1. How do IFRS and U.S. GAAP differ with respect to the classification of debt that is expected to be refinanced?
2. What is the difference between the use of the term contingent liability in U.S. GAAP and IFRS?
Thank you!
In: Accounting
A machine can be purchased for $252,000 and used for five years,
yielding the following net incomes. In projecting net incomes,
double-declining depreciation is applied, using a five-year life
and a zero salvage value.
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
||||||||||||||||
|
Net income |
$ |
13,000 |
$ |
28,000 |
$ |
62,000 |
$ |
48,000 |
$ |
101,000 |
||||||||||
Compute the machine’s payback period (ignore taxes). (Round
payback period answer to 3 decimal places.)
Computation of Annual Depreciation Expense
Year Beginning Book Value Annual Depr. (40% of Book Value) Accumulated Depreciation at Year-End Ending Book Value
1
2
3
4
5
Annual Cash Flows
Year Net income Depreciation Net Cash Flow Cumulative Cash Flow
0 $(252,000) $(252,000)
1 13,000
2 28,000
3 62,000
4 48,000
5 101,000
Payback period = years
In: Accounting
|
Beyer Company is considering the purchase of an asset for
$270,000. It is expected to produce the following net cash flows.
The cash flows occur evenly within each year.
|
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In: Accounting
Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
| Current Year | Previous Year | ||||
| Sales | $701,100 | $570,000 | |||
| Cost of goods sold | 605,000 | 500,000 | |||
| Gross profit | $96,100 | $70,000 | |||
| Selling expenses | $27,120 | $24,000 | |||
| Administrative expenses | 24,200 | 20,000 | |||
| Total operating expenses | $51,320 | $44,000 | |||
| Income before income tax | $44,780 | $26,000 | |||
| Income tax expenses | 17,900 | 10,400 | |||
| Net income | $26,880 | $15,600 | |||
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.
| Winthrop Company | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount |
Previous year Amount |
Increase (Decrease) Amount |
Increase (Decrease) Percent |
|
| Sales | $701,100 | $570,000 | $ | % |
| Cost of goods sold | 605,000 | 500,000 | % | |
| Gross profit | $96,100 | $70,000 | $ | % |
| Selling expenses | $27,120 | $24,000 | $ | % |
| Administrative expenses | 24,200 | 20,000 | % | |
| Total operating expenses | $51,320 | $44,000 | $ | % |
| Income before income tax | $44,780 | $26,000 | $ | % |
| Income tax expense | 17,900 | 10,400 | % | |
| Net income | $26,880 | $15,600 | $ | % |
b. The net income for Winthrop Company increased between years. This increase was the combined result of an in sales and percentage in cost of goods sold. The cost of goods sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be than the percentage increase in sales.
In: Accounting
Current Position Analysis
The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:
| Current Year | Previous Year | |||||||
| Current assets: | ||||||||
| Cash | $425,600 | $317,200 | ||||||
| Marketable securities | 492,800 | 356,900 | ||||||
| Accounts and notes receivable (net) | 201,600 | 118,900 | ||||||
| Inventories | 646,800 | 372,100 | ||||||
| Prepaid expenses | 333,200 | 237,900 | ||||||
| Total current assets | $2,100,000 | $1,403,000 | ||||||
| Current liabilities: | ||||||||
| Accounts and notes payable | ||||||||
| (short-term) | $406,000 | $427,000 | ||||||
| Accrued liabilities | 294,000 | 183,000 | ||||||
| Total current liabilities | $700,000 | $610,000 | ||||||
a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
| Current Year | Previous Year | |||||
| 1. Working capital | $ | $ | ||||
| 2. Current ratio | ||||||
| 3. Quick ratio | ||||||
b. The liquidity of Nilo has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of an in current assets relative to current liabilities.
