On December 31, 2017, Brisbane Company had 100,000 shares of common stock outstanding and 23,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2018, Brisbane purchased 17,000 shares of common stock on the open market as treasury stock paying $33 per share. Brisbane sold 5,300 treasury shares on September 30, 2018, for $38 per share. Net income for 2018 was $173,905. Also outstanding during the year were fully vested incentive stock options giving key personnel the option to buy 43,000 common shares at $33. The market price of the common shares averaged $43 during 2018. Required: Compute Brisbane's basic and diluted earnings per share for 2018. (Round your answers to 2 decimal places.)

On January 1, 2018, Harlon Consulting entered into a three-year lease for new office space agreeing to lease payments of: $5,000 in 2018, $6,000 in 2019 and $7,000 in 2020. Payments are due on December 31 of each year with the first payment being made on December 31, 2018. Harlon is aware that the lessor used a 5% interest rate when calculating lease payments.

Required:

1. Prepare the appropriate entries for Harlon Consulting on January 1, 2018 to record the lease.

2. Prepare the appropriate entries for Harlon Consulting on December 31, 2018 to record the lease.

3. Prepare the appropriate entries for Harlon Consulting on December 31, 2019 to record the lease.

4. Prepare the appropriate entries for Harlon Consulting on December 31, 2020 to record the lease.

At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $36 million attributable to a temporary book-tax difference of $90 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $80 million. Payne has no other temporary differences. Taxable income for 2018 is $230 million and the tax rate is 40%.

Payne has a valuation allowance of $10 million for the deferred tax asset at the beginning of 2018.

Required:
1. Prepare the journal entry(s) to record Payne’s income taxes for 2018, assuming it is more likely than not that the deferred tax asset will be realized.
2. Prepare the journal entry(s) to record Payne’s income taxes for 2018, assuming it is more likely than not that one-fourth of the deferred tax asset will ultimately be realized.

On January 2, 2018, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $105 million. Jackson Industry’s net income for the year ended December 31, 2018, was $135 million. The fair value of the shares held by Sanborn was $128 million at December 31, 2018. During 2018, Jackson declared a dividend of $70 million.

Required:
1. Prepare all appropriate journal entries related to the investment during 2018.

Record the purchase of Jackson Industry capital stock for $105.

Record Sanborn Tobacco's portion of Jackson Industry's net income of $135 million.

Record the dividend revenue

Record the fair value adjustment.

2. Assume that Sanborn sold the stock on January 2, 2019 for $140 million. Prepare the journal entries Sanborn would use to record the sale.

The Alford Group had 310,000 shares of common stock outstanding at January 1, 2018. The following activities affected common shares during the year. There are no potential common shares outstanding.
  

Required:

1. Determine the 2018 EPS.
2. Determine the 2019 EPS.
3. At what amount will the 2018 EPS be presented in the 2019 comparative financial statements?

(For all requirements, Enter your answers in thousands.)

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $197,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $645,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,060,000 in total. Seida's January 1, 2018 book value equaled $1,910,000, although land was undervalued by $137,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $278,000 and declared and paid dividends of $113,000. Prepare the 2018 journal entries for Milani related to its investment in Seida.

Record 2018 amortization for trademark excess fair value.

Damon, Inc., acquired 25% of Jolie Enterprises for $8,000,000 on October 1, 2018. The total fair value of Jolie's identifiable net assets was $27,000,000 on that date, and the total book value of those net assets was $23,000,000.

The difference between fair value and book value is attributed to equipment that has a remaining useful life of 4 years. During 2018 Jolie recognized net income of $2,000,000 and paid dividends of $1,200,000 ($300,000 per quarter). Jolie had a fair value of $36,000,000 as of December 31, 2018.

Required: Assume Damon accounts for the Jolie investment under the equity method. Indicate the total effect of the Jolie investment on Damon's:

1) Net income for 2018.

2) The balance in Damon's investment account on December 31, 2018.

Golden Manufacturing Company started operations by acquiring $142,000 cash from the issue of common stock. On January 1, 2018, the company purchased equipment that cost $132,000 cash, had an expected useful life of five years, and had an estimated salvage value of $13,200. Golden Manufacturing earned $94,700 and $68,080 of cash revenue during 2018 and 2019, respectively. Golden Manufacturing uses double-declining-balance depreciation.

Required

1. Record the purchase in a horizontal statements model.

1. b-1. Prepare an income statements for 2018 and 2019. Use a vertical statements format.

1. b-2. Prepare a balance sheets for 2018 and 2019. Use a vertical statements format.

1. b-3. Prepare a statements of cash flows for 2018 and 2019. Use a vertical statements format.

At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book–tax difference of $75 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $70 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $180 million and the tax rate is 40%.

Required:
1. Prepare the journal entry(s) to record Payne’s income taxes for 2018, assuming it is more likely than not that the deferred tax asset will be realized.
2. Prepare the journal entry(s) to record Payne’s income taxes for 2018, assuming it is more likely than not that one-fourth of the deferred tax asset will ultimately be realized.

• Record valuation allowance for the end of 2018.