1.) Company Zeta bought new office furniture in the year 2000. The purchase cost was 62426 dollars and in addition it had to spend 14941 dollars for installation. The furniture has been in use since April 21st, 2000. Zeta forecasted that in 2015 the office furniture would have a net salvage value of $1000. Using the US Accelerated Depreciation Schedule, estimate the value of depreciation recorded in the accounting books in the year 2004 if the company decided to sell the furniture on June 5th (of 2004). (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)

ANSWER: 3454.44

2.) Company Omega bought new petroleum refining equipment in the year 2000. The purchase cost was 174324 dollars and in addition it had to spend 14582 dollars for installation. The refining equipment has been in use since February 1st, 2000. Omega forecasted that in 2030 the equipment would have a net salvage value of $10,000. Using the US Straight Line Depreciation Schedule, estimate the value of depreciation recorded in the accounting books in the year 2004 if the company decided to sell the equipment on August 5th (of 2004). (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)

ANSWER: 9445.3

Company H has one class of Common Stock – Class A.

There are 15 million Class A shares and they each carry a Par Value of $ 1. The Class A shares were issued at a market price of $ 30 per share. The shares are publicly traded on the New York Stock Exchange.

1. Show the Journal Entry for the issuance of the Class A shares.

2. Company H proposes to buy land which does not have a specified fair value. It offers the land owner 100,000 shares when the stock price for Class A shares has risen to $ 50 per share. Assuming this arrangement is concluded show the journal entry that would be made.

3. The company decides to have an active repurchase and reselling program for the Class A shares.
   1. 100,000 Class A shares are repurchased at a price of $ 40 each. Show the entry for this.

2. Of those shares 50,000 are resold at a price of $45 each. Show the entry for this.

3. Then 25,000 shares are resold at a price of $ 20 per share. Show the entry for this.

4. After these three transactions:
   1. How many Shares are left in the Treasury Share account?

2. What is the balance in the Treasury Share account?

3. It is a Debit or Credit Balance?

Does this mean that Equity is increased or decreased to the extent of this final balance in the Treasury Share account?

Q1.1)

On January 1, 2014, Thor Corp. bought 30,000 shares of the available 100,000 common shares of Loki Inc., a publicly traded firm. This acquisition provided Thor with significant influence. Thor paid $700,000 cash for the investment. At the time of the acquisition, Loki reported assets of $2,500,000 and liabilities of $1,200,000. Asset values reflected fair market value, except for capital assets that had a net book value of $500,000 and a fair market value of $730,000. These assets had a remaining useful life of five years. For 2014 Loki reported net income of $400,000 and paid total cash dividends of $100,000. On May 16, 2018, Thor sold 15,000 of its shares in Loki for $425,000. Thor has no immediate plans to sell its remaining investment in Iceberg. Loki is actively traded, and stock price information follows:

Assets

January 1, 2014 = $23
December 31, 2014 = $25
January 1, 2018 = $26

Required:

1. Assuming Thor is using ASPE, did the initial investment include a payment for goodwill? Provide support for your answer.
2. At the end of 2014, what would appear on the income statement and balance sheet of Thor in connection with its investment in Loki? Show supporting calculations.
3. Provide the entry to account for Thor’s sale of the shares in May 2018. How should Thor account for its remaining investment in Loki?

On January 1, 2014, Thor Corp. bought 30,000 shares of the available 100,000 common shares of Loki Inc., a publicly traded firm. This acquisition provided Thor with significant influence. Thor paid $700,000 cash for the investment. At the time of the acquisition, Loki reported assets of $2,500,000 and liabilities of $1,200,000. Asset values reflected fair market value, except for capital assets that had a net book value of $500,000 and a fair market value of $730,000. These assets had a remaining useful life of five years. For 2014 Loki reported net income of $400,000 and paid total cash dividends of $100,000.

On May 16, 2018, Thor sold 15,000 of its shares in Loki for $425,000. Thor has no immediate plans to sell its remaining investment in Iceberg.

Loki is actively traded, and stock price information follows:

o January 1, 2014 = $23

o December 31, 2014 = $25

o January 1, 2018 = $26

Required

1. Assuming Thor is using ASPE, did the initial investment include a payment for goodwill? Provide support for your answer.

2. At the end of 2014, what would appear on the income statement and balance sheet of Thor in connection with its investment in Loki? Show supporting calculations.

3. Provide the entry to account for Thor’s sale of the shares in May 2018. How should Thor account for its remaining investment in Loki?

