Kishwaukee Corporation as of December 31, 2012. KISHWAUKEE CORPORATION BALANCE SHEET DECEMBER 31, 2012 Assets Goodwill (Note 2) …………………………...

Q: Carol Keene, corporate comptroller for Dumaine Industries, is trying to

Carol Keene, corporate comptroller for Dumaine Industries, is trying to decide how to present “Property, plant, and equipment” in the balance sheet. She realizes that the statement of cash flows will...

Q: Indicate where the following items would ordinarily appear on the financial statements

Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2012. (a) The service life of certain equipment was changed from 8 to 5 years. If a...

Q: In early January 2011, Reymont Corporation applied for a trade name

In early January 2011, Reymont Corporation applied for a trade name, incurring legal costs of $18,000. In January 2012, Reymont incurred $7,800 of legal fees in a successful defense of its trade name....

Q: Devon Harris Company has provided information on intangible assets as follows.

Devon Harris Company has provided information on intangible assets as follows. A patent was purchased from Bradtke Company for $2,500,000 on January 1, 2011. Harris estimated the remaining useful life...

Q: Hasselback Company acquired a plant asset at the beginning of Year 1

Hasselback Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three dif...

Q: Chopin Engineering Corporation purchased conveyor equipment with a list price of $

Chopin Engineering Corporation purchased conveyor equipment with a list price of $15,000. Presented below are three independent cases related to the equipment. (Round to nearest dollar.) (a) Chopin pa...

Q: Logan Industries purchased the following assets and constructed a building as well

Logan Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2 These assets were purchased as a lump sum for $104,000 ca...

Q: McArthur Inc. has negotiated the purchase of a new piece of

McArthur Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $7,000 plus trade-in, f.o.b. factory. McArthur Inc. paid $7,000 cash and traded in used equipment. The use...

Q: Accardo Resources Group has been in its plant facility for 15 years

Accardo Resources Group has been in its plant facility for 15 years. Although the plant is quite functional, numerous repair costs are incurred to maintain it in sound working order. The company’s pla...

Q: On December 31, 2012, Chrysler Inc. has a machine

On December 31, 2012, Chrysler Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows. Machine ……………………………………….. $1,300,00...

Q: During the current year, Marshall Construction trades an old crane that

During the current year, Marshall Construction trades an old crane that has a book value of $90,000 (original cost $140,000 less accumulated depreciation $50,000) for a new crane from Brigham Manufact...

Q: Klamath Company, a manufacturer of ballet shoes, is experiencing a

Klamath Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an effort to expand its production capacity to meet the increased demand for its product, the company...

Q: Montana Matt’s Golf Inc. was formed on July 1, 2011

Montana Matt’s Golf Inc. was formed on July 1, 2011, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to i...

Q: Conan O’Brien Logging and Lumber Company owns 3,000 acres of

Conan O’Brien Logging and Lumber Company owns 3,000 acres of timberland on the north side of Mount Leno, which was purchased in 2000 at a cost of $550 per acre. In 2012, O’Brien began selectively logg...

Q: As a new intern for the local branch office of a national

As a new intern for the local branch office of a national brokerage firm, you are excited to get an assignment that allows you to use your accounting expertise. Your supervisor provides you the spread...

Q: Electroboy Enterprises, Inc. operates several stores throughout the western United

Electroboy Enterprises, Inc. operates several stores throughout the western United States. As part of an operational and financial reporting review in a response to a downturn in its markets, the comp...

Q: The following information pertains to the January 2, year 2 transaction

The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc. Net book value – old print machine…………. $20,000 Total cost of new...

Q: If ROI is used to evaluate a manager’s performance for a relatively

If ROI is used to evaluate a manager’s performance for a relatively new division, which of the following measures for assets (or investment) will increase ROI? a. Gross book value used instead of net...

Q: On January 3, 2011, Martin Company purchased for $500

On January 3, 2011, Martin Company purchased for $500,000 cash a 10% interest in Renner Corp. On that date, the net assets of Renner had a book value of $3,700,000. The excess of cost over the underly...

Q: The balance sheet data of Wyeth Company at the end of 2012

The balance sheet data of Wyeth Company at the end of 2012 and 2011 are shown on page 1488. Land was acquired for $30,000 in exchange for common stock, par $30,000, during the year; all equipment pu...

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On January 1, 2012, Sandburg Co. purchased 25,000 shares (a 10% interest) in Yevette Corp. for $1,400,000. At the time, the book value and the fair value of Yevette’s net identifiabl...

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Presented in Illustration 21-31 are the financial statement disclosures from the 2009 annual report of Tasty Baking Company. Instructions Answer the following questions related to these disclosures....

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The management of Pittsburgh Pipe is evaluating a proposal to buy a new turning lathe as a replacement for a less efficient piece of similar equipment that would then be sold. The new latheâ...

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Pete’s Paving provides custom paving of sidewalks and driveways. One of the most labor-intensive aspects of the paving operation is preparing and mixing materials. Sharon Guillon, corporate engineer,...

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Janet Cosgrove is the manager of Saratoga Sporting Goods, a division of Global Sports. Cosgrove’s division sells a variety of sporting goods and supplies to wholesalers and retail chains throughout th...

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You have been hired to assist the management of Great Bend Office Systems in resolving certain issues. The company has its home office in Montana and leases facilities in Montana, Idaho, and North Dak...

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Arizona Mechanical recently created a new product, a computer-controlled, laser-precise lathe, and Ohio Ornamental Metals is considering purchasing one. Ohio’s CFO received the following information f...

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Three years ago, Girston Gravel Pit purchased a material conveyor system. The company has decided to sell the system and acquire more advanced technology. Data relating to the existing system follow....

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Determine the effect on the current ratio, the quick ratio, net working capital (current assets less current liabilities), and the debt ratio (total liabilities to total assets) of each of the followi...

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Un Company sold office equipment with a cost of $23,000 and accumulated depreciation of $12,000 for $14,000. Required: a. What is the book value of the asset at the time of sale? b. What is the amoun...

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Bill’s Wrecker Service has just completed a minor repair on a tow truck. The repair cost was $1,550, and the book value prior to the repair was $6,500. In addition, the company spent $12,000 to replac...

Q: Sellers Construction Company purchased a compressor for $28,000 cash

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Q: At the beginning of 2018, Copeland Drugstore purchased a new computer

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Repeat the cost of capital calculations in Figure 12.8, assuming market value weights instead of book value weights.

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Q: (Note that this is the same problem as Problem 5-

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Q: (Note that this is the same problem as Problem 5-

(Note that this is the same problem as Problem 5-4 and Problem 5-11, but assuming the use of the complete equity method.) On January 1, 2013, Porter Company purchased an 80% interest in the capital st...

Q: On January 1, 2014, Palmer Company acquired a 90%

On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity...

Q: The Mcquire Company is considering acquiring 100% of the Sosa Company

The Mcquire Company is considering acquiring 100% of the Sosa Company. The management of Mcquire fears that the acquisition price may be too high. Condensed financial statements for Sosa Company for t...

Q: On January 1, 2014, Paxton Company purchased a 70%

On January 1, 2014, Paxton Company purchased a 70% interest in Sagon Company for $1,300,000, at which time Sagon Company had retained earnings of $500,000 and capital stock of $1,000,000. On January 1...

Q: Perke Corporation purchased 80% of the stock of Superstition Company for

Perke Corporation purchased 80% of the stock of Superstition Company for $1,970,000 on January 1, 2015. On this date, the fair value of the assets and liabilities of Superstition Company was equal to...

Q: On January 1, 2013, Porter Company purchased an 80%

On January 1, 2013, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,...

Q: On January 1, 2014, Palmer Company acquired a 90%

On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity...

Q: Pillow Company purchased 90% of the common stock of Satin Company

Pillow Company purchased 90% of the common stock of Satin Company on May 1, 2011, for a cash payment of $474,000. December 31, 2011, trial balances for Pillow and Satin were: Satin Company declared...

Q: On January 1, 2014, Perini Company purchased an 85%

On January 1, 2014, Perini Company purchased an 85% interest in Silvas Company for $400,000. On this date, Silvas Company had common stock of $90,000 and retained earnings of $210,000. An examination...

Q: On January 1, 2014, Pueblo Corporation purchased a 75%

On January 1, 2014, Pueblo Corporation purchased a 75% interest in Sanchez Company for $900,000. A summary of Sanchez Company’s balance sheet at date of purchase follows: The equip...

Q: Patten Corporation acquired an 85% interest in Savage Company for $

Patten Corporation acquired an 85% interest in Savage Company for $3,100,000 on January 1, 2014. On this date, the balances in Savage Company’s capital stock and retained earnings ac...

Q: On January 1, 2014, Pump Company acquired all the outstanding

On January 1, 2014, Pump Company acquired all the outstanding common stock of Sound Company for $556,000 in cash. Financial data relating to Sound Company on January 1, 2014, are presented here: Sou...

Q: Give several reasons why a parent company would be willing to pay

Give several reasons why a parent company would be willing to pay more than book value for subsidiary stock acquired.

Q: On April 1, Year 1, Company P purchased 85%

On April 1, Year 1, Company P purchased 85% of S Company for total consideration of $357,000, which included $30,000 of contingent consideration as measured according to GAAP at fair value. Each compa...

Q: On April 1, Year 1, Company P purchased 85%

On April 1, Year 1, Company P purchased 85% of S Company for total consideration of $357,000, which included $30,000 of contingent consideration as measured according to GAAP at fair value. Each compa...

Q: Distinguish among the following concepts: (a) Difference between

Distinguish among the following concepts: (a) Difference between book value and the value implied by the purchase price. (b) Excess of implied value over fair value. (c) Excess of fair value over impl...

Q: In what account is the difference between book value and the value

In what account is the difference between book value and the value implied by the purchase price recorded on the books of the investor? In what account is the “excess of implied over fair value” recor...

Q: How do you determine the amount of “the difference between book

How do you determine the amount of “the difference between book value and the value implied by the purchase price” to be allocated to a specific asset of a less than wholly owned subsidiary?

Q: P Company acquired a 100% interest in S Company. On

P Company acquired a 100% interest in S Company. On the date of acquisition, the fair value of the assets and liabilities of S Company was equal to their book value except for land that had a fair val...

Q: What is the effect on the noncontrolling share of consolidated income that

What is the effect on the noncontrolling share of consolidated income that results from the recording in the consolidated statements workpaper of differences between book value and the value implied b...

Q: Is the recognition of a deferred tax asset or deferred tax

Is the recognition of a deferred tax asset or deferred tax liability when allocating the difference between book value and the value implied by the purchase price affected by whether or not the affili...

Q: Pequity Company purchased 85% of the common stock of Sequity Company

Pequity Company purchased 85% of the common stock of Sequity Company on April 1, Year 1. The fair value of the consideration transferred consisted of a cash payment of $545,000 and contingent consider...

Q: Parry Corporation acquired a 100% interest in Sent Company on January

Parry Corporation acquired a 100% interest in Sent Company on January 1, 2011, paying $140,000. Financial statement data for the two companies for the year ended December 31, 2011 follow: Required:...

Q: Perkins Company acquired 100% of Schultz Company on January 1,

Perkins Company acquired 100% of Schultz Company on January 1, 2012, for $161,500. On December 31, 2012, the companies prepared the following trial balances: Required: A. What method is being used b...

Q: Place Company purchased 92% of the common stock of Shaw,

Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2012, for $400,000. Trial balances at the end of 2012 for the companies were: Inventory balances on December 31, 2012, wer...

Q: On January 1, 2012, Perez Company purchased 90% of

On January 1, 2012, Perez Company purchased 90% of the capital stock of Sanchez Company for $85,000. Sanchez Company had capital stock of $70,000 and retained earnings of $12,000 at that time. On Dece...

Q: On January 1, 2011, Plank Company purchased 80% of

On January 1, 2011, Plank Company purchased 80% of the outstanding capital stock of Scoba Company for $53,000. At that time, Scoba’s stockholders’ equity consisted...

Q: In the following table, General Electric’s Balance Sheet from its 2005

In the following table, General Electric’s Balance Sheet from its 2005 annual report is shown. There are six columns of numbers. In the first two columns, GE’s cons...

Q: On February 23, 2005, eBay acquired Viva Group, Inc

On February 23, 2005, eBay acquired Viva Group, Inc., which does business under the name Rent.com, for a cash purchase price of approximately $435.365 million including net cash and investments of app...

Q: A 90% interest in Saxton Corporation was purchased by Palm Incorporated

A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained ear...

Q: On January 1, 2015, Payne Corporation purchased a 75%

On January 1, 2015, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Company’s balance sheet on that date revealed the following: The...

