Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $306,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $784,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2017. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $182,000 in 2017 and $244,000 of net income during 2018. Dividends of $64,000 and $90,000 are declared and paid in 2017 and 2018, respectively. Belden uses the equity method. On its 2018 comparative income statements, how much income would Belden report for 2017 and 2018 in connection with the company's investment in Sheffield? If Belden sells its entire investment in Sheffield on January 1, 2019, for $412,000 cash, what is the impact on Belden's income? Assume that Belden sells inventory to Sheffield during 2017 and 2018 as follows. What amount of equity income should Belden recognize for the year 2018? Year Cost to Belden Price to Sheffield Year-End Balance (at Transfer Price) 2017 $36,000 $60,000 $20,000 (sold in following year) 2018 34,160 61,000 38,000 (sold in following year)
In: Advanced Math
Corbit Corporation’s 2018 financial statements include the following discussion regarding its use of put options (from Note 9):
During 2016, the company implemented a stock repurchase program to repurchase up to 500,000 shares of stock. In conjunction with the company’s stock repurchase program, the company issues put options that give the purchaser the right to sell shares of Corbit stock to the company at specified prices on specific dates. Recent plan activity is as follows:
Outstanding
Put Options
Balance, December 31, 2016 500,000
Options issued 0
Options exercised (100,000)
Balance, December 31, 2017 400,000
Options issued 0
Options exercised 0
Balance, December 31, 2018 400,000
Corbit’s stock price was $30 per share on 12/31/18, and the company’s stock price averaged $32 per share during 2018. Assume that all outstanding put options are freely exercisable and that all of the outstanding put options on 12/31/18 have an exercise price of $36 per share. Also, assume that Corbit’s net income for 2018 was $10 million and that the company’s weighted-average number of common shares outstanding for 2018 was 4.5 million. Corbit has no other potential common shares.
Required:
1. Explain and illustrate how the outstanding put options should be reflected in the 2018 diluted EPS calculation (provide the full citation(s) from the FASB codification that supports your answer).
2. Calculate Corbit’s basic and diluted EPS for 2018.
In: Accounting
Corbit Corporation’s 2018 financial statements include the following discussion regarding its use of put options (from Note 9):
During 2016, the company implemented a stock repurchase program to repurchase up to 500,000 shares of stock. In conjunction with the company’s stock repurchase program, the company issues put options that give the purchaser the right to sell shares of Corbit stock to the company at specified prices on specific dates. Recent plan activity is as follows:
Outstanding
Put Options
Balance, December 31, 2016 500,000
Options issued 0
Options exercised (100,000)
Balance, December 31, 2017 400,000
Options issued 0
Options exercised 0
Balance, December 31, 2018 400,000
Corbit’s stock price was $30 per share on 12/31/18, and the company’s stock price averaged $32 per share during 2018. Assume that all outstanding put options are freely exercisable and that all of the outstanding put options on 12/31/18 have an exercise price of $36 per share. Also, assume that Corbit’s net income for 2018 was $10 million and that the company’s weighted-average number of common shares outstanding for 2018 was 4.5 million. Corbit has no other potential common shares.
Required:
1. Explain and illustrate how the outstanding put options should be reflected in the 2018 diluted EPS calculation (provide the full citation(s) from the FASB codification that supports your answer).
2. Calculate Corbit’s basic and diluted EPS for 2018.
In: Accounting
Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $310,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $808,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2017. No goodwill resulted from Belden's share purchase.
Sheffield reported net income of $168,000 in 2017 and $222,000 of net income during 2018. Dividends of $76,000 and $62,000 are declared and paid in 2017 and 2018, respectively. Belden uses the equity method.
On its 2018 comparative income statements, how much income would Belden report for 2017 and 2018 in connection with the company's investment in Sheffield?
If Belden sells its entire investment in Sheffield on January 1, 2019, for $422,000 cash, what is the impact on Belden's income?
Assume that Belden sells inventory to Sheffield during 2017 and 2018 as follows. What amount of equity income should Belden recognize for the year 2018?
| Year | Cost to Belden |
Price to Sheffield |
Year-End Balance (at Transfer Price) |
| 2017 | $21,600 | $40,000 | $20,000 (sold in following year) |
| 2018 | 29,500 | 59,000 | 40,000 (sold in following year) |
In: Accounting
The following two tables are used in all the following questions. Thus, part of the following questions involve determining exactly what you need for each question. Please assume that for GDP calculations, only two things are produced in this economy: houses (a good) and dog walking (a service). Please ignore coffee for the GDP calculations. Also, assume that 2018 is the base year for GDP calculations. The base year for the CPI is not given.
| Year | Houses Produced (millions) | Average House Price | Dogs Walked (millions) | Average Dog Walking Fee |
| 2018 | 1.00 | $200,000 | 1,000 | $25.00 |
| 2019 | 1.01 | $208,000 | 1,010 | $25.10 |
| Year | Nominal price of a cup of coffee | CPI | CPI Market Basket | Nominal interest rate on a car loan |
| 1989 | $1.70 | 180 | $28,800 | 5% |
| 1999 | $1.85 | 200 | $32,000 | 3% |
| 2009 | $1.95 | 220 | $35,200 | 2% |
| 2018 | $1.98 | 245 | $39,200 | 5% |
| 2019 | $2.00 | 250 | $40,000 | 6% |
1. How much did the real price of coffee change from 2018 to
2019?
