Archives: Solution Manual
978-1259722653 Chapter 14 Solution Manual Part 5
Requirement 1: Annual pension expense Assumptions: Discount rate = 8% and rate of return on plan assets = 10% End of Year 1 Annual Salary 2 Cumulative Salary 3 Total Vested Pension 4 Vested During the Year 5 Discount Period […]
978-1259722653 Chapter 14 Solution Manual Part 4
P14-5. Calculating PBO, ABO and pension expense (LO 14-1, LO 14-2, LO 14-3) Requirement 1: Calculation of PBO on January 1, 2017: Annual pension benefits starting on 12/31/2031 and continuing for 10 years thereafter (11 years total = 76 – […]
978-1259722653 Chapter 14 Solution Manual Part 3
Financial Reporting and Analysis (7th Ed.) Chapter 14 Solutions Pensions and Postretirement Benefits Problems Problems P14-1. Determining components of pension expense (LO14-3, LO14-4, LO14-6) Requirement 1: Interest cost Beginning balance of PBO $600,000 Requirement 2: Expected dollar return on plan […]
978-1259722653 Chapter 14 Solution Manual Part 2
E14-16. Determining postretirement health care expenses and plan assets and liabilities balances (LO14-7) Requirement 1: Determination of postretirement health care expense for 2017: Service cost $20,000 Interest on accumulated benefit obligation Recognized actuarial loss 7 ,000 Postretirement expense $58 ,000 […]
978-1259722653 Chapter 14 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 14 Solutions Pensions and Postretirement Benefits M,;nbklExercises Exercises E14-1. Determining projected benefit obligation (LO14-3) (AICPA adapted) The projected benefit obligation on 12/31/17 is computed as follows: Pension benefit obligation 12/31/17 $82 ,200 E14-2. […]
978-1259722653 Chapter 13 Solution Manual Part 5
C13-4. ABC Inc.: Interpreting tax notes and reconciling statutory and effective rates Requirement 1: Tax Amount Tax Rate The expense at the statutory rate is calculated by multiplying the earnings before income taxes of $10,891 by 35%. The tax effects […]
978-1259722653 Chapter 13 Solution Manual Part 4
P13-15. Financial statement effects of tax rate change Requirement 1: Both companies project pretax income of $100 million. Because there are no permanent differences and no change in cumulative temporary differences in 2017 for either company, both are also Requirement […]
978-1259722653 Chapter 13 Solution Manual Part 3
P13-7. Tax rate reconciliation schedules for IFRS vs. U.S. GAAP Note: If the weighted average tax rate or effective rate is rounded before doing Calculations relevant to both reconciliations: Country X Country Y Total Pre-tax Book Income (1) $1,250,000 $1,100,000 […]
978-1259722653 Chapter 13 Solution Manual Part 2
E13-17. Computing tax due, deferred taxes, and tax expense Requirement 1: The calculation of tax due for 2017 is as follows: Requirement 2: Changes in deferred taxes for 2017: Temporary difference Gross profit on installment sales–future taxable amount $800,000 Tax […]
978-1259722653 Chapter 13 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 13 Solutions Income Tax Reporting Exercises Exercises E13-1. Determining current taxes due (AICPA adapted) Because Allen has no current income tax liability at December 31, 2016 and it made no estimated tax payments […]
978-1259722653 Chapter 12 Solution Manual Part 7
P12-16. Evaluating sale and leaseback under ASC 840 and ASU 2016-02 (ASC 842) (LO 12-3, LO 12-4, LO 12-6) Requirement 1: Lease type under ASC 840 This is a capital lease for Merchant because the lease meets at least one […]
978-1259722653 Chapter 12 Solution Manual Part 6
P12-12. Accounting for monthly rental payments under ASC 840 (LO 12-1, LO 12-3, LO 12-5, LO 12-7, LO 12-8) Requirement 1: Monthly rental computation Requirement 2: Type of lease Sales-type because criterion 4 is met and the cost is different […]
978-1259722653 Chapter 12 Solution Manual Part 5