Q: Pace Company purchased 20,000 of the 25,000 shares

Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $525,000. On January 3, 2014, the acquisition date, Saddler Corporation’s capital stock and retained ear...

Q: Price Company purchased 90% of the outstanding common stock of Score

Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2011, for $450,000. At that time, Score Company had stockholders’ equity consisting of comm...

Q: On January 1, 2015, Porter Company purchased an 80%

On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for $260,000. On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500. An examination o...

Q: On January 1, 2014, P Company purchased an 80%

On January 1, 2014, P Company purchased an 80% interest in S Company for $600,000, at which time S Company had retained earnings of $300,000 and capital stock of $350,000. Any difference between book...

Q: Park Company acquires an 85%interest in Sunland Company on January

Park Company acquires an 85%interest in Sunland Company on January 2, 2015. The resulting difference between book value and the value implied by the purchase price in the amount of $120,000 is entirel...

Q: On January 1, 2014, Packard Company purchased an 80%

On January 1, 2014, Packard Company purchased an 80% interest in Sage Company for $600,000. On this date Sage Company had common stock of $150,000 and retained earnings of $400,000. Sage Company’s equ...

Q: Padilla Company purchased 80% of the common stock of Sanoma Company

Padilla Company purchased 80% of the common stock of Sanoma Company in the open market on January 1, 2013, paying $31,000 more than the book value of the interest acquired. The difference between book...

Q: On January 1, 2013, Point Corporation acquired an 80

On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $2,000,000. At that time Sharp Company had capital stock of $1,500,000 and retained earnings of $700,000. The book v...

Q: Preston Company acquired the assets (except for cash) and

Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as fol...

Q: Pretzel Company acquired the assets (except for cash) and assumed

Pretzel Company acquired the assets (except for cash) and assumed the liabilities of Salt Company on January 2, 2015. As compensation, Pretzel Company gave 30,000 shares of its common stock, 15,000 sh...

Q: Pritano Company acquired all the net assets of Succo Company on

Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,160,000 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: As part of th...

Q: Effective December 31, 2013, Zintel Corporation proposes to issue

Effective December 31, 2013, Zintel Corporation proposes to issue additional shares of its common stock in exchange for all the assets and liabilities of Smith Corporation and Platz Corporation, after...

Q: Company S has no long-term marketable securities. Assume the

Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $130,000 cash for 100% of the net assets of S Company. Case B Assume that P Compan...

Q: The following balance sheets were reported on January 1, 2014,

The following balance sheets were reported on January 1, 2014, for Peach Company and Stream Company: Required: Appraisals reveal that the inventory has a fair value of $120,000, and the equipment ha...

Q: Patel Company issued 100,000 shares of $1 par

Patel Company issued 100,000 shares of $1 par value common stock (market value of $6/share) for the net assets of Seely Company on January 1, 2014, in a statutory merger. Seely Company had the followi...

Q: Prepare in general journal form the workpaper entries to eliminate Prancer Company’s

Prepare in general journal form the workpaper entries to eliminate Prancer Company’s investment in Saltez Company in the preparation of a consolidated balance sheet at the date of ac...

Q: Patel Company issued 95,000 shares of $1 par value

Patel Company issued 95,000 shares of $1 par value common stock (market value of $6/share) for 95% of the common stock of Seely Company on January 1, 2014. Seely Company had the following assets, liab...

Q: December 31, 2014, trial balances for Pledge Company and its

December 31, 2014, trial balances for Pledge Company and its subsidiary Stom Company follow: Pledge Company purchased 72,000 shares of Stom Company’s common stock on January 1, 201...

Q: Profeet Company purchased the Starless Company in a nontaxable combination consummated

Profeet Company purchased the Starless Company in a nontaxable combination consummated as a stock acquisition. Profeet issued 10,000 shares of $5 par value common stock, with a market value of $70, in...

Q: On January 1, 2013, Peach Company issued 1,

On January 1, 2013, Peach Company issued 1,500 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Swartz Company in a purchase...

Q: Pool Company purchased 90% of the outstanding common stock of Spruce

Pool Company purchased 90% of the outstanding common stock of Spruce Company on December 31, 2014, for cash. At that time the balance sheet of Spruce Company was as follows: Required: Prepare the el...

Q: On December 31, 2013, Price Company purchased a controlling interest

On December 31, 2013, Price Company purchased a controlling interest in Shipley Company. The balance sheet of Price Company and the consolidated balance sheet on December 3, 2013, were as follows:...

Q: Percy Company purchased 80% of the outstanding voting shares of Song

Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $387,000. At the time of purchase, Song Company’s total stockholdersâ&...

Q: On January 1, 2017, Plutonium Corporation acquired 80% of

On January 1, 2017, Plutonium Corporation acquired 80% of the outstanding stock of Sulfurst Inc. for $268,000 cash. The following balance sheet shows Sulfurst Inc.’s book values imme...

Q: In this project, you are to provide an analysis of alternative

In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent effects on consolidated reporting. The project requires the use of...

Q: West Company acquired 60 percent of Solar Company for $300,

West Company acquired 60 percent of Solar Company for $300,000 when Solar’s book value was $400,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value...

Q: West Company acquired 60 percent of Solar Company for $300,

West Company acquired 60 percent of Solar Company for $300,000 when Solar’s book value was $400,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value...

Q: West Company acquired 60 percent of Solar Company for $300,

West Company acquired 60 percent of Solar Company for $300,000 when Solar’s book value was $400,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value...

Q: In January 1, Park Corporation and Strand Corporation had condensed balance

In January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common...

Q: In January 1, Park Corporation and Strand Corporation had condensed balance

In January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common...

Q: In January 1, Park Corporation and Strand Corporation had condensed balance

In January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common...

Q: In January 1, Park Corporation and Strand Corporation had condensed balance

In January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common...

Q: In January 1, Park Corporation and Strand Corporation had condensed balance

In January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common...

Q: On January 1, 2017, Grand Haven, Inc., reports

On January 1, 2017, Grand Haven, Inc., reports net assets of $760,000 although equipment (with a four-year remaining life) having a book value of $440,000 is worth $500,000 and an unrecorded patent is...

Q: On January 1, 2016, Pride Corporation purchased 90 percent of

On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc., for $540,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,000...

Q: On January 1, 2016, Pride Corporation purchased 90 percent of

On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc., for $540,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,000...

Q: Atwater Company acquires 80 percent of the outstanding voting stock of Belwood

Atwater Company acquires 80 percent of the outstanding voting stock of Belwood Company. On that date, Belwood possesses a building with a $160,000 book value but a $220,000 fair value. At what value w...

Q: Wolf Pack Transport Co. has a 25 percent equity investment in

Wolf Pack Transport Co. has a 25 percent equity investment in Maggie Valley Depot (MVD), Inc., which owns and operates a warehousing facility used for the collection and redistribution of various cons...

Q: Haynes, Inc., obtained 100 percent of Turner Company’s common stock

Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 9,000 shares of $10 par value common stock. Haynes’s shares had a...

Q: On January 1, 2017, Alison, Inc., paid $

On January 1, 2017, Alison, Inc., paid $60,000 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $200,000 and liabilities of $75,000. A pa...

Q: Milani, Inc., acquired 10 percent of Seida Corporation on January

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $190,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased...

Q: On January 1, 2016, Halstead, Inc., purchased 75

On January 1, 2016, Halstead, Inc., purchased 75,000 shares of Sedgwick Company common stock for $1,480,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Se...

Q: Following are selected account balances from Penske Company and Stanza Corporation as

Following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2018: On January 1, 2018, Penske acquired all of Stanza’s outstanding stock for...

Q: Several years ago, Einstein, Inc., bought 40 percent of

Several years ago, Einstein, Inc., bought 40 percent of the outstanding voting stock of Brooks Company. The equity method is appropriately applied. On August 1 of the current year, Einstein sold a por...

Q: On December 31, 2016, Akron, Inc. purchased 5

On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip Company’s common shares on the open market in exchange for $16,000. On December 31, 2017, Akron, Inc., acquires an additi...

Q: Belden, Inc. acquires 30 percent of the outstanding voting shares

Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $312,000, which gives Belden the ability to significantly influence Sheffield. Sheffield ha...

Q: Harper, Inc. acquires 40 percent of the outstanding voting stock

Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $210,000 in cash. The book value of Kinman’s net assets on that date was $400,000, although o...

Q: On July 1, 2016, Killearn Company acquired 88,000

On July 1, 2016, Killearn Company acquired 88,000 of the outstanding shares of Shaun Company for $13 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to s...

Q: On January 1, 2017, Fisher Corporation purchased 40 percent (

On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of Bowden, Inc., for $982,000 in cash and began to use the equity method for the investment. The price p...

Q: Pratt Company acquired all of Spider, Inc.’s outstanding shares

Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2018, for $495,000 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal...

Q: Angela Corporation (a private company) acquired all of the outstanding

Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2018, in exchange for $9,000,000 in cash. At the acquisition date, Eddy Techâ...

Q: Allison Corporation acquired all of the outstanding voting stock of Mathias,

Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2017, in exchange for $5,875,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidi...

Q: On January 1, 2017, Prestige Corporation acquired 100 percent of

On January 1, 2017, Prestige Corporation acquired 100 percent of the voting stock of Stylene Corporation in exchange for $2,030,000 in cash and securities. On the acquisition date, Stylene had the fol...

Q: On January 1, 2018, Johnsonville Enterprises, Inc., acquired

On January 1, 2018, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company’s outstanding common shares in exchange for $3,000,000 cash. The price paid for the 80 percent ownership inter...

Q: On January 1, 2017, Palka, Inc., acquired 70

On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,141,000 in cash. The price paid was proportionate to Sellinger’s total fair...

Q: Parker, Inc., acquires 70 percent of Sawyer Company for $

Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the...

Q: On January 1, Beckman, Inc., acquires 60 percent of

On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $36,000. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,000 and no...

Q: Plaza, Inc., acquires 80 percent of the outstanding common stock

Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $900,000 cash. At the acquisition date, Stanford’s total...

Q: On January 1, 2016, Parflex Corporation exchanged $344,

On January 1, 2016, Parflex Corporation exchanged $344,000 cash for 90 percent of Eagle Corporation’s outstanding voting stock. Eagle’s acquisition date balance she...

Q: On January 1, 2017, Holland Corporation paid $8 per

On January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland’s outstanding voting stock, representing...

Q: Posada Company acquired 7,000 of the 10,000 outstanding

Posada Company acquired 7,000 of the 10,000 outstanding shares of Sabathia Company on January 1, 2016, for $840,000. The subsidiary’s total fair value was assessed at $1,200,000 although its book valu...

Q: Miller Company acquired an 80 percent interest in Taylor Company on January

Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid $664,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent...

Q: Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation

Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before a...

Q: Under fair-value accounting for an equity investment, which of

Under fair-value accounting for an equity investment, which of the following affects the income the investor recognizes from its ownership of the investee? a. The investee’s reported income adjusted...

Q: Paar Corporation bought 100 percent of Kimmel, Inc., on January

Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2015. On that date, Paar’s equipment (10-year remaining life) has a book value of $420,000 but a fair value of $520,000. Kimmel has e...

Q: Duke Corporation owns a 70 percent equity interest in Salem Company,

Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this trans...

Q: On January 1, 2016, Phoenix Co. acquired 100 percent

On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying...

Q: On January 1, 2016, Phoenix Co. acquired 100 percent

On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying...

Q: On January 1, 2016, Phoenix Co. acquired 100 percent

On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying...

Q: Use the same facts as in problem (22), but assume

Use the same facts as in problem (22), but assume instead that Arturo pays cash of $4,200,000 to acquire Westmont. No stock is issued. Prepare Arturo’s journal entries to record its...

Q: On January 1, 2018, Fisher Corporation paid $2,

On January 1, 2018, Fisher Corporation paid $2,290,000 for 35 percent of the outstanding voting stock of Steel, Inc., and appropriately applies the equity method for its investment. Any excess of cost...

Q: The partnership of Frick, Wilson, and Clarke has elected to

The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this time shows the following account balances: Part...

Q: On January 1, Coldwater Company has a net book value of

On January 1, Coldwater Company has a net book value of $2,174,000 as follows 2,000 shares of preferred stock; par value $100 per share; cumulative, nonparticipating, nonvoting; call value $108 per sh...

Q: Aaron Company’s books show current earnings of $430,000 and

Aaron Company’s books show current earnings of $430,000 and $46,000 in cash dividends. Zeese Company earns $164,000 in net income and declares $11,500 in dividends. Aaron has held a 70 percent interes...