2. Without making a calculation, which did you think increased more
from 2018 to 2019 -- real or nominal GDP? Why?
3. Convert the nominal price of coffee from 1989 to 2019
prices.
4. What was the economy's growth rate from 2018 to 2019?
5. Given the data in these tables, can you compute the value of the
market basket in the base year of the CPI?
6. What was the economy's inflation rate from 2018 to 2019?
In: Economics
Problem 19-8 (Part Level Submission)
The following information was disclosed during the audit of Elbert Inc.
| 1. |
Year |
Amount Due |
||
| 2017 | $130,000 | |||
| 2018 | 104,000 |
| 2. | On January 1, 2017, equipment costing $600,000 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11A must be used.) | |
| 3. | In January 2018, $225,000 is collected in advance rental of a building for a 3-year period. The entire $225,000 is reported as taxable income in 2018, but $150,000 of the $225,000 is reported as unearned revenue in 2018 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2019 and 2020. | |
| 4. | The tax rate is 40% in 2017 and all subsequent periods. (Hint: To find taxable income in 2017 and 2018, the related income taxes payable amounts will have to be “grossed up.”) | |
| 5. | No temporary differences existed at the end of 2016. Elbert expects to report taxable income in each of the next 5 years. |
E. Prepare the journal entry to record income taxes for 2018.
| Account Titles | Debit | Credit |
| Income Tax Expense | $ | |
| Deferred Tax Asset | $ | |
| Income Tax Payable | $104,000 |
F. Draft the income tax section of the income statement for 2018, beginning with “Income before income taxes.”
In: Accounting
On January 1, 2017, Riverbed Company issued $ 1,930,000 face value, 9%, 10-year bonds at $ 2,059,503. This price resulted in a 8% effective-interest rate on the bonds. Riverbed uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1.
Prepare the journal entries to record the following transactions. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| 1. | The issuance of the bonds on January 1, 2017. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | Accrual of interest and amortization of the premium on December 31, 2017. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | The payment of interest on January 1, 2018. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
4. Accrual of interest and amortization of the premium on December 31, 2018.
Show the proper long-term liabilities balance sheet presentation for the liability for bonds payable at December 31, 2018. (Round answers to 0 decimal places, e.g. 125.)
Provide the answers to the following questions.
|
In: Accounting
In: Accounting
Wildhorse Ltd. purchased a new machine on April 4, 2014, at a cost of $152,000. The company estimated that the machine would have a residual value of $14,000. The machine is expected to be used for 9,200working hours during its four-year life. Actual machine usage was 1,300 hours in 2014; 2,000 hours in 2015; 2,500 hours in 2016; 1,800 hours in 2017; and 1,600hours in 2018. Wildhorse has a December 31 year end.
(a)
Calculate depreciation for the machine under each of the
following methods: (Round expense per unit to 2 decimal
places, e.g. 2.75 and final answers to 0 decimal places, e.g.
5,275.)
(1) Straight-line for 2014 through to 2018.
| 2014 expense | $enter a dollar amount | ||
|---|---|---|---|
| 2015 expense | $enter a dollar amount | ||
| 2016 expense | $enter a dollar amount | ||
| 2017 expense | $enter a dollar amount | ||
| 2018 expense | $enter a dollar amount |
(2) Diminishing-balance using double the
straight-line rate for 2014 through to 2018.
| 2014 expense | $enter a dollar amount | ||
|---|---|---|---|
| 2015 expense | $enter a dollar amount | ||
| 2016 expense | $enter a dollar amount | ||
| 2017 expense | $enter a dollar amount | ||
| 2018 expense | $enter a dollar amount |
(3) Units-of-production for 2014 through to
2018.
| 2014 expense | $enter a dollar amount | ||
|---|---|---|---|
| 2015 expense | $enter a dollar amount | ||
| 2016 expense | $enter a dollar amount | ||
| 2017 expense | $enter a dollar amount | ||
| 2018 expense | $enter a dollar amount |
In: Accounting
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018:
| Asset | Cost | Date Placed in Service | |
| Office furniture | $ | 150,000 | 02/03/2018 |
| Machinery | 1,560,000 | 07/22/2018 | |
| Used delivery truck* | 40,000 | 08/17/2018 | |
*Not considered a luxury automobile.
During 2018, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2019 to increase its production capacity. These are the assets acquired during 2019:
| Asset | Cost | Date Placed in Service | |
| Computers & info. system | $ | 400,000 | 03/31/2019 |
| Luxury auto† | 80,000 | 05/26/2019 | |
| Assembly equipment | 1,200,000 | 08/15/2019 | |
| Storage building | 700,000 | 11/13/2019 | |
†Used 100% for business purposes.
Karane generated taxable income in 2019 of $1,732,500 for purposes of computing the §179 expense. (Use MACRS)
c. Compute the maximum 2019 depreciation deductions, including §179 expense, but now assume that Karane would like to take bonus depreciation.
| Description | COst | SEC. 179 Expense | Bonus | MACRS Basis | Current Marcs Depreciation |
Total Depreciation Deduction |
|
|
2018 |
|||||||
| Office furniture | |||||||
|
|||||||
| Used delivery truck | |||||||
| 2019 Assets | |||||||
| Computers | |||||||
| Luxury Auto | |||||||
| Assembly Equipment | |||||||
| Storage Building | |||||||
| Total |
In: Accounting