P12-9. Recording capital lease for lessee and comparing to operating lease treatment under ASC 840 (LO 12-2, LO12-3, LO12-5) Part A – June 30 reporting year Requirement 1: Lease criteria This is a capital lease for Burgundy because the lease […]
978-1259722653 Chapter 12 Solution Manual Part 4
P12-4. Recording operating lease and comparing to finance lease treatment under ASU 2016-02 (ASC 842) (LO 12-6) Part 1 – Lease classification Part 2 – Amortization table (A) (B) ( C) (D) Interest Principal Date Payment Expense Reduction Balance .09 […]
978-1259722653 Chapter 12 Solution Manual Part 3
E12-17. Classifying leases under ASC 840, IAS 17 and ASU (2016-02 (ASC 842) (LO 12-3, LO 12-6, LO 12-10) Requirement 1: Classification under ASC 840 The lease would be a capital lease because the lease term of 5 years is […]
978-1259722615 Chapter 14 Solution Manual
Solutions to Chapter 14 Introduction to Corporate Financing 1. a. False. Because of efficient markets, it is difficult to find undervalued securities or issue overvalued securities. Thus, good investment decisions are more valuable to owners. b. False. Competiti˜on is an […]
978-1259722653 Chapter 12 Solution Manual Part 2
E12-8. Determining lease payment and depreciation amounts for a capital lease (LO 12-1, LO 12-3, LO 12-5) Note that the calculations will be the same for a finance lease under ASC 842. Part 1 – Lease payment computations Case 1 […]
978-1259722653 Chapter 12 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 12 Solutions Financial Reporting for Leases Exercises Exercises E12-1. Accounting for lessee with purchase option under ASC 840 (LO 12-3) Requirement 1: Amount capitalized by Leland at 07/01/2017 The $100,000 represents a bargain […]
978-1259722653 Chapter 11 Solution Manual Part 7
C11-2 Tuesday Morning Corporation: Interpreting long-term debt disclosures Requirement 1: Requirement 2: $1,298 from the cash flow statement Requirement 3: The difference is $104. This appears to suggest that payment on the note payable in Note 5 was not made […]
978-1259722653 Chapter 11 Solution Manual Part 6
P11-23. Hedging a Planned Sale (LO 11-7, LO 11-8) Requirement 1: Newton plans to sell some of its corn inventory next March, six months from now (October). This sale will take place at the March market price. However, Newton does […]
978-1259722653 Chapter 11 Solution Manual Part 5
P11-17. Unconditional purchase obligations (LO 11-6, LO 11-9) Requirement 1: The following schedule shows the present value computation using an 8% discount rate: Year Purchase commitment Present value factor Present value amount Requirement 2: Using the amounts now shown on […]
978-1259722653 Chapter 11 Solution Manual Part 4
P11-11. Discount and premium amortization (LO 11-2) Requirement 1: The carrying values of both bonds in each of the two years presented is simply equal to the present value of the principal and interest payments discounted over the remaining life […]
978-1259722653 Chapter 11 Solution Manual Part 3
P11-6. Call options as investments (LO 11-7) Required entries for 1 through 3: July 1, 2017: July 31, 2017: DR Unrealized holding loss on stock options $75 CR Market adjustment—stock options $75 August 31, 2017: DR Market adjustment—stock options $1,950 […]
978-1259722653 Chapter 11 Solution Manual Part 2
Financial Reporting and Analysis (7th Ed.) Chapter 11 Solutions Financial Instruments and Liabilities Problems/Discussion Questions Problems P11-1. Imputing interest (LO 11-3) Requirement 1: To verify that the imputed interest rate on the dealer’s loan is 6%, compute the present value […]
978-1259722653 Chapter 11 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 11 Solutions Financial Instruments and Liabilities Exercises Exercises E11-1. Finding the issue price (LO 11-2) (AICPA adapted) We know that the bonds were priced to yield 8% when the contract interest rate was […]
978-1259722653 Chapter 10 Solution Manual Part 4
