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Accounting Chapter 14 The specific provisions of a bond issue are described
Chapter 14 Bonds and Long-Term Notes True/False Questions 1. The specific provisions of a bond issue are described in a document called a bond indenture. Answer: True Level of Learning: 1 Easy Learning Objective: 14-01 Topic Area: Bond indenture Blooms: […]
Accounting Chapter 15 Depreciation on leased assets Based on term
Chapter 15 Leases AACSB: Knowledge application AICPA: FN Measurement Feedback: Lease receivable (PV of lease payments [“selling price”]) 80,000 Profit on ROU asset sold (difference) …… 14,000 Asset (lessor’s cost: book value) ……… 66,000 Interest revenue = (10% x ½ […]
Accounting Chapter 15 For This Lease A The Lease Payment
Chapter 15 Leases Intermediate Accounting, Eighth Edition, Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 15–61 130. On June 30, 2016, Blue, Inc., leased equipment from Big Leasing […]
Accounting Chapter 15 Peridot Leasing Entered Into Agreement Lease
Chapter 15 Leases 148. Peridot Leasing entered into an agreement to lease warehouses to AMC Foods. a. The agreement calls for ownership of the aircraft to be transferred to AMC Foods at the end of the lease term. b. The […]
Accounting Chapter 15 Recording a sales-type lease is similar to recording
Chapter 15 Leases Intermediate Accounting, Eighth Edition, Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 15–21 59. What would be the amount of interest expense recorded with payment […]
Accounting Chapter 16 A temporary difference originates in one period
Chapter 16 Accounting for Income Taxes True/False Questions 1. A temporary difference originates in one period and reverses, or turns around, in one or more later periods. Answer: True Level of Learning: 1 Easy Learning Objective: 16-01 Topic Area: Temporary […]
Accounting Chapter 16 Peridot Jewelers Reported The Following Operating Income loss
Chapter 16 Accounting for Income Taxes a. An increase in a deferred tax asset. b. A decrease in a deferred tax asset. c. An increase in a deferred tax liability. d. A decrease in a deferred tax liability. Answer: b […]
Accounting Chapter 18 Mandatorily redeemable preferred stock is reported
Chapter 18 Shareholders’ Equity True/False Questions 1. Mandatorily redeemable preferred stock is reported as a liability. Answer: True Level of Learning: 1 Easy Learning Objective: 18-03 Topic Area: Stock—Classes of shares Blooms: Remember AACSB: Reflective thinking AICPA: FN Measurement 2. […]
Accounting Chapter 2 Owners’ equity can be expressed as assets minus
Chapter 2 Review of the Accounting Process True/False Questions 1. Owners’ equity can be expressed as assets minus liabilities. Answer: True Level of Learning: 1 Easy Learning Objective: 02-01 Topic Area: The basic model – Accounting equation Blooms: Remember AACSB: […]
Accounting Chapter 2 Prepare an income statement for China Tea Company
Chapter 2 Review of the Accounting Process Use the following to answer questions 125–127: The adjusted trial balance for China Tea Company at December 31, 2016, is presented below: Debit Credit Cash 10,500 Accounts receivable 150,000 Prepaid rent 5,000 Inventory […]
Accounting Chapter 3 The balance sheet reports a company’s financial position
Chapter 3 The Balance Sheet and Financial Disclosures True/False Questions 1. The balance sheet reports a company’s financial position at a point in time. Answer: True Level of Learning: 1 Easy Learning Objective: 03-01 Topic Area: The Balance Sheet Blooms: […]
Accounting Chapter 4 Income tax expense has not yet been accrued
Chapter 4 The Income Statement, Comprehensive Income, and the Statement of Cash Flows Intermediate Accounting, Eighth Edition, Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 4–41 Use the […]
Chapter 1 A forward contract is similar to a futures contract
