Exam 25: Appendix

Use the following data for questions 10 through 17. Each question is independent of the other questions. Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for Machine A. -Given the assumptions in 15 above, at what amount will Brown record Machine A?

Worthington Company purchased a machine on January 1, 2012, for $6,400,000. At the date of acquisition, the machine had an estimated useful life of six years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2015, Worthington determined, as a result of additional information, that the machine had an estimated useful life of eight years from the date of acquisition with no salvage. An accounting change was made to reflect this additional information. What amount of depreciation expense should be reported in Worthington's income statement for the year ended December 31, 2015?

Use the following data for questions 10 through 17. Each question is independent of the other questions. Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for Machine A. -Given the assumptions in 15 above except that the selling prices and fair market values of A and B are $756,000 and $675,000, respectively, at what amount will Brown record Machine A?

The calculation of the number of times interest is earned involves dividing

Use the following data for questions 10 through 17. Each question is independent of the other questions. Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for Machine A. -Return to the original problem. Assume that Sawyer is a dealer selling new machines and that Brown is a manufacturer. Assume that the exchange has commercial substance. For this transaction, at what amount will Sawyer record the truck? a. $540,000. b. $737,100. c. $621,000. d. $656,100.

Problem D-I — Treasury Stock The stockholders' equity section of Carey Co.'s balance sheet at December 31, 2014, was as follows: Instructions Prepare journal entries (1, 2, and 4) and show proper disclosure (3) to reflect the following treasury stock transactions showing how each is accounted for under the cost method. (Show computations.) -On June 30, 2015 the firm sold 10,000 of the reacquired shares for $17 per share.

Statement of Cash Flows. Additional Data: 1. Net income for the year amounted to $109,000. 2. Cash dividends were paid amounting to 4% of par value. 3. Land was sold for $120,000." 4. Sharp sold equipment, which cost $225,000 and had accumulated depreciation of $90,000, for $115,000. InstructionsPrepare a statement of cash flows using the indirect method."

Retained earnings in the amount of the distribution are transferred to capital stock, in some instances in an amount in excess of that required by the laws of the state of incorporation.

Information from Collins Company's balance sheet is as follows: $\text { Current assets: }$ Cash 12,000,000 Short-term investments 20,000,000 Accounts receivable 50,000,000 Inventories 66,000,000 Prepaid expenses 2,000,000 Total current assets \ 150,000,000 Current liabilities: Notes payable 21,000,000 Accounts payable 18,000,000 Accrued expenses 13,000,000 Income taxes payable 3,000,000 Current portion of long-term debt 5,000,000 Total current liabilities \6 0,000,000 What is the acid-test (quick) ratio?

Use the following data to answer questions 5 through 9: Davis Company purchased a new piece of equipment on July 1, 2014 at a cost of $1,800,000. The equipment has an estimated useful life of 5 years and an estimated salvage value of $150,000. The current year end is 12/31/15. Davis records depreciation to the nearest month. -If, at the end of 2016, Davis Company decides the equipment still has five more years of life beyond 12/31/16, with a salvage value of $150,000, what is straight-line depreciation for 2016? (Assume straight-line used in all years.)

In accordance with GAAP, the maximum period over which a patent can be amortized is

Use the following data for questions 10 through 17. Each question is independent of the other questions. Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method. On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for Machine A. -Exchange of Assets.Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies. "1. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance.Jensen Co.'s Books: Merton Co.'s Books:""2. Jensen Co. and Merton Co. traded the above equipment. The exchange lacks commercial substance.Jensen Co.'s Books: Merton Co.'s Books:Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies. ""3. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance.Jensen Co.'s Books: Merton Co.'s Books:""4. Jensen Co. and Merton Co. traded the above equipment. The exchange lacks commercial substance.Jensen Co.'s Books: Merton Co.'s Books:"

Fargo, Inc. disclosed the following information as of and for the year ended December 31, 2015: Net cash sales 600,000 Net credit sales 960,000 Inventory at beginning 100,000 Inventory at end 150,000 Net income 30,000 Accounts receivable at beginning of year 110,000 Accounts receivable at end of year 130,000 Fargo's receivables turnover is

How does failure to record accrued revenue distort the financial reports?

Of the following adjusting entries, which one would cause an increase in assets at the end of the period?

Information concerning the debt of Cole Company is as follows: In preparing a statement of cash flows for the year ended December 31, 2015, for Cole Company, cash flows from financing activities would reflectOutflow

Earnings Per Share ConceptsIndicate which of the following securities would be included in the computation of "basic earnings per share," and which would be included in the computation of "diluted earnings per share." Place a "B" before those which affect only basic EPS, a "D" before those which affect only diluted EPS, a "BD" before those which affect both basic and diluted EPS, and an "N" before those securities which do not affect EPS computations. Assume that, where applicable, the appropriate securities are dilutive.1. Warrants to purchase additional common shares.2. Common stock.3. Nonconvertible debenture bonds.4. Convertible, noncumulative preferred stock.5. Cumulative, nonconvertible preferred stock.6. Convertible bonds.7. Executive stock options.8. Notes payable.

In considering interim financial reporting, how did the Accounting Principles Board conclude that such reporting should be viewed?

Perry Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $550,000. At the time of acquisition Perry paid $20,000 to have the assets appraised. The appraisal disclosed the following values: Land \ 320,000 Buildings 256,000 Equipment 64,000 What cost should be assigned to the land, buildings, and equipment, respectively?

Accounting for Troubled Debt Restructurings.On December 31, 2014, Federal Bank enters into a debt restructuring agreement with Carson Company which is experiencing financial difficulties. The bank restructures a $5,000,000 note receivable by:1. Reducing the principal obligation from $5,000,000 to $4,000,000.2. Extending the maturity date from 12/31/14 to 12/31/17, and"3. Reducing the interest rate from 12% to 6%.Interest has been paid up to date as of 12/31/14. InstructionsDiscuss the nature of this transaction, indicating whether any gain or loss is recognized by either party and preparing any 12/31/14 journal entries that may be required by the debtor (Carson)."