1.The revenue recognition standard, Revenue from Contracts with Customers, states a specific approach should be used by companies to recognize revenue. The standard:

a.Requires an asset-liability approach because an asset or a liability may stem from the terms of the contract and measuring the change in the asset or liability over the life of the contract results in a disciplined approach to measuring and recognizing revenue.

b.Requires an earned-realized approach because the contract will result in revenue being earned and the collection of payment from the customer will result in the realization of the earned revenue.

c.Requires companies to recognize revenue by using a liability-equity approach because a contract results in a company’s promise to perform a service and the company reports that promise as a liability until the service is completed. Further, a company’s equity is increased because net income is closed to retained earnings.

d.Requires companies to recognize revenue by using an asset-equity approach because revenue typically results in an increase in assets through the collection of cash or recognition of accounts receivable and an increase in equity through the closing of net income to retained earnings.

2. Which type of transaction generally results in revenue being recognized with the passage of time?

3. Mars Corporation uses the percentage-of-completion method. At the end of the first year of a $9,000,000 contract, the following information is available:

In the first year, Mars should recognize gross profit of

4. Mars Corporation uses the completed-contract method. At the end of the first year of a $9,000,000 contract, the following information is available:

In the first year, Mars should recognize gross profit of

5. At the end of the first year of a $9,000,000 contract, Mars Corporation provides the following information:

In the first year, Mars should recognize gross profit (loss) of

15 18 19 22 23 24 27 28 28 29 29 30 30 33 33 34 35 38 38 40
41 41 45 45 45 48 48 49 49 49 51 51 51 52 52 53 54 54 56 56
56 59 59 59 59 60 60 60 61 61 61 63 63 64 66 66 66 67 69 69
70 73 74 74 74 75 75 75 75 76 76 79 82 84 87 87 88 90 95 100

Calculate:

a. Series, Sturges
b. Frequency distribution table.
d. Central Tendency Measures. (Mean, median, mode) and Position measurements. (quartile 1, decile 8 and percentile 85).

Rand Medical has a defined benefit pension for which the following pension-related data were available on December 31, 2005 (the end of the company’s fiscal period): Projected benefit obligation (PBO): Balance, January 1, 2005 $1,800,000 Service cost 369,000 Interest cost, discount rate, 10% 180,000 Losses (gains) due to changes in actuarial assumptions in 2005 0 Pension benefits paid (189,000) Balance, December 31, 2005 $2,160,000 Plan assets: Balance, January 1, 2005 $ 1,350,000 Actual return on plan assets 135,000 (Expected return on plan assets, $120,000) Contributions 450,000 Pension benefits paid (189,000) Balance, December 31, 2005 $ 1,746,000 January 1, 2005, balances: Unrecognized past service cost (annual amortization $36,000) 216,000 Unrecognized net loss (amortization over 10 years, if needed) 210,000 Unrecognized transition cost 0 Intangible pension asset 0 Prepaid (accrued) pension cost (credit balance) $ (24,000) Required: 1. Calculate Rand’s 2005 pension expense. Show calculations. 2. Prepare Rand’s 2005 journal entry to record pension expense and funding. 3. Reconcile the funded status of the plan with the books at the end of 2005.

Using the worksheet you completed in Part 1, revise the given year end information with the following values and then answer the questions below:

Select year end company accounts and additional information:

Required:
1. Prepare the adjusting journal entries based on the results of your revised spreadsheet.

• Record the adjusting entry for supplies expense if supplies on hand at the end of the year were $8,300.

Note: Enter debits before credits.

• Record the adjusting entry for services remaining to be provided to customers who paid $4,300 in advance.

Note: Enter debits before credits.

• Record the adjusting entry for additional salaries of $9,400 owed to employees at the end of the year.

Note: Enter debits before credits.

• A note receivable of $9,800 was received on March 31 with an interest rate of 8%. Record the adjusting entry for interest on the Note Receivable at year end.

Note: Enter debits before credits.

2. Complete the table below with the new balances in each account:

3. Now assume supplies on hand at the end of the year were $15,800, and services remaining to be provided to customers were $6,800. Enter the recalculated values below:

Each part should be no more than 1 page in length.

Part I

The rules of accounting provide management with “some” latitude in determining when revenue is earned. Assume that a company normally required acceptance by its customers prior to recording revenue as earned, delivers a product to a customer near the end of the quarter. The company believes that customer acceptance is assured, but cannot obtain it prior to the quarter-end. Recording the revenue would assure “making its numbers” for the quarter. Although formal acceptance is not obtained, the salesperson records the sale, fully intending to obtain written acceptance as soon as possible.

1. What are the revenue recognition requirements in this case?

2. What are the ethical issues relating to this sale?

3. Assume you are on the board of directors of this company. What safeguards can you put in place to provide assurance that the company’s revenue recognition policy is followed?

Part II

Research and review what a financial statement derivative is. Identify an example and how company’s use to leverage the business activities.

Part III

A company’s return on net operating assets (RNOA = NOPAT/Average NOA) is commonly used to evaluate financial performance. If managers cannot increase NOPAT, they can still increase this return by reducing the amount of net operating assets (NOA). In bullet form, list specific ways that managers could reduce the following assets:

1. Receivables

2. Inventories

3. Plant, property equipment