In: Accounting
How long will it take for $1,000 to amount to $10,000 if invested at 6% compounded monthly? Express the answer in years, rounded to two decimal places
In: Accounting
Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted-average method of process costing. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June):
| Work in Process—Mixing Department | |||
| June 1 balance |
29,000 |
Completed and transferred to Finished Goods |
? |
| Materials | 145,275 | ||
| Direct labor | 92,500 | ||
| Overhead | 110,000 | ||
| June 30 balance | ? | ||
The June 1 work in process inventory consisted of 4,700 units with $16,040 in materials cost and $12,960 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 60% complete with respect to conversion. During June, 37,200 units were started into production. The June 30 work in process inventory consisted of 8,200 units that were 100% complete with respect to materials and 50% complete with respect to conversion.
What is the cost of beginning work in process inventory plus the cost added during the period for conversion?
What is the cost per equivalent unit for materials?
What is the cost per equivalent unit for conversion?
What is the cost of ending work in process inventory for materials?
What is the cost of ending work in process inventory for conversion?
What is the cost of materials transferred to finished goods?
What is the amount of conversion cost transferred to finished goods?
Prepare the journal entry to record the transfer of costs from Work in Process to Finished Goods
What is the total cost to be accounted for?
What is the total cost accounted for?
In: Accounting
|
On 1 December 2013, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of Rent-It, an equipment rental company that was going out of business. The newly formed company uses the following accounts: |
******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
| Cash | Share Capital |
| Accounts Receivable | Retained Earnings |
| Prepaid Rent | Dividends |
| Unexpired Insurance | Income Summary |
| Office Supplies | Rental Fees Earned |
| Rental Equipment | Salaries Expense |
| Accumulated Depreciation: Rental Equipment | Maintenance Expense |
| Notes Payable | Utilities Expense |
| Accounts Payable | Rent Expense |
| Interest Payable | Office Supplies Expense |
| Salaries Payable | Depreciation Expense |
| Dividends Payable | Interest Expense |
| Unearned Rental Fees | Income Taxes Expense |
| Income Taxes Payable |
******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
The corporation performs adjusting entries monthly. Closing entries are performed annually on 31 December. During December, the corporation entered into the following transactions: |
******USA FORMA******USA FORMAT******USA FORMA******USA
FORMA******USA FORMA******USA FORMA******
| Dec. | 1 |
Issued to John and Patty Driver 30,000 new shares in exchange for a total of $300,000 cash. |
| Dec. | 1 |
Purchased for $220,800 all of the equipment formerly owned by Rent-It. Paid $131,000 cash and issued a one-year note payable for $89,800. The notes, plus all 12-months of accrued interest, are due 30 November 2014. |
| Dec. | 1 |
Paid $10,200 to Shapiro Realty as three months’ advance rent on the rental yard and office formerly occupied by Rent-It. |
| Dec. | 4 |
Purchased office supplies on account from Modern Office Co., $1,900. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) |
| Dec. | 8 |
Received $8,100 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) |
| Dec. | 12 | Paid salaries for the first two weeks in December, $5,000. |
| Dec. | 15 |
Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,100, of which $12,300 was received in cash. |
| Dec. | 17 |
Purchased on account from Earth Movers Limited, $900 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days. |
| Dec. | 23 | Collected $2,700 of the accounts receivable recorded on15 December. |
| Dec. | 26 |
Rented a backhoe to Mission Landscaping at a price of $260 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks. |
| Dec. | 26 | Paid biweekly salaries, $5,000. |
| Dec. | 27 | Paid the account payable to Earth Movers Limited, $900. |
| Dec. | 28 | Declared a dividend of 10 cents per share, payable on 15 January 2014. |
| Dec. | 29 |
Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-defendant in a $29,000 lawsuit filed on behalf of Kevin Davenport. Mission Landscaping had left the rented backhoe in a fenced construction site owned by Collier Construction. After working hours on 26 December, Davenport had climbed the fence to play on parked construction equipment. While playing on the backhoe, he fell and broke his arm. The extent of the company’s legal and financial responsibility for this accident, if any, cannot be determined at this time. ( Note: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.) |
| Dec. | 29 |
Purchased a 12-month public-liability insurance policy for $8,520. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on 1 January 2014, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. |
| Dec. | 31 |
Received a bill from Universal Utilities for the month of December, $660. Payment is due in 30 days. |
| Dec. | 31 |
Equipment rental fees earned during the second half of December amounted to $20,100, of which $15,800 was received in cash. |
******USA FORMA******USA FORMAT******USA FORMA******USA
FORMA******USA FORMA******USA FORMA******
