Archives: Solution Manual

Question 10–1 The difference between tangible and intangible long-lived, revenue-producing assets is that intangible assets lack physical substance and they primarily refer to the ownership of rights. Question 10–2 The cost of property, plant, and equipment and intangible assets includes […]

Property, plant, and equipment 1,000,000 Intangible assets 2,970,000 Less: Book value in excess of fair value: Receivables (150,000) 20,070,000 Goodwill $ 4,930,000 Alternate Exercises and Problems 10–1 Chapter 10 Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition EXERCISES […]

Alternate Exercises and Problems 9–1 Chapter 9 Inventories: Additional Issues EXERCISES Exercise 9-1 Requirement 1 (1) (2) Product Cost NRV Inventory Value [Lower of (1) or (2)] Gloves $360,000 $300,000 $300,000 Bats 260,000 320,000 260,000 Balls 150,000 125,000 125,000 Uniforms […]

Inventory 16 Freight-in 16 Accounts payable 16 Accounts payable 16 Returns Accounts payable 6 Accounts payable 6 Inventory 6 Purchase returns 6 Purchase returns 6 Inventory (beginning) 112 Purchases 265 Freight-in 16 Cost of goods sold: Beginning inventory $112 Purchases […]

Sales revenue …………………………………………………….. 128,000 April 16, 2016 Cash (99% x $128,000) ……………………………………………… 126,720 Sales discounts (1% x $128,000) ………………………………… 1,280 Accounts receivable ……………………………………………. 128,000 Sales revenue …………………………………………………….. 128,000 May 6, 2016 Cash …………………………………………………………………….. 128,000 Accounts receivable ……………………………………………. 128,000 Alternate Exercises […]

* Future value of $1: n=10, i=8% (from Table 1) 2. FV = $30,000 x 3.20714* = $96,214 * Future value of $1: n=20, i=6% (from Table 1) 3. FV = $40,000 x 17.44940* = $697,976 * Future value of […]

5–12 Intermediate Accounting, 8/e PROBLEMS Problem 5-1 Requirement 1 a. Number of performance obligations in the contract: 2. The unlimited access to facilities and classes for one year is one performance obligation. Because the discount voucher provides a material right […]

Alternate Exercises and Problems 5–1 Chapter 5 Revenue Recognition and Profitability Analysis EXERCISES Exercise 5–1 Happy first must identify each performance obligation’s share of the sum of the stand-alone selling prices of all performance obligations: Patio: $3,400 = 85% $3,400 […]

Alternate Exercises and Problems 4–1 Chapter 4 The Income Statement, Comprehensive Income, and the Statement of Cash Flows EXERCISES Exercise 4-1 Requirement 1 APEX COMPUTER CORPORATION Income Statement For the Year Ended December 31, 2016 Revenues and gains: Sales ……………………………………………………….. […]

Alternate Exercises and Problems 3–1 Chapter 3 The Balance Sheet and Financial Disclosures EXERCISES Exercise 3-1 1. b Note receivable, due in 2 years 10. a Inventories 2. a Accounts receivable 11. d Goodwill 3. –c Accumulated depreciation 12. f […]

2. – 15,000 (cash) + 60,000 (equipment) + 45,000 (note payable) 3. + 270,000 (inventory) + 270,000 (accounts payable) 4. + 360,000 (accounts receivable) + 360,000 (revenue) – 210,000 (inventory) – 210,000 (expense) 5. – 20,000 (cash) – 20,000 (expense) […]

Alternate Exercises and Problems 1–1 Chapter 1 Environment and Theoretical Structure of Financial Accounting EXERCISES Exercise 1-1 Requirement 1 Haskins and Price Operating Cash Flow Year 1 Year 2 Cash collected $330,000 $450,000 Cash disbursements: Payment of rent (60,000) – […]

Problem A–1 (continued) Requirement 6 Income Statement + (−) 2016 (8,000) Interest expense (1,000) Interest expense (1,759) Holding loss—interest rate swap 1,759 Holding gain—hedged note (9,000) Net effect—same as floating interest payment on swap 2017 (8,000) Interest expense 1,000 Interest […]

Appendix A Derivatives QUESTIONS FOR REVIEW OF KEY TOPICS Question A–1 These instruments “derive” their values or contractually required cash flows from some other security or index. Question A–2 The FASB has taken the position that the income effects of […]

Student Name: Class: Product Units Cost NRV Inventory Value A1,000 10,000$ 13,600$ 10,000$ 31,450$ 2,150$ «- Correct! Loss from inventory write-down: Inventory carrying value: 31,450$ «- Correct! Requirement 1: Requirement 2: Inventory carrying value: Instructor Inventory THE DECKER COMPANY Problem […]

