1) What are the duties of a trustee in a liquidation proceeding?
2) When a subsidiary issues additional shares of stock to noncontrolling stockholders
and such issuance results in an increase in the book value of the parents share of the
subsidiarys equity, how should the increase be reflected in the financial statements?
What if it results in a decrease?
3) Explain what is meant by the two-transaction method in recording exporting or
importing trans-actions. What support is given for this method?
4) What is the purpose of a Statement of Affairs?
5) Prepare journal entries for the following transactions or events:
1>The board of trustees of Snark College voted to designate $300,000 for expansion of
the student union and $90,000 for future research projects.
2>In accordance with the requirements of a bond indenture, Snark College transferred
$85,000 of unrestricted funds for the accumulation of cash to retire the debt related to
the construction of the Central Computer Building.
3>A governing board of a hospital designates $280,000 for the future expansion of the
emergency care facilities.
4>A heart association receives pledges of $900,000 from the general public in
connection with a telethon. It is estimated that 30% of the amounts pledged will not be
collectible.
5>An ONNO receives the donated services of a CPA with a market value of $10,000.
6>On November 3, 2014, $75,000 was donated to a university for library acquisitions
of which $50,000 was expended for this purpose during the remainder of the fiscal year.
7>On November 4, 2014, $15,000 was contributed to a voluntary health organization to
be used to conduct CPR classes for the public. During the remainder of the current
fiscal year $14,000 was expended for this purpose.
8>On November 5, 2014, $100,000 was contributed to a hospital for cancer research of
which $90,000 was expended for this purpose during the remainder of the fiscal year.
6) What columns would you suggest for a subsidiary ledger account in order that it
might be a subsidiary not only to the appropriations control account but also the
encumbrances and the expenditures control accounts?
7) When should an NNO record donated services in its accounting records?
8) Describe the circumstances where neither the goodwill nor the bonus method should
be used to record the admission of a new partner.
9) What is a put option, and how might it be used to hedge a forecasted transaction?
10) Universities and hospitals often reduce their standard service charge to students or
patients. How are these reductions reflected in the statements of revenue and expenses
of these organizations? Explain.