| Data for Adjusting Entries |
| a. | The advance payment of rent on 1 December covered a period of three months. |
| b. | The annual interest rate on the note payable to Rent-It is 6 percent. |
| c. | The rental equipment is being depreciated by the straight-line method over a period of eight years. |
| d. | Office supplies on hand at 31 December are estimated at $610. |
| e. |
During December, the company earned $3,900 of the rental fees paid in advance by McNamer Construction Co.on 8 December. |
| f. |
As of 31 December, six days’ rent on the backhoe rented to Mission Landscaping on 26 December has been earned. |
| g. |
Salaries earned by employees since the last payroll date (26 December) amounted to $1,300 at month-end. |
| h. |
It is estimated that the company is subject to an income tax rate of 40 percent of profit before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in 2014. |
(A)******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
Journalize the December transactions. Do not record adjusting entries at this point. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
|
(B)******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
Post the entries into the following ledger accounts. (Record the transactions in the given order. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) |
(C)******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
Prepare an income statement for the year ended December 31. (Input all amounts as positive values. Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.) |
(D)******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
Prepare a statement of changes in equity for the year ended December 31. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) |
(E)******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
Prepare a statement of financial position (in report form) as at December 31. (Input all amounts as positive values. Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.) |
(F)******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA******
|
Prepare an after-closing trial balance as of December 31. (The items in the Trial Balance should be grouped as follows: Assets (in order of their liquidity), Liabilities (in order of their liquidity) and Equity. Omit the "$" sign in your response.) |
In: Accounting
Direct Materials Variances LO10–1 Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 35,000 helmets, using 22,500 kilograms of plastic. The plastic cost the company $171,000. According to the standard cost card, each helmet should require 0.6 kilograms of plastic, at a cost of $8 per kilogram.
|
1. |
Number of helmets................................................ |
|
|
Number of kilograms of plastic per helmet............. |
× ___ |
|
|
Standard Kilograms allowed................................... |
||
|
Standard cost per Kilogram................................... |
× $____ |
|
|
Total standard cost................................................ |
$______ |
|
|
Actual cost incurred............................................... |
$______ |
|
|
Standard cost above.............................................. |
______ |
|
|
Spending variance................................................. |
$ ___ |
|
|
__ |
2.
|
Standard Quantity Allowed |
Actual Quantity of Input, |
Actual Quantity of Input, |
|||
|
______ kilograms × |
______ kilograms × |
$_______ |
|||
|
Materials quantity variance = $_____ __ |
Materials price variance = $_____ __ |
||||
|
Spending variance = $___ __ |
|||||
Alternatively, the variances can be computed using the formulas:
Materials quantity variance = SP (AQ – SQ)
= $ _____per Kilogram (_______ Kilogram – _____ Kilogram)
= $______ __
Materials price variance = AQ (AP – SP)
= _____ Kilogram ($____ per Kilogram* – $___ per Kilogram)
= $____ __
*$171,000 / 22,500 Kilogram = $____ per Kilogram.
In: Accounting
In: Accounting
Question 2:
On September 30, 2017, the Radison Avenue Incorporated post-closing trial balance was as follows. The company adjusts its accounts monthly.
|
Account |
Debit |
Credit |
|
Cash |
16,500 |
|
|
Accounts Receivable |
14,200 |
|
|
Supplies |
3,300 |
|
|
Equipment |
17,900 |
|
|
Accumulated Depreciation – Equipment |
4,550 |
|
|
Accounts Payable |
3,200 |
|
|
Salaries Payable |
1,800 |
|
|
Unearned Revenue |
850 |
|
|
Common Shares |
9,100 |
|
|
Retained Earnings |
32,400 |
|
|
$51,900 |
$51,900 |
During October, the following transactions were completed:
Paid $2,300 to employees for salaries due, of which $1,800 is for September salaries payable and $500 for October
Issued common shares for $4,800
Received $11,200 cash from customers in payment of accounts
Received $12,700 cash for services performed in October Purchased supplies on account, $675
Paid creditors $3,200 of accounts payable due
Paid October rent, $550
Paid salaries, $2,150
Performed services on account, $3,200
Paid a cash dividend, $600
Received $1,350 from customers for services to be provided in the future
Adjustment data for the month:
Accrued salaries payable are $1,100
Unearned revenue of $850 was earned during the month
Income tax payable is estimated to be $600
Required:
In good format, and making whatever assumption you feel appropriate, prepare an accrual-based Income Statement and Statement of Financial Position (Balance Sheet) for the month ending October 2017.