A AP PP PE EN ND DI IX X A A D De er ri iv va at ti iv ve es s L Le ec ct tu ur re e O Ou ut tl li in ne e date, […]
Chapter 1 In this chapter you explore important topics such as
CHAPTER 1 ENVIRONMENT AND THEORETICAL STRUCTURE OF FINANCIAL ACCOUNTING Overview The primary function of financial accounting is to provide useful financial information to users external to the business enterprise. The focus of financial accounting is on the information needs of […]
Chapter 1 Neutrality is an attribute of faithful representation
Exercise 1–14 Statement Concept 1. d. Monetary unit assumption 2. h. Full-disclosure principle 3. g. Expense recognition 4. e. Historical cost principle 5. c. Periodicity assumption 6. a. Economic entity assumption 7. i. Cost effectiveness 8. j. Materiality 9. f. […]
Chapter 1 Two extremely important variables that must be
Question 1–1 Financial accounting is concerned with providing relevant financial information about various kinds of organizations to different types of external users. The primary focus of financial accounting is on the financial information provided by profit– oriented companies to their […]
Chapter 1 Accounting standards should be set with overall societal
1-18 Intermediate Accounting, 8/e QUALITATIVE CHARACTERISTICS OF ACCOUNTING INFORMATION PRIMARY QUALITATIVE CHARACTERISTICS ➢ Relevance Predictive value Confirmatory value Enhancing aspect: materiality ➢ Faithful representation Completeness — All information that is necessary for faithful representation. Neutrality […]
Chapter 11 Factors That Could Result Impairment Review Include
AMORTIZATION OF INTANGIBLE ASSETS ➢ The cost of an intangible asset with a finite useful life is amortized. ▶ Intangibles typically have no residual value, so the amortization base is simply cost. ▶ The cost of an intangible asset usually […]
Chapter 11 Individual assets in the composite may have diverse
Question 11–1 The terms depreciation, depletion, and amortization all refer to the process of allocating the cost of property, plant, and equipment and finite-life intangible assets to periods of use. The only difference between the terms is that they refer […]
Chapter 17 The Amounts Each Are Reported The Disclosure
Case 17–3 (concluded) Requirement 4 Two of the other amounts reported in the disclosure note are reported in the balance sheet. The net gain and prior service cost are reported as components of accumulated other comprehensive income. This is a […]
Chapter 18 A debit balance in retained earnings is referred
18-18 Intermediate Accounting, 8/e RETAINED EARNINGS ❖ In general, retained earnings represents a corporation’s accumulated, undistributed, or reinvested net income (or net loss). It also is called “reinvested capital” or “earned capital.” ❖ Distributions of earned assets are dividends. ❖ […]
Chapter 18 A stock dividend is the distribution of additional
Problem 18–10 Transactions N 1. Sale of common stock N 2. Purchase of treasury stock at a cost less than the original issue price N 3. Purchase of treasury stock at a cost greater than the original issue price D […]
Chapter 18 A treasury stock account is created when a company
CPA / CMA REVIEW QUESTIONS CPA Exam Questions 1. b. The entries to record the stock issuance and subsequent acquisition and retirement (per share) are as follows: Issuance Cash ……………………………………………………………………. 25 Common stock ……………………………………………….. 10 Paid-in capital—excess of par …………………………… […]
Chapter 18 One component of Other comprehensive Income for
Case 18–4 (continued) This is the measure of comprehensive income Cisco reported in the disclosure note. Notice that each component is reported net of its related income tax expense or income tax benefit. The second measure—the comprehensive income accumulated over […]
Chapter 18 shareholders generally may not lose more than the
