Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2018, the company issued 480,000 executive stock options permitting executives to buy 480,000 shares of Pastner stock for $40 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2018 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2018, as follows:

Required:
1. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately.
2. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner uses the straight-line method to allocate the total compensation cost.
  

Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.5% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2004 and is expected to retire at the end of 2038 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $98,000 at the end of 2018 and the company's actuary projects her salary to be $320,000 at retirement. The actuary's discount rate is 8%.

1. What is the company's projected benefit obligation at the beginning of 2018 (after 14 years' service) with respect to Davenport?(Round your final answer to nearest whole dollar)

2.Estimate by the projected benefits approach the portion of Davenport's annual retirement payments attributable to 2018 service.

3.What is the company's service cost for 2018 with respect to Davenport?(Round your final answer to nearest whole dollar)

4.What is the company's interest cost for 2018 with respect to Davenport?(Round your final answer to nearest whole dollar)

5.Combine your answers to requirements 1, 3, and 4 to determine the company's projected benefit obligation at the end of 2018 (after 15 years' service) with respect to Davenport. (Round your final answer to nearest whole dollar)

Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2018, the company issued 480,000 executive stock options permitting executives to buy 480,000 shares of Pastner stock for $43 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2018 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2018, as follows:

Required:
1. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately.
2. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner uses the straight-line method to allocate the total compensation cost.
  

On January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest's inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of 2018. On Pine's financial statements for the year ended December 31, 2018, what income effects would be reported from its ownership in Seacrest? (Round your answers to the nearest whole dollar.)

Other Comprehensive Loss is what?

Gain on Sale of Investment is what?

Equity Income is what?

Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $90 million of 6% bonds, dated January 1, on January 1, 2018. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $73 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2016, was $80 million.

Required:

1.Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).) a. Record Fuzzy Monkey’s investment on bonds on January 1, 2018.

b. Record the interest revenue on June 30, 2018.

c. Record the interest revenue on December 31, 2018.

2. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet?

3. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment?

a. Operating cash flow

b. Investing cash flow

On January 1, 2018, a machine was purchased for $102,500. The machine has an estimated salvage value of $7,580 and an estimated useful life of 5 years. The machine can operate for 113,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 22,600 hrs; 2019, 28,250 hrs; 2020, 16,950 hrs; 2021, 33,900 hrs; and 2022, 11,300 hrs.

Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)

eTextbook and Media

Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods. (Round answers to 0 decimal places, e.g. 45,892.)

Tanner-UNF Corporation acquired as a long-term investment $200 million of 6% bonds, dated July 1, on July 1, 2018. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $170 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $180 million.

Required:
1. How would this investment be classified on Tanner-UNF's balance sheet?
2. to 4. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018, interest on December 31, 2018, at the effective rate and fair value changes as of December 31, 2018.
5. At what amount will Tanner-UNF report its investment in the December 31, 2018, balance sheet?
6. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $150 million. Prepare the journal entry to record the sale.

On January 1, 2018, Pine Company owns 40 percent (56,000 shares) of Seacrest, Inc., which it purchased several years ago for $312,200. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $404,600. Excess patent cost amortization of $16,800 is still being recognized each year. During 2018, Seacrest reports net income of $438,000 and a $168,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 11,200 shares of Seacrest on August 1, 2018, for $133,707 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2017, Pine sold $54,000 in inventory (which it had originally purchased for only $32,400) to Seacrest. At the end of that fiscal year, Seacrest's inventory retained $16,600 (at sales price) of this merchandise, which was subsequently sold in the first quarter of 2018. On Pine's financial statements for the year ended December 31, 2018, what income effects would be reported from its ownership in Seacrest? (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

Equity income_____

Other Comprehensive Loss__________

Gain on sale of investment_______

Rosie Dry Cleaning was started on January 1, 2018. It experienced the following events during its first two years of operation:

Events Affecting 2018

1. Provided $32,050 of cleaning services on account.
2. Collected $25,640 cash from accounts receivable.
3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Events Affecting 2019

1. Wrote off a $240 account receivable that was determined to be uncollectible.
2. Provided $37,402 of cleaning services on account.
3. Collected $33,101 cash from accounts receivable.
4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Required

1. Organize the transaction data in accounts under an accounting equation for each year.
2. Determine the following amounts:

1. (1) Net income for 2018.
2. (2) Net cash flow from operating activities for 2018.
3. (3) Balance of accounts receivable at the end of 2018.
4. (4) Net realizable value of accounts receivable at the end of 2018.

3. Determine the following amounts:

1. (1) Net income for 2019.
2. (2) Net cash flow from operating activities for 2019.
3. (3) Balance of accounts receivable at the end of 2019.
4. (4) Net realizable value of accounts receivable at the end of 2019.

1. Fill in the blanks in the income statement and balance sheet and show that Cash Flow Identity holds.

2. If the company sold $300 worth of fixed assets, how much fixed assets were sold?

3. Assuming that the company had either seasoned equity offering or repurchase, which one did the company have?

4. If the company borrowed $55 in 2018, how much of the Long-term debt was paid in 2018?