Q: Redfield Company reports current earnings of $420,000 while declaring

Redfield Company reports current earnings of $420,000 while declaring $52,000 in cash dividends. Snedeker Company earns $147,000 in net income and declares $13,000 in dividends. Redfield has held a 70...

Q: Following are several figures reported for Allister and Barone as of December

Following are several figures reported for Allister and Barone as of December 31, 2018: Allister acquired 90 percent of Barone in January 2017. In allocating the newly acquired subsidiaryâ€...

Q: On January 1, 2017, Corgan Company acquired 80 percent of

On January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $980,000 in cash and other consideration. At the acquisition date, Smashing had...

Q: Placid Lake Corporation acquired 80 percent of the outstanding voting stock of

Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $400,000. Any excess fair value was assigned to int...

Q: Pat, Jean Lou, and Diane are partners with capital balances

Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively. These three partners share profits and losses equally. For an investment of $50,000 cash (pa...

Q: Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft

Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $612,000 in cash and other consideration. At the acquisition date, Protrade assesse...

Q: On January 1, 2017, QuickPort Company acquired 90 percent of

On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had common stock...

Q: Padre holds 100 percent of the outstanding shares of Sonora. On

Padre holds 100 percent of the outstanding shares of Sonora. On January 1, 2016, Padre transferred equipment to Sonora for $95,000. The equipment had cost $130,000 originally but had a $50,000 book va...

Q: On January 1, 2018, Ackerman sold equipment to Brannigan (

On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transfe...

Q: Allison Corporation acquired 90 percent of Bretton on January 1, 2016

Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton’s total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a 10-year...

Q: On January 1, 2018, Sledge had common stock of $

On January 1, 2018, Sledge had common stock of $120,000 and retained earnings of $260,000. During that year, Sledge reported sales of $130,000, cost of goods sold of $70,000, and operating expenses of...

Q: Pitino acquired 90 percent of Brey’s outstanding shares on January 1,

Pitino acquired 90 percent of Brey’s outstanding shares on January 1, 2016, in exchange for $342,000 in cash. The subsidiary’s stockholders’ equit...

Q: Following are financial statements for Moore Company and Kirby Company for 2018

Following are financial statements for Moore Company and Kirby Company for 2018: ∙ Moore purchased 90 percent of Kirby on January 1, 2017, for $657,000 in cash. On that date, the 1...

Q: On January 1, 2017, Panther, Inc., issued securities

On January 1, 2017, Panther, Inc., issued securities with a total fair value of $577,000 for 100 percent of Stark Corporation’s outstanding ownership shares. Stark has long supplied...

Q: The following separate income statements are for Burks Company and its 80

The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company: Additional Information ∙ Amortization expense...

Q: On January 1, 2018, Primair Corporation loaned Vista Company $

On January 1, 2018, Primair Corporation loaned Vista Company $300,000 and agreed to guarantee all of Vista’s long-term debt in exchange for (1) decision-making authority over all of...

Q: On January 1, 2016, Aronsen Company acquired 90 percent of

On January 1, 2016, Aronsen Company acquired 90 percent of Siedel Company’s outstanding shares. Siedel had a net book value on that date of $480,000: common stock ($10 par value) of $200,000 and retai...

Q: On January 1, 2017, Mona, Inc., acquired 80

On January 1, 2017, Mona, Inc., acquired 80 percent of Lisa Company’s common stock as well as 60 percent of its preferred shares. Mona paid $65,000 in cash for the preferred stock, w...

Q: Bolero Company holds 80 percent of the common stock of Rivera,

Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 20...

Q: On June 30, 2018, Plaster, Inc., paid $

On June 30, 2018, Plaster, Inc., paid $916,000 for 80 percent of Stucco Company’s outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling...

Q: The following account balances are for the Agee Company as of January

The following account balances are for the Agee Company as of January 1, 2017, and December 31, 2017. All amounts are denominated in kroner (Kr). Additional Information ∙ Agee issu...

Q: Boswell and Johnson form a partnership on May 1, 2016.

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $50,000; Johnson conveys title to the following properties to the partnership: The partners agree to start their par...

Q: Gray, Stone, and Lawson open an accounting practice on January

Gray, Stone, and Lawson open an accounting practice on January 1, 2016, in San Diego, California, to be operated as a partnership. Gray and Stone will serve as the senior partners because of their yea...

Q: A partnership of attorneys in the St. Louis, Missouri,

A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2018: According to the articles of partnership, Athos is to receive an allocation...

Q: On January 1, 2013, Phelps Company purchased an 85%

On January 1, 2013, Phelps Company purchased an 85% interest in Sloane Company for $955,000 when the retained earnings of Sloane Company were $150,000. The difference between implied and book value wa...

Q: Pierce Company acquired a 90% interest in Sanders Company on January

Pierce Company acquired a 90% interest in Sanders Company on January 1, 2014, for $1,480,000. At this time, Sanders Company’s common stock and retained earnings balances were $1,000,...

Q: Sarko Company had 300,000 shares of $10 par value

Sarko Company had 300,000 shares of $10 par value common stock outstanding at all times, and retained earnings balances as indicated here: Pelzer Company acquired Sarko Company stock through open-ma...

Q: The accounts of Pyle Company and its subsidiary, Stern Company,

The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2014: Pyle Company made the following open-market purchase and sale of Stern Company common st...

Q: The accounts of Pyle Company and its subsidiary, Stern Company,

The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2014: Pyle Company made the following open-market purchase and sale of Stern Company common st...

Q: The accounts of Pyle Company and its subsidiary, Stern Company,

The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2014: Pyle Company made the following open-market purchase and sale of Stern Company common st...

Q: Trial balances for Porter Company and its subsidiary, Spitz Company,

Trial balances for Porter Company and its subsidiary, Spitz Company, as of December 31, 2014, follow: Porter Company made the following open-market purchase and sale of Spitz Company common stock: J...

Q: (Note: This is the same problem as Problem 8-

(Note: This is the same problem as Problem 8-3, but assuming use of the complete or the partial equity method.) The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as...

Q: (Note: This is the same problem as Problem 8-

(Note: This is the same problem as Problem 8-4, but assuming use of the complete or the partial equity method.) Trial balances for Porter Company and its subsidiary, Spitz Company, as of December 31,...

Q: On January 1, 2014, Plum Company made an open-

On January 1, 2014, Plum Company made an open-market purchase of 30,000 shares of Spivey Company common stock for $122,000. At that time, Spivey Company had common stock ($2 par) of $600,000 and retai...

Q: On January 1, 2009, Pabst Company acquired 80% of

On January 1, 2009, Pabst Company acquired 80% of Secor Company’s common stock and 30% of Secor Company’s 10% preferred stock. Pabst Company paid $680,000 for the c...

Q: PAL Corporation acquired 40% of the outstanding preferred stock of Saltz

PAL Corporation acquired 40% of the outstanding preferred stock of Saltz, Inc. for $60,000 and 90% of that firm’s outstanding common stock for $600,000 on January 1, 2013. On the dat...

Q: P Company owns 80% of S Company’s common stock (cost

P Company owns 80% of S Company’s common stock (cost $650,000) and 20% of its preferred stock (cost $50,000). Both interests were acquired on January 1, 2012. On the date of purchase...

Q: Parson Industries purchased 80% of the common stock of Succo Company

Parson Industries purchased 80% of the common stock of Succo Company on January 1, 2013, for $300,000 when Succo Company’s capital consisted of common stock of $200,000, preferred stock of $100,000, o...

Q: A balance sheet for Bran Company on June 30, 2015,

A balance sheet for Bran Company on June 30, 2015, the date Jim Brown was appointed trustee, is presented here: The following information concerning the period from June 30, 2015, to December 31, 20...

Q: Explain how to account for the difference between implied and book value

Explain how to account for the difference between implied and book value interest of an investment in preferred stock of a subsidiary.

Q: On September 30, 2014, SRP Company filed a petition for

On September 30, 2014, SRP Company filed a petition for reorganization with a bankruptcy court. The plan was approved by the court and all parties of interest on January 2, 2015, when SRP Company&acir...

Q: When a subsidiary issues additional shares of stock to noncontrolling stockholders and

When a subsidiary issues additional shares of stock to noncontrolling stockholders and such issuance results in an increase in the book value of the parent’s share of the subsidiary’s equity, how shou...

Q: P Company holds an 80% interest in S Company. Determine

P Company holds an 80% interest in S Company. Determine the effect (that is, increase, decrease, no change, not determinable) on both the total book value of the noncontrolling interest and the noncon...

Q: On January 2, 2014, Patten Company purchased a 90

On January 2, 2014, Patten Company purchased a 90% interest in Sterling Company for $1,400,000. At that time Sterling Company had capital stock outstanding of $800,000 and retained earnings of $425,00...

Q: On January 1, 2012, Perry Company purchased 80% of

On January 1, 2012, Perry Company purchased 80% of Selby Company for $990,000. At that time Selby had capital stock outstanding of $350,000 and retained earnings of $375,000. The fair value of Selby C...

Q: On January 1, 2013, Perry Company purchased 80% of

On January 1, 2013, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby C...

Q: On January 1, 2012, Paul Company purchased 80% of

On January 1, 2012, Paul Company purchased 80% of the voting stock of Simon Company for $1,360,000 when Simon Company had retained earnings and capital stock in the amounts of $450,000 and $1,000,000,...

Q: (Note: This is the same problem as Problem 6-

(Note: This is the same problem as Problem 6-14, but assuming the use of the complete equity method.) On January 1, 2013, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby...

Q: On January 2, 2014, Peoples, Inc. acquired an

On January 2, 2014, Peoples, Inc. acquired an 80% interest in Schmidt Corporation for $900,000. Schmidt reported total stockholders’ equity of $1,000,000 on this date. An examination of Schmidt’s book...

Q: Perez, Inc. owns 7,000 shares (70%

Perez, Inc. owns 7,000 shares (70% interest) of Salata Company’s $100 par value common stock. The stock was purchased for $1,250,000 on January 2, 2013, when Salata reported a common stock balance of...

Q: On January 1, 2014, Pacelli Company acquired a 90%

On January 1, 2014, Pacelli Company acquired a 90% interest in Swartz Corporation for $720,000. On this date, Swartz Corporation reported common stock of $500,000 and retained earnings of $200,000. An...

Q: On January 2, 2014, Pasqual Corporation purchased 80% of

On January 2, 2014, Pasqual Corporation purchased 80% of the outstanding common stock and 30% of the outstanding cumulative, nonparticipating, preferred stock of Sung Company for $400,000 and $70,000,...

Q: Sam’s Company reported the following stockholders’ equity account balances on December 31

Sam’s Company reported the following stockholders’ equity account balances on December 31, 2014. Preferred stock (12%, $100 par value, call price is $105) ………………………………. $100,000 Common stock, $10 pa...

Q: Indicate whether each of the following is true or false. If

Indicate whether each of the following is true or false. If an answer is false, explain why. ______ 1. Insolvency means that a debtor has more current liabilities than current assets. ______ 2. Volunt...

Q: On January 1, 2014, Sherwood Company, an 80%

On January 1, 2014, Sherwood Company, an 80% owned subsidiary of Paradise Company, sold to Paradise Company equipment with a book value of $600,000 for $840,000. The equipment had an estimated remai...

Q: On January 1, 2014, Polar Company, which owns an

On January 1, 2014, Polar Company, which owns an 80% interest in Superior Company, sold Superior Company equipment with a book value of $400,000 for $560,000. The equipment had an estimated remaining...

Q: On January 1, 2013, Price Company acquired an 80%

On January 1, 2013, Price Company acquired an 80% interest in the common stock of Smith Company on the open market for $750,000, the book value at that date. On January 1, 2014, Price Company purchas...

Q: On January 1, 2015, P Company acquired a 90%

On January 1, 2015, P Company acquired a 90% interest in S Company. During 2016, S Company sold merchandise to P Company at 25% above cost in the amount (selling price) of $225,000. At the end of the...

Q: Pomeroy Corporation owns an 80% interest in Sherer Company and a

Pomeroy Corporation owns an 80% interest in Sherer Company and a 90% interest in Tampa Company. On January 2, 2014, Tampa Company sold equipment with a book value of $600,000 to Sherer Company for $78...

Q: Aurora Company is considering the purchase of a new machine. The

Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $140,000, freight charges are estimated to be $4,000, and installation costs are expected to be $6,000....

Q: Kobe Company has a factory machine with a book value of $

Kobe Company has a factory machine with a book value of $90,000 and a remaining useful life of 5 years. It can be sold for $30,000. A new machine is available at a cost of $300,000. This machine will...

Q: Hank Jewell is a production manager at a metal fabricating plant.

Hank Jewell is a production manager at a metal fabricating plant. Last night, he read an article about a new piece of equipment that would dramatically reduce his division’s costs. Hank was very excit...