Chapter 18 Shareholders’ Equity QUESTIONS FOR REVIEW OF KEY TOPICS Question 18–1 The two primary sources of shareholders’ equity are amounts invested by shareholders in the corporation and amounts earned by the corporation on behalf of its shareholders. Invested capital […]
Chapter 18 Within the context of our discussions of retained
C CH HA AP PT TE ER R 1 18 8 S Sh ha ar re eh ho ol ld de er rs s’ ’ E Eq qu ui it ty y Overview We turn our attention in this chapter […]
Chapter 18 the cost of services related to the sale reduced
Exercise 18–7 Requirement 1 ($ in millions) Cash ($424 million – 2 million) …………………………………………… 422 Common stock (15 million shares at $1 par per share) …………… 15 Paid-in capital—excess of par (difference) ……………………… 407 Requirement 2 In recording the sale […]
Chapter 19 Analysts Frequently Use Eps Data Connection With
C CH HA AP PT TE ER R 1 19 9 S Sh ha ar re e– –B Ba as se ed d C Co om mp pe en ns sa at ti io on n a an nd d […]
Chapter 19 Convertible securities are included in the computation
19–94 Intermediate Accounting, 8/e Case 19–12 (concluded) 2015 net preferred Basic income dividends EPS $134 – $12‡ $122 ——————————————————— = —— = $2.44 60 – 12 (10/12) 50 shares retired at Jan. 1 shares net preferred after-tax Diluted income dividends […]
Chapter 19 Diluted Eps Net Income Preferred Dividends Preferred
Exercise 19–6 Requirement 1 At January 1, 2016, the estimated value of the award is: $3 estimated fair value per option x 25 million options granted = $75 million total compensation Requirement 2 ($ in millions) Compensation expense ($75 million […]
Chapter 19 Is the auditor’s obligation to challenge
Case 19–2 (concluded) Writing (20%) 5 Terminology and tone appropriate to the audience of controller. 6 Organization permits ease of understanding. Introduction that states purpose. Paragraphs separate main points. 9 English. Word selection. Spelling. Grammar. 20 points Solutions Manual, Vol.2, […]
Chapter 19 Restricted stock refers to shares actually
Chapter 19 Share-Based Compensation and Earnings per Share QUESTIONS FOR REVIEW OF KEY TOPICS Question 19–1 Restricted stock refers to shares actually awarded in the name of an employee, although the employer might retain physical possession of the shares. Typically, […]
Chapter 19 The Allocation Here Meets That Constraint
Exercise 19–28 Requirement 1 The SARs are considered to be a liability because employees can elect to receive cash at exercise. January 1, 2016 No entry Requirement 2 December 31, 2016 ($ in millions) Compensation expense ($4 x 24 million […]
Chapter 19 The Proceeds Would Increased Or Decreased Any
REACQUIRED SHARES The number of reacquired shares is time-weighted for the fraction of the year they were not outstanding, prior to being subtracted from the number of shares outstanding. Sovran Financial Corporation reported net income of $154 million in […]
Chapter 19 When an SAR is considered to be a liability
19-34 Intermediate Accounting, 8/e STOCK APPRECIATION RIGHTS When an SAR is considered to be equity (because the employer can elect to settle in shares), the amount of compensation is estimated at the grant date as the fair value of […]
Chapter 19 Options are assumed exercised at the beginning of the year
Problem 19–11 (amounts in thousands, except per share amount) net preferred Earnings income dividends Per Share $2,100 – $75 $2,025 ————————————————————————— = ——— = $3.00 600 (1.04) + 60 (10/12) (1.04) – 2 (6/12) 675 shares new shares at Jan. […]
Chapter 2 Interest Revenue Depreciation Expense Accumulated
Question 2–1 External events involve an exchange transaction between the company and a separate economic entity. For every external transaction, the company is receiving something in exchange for something else. Internal events do not involve an exchange transaction but do […]
Chapter 2 Record transactions using the general journal format
CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS Overview Chapter 1 explained that the primary means of conveying financial information to investors, creditors, and other external users is through financial statements and related notes. The purpose of this chapter is to […]
Chapter 2 Salaries and wages expense Supplies
Problem 2–4 (continued) Sales revenue Interest revenue ___________________________ ___________________________ 148,000 Bal. 0 Bal. 7. 2,000 1,333 4. Closing 146,000 Closing 1,333 _______________ ______________ 0 12/31 Bal. 0 12/31 Bal. Cost of goods sold Salaries and wages expense ___________________________ ___________________________ Bal. […]
Chapter 2 The event is recorded as an increase to accounts
Exercise 2–24 Transaction Journal 1. Purchased merchandise on account. PJ 2. Collected an account receivable. CR 3. Borrowed $20,000 and signed a note. CR 4. Recorded depreciation expense. GJ 5. Purchased equipment for cash. CD 6. Sold merchandise for cash. […]
Chapter 2 The transactions affected would be the prepayment
Exercise 2–9 1. Interest receivable ($90,000 x 8% x 3/12) ………………….. 1,800 Interest revenue …………………………………………….. 1,800 2. Rent expense ($6,000 x 2/3) …………………………………… 4,000 Prepaid rent …………………………………………………… 4,000 3. Rent revenue ($12,000 x 7/12) ………………………………… 7,000 Deferred rent revenue ……………………………………. […]
Chapter 2 Accumulated depreciation buildings Office equipment
Problem 2–9 (continued) Insurance expense Utility expense ___________________________ ___________________________ Bal. 0 Bal. 30,000 Adjusting 1,500 _______________ ______________ 12/31 Bal. 1,500 12/31 Bal. 30,000 Maintenance expense ___________________________ Bal. 15,000 _______________ 12/31 Bal. 15,000 Solutions Manual, Vol.1, Chapter 2 2–81 Copyright © […]
Chapter 2 when the revenue is recognized in a period prior
ACCRUALS Accruals involve transactions where the cash outflow or inflow occurs in a period subsequent to expense or revenue recognition. ➢ ACCRUED LIABILITIES Accrued liabilities represent liabilities recorded when an expense has been incurred prior to cash payment. To […]
Chapter 20 Accordingly Clinton Reports The Change Prospectively Previous
Exercise 20-3 This is a change in accounting principle. ($ in millions) Common stock ($1 par x 4 million shares retired)……………………. 4 Paid-in capital—excess of par (average amount above par at which the retired shares originally sold: $800 million ……………… […]
Chapter 20 Change in the percentage used to determine warranty
Exercise 20-21 Requirement 1 The error caused both 2014 net income and 2015 net income to be overstated, so retained earnings is overstated by a total of $85,000. Also, the note payable would be understated by the same amount. Remember, […]
Chapter 20 Fifo And Also Will Revise The Amounts
C CH HA AP PT TE ER R 2 20 0 A Ac cc co ou un nt ti in ng g C Ch ha an ng ge es s a an nd d E Er rr ro or r […]
Chapter 20 Larry Right Accept His Premise That Depreciation
Problem 20-16 a. Investments ($220,000 – 180,000) ………………………………….. 40,000 Gain on sale of investments ……………………………………. 40,000 b. Unrealized loss–OCI ………………………………………………… 16,000 Fair value adjustment (calculated below) …………………… 16,000 Fair value adjustment calculation: Investment balance, May 2016, as reported $250,000 Error […]
Chapter 20 the Company elected to change its inventory valuation method
20–20 Intermediate Accounting, 8e ERROR AFFECTING PREVIOUS FINANCIAL STATEMENTS, BUT NOT NET INCOME Example: Incorrectly recording salaries payable as accounts payable, recording a loss as an expense, or classifying a cash flow as an investing activity rather than a […]
Chapter 20 The Effect The Change Each Line Item
Chapter 20 Accounting Changes and Error Corrections QUESTIONS FOR REVIEW OF KEY TOPICS Question 20-1 Accounting changes are categorized as: 1. Changes in principle (when companies switch from one acceptable accounting method to another) 2. Changes in estimate (when new […]