P10-21. IFRS impairment and revaluation (LO 10-10) Requirement 1: Cost model 12/31/2016: No entry 12/31/2017: 12/31/2018: DR Land €100,000 CR Impairment reversal: land €100,000 Requirement 2: Revaluation model 12/31/2016: DR Land €150,000 CR Revaluation surplus €150,000 12/31/2017: DR Revaluation surplus […]
978-1259722653 Chapter 10 Solution Manual Part 3
P10-16. Making asset age and intercompany comparisons (LO 10-3) Requirement 1: ROA for Gardenia Co. (000s omitted): Jan. 1 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 2017 2017 2018 2019 2020 2021 © 2018 by McGraw-Hill Education. […]
978-1259722653 Chapter 10 Solution Manual Part 2
Financial Reporting and Analysis (6th Ed.) Chapter 10 Solutions Long-Lived Assets and Depreciation Problems Problems P10-1. Computing depreciation expense – SL, DDB, SYD, and UP (LO 10-7) (AICPA adapted) The table below shows the amount of depreciation expense in 2017 […]
978-1259722653 Chapter 10 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 10 Solutions Long-Lived Assets and Depreciation Exercises Exercises E10-1. Capitalizing costs (LO 10-2) Phoenix may capitalize the following costs to the Machine account: The finder’s fee, list price, transportation fee and installation fee […]
978-1259722653 Chapter 9 Solution Manual Part 6
Financial Reporting and Analysis (7th Ed.) Chapter 9 Solutions Inventories Cases Cases C9-1. Daimler AG: Identifying differences and similarities between IFRS and GAAP (LO 11) Similarities 1. As a manufacturer, Daimler reports separate values for raw 2. Daimler uses a […]
978-1259722653 Chapter 9 Solution Manual Part 5
P9-11. Evaluating inventory cost-flow changes (LO 4) Requirement 1: “Better matching of revenues and expenses . . .” Matching does not refer to the physical flow of goods, but rather to cost-flow assumptions. “Better correlation of accounting and financial information […]
978-1259722653 Chapter 9 Solution Manual Part 4
P9-4. Determining the effects of absorption and variable costing (LO 12) Requirement 1: Absorption Cost: 2017 Ending inventory [55,000 @ $8] Absorption Cost: 2018 Sales revenue [85,000 @ $10] $850,000 Cost of goods sold: From beginning inventory [55,000 @ $8] […]
978-1259722653 Chapter 9 Solution Manual Part 3
E9-17. Computing dollar-value LIFO (LO 13) (AICPA adapted) To compute ending inventory at base year prices, we need to divide the year-end prices of each year by the respective price index, then separate the layers to compute ending inventory at […]
978-1259722653 Chapter 9 Solution Manual Part 2
E9-9. Computing ending inventory and cost of sales under direct and absorption costing (LO 12) (AICPA adapted) Requirement 1: Finished goods inventory under variable (direct) costing. Finished Goods Inventory To begin, we know cost of goods manufactured and the beginning […]
978-1259722653 Chapter 9 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 9 Solutions Inventories Exercises Exercises E9-1. Computing inventory amount from income statement data (LO 1) (AICPA adapted) To find merchandise inventory, we first need to find cost of goods sold. This figure can […]
978-1259722653 Chapter 8 Solution Manual Part 5
P8-15. Accounting for transfer of receivables (LO 8-6) It seems that Ricoh Company is treating the discounting of receivables as a sale. Note that Ricoh indicates that “trade notes receivable discounted are contingent liabilities.” If Ricoh had treated the Crown […]
978-1259722653 Chapter 8 Solution Manual Part 4
P8-12. Reconstructing T-accounts (LO 8-12) Requirement 1: Allowance for doubtful accounts Gross accounts receivable Beginning balance $31,651,000 Revenue (from income statement) 137,002,000 Bad debts written-off (from ADA) $6,876,000 Cash collected (plug number) 134,833,000 Ending balance $26,944,000 Journal Entries DR Gross […]
978-1259722653 Chapter 8 Solution Manual Part 3
P8-7. Scheduling interest received (LO 8-4) Effective interest table in 000’s ( a ) ( b ) ( c ) ( d ) Date Interest income – prior (d) x 11.12%) Note payment received (given) Total cash received (a) + […]