Q: BAP Corporation is reviewing an investment proposal. The initial cost and

BAP Corporation is reviewing an investment proposal. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income fo...

Q: BSU Inc. wants to purchase a new machine for $29

BSU Inc. wants to purchase a new machine for $29,300, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage va...

Q: Exhibits 1.26–1.28 of Integrative Case 1

Exhibits 1.26–1.28 of Integrative Case 1.1 (Chapter 1) present the financial statements for Walmart for 2012–2015. In addition, the website for this text contains W...

Q: In Integrative Case 10.1, we projected financial statements for

In Integrative Case 10.1, we projected financial statements for Walmart Stores, Inc. (Walmart), for Years þ1 through þ5. The data in Chapter 12 include the actual amounts for 2015 and the projected am...

Q: In Integrative Case 10.1, we projected financial statements for

In Integrative Case 10.1, we projected financial statements for Walmart Stores for Years +1 through +5. The data in Chapter 12 include the actual amounts for 2015 and the projected amounts for Year þ1...

Q: Lexington Corporation acquired all of the outstanding common stock of Chalfont,

Lexington Corporation acquired all of the outstanding common stock of Chalfont, Inc., on January 1, 2016. Lexington gave shares of its no par common stock with a market value of $504 million in exchan...

Q: Ormond Co. acquired all of the outstanding common stock of Daytona

Ormond Co. acquired all of the outstanding common stock of Daytona Co. on January 1, 2017. Ormond Co. gave shares of its common stock with a fair value of $312 million in exchange for 100% of the Dayt...

Q: Exhibit 8.26 presents the separate financial statements at December 31

Exhibit 8.26 presents the separate financial statements at December 31, 2018, of Prestige Resorts and its 80%-owned subsidiary Booking, Inc. Two years earlier on January 1, 2017, Prestige acquired 80%...

Q: The Coca-Cola Company is a global soft drink beverage company

The Coca-Cola Company is a global soft drink beverage company (ticker: KO) that is a primary and direct competitor with Starbucks. The data in Chapter 12’s Exhibits 12.14, 12.15, and...

Q: The Coca-Cola Company is a global soft-drink beverage

The Coca-Cola Company is a global soft-drink beverage company that is a direct competitor with Starbucks. The data in Chapter 12 include the actual amounts for 2015 and projected amounts for Year þ1 t...

Q: In this chapter, we evaluated shares of common equity in Starbucks

In this chapter, we evaluated shares of common equity in Starbucks using the value-to-book approach, market multiples, and reverse engineering. The Coca-Cola Company competes directly with Starbucks....

Q: The following diagram depicts the relationships among Mary Company, John Company

The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018: Mary Company purchases its interest in John Company on January 1, 2016, for...

Q: On January 1, 2015, Parson Company purchases 80% of

On January 1, 2015, Parson Company purchases 80% of the common stock of Salary Company for $450,000. On this date, Salary has common stock, other paid-in capital in excess of par, and retained earning...

Q: On January 1, 2017, Heckert Company purchases a controlling interest

On January 1, 2017, Heckert Company purchases a controlling interest in Aker Company. The following information is available: a. Heckert Company purchases 1,600 shares of Aker Company outstanding stoc...

Q: Schinzer Company purchases an influential 25% interest in Fowler Company on

Schinzer Company purchases an influential 25% interest in Fowler Company on January 1, 2016, for $300,000. At that time, Fowler’s stockholders’ equity is $1,000,000...

Q: On January 1, 2016, Ashland Company purchases a 25%

On January 1, 2016, Ashland Company purchases a 25% interest in Cramer Company for $195,000. Ashland Company prepares the following determination and distribution of excess schedule: The following a...

Q: Holt Corporation is contemplating the acquisition of Sambo Company’s net assets on

Holt Corporation is contemplating the acquisition of Sambo Company’s net assets on December 31, 2015. It is considering making an offer, which would include a cash payout of $225,000...

Q: On July 1, 2015, Faber Enterprises acquired Ann’s Tool Company

On July 1, 2015, Faber Enterprises acquired Ann’s Tool Company. Prior to the merger of the two companies, each company calculated its income for the entire year ended December 31, 20...

Q: Hanson Company issues 10,000 shares of $10 par common

Hanson Company issues 10,000 shares of $10 par common stock for the net assets of Marcus Incorporated on December 31, 2016. The stock has a fair value of $65 per share. Acquisition costs are $10,000,...

Q: On December 31, 2015, Aron Company purchases 100% of

On December 31, 2015, Aron Company purchases 100% of the common stock of Shield Company for $450,000 cash. On this date, any excess of cost over book value is attributed to accounts with fair values t...

Q: On January 1, 2015, Paro Company purchases 80% of

On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of...

Q: Parker Company acquires an 80% interest in Sargent Company for $

Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet: The excess of the price paid over book value...

Q: Company P purchases an 80% interest in Company S on January

Company P purchases an 80% interest in Company S on January 1, 2015, for $480,000. Company S had equity of $450,000 on that date. Any excess of cost over book value was attributed to equipment with a...

Q: Company P purchased an 80% interest (8,000 shares

Company P purchased an 80% interest (8,000 shares) in Company S for $800,000 on January 1, 2015. Company S’s equity on that date was $900,000. Any excess of cost over book value was attributed to equi...

Q: Company S has the following stockholders’ equity on January 1, 2019

Company S has the following stockholders’ equity on January 1, 2019: Common stock ($1 par, 100,000 shares). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 6% preferre...

Q: Paulos Company purchases a controlling interest in Sanjoy Company. Sanjoy had

Paulos Company purchases a controlling interest in Sanjoy Company. Sanjoy had identifiable net assets with a book value of $500,000 and a fair value of $800,000. It was agreed that the total fair valu...

Q: Pillow Company is purchasing a 100% interest in the common stock

Pillow Company is purchasing a 100% interest in the common stock of Sleep Company. Sleep’s balance sheet amounts at book and fair values are as follows: Use valuation analysis sche...

Q: Pillow Company is purchasing an 80% interest in the common stock

Pillow Company is purchasing an 80% interest in the common stock of Sleep Company. Sleep’s balance sheet amounts at book and fair values are as follows: Use valuation analysis sche...

Q: Pillow Company is purchasing an 80% interest in the common stock

Pillow Company is purchasing an 80% interest in the common stock of Sleep Company for $800,000. Sleep’s balance sheet amounts at book and fair value are as follows: Use a valuation...

Q: The trial balances of Charles Company and its subsidiary, Lehto,

The trial balances of Charles Company and its subsidiary, Lehto, Inc., are as follows on December 31, 2017: On January 1, 2015, Charles Company exchanges 20,000 shares of its common stock, with a fa...

Q: Parker Company acquires an 80% interest in Sargent Company for $

Parker Company acquires an 80% interest in Sargent Company for $300,000 on January 1, 2015, when Sargent Company has the following balance sheet: The excess of the price paid over book value is attr...

Q: A parent company acquired an 80% interest in a subsidiary on

A parent company acquired an 80% interest in a subsidiary on July 1, 2015. The subsidiary closed its books on that date. The subsidiary reported net income of $60,000 for 2015, earned evenly during th...

Q: A parent company acquired an 80% interest in a subsidiary on

A parent company acquired an 80% interest in a subsidiary on January 1, 2015, at a price high enough to result in goodwill. Included in the assets of the subsidiary are inventory with a book value of...

Q: The Vary Company has total assets with a book value of $

The Vary Company has total assets with a book value of $3,000,000 and a fair value of $4,000,000. A potential primary beneficiary company has guaranteed the debt of the Vary Company and will receive a...

Q: Bell Corporation purchases all of the outstanding stock of Stockdon Corporation for

Bell Corporation purchases all of the outstanding stock of Stockdon Corporation for $220,000 in cash on January 1, 2017. On the purchase date, Stockdon Corporation has the following condensed balance...

Q: On January 1, 2015, Paro Company purchases 80% of

On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of...

Q: Baker Enterprises purchases an 80% interest in Kohlenberg International for $

Baker Enterprises purchases an 80% interest in Kohlenberg International for $850,000 on January 1, 2015. The estimated fair value of the NCI is $190,000. On the purchase date, Kohlenberg International...

Q: Parker Company acquires an 80% interest in Sargent Company for $

Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet: The excess of the price paid over book value...

Q: Sandin Company prepares the following balance sheet on January 1, 2015

Sandin Company prepares the following balance sheet on January 1, 2015: On this date, Prescott Company purchases 8,000 shares of Sandin Company’s outstanding stock for a total pri...

Q: Whitney Company acquires an 80% interest in Masters Company common stock

Whitney Company acquires an 80% interest in Masters Company common stock on January 1, 2015. Appraisals of Masters’ assets and liabilities are performed, and Whitney ends up paying a...

Q: The separate income statements of Danner Company and its 90%-owned

The separate income statements of Danner Company and its 90%-owned subsidiary, Link Company, for the year ended December 31, 2016, are as follows: The following additional facts apply: a. On Janua...

Q: Jeter Corporation purchases 80% of the outstanding stock of Super Company

Jeter Corporation purchases 80% of the outstanding stock of Super Company for $275,000 on July 1, 2015. Super Company has the following stockholders’ equity on July 1, 2015: Common...

Q: Detner International purchases 80% of the outstanding stock of Hardy Company

Detner International purchases 80% of the outstanding stock of Hardy Company for $1,600,000 on January 1, 2015. At the purchase date, the inventory, equipment, and patents of Hardy Company have fair v...

Q: Born Company acquires an 80% interest in Roland Company for $

Born Company acquires an 80% interest in Roland Company for $660,000 cash on January 1, 2017. The NCI has a fair value of $165,000. Any excess of cost over book value is attributed to goodwill. To hel...

Q: Paridon Motors purchases an 80% interest in Snap Battery Company on

Paridon Motors purchases an 80% interest in Snap Battery Company on January 1, 2012, for $700,000 cash. At that date, Snap Battery Company has the following stockholders’ equity: Common stock ($10 p...

Q: On May 1, 2016, Tole Company acquires a 80%

On May 1, 2016, Tole Company acquires a 80% interest in Marco Company for $400,000. The fair value of the NCI is $100,000. The following determination and distribution of excess schedule is prepared:...

Q: Deko Company purchases an 80% interest in the common stock of

Deko Company purchases an 80% interest in the common stock of Farwell Company for $850,000 on January 1, 2017. At the time of the purchase, the total stockholders’ equity of Farwell...

Q: (This is the same as Exercise 5 but with separate taxation

(This is the same as Exercise 5 but with separate taxation.) Dunker Company purchases an 80% interest in the common stock of Fennig Company for $850,000 on January 1, 2017. The fair value of the NCI i...

Q: The separate income statements of Coors Company and its 60% owned

The separate income statements of Coors Company and its 60% owned subsidiary, Vespa Company, for the year ended December 31, 2017, are as follows: The following additional information is availab...

Q: Rob Company purchases a 90% interest in Venus Company for $

Rob Company purchases a 90% interest in Venus Company for $418,500 on January 1, 2017. Any excess of cost over book value is attributed to equipment, which is being depreciated over 20 years. Both com...

Q: Carpenter Company has the following balance sheet on December 31, 2015

Carpenter Company has the following balance sheet on December 31, 2015: The investment in Hinckley Company account reflects the original cost of an 80% interest (40,000 shares) purchased on Januar...

Q: Center, Inc., purchases 24,000 shares of Bruce Corporation

Center, Inc., purchases 24,000 shares of Bruce Corporation, which equates to an 80% interest, on January 1, 2015. The following determination and distribution of excess schedule is prepared: Bruce...

Q: On January 1, 2016, Boelter Company purchases 80% of

On January 1, 2016, Boelter Company purchases 80% of the outstanding common stock of Mill Corporation for $280,000. On this date, Mill Corporation stockholders’ equity is as follows: 6% Preferred st...

Q: On December 31, 2014, Zigler Corporation purchases an 80%

On December 31, 2014, Zigler Corporation purchases an 80% interest in the common stock of Kim Company for $420,000. The stockholders’ equity of Kim Company on December 31, 2014, is as follows: 8% Cum...

Q: On January 1, 2015, Talbot Company acquires 90% of

On January 1, 2015, Talbot Company acquires 90% of the outstanding stock of Lego Company for $810,000. At the time of the acquisition, Lego Company has the following stockholders’ equity: Common sto...

Q: On January 1, 2015, 100% of the outstanding stock

On January 1, 2015, 100% of the outstanding stock of Solo Company was purchased by Plato Corporation for $3,300,000. At that time, the book value of Solo’s net assets equaled $3,000,...