DOLLAR-VALUE LIFO RETAIL METHOD ➢ Using the LIFO retail method in combination with dollar- value LIFO is referred to as the dollar-value LIFO retail method. On January 1, 2016, the Nicholson Department Store adopted the dollar-value LIFO retail inventory method. […]

CHAPTER 9 INVENTORIES: ADDITIONAL ISSUES Overview We covered most of the principal measurement and reporting issues involving the asset inventory and the corresponding expense cost of goods sold in the previous chapter. In this chapter we complete our discussion of […]

Problem 9–16 (concluded) Requirement 3 a. $11.50 If market price on purchase date has not declined from year-end price, the purchase is recorded at the year-end market price. Purchases ($10.30 x 20,000 units) ………………………………… 206,000 Estimated liability on purchase commitment […]

Problem 9–10 Requirement 1 Cost Retail Beginning inventory $ 27,500 $ 45,000 Plus: Purchases 282,000 490,000 Freight-in 26,500 Less: Purchase returns (6,500) (10,000) Purchase discounts (5,000) Plus: Net markups 25,000 550,000 $324,500 Cost-to-retail percentage: = 59% $550,000 Less: Net markdowns […]

Exercise 9–24 1. To include the $4 million in year 2016 purchases and increase retained earnings to what it would have been if 2015 cost of goods sold had not included the $4 million purchases: Analysis: 2015 2016 Beginning inventory […]

Exercise 9–4 The FASB Accounting Standards Codification® represents the single source of authoritative U.S. generally accepted accounting principles. The specific citation for each of the following items is: 1. The accounting treatment required for a correction of an inventory error […]

Question 9–1 Question 9–2 Question 9–3 Question 9–4 The gross profit method estimates cost of goods sold, which is then subtracted from cost of goods available for sale to obtain an estimate of ending inventory. The estimate of cost of […]

Student Name: Class: Units Unit cost Total cost 6,000 8.00$ 48,000$ 153,000$ (78,000) «- Correct! 75,000$ «- Correct! Cost of goods sold Less: Ending inventory (calculation below) Cost of goods available for sale Correct! Date of Total purchase Units Unit […]

8-20 Intermediate Accounting, 8/e FIFO — PERPETUAL INVENTORY SYSTEM  The same ending inventory and cost of goods sold amounts are always produced in a perpetual system as in a periodic system when FIFO is used. Date Purchased Sold Balance […]

CHAPTER 8 INVENTORIES: MEASUREMENT Overview The next two chapters continue our study of assets by investigating the measurement and reporting issues involving inventories and the related expense—cost of goods sold. Inventory refers to the assets a company (1) intends to […]

8–72 Intermediate Accounting, 8/e company’s products are rising. When costs are decreasing, LIFO results in lower cost of goods sold, higher taxable income, and a higher current tax liability than FIFO. In the case of the electronics client, you would […]

Problem 8–11 Requirement 1 Sales (27,000 units x $2,000) $54,000,000 Less: Cost of goods sold (27,000 units x $1,000) (27,000,000) Gross profit $27,000,000 Gross profit ratio = $27,000,000  $54,000,000 = 50% Requirement 2 Sales (27,000 units x $2,000) $54,000,000 […]

Exercise 8–25 Set the base year, 1/1/16, equal to 1.00. Cost index in layer year: 264 ÷ 240 = 1.10 Ending Inventory Inventory Layers Inventory Layers Inventory Date at Base Year Cost at Base Year Cost Converted to Cost DVL […]

Exercise 8–6 Inventory balance before additional transactions $165,000 Add: 2. Goods shipped to Kwok f.o.b. shipping point on Dec. 28 17,000 3. Goods shipped to customer f.o.b. destination on December 27 22,000 Correct inventory balance $204,000 Exercise 8–7 Inventory balance […]

Question 8–1 Question 8–2 Question 8–3 Perpetual System Periodic System (1) Purchase of merchandise debit inventory debit purchases (2) Sale of merchandise debit cost of goods sold; credit inventory no entry (3) Return of merchandise credit inventory credit purchase returns […]

Student Name: Class: Account Debit Credit 78,600 78,600 «- Correct! Account Debit Credit 4,300 4,300 «- Correct! Percent Estimated Amount Uncollectible Allowance 98,000 15% 14,700 60,000 25% 15,000 55,000 40% 22,000 643,000$ 68,900$ Correct! Correct! Totals Over 120 days 91-120 […]

RECEIVABLE IMPAIRED BY TROUBLED DEBT RESTRUCTURING – TERMS MODIFIED Brillard Properties owes First Prudent Bank $30 million, under a 10% note with 2 years remaining to maturity. Due to financial difficulties of the developer, the previous year’s interest ($3 million) […]

