Flint Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares of $12 par common stock. At no time has Flint issued any potentially dilutive securities. Listed below is a summary of Flint’s common stock activities. 1. Number of common shares issued and outstanding at December 31, 2018 2,160,000 2. Shares issued as a result of a 12% stock dividend on September 30, 2019 259,200 3. Shares issued for cash on March 31, 2020 2,190,000 Number of common shares issued and outstanding at December 31, 2020 4,609,200 4. A 2-for-1 stock split of Flint’s common stock took place on March 31, 2021.

Compute the weighted-average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement.

Compute the weighted-average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement.

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2020 on the 2021 comparative income statement.

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2021 on the 2021 comparative income statement.

Lester Company processes a raw material called Wizon until the splitoff point were it becomes products X, Y, and Z. Product X is sold at the splitoff point with no further processing. Products Y and Z require further processing to finish them before they can be sold. The following is a summary of costs and other related data for the year ending December 31, 2020.

Joint costs before the splitoff point $240,000

Separable Joint costs after splitoff to complete “Y” $132,000

Separable costs after splitoff to complete “Z” $228,000

product X Y Z

Litres processed 60,000 60,000 120,000

Selling price per litre $1.50 $3.20 $3.15

There were no inventories on hand January 1, 2020, and there was no Wizon on hand on December 31, 2020. All units of X, Y, and Z on hand at year end were complete as to processing.

REQUIRED:

1. Allocate the total joint costs to products X, Y, and Z using the net realizable value method.

2. Calculate the full cost of producing one unit of each of X, Y, and Z

.3. For each product (X, Y, and Z) calculate the dollar value of the cost of goods sold for 2020 and the ending inventory dollar value at December 31, 2020. Assume that 40,000 units of X, 60,000 units of Y, and 90,000 units of Z were sold during 2020.

Exercise 16-15

Nash Inc. uses a calendar year for financial reporting. The company is authorized to issue 8,880,000 shares of $12 par common stock. At no time has Nash issued any potentially dilutive securities. Listed below is a summary of Nash’s common stock activities.

a.) Compute the weighted-average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement.

b.) Compute the weighted-average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement.

c.) Compute the weighted-average number of common shares to be used in computing earnings per common share for 2020 on the 2021 comparative income statement.

d.) Compute the weighted-average number of common shares to be used in computing earnings per common share for 2021 on the 2021 comparative income statement.

The audit team completed the field work on 22 July 2020. The audit report was signed on 5 August by Charles Kirby. The financial statements were signed by the BoD on the same day, which was subsequently released to shareholders on 12 August 2020. During the review of subsequent events, you noted the following material events:

1) Cook’s Furniture Ltd has purchased a property in Adelaide Australia on 20 July 2020 for AUD 3,200,000 and intended to use it as a showroom. The company borrowed AUD 2,000,000 to finance the purchase. The company plans to take the opportunity of the current low interest rate to expand its property acquisitions

. 2) The company applied for Wages Subsidy scheme on 4 April and was granted 70,000. On 7 August, the BoD received a letter from the government requesting the company to pay back the Wages Subsidy with interests citing the reason that the company did not qualify.

3) The company was experiencing delays in its supply chain from overseas suppliers from March to May 2020, which resulted longer lead times in filling customer orders. On 31 July, a customer filed a lawsuit against the company suing for damages of $300, 000. Because of the delay, this customer could not open business on time and suffered income loss. REQUIRED:

For each of the above subsequent event:

a) Explain the potential impact on the 2020 financial statements.

b) Discuss audit procedures that may verify the potential impact on the 2020 financial statements.

1. On 5 September 2018, Norris Corporation purchased a computer equipment for $100,000, paid $20,000 cash and signed a 6% two-year notes payable for the remaining balance. The equipment was expected to be used for 4 years with a residual value of $10,000. Straight-line depreciation method is used. Depreciation for fractional years is recorded to the nearest full month. The financial year-end date is 31 December.

On 25 February 2020, the company spent $25,000 to completely overhaul the equipment. The management believes the estimated useful life of the equipment will be extended for 3 years more with residual value of $6,000, with effect on 25 February 2020.