Q: Myles Corporation and its subsidiary, Downer Corporation, have the following

Myles Corporation and its subsidiary, Downer Corporation, have the following trial balances as of December 31, 2017: Myles Corporation acquires its 60% interest in Downer Corporation for $348,000...

Q: Baker Company acquires an 80% interest in the common stock of

Baker Company acquires an 80% interest in the common stock of Cain Company for $440,000 on January 1, 2015. The price is equal to the book value of the interest acquired. Baker Company maintains its i...

Q: Companies A, B, and C produce the following separate internally

Companies A, B, and C produce the following separate internally generated net incomes during 2015: Company A acquires an 80% interest in Company B on January 1, 2012, and Company B acquires a 60%...

Q: On January 1, 2015, Peanut Company acquired 80% of

On January 1, 2015, Peanut Company acquired 80% of the common stock of Salt Company for $200,000. On this date, Salt had total owners’ equity of $200,000 (including retained earnings...

Q: Turf Company purchases a 30% interest in Minnie Company for $

Turf Company purchases a 30% interest in Minnie Company for $90,000 on January 1, 2015, when Minnie has the following stockholders’ equity: Common stock ($10 par). . . . . . . . . . . . . . . . . . ....

Q: Spancrete Corporation acquires a 30% interest in the outstanding stock of

Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015. At that time, the following determination and distribution of excess schedule is prepared...

Q: Hanson Corporation purchases a 10% interest in Novic Company on January

Hanson Corporation purchases a 10% interest in Novic Company on January 1, 2016, and an additional 15% interest on January 1, 2018. These investments cost Hanson Corporation $80,000 and $110,000, resp...

Q: On January 1, 2017, Lund Corporation purchases a 30%

On January 1, 2017, Lund Corporation purchases a 30% interest in Aluma-Boat Company for $200,000. At the time of the purchase, Aluma-Boat has total stockholders’ equity of $400,000....

Q: The following nominal accounts apply to a primary beneficiary company and a

The following nominal accounts apply to a primary beneficiary company and a VIE: The fair value of the VIE assets had a fair value $100,000 higher than book value on the date control was achieved. T...

Q: Small Company acquired a controlling interest in Big Company. Private Company

Small Company acquired a controlling interest in Big Company. Private Company had the following balance sheet on the acquisition date: Big Company had the following book and fair values on the acqui...

Q: Rainman Corporation is considering the acquisition of Largo Company through the acquisition

Rainman Corporation is considering the acquisition of Largo Company through the acquisition of Largo’s common stock. Rainman Corporation will issue 20,000 shares of its $5 par common...

Q: On January 1, 2015, Peanut Company acquired 80% of

On January 1, 2015, Peanut Company acquired 80% of the common stock of Salt Company for $200,000. On this date, Salt had total owners’ equity of $200,000 (including retained earnings...

Q: On January 1, 2016, the shareholders of Unknown Company request

On January 1, 2016, the shareholders of Unknown Company request 6,000 Famous shares in exchange for all of their 5,000 shares. This is an exchange ratio of 1.2 to 1. The fair value of a share of Famou...

Q: Arther Corporation acquired all of the outstanding $10 par voting common

Arther Corporation acquired all of the outstanding $10 par voting common stock of Trent Inc., on January 1, 2016, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, 2015...

Q: On January 1, 2015, Peanut Company acquired 80% of

On January 1, 2015, Peanut Company acquired 80% of the common stock of Salt Company for $200,000. On this date, Salt had total owners’ equity of $200,000, which included retained ear...

Q: Steven Truck Company has been an 80%-owned subsidiary of Paulz

Steven Truck Company has been an 80%-owned subsidiary of Paulz Heavy Equipment since January 1, 2013, when Paulz acquired 128,000 shares of Steven common stock for $832,000, an amount equal to the boo...

Q: Anton Company acquired the net assets of HairCompany on January 1,

Anton Company acquired the net assets of HairCompany on January 1, 2015, for $600,000. Using a business valuation model, the estimatedvalue of Anton Company was $650,000 immediately after the acquisit...

Q: The December 31, 2019, post-closing trial balances of

The December 31, 2019, post-closing trial balances of Marley Corporation and its subsidiary, Foster Corporation, are as follows: The following additional information is available: a. Marley initia...

Q: On January 1, 2015, Peanut Company acquired 80% of

On January 1, 2015, Peanut Company acquired 80% of the common stock of Salt Company for $200,000. On this date, Salt had total owners’ equity of $200,000. During 2015 and 2016, Peanu...

Q: Book, Inc., acquires all of the outstanding $25 par

Book, Inc., acquires all of the outstanding $25 par common stock of Cray, Inc., on June 30, 2014, in exchange for 40,000 shares of its $25 par common stock. On June 30, 2014, Book, Inc., common stock...

Q: On January 1, 2015, Press Company acquires 90% of

On January 1, 2015, Press Company acquires 90% of the common stock of Soap Company for $324,000. On this date, Soap has total owners’ equity of $270,000, including retained earnings...

Q: (Note: The use of a financial calculator or Excel is

(Note: The use of a financial calculator or Excel is suggested for this case.) Modern Company acquires the net assets of Frontier Company for $ 1,300,000 on January 1, 2015. A business valuation cons...

Q: Refer to the preceding facts for Purple’s acquisition of Salmon common stock

Refer to the preceding facts for Purple’s acquisition of Salmon common stock. On January 1, 2016, Salmon held merchandise sold to it by Purple for $14,000. This beginning inventory h...

Q: Refer to the preceding facts for Purple’s acquisition of Salmon common stock

Refer to the preceding facts for Purple’s acquisition of Salmon common stock. On January 1, 2017, Salmon held merchandise sold to it from Purple for $12,000. This beginning inventory...

Q: On September 1, 2015, Parcel Corporation purchased 80% of

On September 1, 2015, Parcel Corporation purchased 80% of the outstanding common stock of Sack Corporation for $152,000. On that date, Sack’s net book values equaled fair values, and...

Q: Refer to the preceding information for Paulcraft’s acquisition of Switzer’s common stock

Refer to the preceding information for Paulcraft’s acquisition of Switzer’s common stock. Assume that Paulcraft pays $420,000 for 70% of Switzer common stock. Paulc...

Q: Refer to the preceding facts for Panther’s acquisition of Sandin common stock

Refer to the preceding facts for Panther’s acquisition of Sandin common stock. On January 1, 2016, Panther held merchandise sold to it from Sandin for $12,000. This beginning inventory had an applicab...

Q: The December 31, 2016, trial balances of Pettie Corporation and

The December 31, 2016, trial balances of Pettie Corporation and its 90%-owned subsidiary Sunco Corporation are as follows: Pettie’s investment in Sunco was purchased for $1,260,00...

Q: On January 1, 2015, Parker Company acquired 90% of

On January 1, 2015, Parker Company acquired 90% of the common stock of Stride Company for $351,000. On this date, Stride had common stock, other paid-in capital in excess of par, and retained earnings...

Q: On January 1, 2013, Appliance Outlets had the following balances

On January 1, 2013, Appliance Outlets had the following balances in its stockholders’ equity accounts: Common Stock ($10 par), $800,000; Paid-In Capital in Excess of Par, $625,000; a...

Q: Princess Company acquired a 90% interest in Sundown Company on January

Princess Company acquired a 90% interest in Sundown Company on January 1, 2011, for $675,000. Any excess of cost over book value was due to goodwill. Capital balances of Sundown Company on January 1,...

Q: On January, 1, 2015, Perko Company acquires 70%

On January, 1, 2015, Perko Company acquires 70% of the common stock of Solan Company for $385,000 in a taxable combination. On this date, Solan has total owners’ equity of $422,000,...

Q: Refer to the preceding facts for Penske’s acquisition of Stock common stock

Refer to the preceding facts for Penske’s acquisition of Stock common stock. Penske uses the simple equity method to account for its investment in Stock. During 2016, Stock sells $30...

Q: Refer to the preceding facts for Penske’s acquisition of Stock common stock

Refer to the preceding facts for Penske’s acquisition of Stock common stock. Penske accounts for its investment in Stock using the simple equity method, including income tax effects....

Q: Presented below are the consolidated work paper balances of Bush, Inc

Presented below are the consolidated work paper balances of Bush, Inc., and its subsidiary, Dorr Corporation, as of December 31, 2016 and 2015: Additional information: a. On January 20, 2016, Bush...

Q: On January 1, 2015, Dawn Corporation exchanges 12,000

On January 1, 2015, Dawn Corporation exchanges 12,000 shares of its common stock for an 80% interest in Mercer Company. The stock issued has a par value of $10 per share and a fair value of $25 per sh...

Q: On January 1, 2015, Pepper Company purchases 80% of

On January 1, 2015, Pepper Company purchases 80% of the common stock of Salty Company for $270,000. On this date, Salty has total owners’ equity of $300,000. The excess of cost over...

Q: On January 1, 2015, Pillar Company purchases an 80%

On January 1, 2015, Pillar Company purchases an 80% interest in Stark Company for $890,000. On the date of acquisition, Stark has total owners’ equity of $800,000. Buildings, which h...

Q: Refer to the preceding facts for Parson’s acquisition of Solar common stock

Refer to the preceding facts for Parson’s acquisition of Solar common stock. Parson uses the simple equity method to account for its investment in Solar. During 2016, Solar sells $30...

Q: Refer to the preceding facts for Parson’s acquisition of Solar common stock

Refer to the preceding facts for Parson’s acquisition of Solar common stock. Parson uses the simple equity method to account for its investment in Solar. During 2017, Solar sells $40...

Q: The following determination and distribution of excess schedule is prepared on January

The following determination and distribution of excess schedule is prepared on January 1, 2012, the date on which Palmer Company purchases a 60% interest in Sharon Company: On December 31, 2013, P...

Q: Kraus Company has the following balance sheet on July 1, 2016

Kraus Company has the following balance sheet on July 1, 2016: On July 1, 2016, Neiman Company purchases 80% of the outstanding common stock of Kraus Company for $310,000. Any excess of book value o...

Q: The information shown on page 425 is available regarding the investments of

The information shown on page 425 is available regarding the investments of Billings Corporation in Channel Company for the years 2011–2015. The stockholders’ e...

Q: On January 1, 2017, Black Jack Corporation purchases all of

On January 1, 2017, Black Jack Corporation purchases all of the preferred stock and 60% of the common stock of Zeppo Company for $56,000 and $111,000, respectively. Immediately prior to the purchases,...

Q: On January 1, 2015, Bear Corporation acquires a 60%

On January 1, 2015, Bear Corporation acquires a 60% interest in Kelly Company and an 80% interest in Samco Company. The purchase prices are $225,000 and $250,000, respectively. The excess of cost over...

Q: On January 1, 2016, Mitta Corporation acquires a 60%

On January 1, 2016, Mitta Corporation acquires a 60% interest (12,000 shares) in Train Company for $156,000. Train stockholders’ equity on the purchase date is as follows: Common s...

Q: The audit of Barns Company and its subsidiaries for the year ended

The audit of Barns Company and its subsidiaries for the year ended December 31, 2016, is completed. The working papers contain the following information: a. Barns Company acquires 4,000 shares of Webo...

Q: Albers Company acquires an 80% interest in Barker Company on January

Albers Company acquires an 80% interest in Barker Company on January 1, 2015, for $850,000. The following determination and distribution of excess schedule is prepared at the time of purchase: Alber...

Q: Abrams Company is a sole proprietorship. The book value of its

Abrams Company is a sole proprietorship. The book value of its identifiable net assetsis $400,000, and the fair value of the same net assets is $600,000. It is agreed that thebusiness is worth $850,00...

Q: Subsidiary Company S is 80% owned by Company P. Company

Subsidiary Company S is 80% owned by Company P. Company S sold a machine with a book value of $100,000 to Company P for $150,000. The asset has a 5-year life and is depreciated under the straight-line...

Q: On January 1, 2015, Paro Company purchases 80% of

On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100...

Q: P Company acquires 80% of the common stock of S Company

P Company acquires 80% of the common stock of S Company for an agreed-upon price of $640,000. The fair value of the NCI is $160,000. The book value of the net assets is $600,000, which includes $50,00...

Q: Par Company acquires 100% of the common stock of Sub Company

Par Company acquires 100% of the common stock of Sub Company for an agreedupon price of $900,000. The book value of the net assets is $700,000, which includes $50,000 of subsidiary cash equivalents. E...

Q: On January 1, 2015, Company P sold a machine to

On January 1, 2015, Company P sold a machine to its 70%-owned subsidiary, Company S, for $60,000. The book value of the machine was $50,000. The machine was depreciated using the straight-line method...

