($ in millions)
Reported in income statement:
Service cost-2016 $ 150
Past service cost 24
Service cost $ 174
Net interest cost (10% x [$960 – 600]) $ 36
Reported as OCI:
Remeasurement gain from assumption change-OCI $ (44)
Remeasurement loss on plan assets-OCI ($40 – [10% x $600]) 20
$ (24)
Net pension cost (not separately reported) $ 186
Pockets lent $20,000 to Lego Construction on January 1, 2016. Lego signed a
three-year, 5% installment note to be paid in three equal payments at the end of each
year.
Required:
(1.) Prepare the journal entry on January 1, 2016, for Pockets’ lending the funds.
(2.) Calculate the amount of one installment payment.
(3.) Prepare an amortization schedule for the three-year term of the installment note.
(4.) Prepare Pockets’ journal entry for the first installment payment on December 31,
2016.
(5.) Prepare Pockets’ journal entry for the third installment payment on December 31,
2018.
Contrast the role of the conceptual framework in U.S. GAAP and IFRS.
The condensed balance sheet and income statement for Marjoram Company are
presented below.
Compute the return on shareholders’ equity ratio for Marjoram Company. Round your
answer to two decimal places.
Prepare a time diagram for the future value of an annuity due with three payments of
$400. Be sure to indicate the periods in which interest is added.
How is a complex capital structure different from a simple capital structure?
Veras Bus Transportation provides on-campus bus services for universities. On January
1, it enters into a one-year contract with Moose University to operate five bus lines
traveling throughout the campus. Under the contract, Veras will be paid $100,000 on the
last day of each month. In addition, Veras will receive an additional $120,000 at the end
of each six-month period, provided it remains free of accidents. – On January 1, based
on historical experience, Veras estimated that there is a 75% chance that it will remain
free of accidents for the entire year.
– On March 20, three of the most senior drivers at Veras abruptly left. As a result, Veras
had to hire inexperienced drivers to fill the vacant positions. Consequently, Veras
revised its estimate to a 30% chance that it would earn the semiannual bonus.
– On June 30, Moose confirmed that there was no accident between January and June,
so Veras would be entitled to the semiannual bonus. Veras bases estimates of variable
consideration on the most likely amount it expects to receive.
Prepare Veras’ January 31 journal entry to account for the revenue earned from January
1 – January 31.