ASSIGNMENT OF ACCOUNTS RECEIVABLE (continued) In Santa Teresa’s December 31, 2016, balance sheet, the receivables and note payable would be reported together as follows: Current assets: Accounts receivable assigned ($620,000 – 400,000) $220,000 Less: Liability—financing arrangement ($500,000 – 400,000) (100,000) […]

C CH HA AP PT TE ER R 7 7 C Ca as sh h a an nd d R Re ec ce ei iv va ab bl le es s Overview We begin our study of assets by looking […]

7–78 Intermediate Accounting, 8/e Real World Case 7–4 Requirement 2 a. Sales returns reserve is a contra-asset account, serving to reduce the carrying value of accounts receivable for the estimated amount of sales returns. Green Mountain is using the term […]

Problem 7–10 (continued) April 30, 2016 Cash (99% x $50,000) ……………………………………………….. 49,500 Loss on sale of accounts receivable (1% x $50,000) ……… 500 Accounts receivable ……………………………………………. 50,000 To accrue interest on note receivable for four months: June 30, 2016 Interest […]

Exercise 7–31 (concluded) Amortization Schedule – Not required Cash Effective Increase in Outstanding Interest Interest Balance Balance by agreement 10% x Outstanding Balance Discount Reduction 10,826,490 1 1,000,000 .10 (10,826,490) = 1,082,649 82,649 10,909,139 2 1,000,000 .10 (10,909,139) = 1,090,861* […]

Exercise 7–8 Requirement 1 Estimated returns = 4% x $11,500,000 = $460,000 Less: Actual returns (450,000) Remaining estimated returns $10,000 To record the actual sales returns Sales returns ………………………………………………………….. 450,000 Accounts receivable ……………………………………………. 450,000 Inventory ……………………………………………………………… 292,500 Cost of goods […]

Question 7–1 Cash equivalents usually include negotiable instruments as well as highly liquid investments that have a maturity date no longer than three months from date of purchase. Question 7–2 Internal control procedures involving accounting functions are intended to improve […]

Student Name: Class: Yearly Time Interest Cash Flow Period Rate *Factor PVA PV Years 1-5 70,000$ 5 8% 3.99271 279,490$ Years 6-10 70,000 5 10% 3.79079 265,355 Problem 06-05 McGraw-Hill/Irwin Instructor Estimated Cash Flows CLAUSSEN PURCHASE 265,355 5 8% 0.68058 […]

FUTURE VALUE OF AN ANNUITY DUE  Sally Rogers wants to accumulate a sum of money to pay for graduate school. Rather than investing a single amount today that will grow to a future value, she decides to invest $10,000 […]

CHAPTER 6 TIME VALUE OF MONEY CONCEPTS Overview Time value of money concepts, specifically future value and present value, are essential in a variety of accounting situations. These concepts and the related computational procedures are the subjects of this chapter. […]

Problem 6–11 Requirement 1 PVAD = Annuity amount x Annuity factor Annuity amount = PVAD Annuity factor Annuity amount = $800,000 7.24689* * Present value of an annuity due of $1: n = 10, i = 8% (from Table 6) […]

Exercise 6–19 Requirement 1 PVA = $400,000 (10.59401* ) = $4,237,604 = Liability * Present value of an ordinary annuity of $1: n = 20, i = 7% (from Table 4) Requirement 2 PVAD = $400,000 (11.33560* ) = $4,534,240 […]

Question 6–1 Interest is the amount of money paid or received in excess of the amount borrowed or lent. Question 6–2 Compound interest includes interest not only on the original invested amount but also on the accumulated interest from previous […]

Student Name: Class: Requirement 1: 2016 Cost recovery %: $180,000 $300,000 = 60% =40% Correct! Requirement 2: Date Account Debit Credit 2016 300,000 Correct! 180,000 120,000 120,000 120,000 48,000 48,000 2017 400,000 Correct! 280,000 120,000 250,000 250,000 85,000 85,000 To […]

COST RECOVERY METHOD ➢ The cost recovery method defers all gross profit recognition until cash equal to the cost of the item sold has been recovered. On November 1, 2016, the Belmont Corporation, a real estate developer, sold a tract […]

T5–41 Instructor’s Resource Manual, Chapter 5 5-61 Copyright © 2015 McGraw-Hill Education. All rights reserved. DUPONT FRAMEWORK ➢ The DuPont Framework helps identify how profitability, activity, and financial leverage trade off to determine return to shareholders: Return on equity = […]

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 […]

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 […]