Q: Company R purchases a 25% interest in Company E on January

Company R purchases a 25% interest in Company E on January 1, 2014, at its book value of $20,000. From 2014 through 2018, Company E earns a total of $200,000. From 2019 through 2023, it loses $300,000...

Q: Sedona Electronics of Arizona exports 25,000 Disc Drive Controllers (

Sedona Electronics of Arizona exports 25,000 Disc Drive Controllers (DDCs) per year to China under an agreement that covers the period 2009–2013. In China, the DDCs are sold for the RMB (Chinese curre...

Q: Cutler Manufacturing manufactures and distributes specialty piping used in the construction industry

Cutler Manufacturing manufactures and distributes specialty piping used in the construction industry. Due to the recent contraction in the commercial construction market, the company has had difficult...

Q: Frankton Corporation has experienced difficult financial times for the past five years

Frankton Corporation has experienced difficult financial times for the past five years resulting in serious cash flow problems, negative earnings, and increasing deficits in retained earnings. The neg...

Q: Ridgeway Builders, Inc., is in the residential construction industry and

Ridgeway Builders, Inc., is in the residential construction industry and has been experiencing a business downturn. As a result of these economic conditions, the company is having difficulty serving i...

Q: Howard Manufacturing has two debts outstanding with a creditor. Howard is

Howard Manufacturing has two debts outstanding with a creditor. Howard is experiencing financial difficulties, and the creditor has granted a concession. Therefore, accounting for the debt in question...

Q: Peltzer Manufacturing is experiencing financial difficulties. Rather than entering into a

Peltzer Manufacturing is experiencing financial difficulties. Rather than entering into a lengthy bankruptcy proceeding, the company has reached an agreement with its long-term creditors to restructur...

Q: A partially completed statement of realization and liquidation is as follows:

A partially completed statement of realization and liquidation is as follows: The following additional transactions have occurred through August 12 of the current year: a. Receivables collected amou...

Q: St. John Corporation is barely solvent and has been seeking an

St. John Corporation is barely solvent and has been seeking an equity investor that would be interested in making a capital contribution so that the company would hopefully return to performance level...

Q: WTC Manufacturing, Inc., has an 80% interest in a

WTC Manufacturing, Inc., has an 80% interest in a foreign subsidiary, Mofoco Manufacturing. Relevant details regarding WTC’s investment in Mofoco are as follows: Date of acquisitio...

Q: Due to increasing pressures to expand globally, Pueblo Corporation acquired a

Due to increasing pressures to expand globally, Pueblo Corporation acquired a 100% interest in Sorenson Company, a foreign company, on January 1, 2016. Pueblo paid 12,000,000 FC, and Sorensonâ&#...

Q: On October 1, 2013, Kemper International acquired a 90%

On October 1, 2013, Kemper International acquired a 90% interest in the equity of Spruco Manufacturing when the subsidiary’s equity was 8,000,000 foreign currency (FC), including ret...

Q: Prospect International, a U.S. company, acquired an

Prospect International, a U.S. company, acquired an 80% controlling interest in the equity of a foreign corporation, Aspic Developments. At the time of the acquisition, January 1, 2014, Prospect paid...

Q: Campione Manufacturing acquired an 80% interest in DaLuca Distributors, a

Campione Manufacturing acquired an 80% interest in DaLuca Distributors, a foreign corporation established on November 1, 2010, for 650,000 foreign currency units (FC). Campione acquired its 80% intere...

Q: Balfour Corporation acquired 100% of Tobac, Inc., a foreign

Balfour Corporation acquired 100% of Tobac, Inc., a foreign corporation, for 33,000,000 FC. The acquisition, which was accounted for as a purchase, occurred on July 1, 2015, when Tobacâ€
...

Q: The following schedule was developed for Monroe Corporation to support interim reporting

The following schedule was developed for Monroe Corporation to support interim reporting for the year 2014. The following additional 2014 information is available: 1. The statutory tax rate is as f...

Q: Midway Construction was a partnership owned by Davis, Murray, and

Midway Construction was a partnership owned by Davis, Murray, and Clay with year-end 2013 capital balances of $50,000, 80,000, and $70,000, respectively. Davis and Murray each received an annual salar...

Q: Murphy and Reinartz have been partners for several years and critical values

Murphy and Reinartz have been partners for several years and critical values related to their partnership are as follows: In 2016, the partnership reported net income of $230,000, and each partner r...

Q: At the end of 2015, Klaproth finds himself in a difficult

At the end of 2015, Klaproth finds himself in a difficult situation. He is a partner in a residential construction company, and the housing market has been adversely impacted by interest rates, mortga...

Q: A partnership has decided to liquidate its operations. Prior to beginning

A partnership has decided to liquidate its operations. Prior to beginning the liquidation process, the partnership had cash balances of $12,000 and noncash assets of $210,000. At that time liabilities...

Q: Prior to liquidation, the following information relates to the partnership:

Prior to liquidation, the following information relates to the partnership: Partnership trial balance: On June 30, other assets with a book value of $160,000 were sold for $120,000, and all availabl...

Q: Select the best answer for each of the following multiple-choice

Select the best answer for each of the following multiple-choice items. Items (1) through (3) are based on the following: The Fox Point Humane Society, a VHWO caring for lost animals, had the followin...

Q: On June 30, 2015, the shareholders’ equity of Fabinet,

On June 30, 2015, the shareholders’ equity of Fabinet, a foreign corporation, was 10,500,000 FC. At that time, Newcore, a U.S. corporation, acquired 40% in Fabinet by paying $3,120,000 when 1 FC was e...

Q: Champos Corporation is a foreign corporation that was formed on June 30

Champos Corporation is a foreign corporation that was formed on June 30, 2015. On July 1, 2016, Magnum Ventures, a U.S. venture capital firm, paid $700,000 to acquire a 30% interest in the equity of C...

Q: Rose Corporation was unable to service its outstanding debts. The company

Rose Corporation was unable to service its outstanding debts. The company is considered to be experiencing significant financial difficulties. In an attempt to avoid filing for bankruptcy, it took the...

Q: Pearson and Murphy have partner capital balances, at book value,

Pearson and Murphy have partner capital balances, at book value, of $45,000 and $65,000 as of December 31. Pearson is allocated 60% of profits or losses, and Murphy is allocated the balance. The partn...

Q: Meyers is considering investing in one of several existing partnerships and is

Meyers is considering investing in one of several existing partnerships and is attempting to consider the price to be paid for a partnership interest. In addition to investing cash, Meyers would be co...

Q: A condensed balance sheet for a partnership to be liquidated is as

A condensed balance sheet for a partnership to be liquidated is as follows: The profit and loss percentages for Partners A, B, and C are 50%, 30%, and 20%, respectively. For each of the following in...

Q: Twelve years ago, Adams, Boyd, and Chambers formed a

Twelve years ago, Adams, Boyd, and Chambers formed a partnership manufacturing small circuit boards. Unfortunately, foreign competition, a softening economy, and management errors have led the partner...

Q: Arnold (A), Bower (B), and Chambers (C

Arnold (A), Bower (B), and Chambers (C) are partners in a small manufacturing firm whose net assets are as follows: The partnership agreement calls for the allocation of profits and losses as foll...

Q: Problem 21-5 presents the balance sheet of St. John

Problem 21-5 presents the balance sheet of St. John Corporation as of the end of the prior year. Assume that the company is not able to service its debts and is unable to secure any significant restru...

Q: Super Senior Agency is a VHWO. The following events occurred during

Super Senior Agency is a VHWO. The following events occurred during the year. The agency uses one control account for its fixed assets, with supporting subsidiary records. 1. Property was purchased fo...

Q: Record the following events of Mental Health Clinic, a VHWO:

Record the following events of Mental Health Clinic, a VHWO: 1. A contribution of $20,000 was received and is to be used for the purchase of equipment, but not until an addition to the building is con...

Q: Amazon.com, Inc. (AMZN) is the world’s

Amazon.com, Inc. (AMZN) is the world’s leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc. (NFLX)...

Q: Alaska Air Group (ALK), Delta Air Lines (DAL),

Alaska Air Group (ALK), Delta Air Lines (DAL), and Southwest Airlines (LUV) reported the following financial information (in millions) in a recent year: a. Determine the fixed asset turnover ratio f...

Q: FedEx Corporation (FDX) and United Parcel Service, Inc.

FedEx Corporation (FDX) and United Parcel Service, Inc. (UPS) compete in the package delivery business. The major fixed assets for each business include aircraft, sorting and handling facilities, deli...

Q: The following table shows the sales and average book value of fixed

The following table shows the sales and average book value of fixed assets for three different companies from three different industries for a recent year: a. For each company, determine the fixed a...

Q: IZ Corporation purchased land for $500,000. Later in

IZ Corporation purchased land for $500,000. Later in the year, the company sold a different piece of land with a book value of $250,000 for $280,000. How are the effects of these transactions reported...

Q: Equipment acquired on January 8 at a cost of $212,

Equipment acquired on January 8 at a cost of $212,000 has an estimated useful life of 15 years, has an estimated residual value of $14,000, and is depreciated by the straight-line method. a. What was...

Q: Apple Inc. (AAPL) designs, manufactures, and markets

Apple Inc. (AAPL) designs, manufactures, and markets personal computers and related software. Apple also manufactures and distributes music players (iPod), mobile phones (iPhone), and smart watches (A...

Q: Assume the same facts as in Exercise 9-23, except

Assume the same facts as in Exercise 9-23, except that the book value of the press traded in is $108,500. Exercise 9-23: A printing press priced at a fair market value of $275,000 is acquired in a...

Q: A building with a cost of $1,800,000

A building with a cost of $1,800,000 has an estimated residual value of $125,000, has an estimated useful life of 40 years, and is depreciated by the straight-line method. (a) What is the amount of th...

Q: In a recent balance sheet, Microsoft Corporation (MSFT) reported

In a recent balance sheet, Microsoft Corporation (MSFT) reported Property, Plant, and Equipment of $38,156 million and Accumulated Depreciation of $19,800 million. a. What was the book value of the fi...

Q: Equipment with a cost of $240,000 has an estimated

Equipment with a cost of $240,000 has an estimated residual value of $18,600, has an estimated useful life of 12 years, and is depreciated by the straight-line method. (a) Determine the amount of the...

Q: State the effect (cash receipt or cash payment and amount)

State the effect (cash receipt or cash payment and amount) of each of the following transactions, considered individually, on cash flows: a. Retired $500,000 of bonds, on which there was $4,000 of una...

Q: As discussed in the chapter, abnormal earnings (AE) are

As discussed in the chapter, abnormal earnings (AE) are where Xt is the firm’s net income, re is the cost of equity capital, and BVt−1 is the book value of equity...

Q: On December 1, 2017, Eva Corporation, a mortgage bank

On December 1, 2017, Eva Corporation, a mortgage bank, has the following amounts on its balance sheet (in millions): Also on December 1, 2017, Eva transfers mortgage receivables with a book value o...

Q: The following events and transactions related to David Company occurred after the

The following events and transactions related to David Company occurred after the balance sheet date of December 31, 2017, and before the financial statements were issued in 2018. None of the items is...

Q: For 2017, Silvertip Construction, Inc., reported income from continuing

For 2017, Silvertip Construction, Inc., reported income from continuing operations (after tax) of $1,650,000. On November 15, 2017, the company adopted a plan to dispose of a component of the business...

Q: The statement of cash flows for the year ended December 31,

The statement of cash flows for the year ended December 31, 2017, and other data for Bradley Corporation are shown below: Additional data: a. Bradley’s Dividends receivable account...

Q: As described in the chapter, the abnormal earnings approach for estimating

As described in the chapter, the abnormal earnings approach for estimating common share value is where V0 is the total value of all outstanding shares, BV0 is the current book value of stockholder...

Q: Kay Wing, Inc., prepared the following balance sheet at December

Kay Wing, Inc., prepared the following balance sheet at December 31, 2016. The following occurred during 2017. 1. $15,000 in cash and a $35,000 note payable were exchanged for land valued at $50,000...

Q: A December 31, 2017, postclosing trial balance for Short Erin

A December 31, 2017, postclosing trial balance for Short Erin Company follows. Additional information about Short Erin’s account balances: Required: 1. Cash includes $12,000 in U....

Q: When a stock is going through a period of non constant growth

When a stock is going through a period of non constant growth for T periods, followed by constant growth forever, the residual income model can be modified as follows: where Al’s...

Q: What are the sustainable growth rate and required return for Beagle Beauties

What are the sustainable growth rate and required return for Beagle Beauties? Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth mo...