In: Accounting
In: Accounting
Jack is the only shareholder of XYZ Corporation. At year-end, XYZ had $200 of current year earnings and profits and $600 of accumulated earnings and profits. If XYZ distributes cash of $200 to Jack, what is Jack’s tax liability on the dividend, if any? Assume Jack has a basis of $10 in XYZ shares. How does this result change if XYZ only has $50 of current earnings and profits and $100 of accumulated earnings and profits?
Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined:
In: Accounting
Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually.
In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit:
| Carrying Amounts | Fair Values | |||||
| Sand Dollar | ||||||
| Tangible assets | $ | 267,000 | $ | 285,900 | ||
| Trademark | 251,000 | 226,100 | ||||
| Customer list | 136,500 | 155,400 | ||||
| Goodwill | 183,050 | ? | ||||
| Liabilities | (39,750 | ) | (39,750 | ) | ||
| Salty Dog | ||||||
| Tangible assets | $ | 265,000 | $ | 265,000 | ||
| Unpatented technology | 236,000 | 174,500 | ||||
| Licenses | 134,500 | 148,400 | ||||
| Goodwill | 193,700 | ? | ||||
| Baytowne | ||||||
| Tangible assets | $ | 203,250 | $ | 220,650 | ||
| Unpatented technology | 0 | 170,250 | ||||
| Copyrights | 60,750 | 91,850 | ||||
| Goodwill | 98,000 | ? | ||||
The fair values for each reporting unit (including goodwill) are $781,400 for Sand Dollar, $789,900 for Salty Dog, and $712,750 for Baytowne. To date, Destin has reported no goodwill impairments.
How much goodwill impairment should Destin report this year?
| Sand Dollar | _________? | ________? |
| Salty Dog | _________? | ________? |
| Baytowne | _________? | ________? |
In: Accounting
Jake Werkheiser decides to invest $4000 in an IRA at the end of each year for the next 5 years. If he makes these investments, and if the certificates pay 8%, compounded annually, how much will he have at the end of the 5 years?
(a) State whether the problem relates to an ordinary annuity or an annuity due.
ordinary annuityannuity due
(b) Solve the problem. (Round your answer to the nearest cent.)
A family wants to have a $170,000 college fund for their children at the end of 14 years. What contribution must be made at the end of each quarter if their investment pays 7.5%, compounded quarterly?
(a) State whether the problem relates to an ordinary annuity or an annuity due.
ordinary annuityannuity due
(b) Solve the problem. (Round your answer to the nearest cent.)
Sam deposits $400 at the end of every 6 months in an account that pays 5%, compounded semiannually. How much will he have at the end of 3 years?
(a) State whether the problem relates to an ordinary annuity or an annuity due.
ordinary annuityannuity due
(b) Solve the problem. (Round your answer to the nearest cent.)
Grandparents plan to open an account on their grandchild's birthday and contribute each month until she goes to college. How much must they contribute at the beginning of each month in an investment that pays 10%, compounded monthly, if they want the balance to be $160,000 at the end of 18 years?
(a) State whether the problem relates to an ordinary annuity or an annuity due.
ordinary annuityannuity due
(b) Solve the problem. (Round your answer to the nearest cent.)
Jane Adele deposits $1,400 in an account at the beginning of each 3-month period for 9 years. If the account pays interest at the rate of 12%, compounded quarterly, how much will she have in her account after 9 years?
(a) State whether the problem relates to an ordinary annuity or an annuity due.
ordinary annuityannuity due
(b) Solve the problem. (Round your answer to the nearest cent.)
In: Accounting