Exam 9: Operating Activities

Derivative instruments acquired to hedge exposure to changes in the fair value of an asset or liability are ______________________________ hedges.

Differences between income before taxes and taxable income are either ____________________ or ____________________.

The following information is related to the defined benefit pension plan of Xavier Company for 2012: Required: a.Using the information provided for Global,prepare the company's journal entry to record income taxes for 2012 and 2011. b.Using the information provided for Global,determine the company's effective tax rate for 2012 and 2011.

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 uncertain that it will collect all four payments from Ranger Inc.and uses the installment method of accounting for revenue recognition what amount of gross profit should Parnell recognize in 2012 from the sale?

Which of the following best describes the accounting treatment for derivative instruments not held for purposes of hedging?

A typical defined benefit pension plan formula includes all of the following except:

Assume that Madison Corp.has agreed to construct a new basketball arena for Gator Town for $70 million dollars.Construction of the new arena begins in July,2012 and is expected to be completed in March 2009.At the signing of the contract Madison Corp.estimates that the new arena will cost $60 million dollars to build.Given the following cost and building schedule determine the cumulative degree of completion and how much revenue and gross margin Madison Corp.should recognize in years 2012,2013 and 2014.

Cooke Industries imports and sells quality merchandise.The company had the following layers in its LIFO inventory at January 1,2012,at which time the replacement cost of the inventory was $600 per unit. Year LoIFO Leyer Added Units Unit Cast 2009 4[ 400 2010 30 475 2011 50 \ 575 The replacement cost of the merchandise remained constant throughout 2012.Cooke sold 300 units during 2012.The company established the selling price of each unit by doubling its replacement cost at the time of sale. Required:1.Determine the gross margin and the gross margin percentage for 2012 assuming that Cooke purchased 310 units during the year. 2.Determine the gross margin and the gross margin percentage for 2012 assuming that Cooke purchased 200 units during the year. 3.Explain why the assumed number of units purchased makes a difference in your answers.

Accountants use reserve accounts for various reasons,for each of the scenarios below describe a specific account example that matches the scenario. 1.The use of a reserve account in order to match expense with revenues. 2.The use of a reserve account in order to keep expense out of the income statement. 3.The use of a reserve account in order to revalue an asset,but delay the income recognition effect.

Bower Construction Comp.has consistently used the percentage-of-completion method for recognizing revenue on its long-term contracts.During 2010 Bower entered into a fixed-price contract to construct an office building for $8,000,000.Information relating to the contract is as follows: Required (Show Calculations): 1.Compute contract costs incurred during 2010,2011 and 2012. 2.Determine how much gross profit Bower should recognize in 2012. 3.Under what conditions would it not be reasonable for a company to use the percentage of completion method of recognizing revenue on long-term contracts? 4.If Bower had used the completed contract method of accounting for this long-term contract how much gross profit would it have earned in 2010,2011 and 2012?

Magnum Construction contracted to construct a factory building for $545,000.The company started during 2012 and was completed in 2013.Information relating to the contract is as follows: Costs incurred during the year Estimated additional cost to complete 165,000 \ldots Billings during the year 280,000 285,000 Cash collections thring the year 260,000 305,000 Required: Record the preceding transactions in Magnum's books under completed-contract and the percentage of completion methods.Determine amounts that will be reported on the balance sheet at the end of 2012.

An inventory pricing procedure in which the current costs have a direct impact on the inventory is:

What are the foiur disclosures required by US.GAAP relating to income taxes?

____________________ differences result from including revenues and expenses in income before taxes in a different period than those items affect taxable income.