Q: Using the P/E, P/CF, and P

Using the P/E, P/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties.  Data for Problem 28: Beagle Beauties engages in the development, manufacture, and sale of a line...

Q: Assume the sustainable growth rate and required return you calculated in Problem

Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual inc...

Q: Use the information from Problem 29 and calculate the stock price with

Use the information from Problem 29 and calculate the stock price with the clean surplus dividend. Do you get the same stock price as in Problem 29? Why or why not? Data from Problem 29: Assume the...

Q: Given your answers in Problems 27–30, do you feel

Given your answers in Problems 27–30, do you feel Beagle Beauties is overvalued or undervalued at its current price of around $82? At what price do you feel the stock should sell? D...

Q: Bill’s Bakery expects earnings per share of $2.56 next

Bill’s Bakery expects earnings per share of $2.56 next year. Current book value is $4.70 per share. The appropriate discount rate for Bill’s Bakery is 11 percent. Calculate the share price for Bill’s...

Q: ABBC, Inc. operates a very successful chain of yogurt and

ABBC, Inc. operates a very successful chain of yogurt and coffee shops spread across the southwestern part of the United States and needs to raise funds for its planned expansion into the Northwest. T...

Q: The following ratios were supplied by six loan applicants. Given this

The following ratios were supplied by six loan applicants. Given this information and the credit-scoring model developed by Altman (equation [17-4]), which loans have a high probability of defaulting...

Q: During the year, Smashville, Inc., had 17,000

During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share.

Q: National Sweetener Company owns the patent to the artificial sweetener known as

National Sweetener Company owns the patent to the artificial sweetener known as Supersweet. Assume that National Sweetener acquired the patent on January 1, 2011, at a cost of $300 million dollars, ex...

Q: Assume that Major Motors Corporation, a large automobile manufacturer,

Assume that Major Motors Corporation, a large automobile manufacturer, reported in a recent annual report to shareholders that its buildings had an original cost of $4,694,000,000. 1. Major Motors us...

Q: Zeff Company purchases a delivery van on January 1, Year 1

Zeff Company purchases a delivery van on January 1, Year 1, at a cost of $15,849. It has a useful life of four years and no estimated salvage value. When making the purchase decision, the company anti...

Q: In the current year, 2017, Reality Corporation reported $200

In the current year, 2017, Reality Corporation reported $200,000 of pre-tax earnings on its income statement. The corporate tax rate is 35% in the current year and next year, and it is scheduled to re...

Q: ABC Inc. is in the business of airframe maintenance, modification

ABC Inc. is in the business of airframe maintenance, modification and retrofit services, avionics and aircraft interior installations, the overhaul and repair of aircraft engines, and other related se...

Q: Brower Corporation owns a manufacturing plant in the country of Oust.

Brower Corporation owns a manufacturing plant in the country of Oust. On December 31, 2017, the plant had a book value of $5,000,000 and an estimated fair value of $8,000,000. Oust’s government has cl...

Q: Diamond Offshore Drilling, Inc. (DOD), is an international

Diamond Offshore Drilling, Inc. (DOD), is an international company that provides contract drilling services to the energy industry. In its 2015 Form 10-K, it reports the following information related...

Q: Four years ago Omega Technology, Inc., acquired a machine to

Four years ago Omega Technology, Inc., acquired a machine to use in its computer chip manufacturing operations at a cost of $35,000,000. The firm expected the machine to have a seven-year useful life...

Q: The income statement for the year ended December 31, 2017,

The income statement for the year ended December 31, 2017, as well as the balance sheets as of December 31, 2017, and December 31, 2016, for Lucky Lady Inc. follow. This information is taken from the...

Q: On January 1, 2017, Newyork Capital Corporation purchased 30%

On January 1, 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of Delta Crating Corp. for $250 million and accounts for this investment under the equity method. The fol...

Q: On January 1, 2017, Delta Inc. acquired 80%

On January 1, 2017, Delta Inc. acquired 80% of Sigma Company’s outstanding stock for $80,000 cash. Following are the balance sheets for Delta and Sigma immediately before the acquisi...

Q: Prince Corp. and Sprite Corp. reported the following balance sheets

Prince Corp. and Sprite Corp. reported the following balance sheets at January 1, 2017: On January 2, 2017, Prince issued $36,000 of stock and used the proceeds to purchase 90% of Spriteâ€...

Q: On January 1, 2017, Pluto Company acquired all of Saturn

On January 1, 2017, Pluto Company acquired all of Saturn Company’s common stock for $1,000,000 cash. On that date, Saturn had retained earnings of $200,000 and common stock of $600,0...

Q: The following information is based on a real company whose name has

The following information is based on a real company whose name has been disguised. Opus One operates in a single business segment, the retailing and servicing of home audio, car audio, and video equi...

Q: Presented next are the balance sheet accounts of Bergen Corporation as of

Presented next are the balance sheet accounts of Bergen Corporation as of December 31, 2017 and 2016. Additional Information: On January 2, 2017, Bergen sold all of its marketable investment securi...

Q: Spridget Company has 1 million shares of common stock authorized with a

Spridget Company has 1 million shares of common stock authorized with a par value of $3 per share, of which 600,000 shares are outstanding. The company received $7 per share when it issued shares to t...

Q: In January 2017, Harold Corporation acquired 20% of Otis Company’s

In January 2017, Harold Corporation acquired 20% of Otis Company’s outstanding common stock for $400,000. This investment gave Harold the ability to exercise significant influence over Otis. The book...

Q: On April 30, 2017, Pound Corp. acquired for cash

On April 30, 2017, Pound Corp. acquired for cash all 200,000 shares of the outstanding common stock of Shake Corp. for $20 per share. At April 30, 2017, Shake’s balance sheet showed net assets with a...

Q: The Barden Corporation’s comparative balance sheets for 2017 and 2016 are presented

The Barden Corporation’s comparative balance sheets for 2017 and 2016 are presented below. The income statement of Barden Corporation for the year ended December 31, 2017, is as...

Q: Neighborhood Supermarkets is preparing to go public, and you are asked

Neighborhood Supermarkets is preparing to go public, and you are asked to assist the firm by preparing its statement of cash flows for 2017. Neighborhood’s balance sheets at December...

Q: Newton Corporation was organized on January 1, 2017. On that

Newton Corporation was organized on January 1, 2017. On that date, it issued 200,000 shares of its $10 par-value common stock at $15 per share (400,000 shares were authorized). During the period from...

Q: Sea Company purchased 60% of Island Company’s common stock for $

Sea Company purchased 60% of Island Company’s common stock for $180,000. On the acquisition date, Island’s book value of net assets totaled $250,000 and the fair va...

Q: On July 1, 2017, Pushway Corporation issued 100,000

On July 1, 2017, Pushway Corporation issued 100,000 shares of common stock in exchange for all of Stroker Company’s common stock. The Pushway stock issued had a market value of $500,...

Q: On January 5, 2018, Alpha Inc. acquired 80%

On January 5, 2018, Alpha Inc. acquired 80% of the outstanding voting shares of Beta Inc. for $2,000,000 cash. Following are the separate balance sheets for the two companies immediately after the sto...

Q: On January 1, 2017, Chesapeake Corporation issued common stock with

On January 1, 2017, Chesapeake Corporation issued common stock with a fair value of $810,000 in exchange for 90% of Deardon Corporation’s common stock. Following are the January 1, 2...

Q: An income statement for Hamilton Corporation follows: /

An income statement for Hamilton Corporation follows: Additional Information: a. Decrease in accounts receivable, $36,000. b. The prepaid insurance account increased by $4,800 during the year. c. I...

Q: Trask Corporation, a public company whose shares are traded in the

Trask Corporation, a public company whose shares are traded in the over-the-counter market, had the following shareholders’ equity account balances at December 31, 2016: Common stock …………………..…………………....

Q: On January 1, 2012, when its $30 par-

On January 1, 2012, when its $30 par-value common stock was selling for $80 per share, Gierach Corporation issued $10 million of 4% convertible debentures due in 10 years. The conversion option allowe...

Q: On January 1, 2017, Figland Company purchased for cash 40

On January 1, 2017, Figland Company purchased for cash 40% of Irene Company’s 300,000 shares of voting common stock for $1,800,000. At the time, 40% of the book value of the underlying equity in Irene...

Q: Divac Company has developed a statement of stockholders’ equity for the year

Divac Company has developed a statement of stockholders’ equity for the year 2017 as follows: Divac’s preferred stock is $100 par, 8% stock. If the stock is liqui...

Q: Assume that Sample Company purchased factory equipment on January 1, 2017

Assume that Sample Company purchased factory equipment on January 1, 2017, for $60,000. The equipment has an estimated life of five years and an estimated residual value of $6,000. Sample’s accountant...

Q: Koffman’s Warehouse purchased a forklift on January 1, 2017, for

Koffman’s Warehouse purchased a forklift on January 1, 2017, for $6,000. The forklift is expected to last for five years and have a residual value of $600. Koffman’...

Q: Assume that Bloomer Company purchased a new machine on January 1,

Assume that Bloomer Company purchased a new machine on January 1, 2017, for $80,000. The machine has an estimated useful life of nine years and a residual value of $8,000. Bloomer has chosen to use th...

Q: The following account balances are taken from the records of Martin Corp

The following account balances are taken from the records of Martin Corp. for the past two years. Other information available for 2017 is as follows: a. Net income for the year was $200,000. b. Depr...

Q: The Operating Activities section of Miller Corp.’s statement of cash

The Operating Activities section of Miller Corp.’s statement of cash flows reported an adjustment for depreciation expense of $25,000, as well as another for a loss on the sale of equipment of $5,000...

Q: The Operating Activities section of Washburn Company’s statement of cash flows reported

The Operating Activities section of Washburn Company’s statement of cash flows reported an adjustment for a gain on the retirement of bonds of $5,000. The Financing Activities section of the statement...

Q: The Stockholders’ Equity section of the December 31, 2017, balance

The Stockholders’ Equity section of the December 31, 2017, balance sheet of Carter Company appeared as follows: Preferred stock, $50 par value, 10,000 shares authorized, ? shares issued ……. $ 400,000...

Q: The following transactions occurred at Hilton Inc. during its first year

The following transactions occurred at Hilton Inc. during its first year of operation: a. Issued 10,000 shares of common stock at $10 each; 100,000 shares are authorized at $1 par value. b. Issued 10,...

Q: Bannack Corp. is in the process of preparing its statement of

Bannack Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2017. An income statement for the year and comparative balance sheets are as follows: For the Year...

Q: Refer to all of the facts in Problem 12-11A.

Refer to all of the facts in Problem 12-11A. Problem 12-11A: Bannack Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2017. An income statement for the ye...

Q: The following events took place at Tasty-Toppins Inc., a

The following events took place at Tasty-Toppins Inc., a pizza shop that specializes in home delivery, during 2017: a. January 1, purchased a truck for $16,000 and added a cab and an oven at a cost of...

Q: The following events took place at Pete’s Painting Company during 2017:

The following events took place at Pete’s Painting Company during 2017: a. On January 1, Pete bought a used truck for $14,000. He added a tool chest and side racks for ladders for $4,800. The truck is...

Q: The Stockholders’ Equity section of the December 31, 2017, balance

The Stockholders’ Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $30 par value, 5,000 shares authorized,? shares issued …….. $120,000 Co...

Q: Glendive Corp. is in the process of preparing its statement of

Glendive Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2017. An income statement for the year and comparative balance sheets are as follows: For the Yea...

Q: Refer to all of the facts in Problem 12-11.

Refer to all of the facts in Problem 12-11. Problem 12-11: Glendive Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2017. An income statement for the yea...

Q: Langsom’s Mfg. is planning for a new project. Usually,

Langsom’s Mfg. is planning for a new project. Usually, Langsom’s depreciates long-term equipment for ten years. The equipment for this project is specialized and will have no further use at the end of...

Q: Mega Enterprises is in the process of negotiating an extension of its

Mega Enterprises is in the process of negotiating an extension of its existing loan agreements with a major bank. The bank is particularly concerned with Mega’s ability to generate s...

Q: Use the following legend to indicate how each transaction would be reported

Use the following legend to indicate how each transaction would be reported on the statement of cash flows. (Assume that the company uses the direct method in the Operating Activities section.)

Q: Refer to the information for Booth Manufacturing above. Required

Refer to the information for Booth Manufacturing above. Required: 1. Calculate the cash flows from operations using the indirect method. 2. Prepare a statement of cash flows. 3. Search the Internet t...

Q: Shaftel Ready Mix is a processor and supplier of concrete, aggregate

Shaftel Ready Mix is a processor and supplier of concrete, aggregate, and rock products. The company operates in the intermountain western United States. Currently, Shaftel has 14 cement-processing pl...