Chapter 20 This is a change in accounting principle
Problem 20-7 (concluded) Equipment: $80,000 – 4,000 Depreciation per ton = = $.19 per ton 400,000 tons 2016 depreciation = $.19 x 50,000 tons = $9,500 2017 depreciation: Revised depreciation rate = ($80,000 – 9,500) – 4,000 = $.152 487,500 […]
Chapter 21 Changes in operating assets and liabilities
Exercise 21–23 Direct Method Cash Flows from Operating Activities: Cash received from customers $672 Cash paid to suppliers (234) Cash paid to employees (116) Cash paid for interest (15) Cash paid for income taxes (86) Net cash flows from operating […]
Chapter 21 Company Statement Cash Flows For Year Ended
Problem 21–2 WRIGHT COMPANY Spreadsheet for the Statement of Cash Flows Dec.31 Changes Dec. 31 2015 Debits Credits 2016 Balance Sheet Assets: Cash 30 (15) 12 42 Accounts receivable 75 (1) 2 73 Short-term investment 15 (9) 25 40 Inventory […]
Chapter 21 Each installment payment includes both an amount
Exercise 21–7 Bond interest Bond interest Unamortized Cash paid Situation expense payable discount for interest increase increase (decrease) (decrease) 1 10 0 0 10 1. Summary Entry Bond interest expense 10 Cash (paid to bondholders) 10 2 10 2 0 […]
Chapter 21 General and administrative expenses payable
21–136 Intermediate Accounting, 8/e Case 21–5 (continued) (f) Retained Earnings _______________________________________________________________ 141 Beginning balance 84 Net income Dividends declared 9 ____________ ? Ending balance Ending R/E = Beginning R/E + Net income – Dividends = 141 + 84 – 9 […]
Chapter 21 Inflows Operating Activities Investing Activities Financing Activities
C CH HA AP PT TE ER R 2 21 1 S St ta at te em me en nt t o of f C Ca as sh h F Fl lo ow ws s R Re ev vi is […]
Chapter 21 Mr Lowell Had Just Hung The Phone
RETAINED EARNINGS The stock dividend caused a $13 million reduction of retained earnings. Net income increased retained earnings by $12 million. The net reduction of $1 million accounted for by these two entries leaves unexplained $5 million […]
Chapter 21 Net cash flows from operating activities
Problem 21–11 ARDUOUS COMPANY Spreadsheet for the Statement of Cash Flows Dec.31 Changes Dec. 31 2015 Debits Credits 2016 Balance Sheet Assets: Cash 81 (21) 35 116 Accounts receivable 194 (1) 4 190 Investment rev. receivable 4 (2) 2 6 […]
Chapter 21 Noncash investing and financing activities
Problem 21–16 DUX COMPANY Spreadsheet for the Statement of Cash Flows Dec.31 Changes Dec. 31 2015 Debits Credits 2016 Balance Sheet Assets: Cash 20 (19) 13 33 Accounts receivable 47 (5) 3 44 Dividends receivable 2 (6) 1 3 Inventory […]
Chapter 21 Note that even if some of the year’s sales
Dec. 31 Changes Dec. 31 2015 Debits Credits 2016 Income Statement Revenues: Sales revenue 100 Investment revenue 3 Gain on sale of land 8 Expenses: Cost of goods sold (60) Salaries expense (13) Depreciation expense (3) Bond interest expense (5) […]
Chapter 21 Our operating results for the first half of
Problem 21–21 (continued) Investment Revenue Receivable Long-term Investments ______________________ _______________________________ 2 31 _________________ (2) 2 (2) 6 (13) 25 Land Buildings and Equipment ______________________ _______________________________ 46 12 _________________ X (14) 46 X (15) 82 70 (11) Accumulated Depreciation Patent ______________________ […]
Chapter 21 The Direct Method Reports Specific Operating Cash
Chapter 21 The Statement of Cash Flows Revisited QUESTIONS FOR REVIEW OF KEY TOPICS Question 21–1 Every cash flow eventually affects the balance of one or more accounts in the balance sheet, and the cash flows related to income-producing activities […]
Chapter 3 A subsequent event is a significant development that takes
