Problem 4–7 (concluded)
Requirement 2
SCHEMBRI MANUFACTURING CORPORATION
Statement of Comprehensive Income
For the Year Ended December 31, 2016
($ in 000s)
Net income ……………………………………………………………..
$3,795
Other comprehensive income (loss):
Loss from foreign currency translation, net of tax ……..
(144)
Total other comprehensive income ……………………………
4–62 Intermediate Accounting, 8/e
Problem 4–8
DUKE COMPANY
Statement of Comprehensive Income
For the Year Ended December 31, 2016
Sales revenue …………………………………………………………
$15,000,000
Cost of goods sold …………………………………………………..
9,000,000
Gross profit ……………………………………………………………
Operating expenses:
Total operating expenses …………………………………….
Operating income ……………………………………………………
Other income (expense):
Income before income taxes ……………………………………..
3,100,000
Income tax expense …………………………………………………
1,240,000
Net income ……………………………………………………………
Other comprehensive income (loss):
Foreign currency translation adjustment loss, net of tax
Unrealized gains on investment securities, net of tax …
108,000
Total other comprehensive loss ………………………………..
Comprehensive income …………………………..……………….
Problem 4–9
Requirement 1
DIVERSIFIED PORTFOLIO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Collections from customers (1) $880,000
Cash flows from financing activities:
Proceeds from issue of common stock 100,000
4–64 Intermediate Accounting, 8/e
Problem 4–9 (concluded)
Requirement 2
DIVERSIFIED PORTFOLIO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Net income $120,000
Adjustments for noncash effects:
Problem 4–10
Requirement 1
2015 Cash:
2015 Cash + Net increase in cash = 2016 Cash
2016 A/R:
2015 Inventory:
2015 A/P + Purchases – Cash paid = 2016 A/P
2015 Accumulated depreciation:
Problem 4–10 (continued)
2015 Total assets:
2016 Total assets:
2015 Income taxes payable:
2016 Retained earnings:
2015 Total liabilities and shareholders’ equity:
2016 Total liabilities and shareholders’ equity:
Problem 4–10 (concluded)
Requirement 2
GRANDVIEW CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2016
($ in millions)
Cash flows from operating activities:
Net income $ 28
Adjustments for noncash effects:
Changes in operating assets and liabilities:
Increase in accounts receivable1 (9)
4–68 Intermediate Accounting, 8/e
Problem 4–11
SANTANA INDUSTRIES
Statement of Cash Flows
For the Year Ended December 31, 2016
($ in thousands)
Cash flows from operating activities:
Net income $ 3,850
Changes in operating assets and liabilities:
Cash flows from investing activities:
Purchase of equipment (4,000)
Cash flows from financing activities:
Proceeds from loan payable 5,000
Payment of dividends (1,000)
Problem 4–12
Branson Electronics Company
Income Statement
Revenues $180,000
Cost of goods sold 35,000
4–70 Intermediate Accounting, 8/e
Judgment Case 4–1
Requirement 1
The term earnings quality refers to the ability of reported earnings (income) to
predict a company’s future earnings. After all, an income statement simply reports on
Requirement 2
To enhance predictive value, analysts try to separate a company’s transitory
earnings effects from its permanent earnings. Transitory earnings effects result from
Requirement 3
An often-debated contention is that, within GAAP, managers have the power, to
a limited degree, to manipulate reported company income. And the manipulation is
CASES
Judgment Case 4–2
Requirement 1
Restructuring costs include costs associated with shutdown or relocation of
facilities or downsizing of operations. Facility closings and related employee layoffs
Requirement 2
Prior to 2003, restructuring costs were recognized (expensed) in the period the
Requirement 3
Restructuring costs would be included as an operating expense in a multi-step
income statement.
Requirement 4
An analyst must interpret restructuring charges in light of a company’s past
4–72 Intermediate Accounting, 8/e
Judgment Case 4–3
No. Companies generally prefer to report earnings that follow a smooth, regular,
upward path. They try to avoid declines, but they also want to avoid increases that
Real World Case 4–4
Requirement 1
Companies often voluntarily provide a pro forma earnings number when they
announce annual or quarterly earnings calculated according to GAAP. These pro
Requirement 2
The term earnings quality refers to the ability of reported earnings (income) to
4–74 Intermediate Accounting, 8/e
Research Case 4–5
Requirement 1
The accounting standards topic number that addresses exit or disposal cost
Requirement 3
A liability for a cost associated with an exit or disposal activity is measured