Q: The comparative balance sheets and income statement of Piura Manufacturing follow.

The comparative balance sheets and income statement of Piura Manufacturing follow. Additional transactions for 20X2 were as follows: a. Cash dividends of $8,000 were paid. b. Equipment was acqui...

Q: Refer to the information for Booth Manufacturing above. Required

Refer to the information for Booth Manufacturing above. Required: Calculate operating cash flows using the direct method. Data for Problem 49: Booth Manufacturing has provided the following financi...

Q: Refer to the information provided in Brief Exercises 14-19,

Refer to the information provided in Brief Exercises 14-19, 14-20, and 14-21. Required: 1. Prepare a statement of cash flows for Swasey for 20X2. 2. What is the relationship between the statement of...

Q: During 20X2, Norton Company had the following transactions: a

During 20X2, Norton Company had the following transactions: a. Cash dividends of $20,000 were paid. b. Equipment was sold for $9,600. It had an original cost of $36,000 and a book value of $18,000. Th...

Q: During 20X2, Evans Company had the following transactions: a

During 20X2, Evans Company had the following transactions: a. Cash dividends of $6,000 were paid. b. Equipment was sold for $2,880. It had an original cost of $10,800 and a book value of $5,400. The l...

Q: Refer to the information provided in Brief Exercises 14-27,

Refer to the information provided in Brief Exercises 14-27, 14-28, and 14-29. Required: 1. Prepare a statement of cash flows for Roberts Company for 20X2. 2. What is the relationship between the stat...

Q: During the year, Roberts Company sold equipment with a book value

During the year, Roberts Company sold equipment with a book value of $140,000 for $190,000 (original purchase cost of $240,000). New equipment was purchased. Roberts provided the following comparative...

Q: During the year, Swasey Company sold equipment with a book value

During the year, Swasey Company sold equipment with a book value of $560,000 for $760,000 (original purchase cost of $960,000). New equipment was purchased. Swasey provided the following comparative b...

Q: The following information concerns the operations of Blane Company for the year

The following information concerns the operations of Blane Company for the year ended December 31, 2014. Required: Determine the operating profit (loss) for each of Blane’s two seg...

Q: You have been engaged to examine the financial statements of the Town

You have been engaged to examine the financial statements of the Town of Bridgeport for the year ended June 30, 2015. Your examination disclosed that, because of the inexperience of the townâ
...

Q: Dorsey Corporation purchased 90% of the common stock of Lansing Company

Dorsey Corporation purchased 90% of the common stock of Lansing Company on January 1, 2008. The cost of the investment was equal to the book value interest acquired. Lansing Company operates two retai...

Q: Refer to the data provided in Exercise 13-7 for Dorsey

Refer to the data provided in Exercise 13-7 for Dorsey Corporation and Lansing Company. Exercise 13-7: Dorsey Corporation purchased 90% of the common stock of Lansing Company on January 1, 2008. The...

Q: For this problem, refer to the information provided in Problem 13

For this problem, refer to the information provided in Problem 13-9 for P Company and SFr Company. Ignore deferred income taxes in the allocation of the difference between implied and book value. Pro...

Q: P Company holds an 80% interest in SFr Company, a

P Company holds an 80% interest in SFr Company, a Swiss company. A trial balance for P Company and SFr Company at December 31, 2015, and other data are given in Problems 13-9 and 13-10. The following...

Q: For this problem, refer to the information provided in Problem 13

For this problem, refer to the information provided in Problem 13-3 for P Company and SFr Company. Ignore deferred income taxes in the assignment of the difference between implied and book value. Req...

Q: P Company holds an 80% interest in SFr Company, a

P Company holds an 80% interest in SFr Company, a Swiss company. A trial balance for P Company and SFr Company at December 31, 2015, and other data are given in Problems 13-3 and 13-4. Ignore deferred...

Q: Babbit, Inc., a multinational corporation based in the United States

Babbit, Inc., a multinational corporation based in the United States, owns an 80% interest in Nakima Company, which is located in Sydney, Australia. The acquisition occurred on January 1, 2014. The di...

Q: The December 31, 2014, balance sheet of the Datamation Partnership

The December 31, 2014, balance sheet of the Datamation Partnership is shown below. Datamation Partnership Balance Sheet December 31, 2014 Assets Cash ……………………………………………………………………………………………. $ 80,000 Acc...

Q: Following is the balance sheet of the BDO Partnership:

Following is the balance sheet of the BDO Partnership: The partners share income 40:40:20, respectively. Assume that 70% of the receivables are collected and that inventory with a book value of $15,...

Q: Nelson, Parker, and Rice are partners who share profits 4

Nelson, Parker, and Rice are partners who share profits 4:3:3, respectively. Parker decides that it would be more profitable for him to operate as a sole proprietor. Nelson and Rice are in agreement t...

Q: Hann, Murphey, and Ryan have operated a retail furniture store

Hann, Murphey, and Ryan have operated a retail furniture store for the past 30 years. Their business has been unprofitable for several years, since several large discount furniture stores opened in th...

Q: Part A Baker, Strong, and Weak have called on

Part A Baker, Strong, and Weak have called on you to assist them in winding up the affairs of their partnership. You are able to gather the following information. 1. The trial balance of the partnersh...

Q: Mark Malone, Pete Patton, and Sally Spencer formed a partnership

Mark Malone, Pete Patton, and Sally Spencer formed a partnership on January 1, 2014. Their original capital investments (all cash) were $140,000, $160,000, and $100,000, respectively. During the first...

Q: Alan Norwood is currently a senior associate with the law firm of

Alan Norwood is currently a senior associate with the law firm of Butler, Starns, and Madden (BSM). His compensation currently includes a salary of $155,000, and benefits valued at $5,000. BSM is cons...

Q: The following information is available for Bailey Company for 2014:

The following information is available for Bailey Company for 2014: 1. On January 2, 2014, Bailey paid property taxes amounting to $60,000 on its plant and equipment for the calendar year 2014. In lat...

Q: Select the best answer for each of the following items:

Select the best answer for each of the following items: 1. In accordance with the marshaling of assets provision of the Uniform Partnership Act, rank the following liabilities of a partnership in orde...

Q: Define and differentiate between the following pairs of terms. a

Define and differentiate between the following pairs of terms. a. Treasury stock versus classified stock b. Round lot versus odd lot c. Par value versus market value d. Book value versus investment va...

Q: Using the resources at your campus or public library or on the

Using the resources at your campus or public library or on the Internet, select any three common stocks you like and determine the latest book value per share, earnings per share, dividend payout rati...

Q: Consider the following information about Truly Good Coffee, Inc.

Consider the following information about Truly Good Coffee, Inc. Total assets …………………………………………………………………… $240 million Total debt ……………………………………………………………………….. $115 million Preferred stock ……………………………...

Q: The Amherst Company has net profits of $10 million, sales

The Amherst Company has net profits of $10 million, sales of $150 million, and 2.5 million shares of common stock outstanding. The company has total assets of $75 million and total stockholders’ equit...

Q: Jack Arnold is a resident of Lubbock, Texas, where he

Jack Arnold is a resident of Lubbock, Texas, where he is a prosperous rancher and businessman. He has also built up a sizable portfolio of common stock, which, he believes, is due to the fact that he...

Q: Highgate Computer Company produces $1.8 million in profits from

Highgate Computer Company produces $1.8 million in profits from $27 million in sales. It has total assets of $15 million. a. Calculate Highgate’s total asset turnover and its net profit margin. b. Fin...

Q: Financial Learning Systems has 2.5 million shares of common stock

Financial Learning Systems has 2.5 million shares of common stock outstanding and 100,000 shares of preferred stock. (The preferred pays annual cash dividends of $5 a share, and the common pays annual...

Q: Newco is a young company that has yet to make a profit

Newco is a young company that has yet to make a profit. You are trying to place a value on the stock, but it pays no dividends and you obviously cannot calculate a P/E ratio. As a result, you decide t...

Q: Ron’s Rodents Co. has total assets of $5 million,

Ron’s Rodents Co. has total assets of $5 million, total short- and long-term debt of $2.8 million, and $400,000 worth of 8% preferred stock outstanding. What is the firm’s total book value? What would...

Q: A firm has 1 million shares of common stock outstanding with a

A firm has 1 million shares of common stock outstanding with a book value of $15 per share. The firm also has total assets with a book value of $20 million. There is no preferred stock. What are the f...

Q: What is the difference between book value accounting and market value accounting

What is the difference between book value accounting and market value accounting? How do interest rate changes affect the value of bank assets and liabilities under the two methods?

Q: What are the differences between the economist’s definition of capital and the

What are the differences between the economist’s definition of capital and the accountant’s definition of capital? a. How does economic value accounting recognize the adverse effects of credit risk?...

Q: What are some of the arguments for and against the use of

What are some of the arguments for and against the use of market value versus book value of capital?

Q: Why is the market value of equity a better measure of a

Why is the market value of equity a better measure of a bank’s ability to absorb losses than book value of equity?

Q: The following is ABC Inc.’s balance sheet (in thousands

The following is ABC Inc.’s balance sheet (in thousands): Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equal...

Q: Exhibit 4.2 presents the balance sheet prepared by Infotech Limited

Exhibit 4.2 presents the balance sheet prepared by Infotech Limited, an Indian information technology firm, for Years 12 and 11. Infotech applies accounting standards issued by the Institute of Charte...

Q: Exhibit 4.3 presents the balance sheet prepared by Svenson,

Exhibit 4.3 presents the balance sheet prepared by Svenson, a Swedish telecommunications firm, for Years 7 and 6. Svenson applies IFRS and reports its results in millions of Swedish kronor (SEK). In a...

Q: Lori and Timothy combined their savings to open the Tres Leche Bakery

Lori and Timothy combined their savings to open the Tres Leche Bakery. Lori invested $10,000 in cash, whereas Timothy put in $7,500 in cash and some kitchen equipment with a book value at $8,000, accu...

Q: Shervonne Thomas is the controller at a large manufacturing company located in

Shervonne Thomas is the controller at a large manufacturing company located in Chesterfield, Virginia. The company has several divisions that evaluate their performance using a return on assets (ROA) f...

Q: Give the journal entry to recognize an impairment loss, if appropriate

Give the journal entry to recognize an impairment loss, if appropriate, in each of the following cases under U.S. GAAP. If a loss does not qualify as an impairment loss, explain the reason, and indica...

Q: GSB Corporation issued semiannual coupon bonds with a face value of $

GSB Corporation issued semiannual coupon bonds with a face value of $110,000 several years ago. The annual coupon rate is 8%, with two coupons due each year, six months apart. The historical market in...

Q: Exhibit 15.9 presents the changes in common shareholders’ equity of

Exhibit 15.9 presents the changes in common shareholders’ equity of Monk Corporation for 2013 through 2015. Monk regularly purchases shares of its common stock and reissues them in c...

Q: Exhibit 6.12 in Chapter 6 provides a simplified statement of

Exhibit 6.12 in Chapter 6 provides a simplified statement of cash flows. For each of the transactions that follow, indicate the number(s) of the line(s) in Exhibit 6.12 affected by the transaction and...

Q: Po River Winery Inc. has inventory that cost $500,

Po River Winery Inc. has inventory that cost $500,000. The aging process for the inventory requires several years. At the company’s closing date (December 31, Year 1), the inventory had a market value...

Q: Assume you are examining the balance sheets of two companies and note

Assume you are examining the balance sheets of two companies and note the following information: Maxie Smith, a student who has had no accounting courses, remarks that Company A and Company B have t...

Q: At the beginning of Year 1, Copeland Drugstore purchased a new

At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $52,000. It is expected to have a five-year life and a $7,000 salvage value. Required: a. Compute the depreciation f...

Q: Ford Construction Company purchased a forklift for $150,000 cash

Ford Construction Company purchased a forklift for $150,000 cash. It had an estimated useful life of four years and a $10,000 salvage value. At the beginning of the third year of use, the company spen...

Q: A plant asset with a cost of $50,000 and

A plant asset with a cost of $50,000 and accumulated depreciation of $41,000 is sold for $10,000. Required: a. What is the book value of the asset at the time of sale? b. What is the amount of gain o...

Q: Efficient Shredding Service has just completed a minor repair on a shredding

Efficient Shredding Service has just completed a minor repair on a shredding machine. The repair cost was $1,900, and the book value prior to the repair was $6,000. In addition, the company spent $12,...

Q: At the beginning of Year 1, Hill Manufacturing purchased a new

At the beginning of Year 1, Hill Manufacturing purchased a new computerized drill press for $75,000. It is expected to have a five-year life and a $15,000 salvage value. Required: a. Compute the depr...