CHAPTER 3 THE BALANCE SHEET AND FINANCIAL DISCLOSURES Overview Chapter 1 stressed the importance of the financial statements in helping investors and creditors predict future cash flows. The balance sheet, along with accompanying disclosures, provides relevant information useful in helping […]
Chapter 3 Current maturities of long-term debt
Problem 3–4 authorized; 400,000 shares issued and outstanding …………. $400,000 Retained earnings ………………………………………………………….. 202,000 Total shareholders’ equity ………………………………………… 602,000 Total liabilities and shareholders’ equity …………………. $992,000 (1) Includes $30,000 in U.S. treasury bills. WEISMULLER PUBLISHING COMPANY Balance Sheet At December […]
Chapter 3 Intangible Assets Patent Total Assets
Question 3–1 The purpose of the balance sheet, also known as the statement of financial position, is to present the financial position of the company on a particular date. Unlike the income statement, which is a change statement that reports […]
Chapter 3 The dictionary defines the term provision
3–56 Intermediate Accounting, 8/e IFRS Case 3–4 Requirement 1 A major difference is the format of Vodafone’s balance sheets (statements of financial position). Under U.S. GAAP, we present current assets and liabilities before noncurrent assets and liabilities. IAS No. 1 […]
Chapter 3 The topic number that provides guidance on
2. (A) in the summary of significant policies note. 3. (C) on the face of the balance sheet. 4. (B) in a separate disclosure note. 5. (B) in a separate disclosure note. 6. (A) in the summary of significant policies […]
Chapter 3 This Will Cause Both Current Assets And
FINANCIAL DISCLOSURES Summary of Significant Accounting Policies ➢ A summary of the company’s significant accounting policies is a required disclosure. Examples include principles of consolidations, definition of cash equivalents, valuation of inventory, method for recording depreciation, and policy for […]
Chapter 4 A distinction often is made between operating and
CHAPTER 4 THE INCOME STATEMENT, COMPREHENSIVE INCOME, AND THE STATEMENT OF CASH FLOWS Overview The purpose of the income statement is to summarize the profit-generating activities that occurred during a particular reporting period. Comprehensive income includes net income as well […]
Chapter 4 This item is discussed elsewhere in your accounting
4-18 Intermediate Accounting, 8/e CHANGE IN ACCOUNTING ESTIMATE ► A change in accounting estimate is reflected in the financial statements of the current period and future periods. T4–12 Copyright © 2015 McGraw-Hill Education. All rights reserved. EARNINGS PER SHARE ➢ […]
Chapter 5 Disclosure The Objective Help Investors Understand The
CHAPTER 5 Revenue Recognition and Profitability Analysis Overview In Chapter 4 we discussed net income and its presentation in the income statement. In Chapter 5 we focus on revenue recognition, which determines when and how much revenue appears in the […]
Chapter 5 Each period during the earnings process
RELATION BETWEEN EARNINGS PROCESS AND REVENUE RECOGNITION METHODS ➢ In most situations, the revenue recognition criteria are satisfied at the point of product delivery. T5-46 Instructor’s Resource Manual, Chapter 5 5-59 Copyright © 2015 McGraw-Hill Education. All rights reserved. REVENUE […]
Chapter 5 Lets Assume That True tech Bases The Estimate
RECOGNIZING REVENUE FOR CONTRACTS WITH MULTIPLE PERFORMANCE OBLIGATIONS ➢ Goal: Separate complex contracts into parts that can be viewed on a stand-alone basis. Steps 2 and 4 are critical to this process. ➢ Step 2: Identify the performance obligation(s) in […]
Chapter 5 The exclusive five-year right to operate the only
FRANCHISE ARRANGEMENTS • Assume that TrueTech starts selling TechStop franchises. TrueTech charges franchisees an initial fee in exchange for (a) the exclusive right to operate the only TechStop in a particular area for a five-year period, (b) the equipment necessary […]