Required:

Calculate the depreciation expense of the computer equipment for the year of 2020. Show your workings. (Round ALL answers to 2 decimal places.)

2. Marvel Company purchased motor vehicle costing $1,200,000 on 15 September 2017. The motor vehicle has an estimated useful life of 5 years and residual value of $200,000. Straight-line depreciation method is used. Half-year convention is adopted. On 5 March 2020, the company sold the motor vehicle for $400,000 cash. The company adjusts its accounts annually with the year-end at 31 December.

Required:

1. (a) Prepare the journal entries to update the depreciation before disposal in 2020;

2. (b) Prepare the journal entries on 5 March 2020 regarding to the disposal.

Panama Company acquired 60 %
of Samoa Corporation on 1/2018. Fair values of Samoa's assets and liabilities
approximated book values on that date. Panama uses the initial value method
to account for its investment in Samoa.
On 1/2019, Panama bought equipment from Samoa for $60,000 that had
originally cost Samoa $120,000 and had $ 90,000
of Accumulated depreciation at the time. The equipment had a five-year
remaining life and was being depreciated using the straight line method.
You are preparing the worksheet for the 2020 fiscal year.
a. Was this equipment sale upstream or downstream?
b. How much unrealized net gain from the equipment transfer remains at the
beginning of 2020? (this is the amount you will need for the *TA entry at 1/2020.)
c. Which company's Retained earnings account will be adjusted in the *TA entry
in part a? (Which company was the “initiator” of the transaction?)
d. How much excess depreciation will there be in each of the first five years
after the transfer?
e. Panama's 2020 net income, without including any investment income, was
$ 360,000 and Samoa reported net income of $ 115,000 in 2020.
What consolidated income will be reported before removing the noncontrolling
interest's share of the subsidiary's net income? (This includes the effect
of the ED entry.)
f. What will the noncontrolling interest's share of the subsidiary's net income be for
2020? (Consider whether the equipment sale had been upstream or downstream.)

Marin Inc. uses a calendar year for financial reporting. The company is authorized to issue 8,610,000 shares of $10 par common stock. At no time has Marin issued any potentially dilutive securities. Listed below is a summary of Marin’s common stock activities.

Compute the weighted-average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement.

eTextbook and Media

Compute the weighted-average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement.

eTextbook and Media

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2020 on the 2021 comparative income statement.

eTextbook and Media

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2021 on the 2021 comparative income statement.

C-Bay Inc.'s accounting year ends on December 31. During the following three years, its common shares outstanding changed as follows.

Required

a. For purposes of calculating EPS at the end of each year, determine the number of shares outstanding. Hint: consider each reporting year separately.

b. For purposes of calculating EPS at the end of 2022, when comparative statements are being prepared on a three-year basis, determine the number of shares outstanding for each year.

c. Compute EPS for each year based on computations in part b. Assume net income is $375,000, $330,000, and $299,000, for years 2022, 2021, and 2020, respectively.

Note: Round earnings per share amounts to two decimal places.

On January 1, 2020, Galactus Corp. (lessor) entered into a noncancellable lease agreement with Blade Corp. (lessee) for machinery which was carried in Galactus’s accounting records at $2,265,000 and had a fair value of $2,400,000. Minimum lease payments under the lease agreement, which expires on December 31, 2029, total $3,550,000. Payments of $355,000 are due each January 1. The first payment was made on January 1, 2020 when the lease agreement was finalized. The interest rate of 10% which was stipulated in the lease agreement is the implicit rate set by the lessor. The effective interest method is being used. Blade expects the machine to have a ten-year life with no residual value, and be depreciated on a straight-line basis. Collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the costs yet to be incurred by Galactus. Both entities are small private corporations that follow ASPE.

Instructions

a. From the lessee's viewpoint, what kind of lease is the above agreement? From the lessor's viewpoint, what kind of lease is the above agreement?

b. Ignoring income taxes, what should be the income reported by Galactus from the lease for calendar 2020?

c. Ignoring income taxes, what should be the expenses incurred by Blade from this lease for the calendar 2020?

d. What journal entries should be recorded by Blade Corp. on January 1, 2020?

e. What journal entries should be recorded by Galactus Corp. on January 1, 2020?