Exam 9: Operating Activities

Falcon Networks Falcon Networks is a leading semiconductor company with operations in 17 different countries. Information about the company's taxes appears below: -Using the information provided by Falcon Networks determine the federal effective tax rate for 2012.

Please answer the following questions about defined benefit pension plANSWER: 1.Companies with defined benefit pension plans must recognize pension expense each period.What are the five components of pension expense? Briefly describe each component. 2.How does each component of pension expense effect pension expense during the period (increase,decrease,or uncertain)? 3.What is the difference between the accumulated pension obligation and the projected pension obligation? 4.What determines whether a pension plan is underfunded or overfunded?

Which of the following is not one of the GAAP classifications for derivatives?

The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms

Explain the difference between a temporary and a permanent timing difference for income tax purposes"

All of the following are true regarding accrual accounting except:

___________________________________ is primarily a question of timing.

A contractor would not use ________________________________________ method of income recognition when there is substantial uncertainty regarding the total costs it will incur in completing the project.

The _____________________________________________ is equal to the actuarial present value of amounts that the employer expects to pay to retired employees based on the employees' service to date and using expected future salary amounts.

A company may try to paint a favorable picture of itself by accelerating the timing of revenues or estimating the collectible amounts too aggressively.In these cases the quality of accounting information declines because it does not represent the company's true economic condition and may not be sustainable.List four conditions which might suggest that a company is recognizing revenues too early?

Derivatives are financial instruments that derive their value from changes in any of the following underlying securitiesexcept:

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

Gorilla,Corp.implemented a defined-benefit pension plan for its employees on January 2,2012.The following data are provided for year 2012,as of December 31 What amount should Gorilla record as additional minimum pension liability at December 31,2012?

Parnell Industries Parnell Industries sold a copy machine to Ranger Inc. on January 1, 2012. The sale price of the machine was $4,000,000 and the machine cost $3,200,000 for Parnell to manufacture. Ranger will make four payments at the end of each year, beginning with 2012, of $1,261,883 each. The four payments of $1,261,883 when discounted at 10% have a present value of $4,000,000. An amortization table appears below: -If Parnell Industries is certain that it will collect all four payments from Ranger Inc.what amount of gross profit should Parnell recognize in 2012 from the sale?

A company that uses LIFO will find that its ______________________________ account will be somewhat out of date.

Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge.Distinguish between the two types of hedges.

A minimum liability for pension expense is reported when

Analysts concerns with postretirement benefits include all of the following except:

The difference between the economic resources received from customers and the economic resources paid to suppliers,employees and other providers of goods and services is called ____________________.

The following information is taken from Satin financial statements (amounts in thousands): Inventory Footnote: If the first-in,first-out method of accounting for inventory had been used,inventory would have been approximately $26.9 million and $25.1 million higher than reported at 12/31/2010 and 12/31/2009,respectively. Required: a.Calculate what inventory would have been at 12/31/2010 and 12/31/2009 had the FIFO inventory method been used. b.What would net income for the year ended 12/31/2010,have been if the FIFO inventory method been used? c.Calculate what stockholders' equity would have been at 12/31/2010 and 12/31/2009 had the FIFO inventory method been used.