978-1259722653 Chapter 8 Solution Manual Part 2
Financial Reporting and Analysis (7th Ed.) Chapter 8 Solutions Receivables Problems Problems P8-1. Determining balance sheet presentation and preparing journal entries for various receivables transactions (LO 8-1, LO 8-4, LO8-6) Requirement 1: Journal entries 1. April 1 x .10) CR […]
978-1259722653 Chapter 8 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 8 Solutions Receivables Exercises Exercises E8-1. Analyzing accounts receivable (LO8-2) (AICPA adapted) To find the amount of gross sales, start by determining credit sales. We can do this with the accounts receivable T-account […]
978-1259722653 Chapter 7 Solution Manual Part 2
P7-6. Tying bonus to EPS performance Requirement 1: According to the bonus formula, Mr. Brincat would receive a bonus of $500,000 if the company reported net after-tax earnings of $50 million and the EPS increase was 10 percent. Requirement 2: […]
978-1259722653 Chapter 7 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 7 Solutions The Role of Financial Information in Contracting Exercises Exercises E7-1. Understanding debt covenants Debt covenants are restrictive provisions written into loan agreements. They are designed to reduce potential conflicts of interest […]
978-1259722653 Chapter 6 Solution Manual Part 4
Financial Reporting and Analysis (7th Ed.) Chapter 6 Solutions The Role of Financial Information in Valuation, Cash Flow Analysis, and Credit Risk Assessment Cases Cases C6-1. Illinois Tool Works: Abnormal earnings valuation Requirements 1 and 2: The template solution (shown […]
978-1259722653 Chapter 6 Solution Manual Part 3
P6-8. Assigning credit ratings using financial ratios Requirement 1: Standard & Poor’s credit analysts would probably assign a credit Requirement 2: The financial ratios for Firm 2 are closest to the median values for AA rated companies. Requirement 3: All […]
978-1259722653 Chapter 6 Solution Manual Part 2
Financial Reporting and Analysis (7th Ed.) Chapter 6 Solutions The Role of Financial Information in Valuation and Credit Risk Assessment Problems/Discussion Questions Problems P6-1 Interpreting stock price changes Requirement 1: AMD’s announcement differed from analysts’ expectations and presumably also from […]
978-1259722653 Chapter 6 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 6 Solutions The Role of Financial Information in Valuation and Credit Risk Assessment Problems/Discussion Questions Exercises E6-1. Free cash flow valuation Requirement 1: Although the exact definition of “free cash flow” varies in […]
978-1259722653 Chapter 5 Solution Manual Part 3
P5-14 Explaining changes in financial ratios (AICPA adapted) 1) a,b,d Inventory turnover is defined as the cost of goods sold divided by average inventory. A lower inventory would cause the inventory turnover ratio to increase, as would a higher cost […]
978-1259722653 Chapter 5 Solution Manual Part 2
P5-4 Decomposing return on common shareholders’ equity Requirement 1: ROCE measures a company’s performance in using capital provided by common shareholders to generate earnings. ROCE ROA measures the profitability of operations before considering how Best Buy financed its assets. ROA […]
978-1259722653 Chapter 5 Solution Manual Part 1
Financial Reporting and Analysis (7th Ed.) Chapter 5 Solutions Essentials of Financial Statement Analysis Exercises Exercises E5-1 Calculating profitability ratios (AICPA adapted) E5-2 Determining inventory turnover (AICPA adapted) E5-3 Determining receivable turnover (AICPA adapted) Accounts receivable turnover = Total credit […]
978-1259722653 Chapter 4 Solution Manual Part 4
Financial Reporting and Analysis (7th Ed.) Chapter 4 Solutions Structure of the Balance Sheet and Cash Flow Statement Cases Cases C4-1. Subsequent events Event 1: The loan, and the nature of the collateral, should be disclosed in the notes to […]