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Solutions and Test Bank For Advanced Accounting 7th
Edition By Debra Jeter
Advanced Accounting (New York University)
Studocu is not sponsored or endorsed by any college or university
Solutions and Test Bank For Advanced Accounting 7th
Edition By Debra Jeter
Advanced Accounting (New York University)
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Package Title: Test BankQuestions
Course Title: Advanced Accounting, 7e
Chapter Number: 1
Question Type: Multiple Choice
1) Stock given as consideration for a business combination is valued at:
a) fair market value
b) par value
c) historical cost
d) None of these
Answer: a
Question Title:Test Bank (Multiple Choice) Question 01
Difficulty: Medium
Learning Objective: 6Indicate the factors used to determine the price and the method of payment for a business combination.
Section Reference: 1.8
2) Which of the following situations best describes a business combination to be accounted for as a statutory
merger? a) Both companies in a combination continue to operate as separate, but related, legal entities.
b) Only one of the combining companies survives and the other loses its separate identity.
c) Two companies combine to form a new third company, and the original two companies are dissolved.
d) One company transfers assets to another company it has created.
Answer: b
Question Title:Test Bank (Multiple Choice) Question 02
Difficulty: Easy
Learning Objective: 5Distinguish between an asset and a stock acquisition.
Section Reference: 1.5
3) A firm can use which method of financing for an acquisition structured as either an asset or stock acquisition? a) Cash b) Issuing Debt
c) Issuing Stock
d) All of these
Answer: d
Question Title:Test Bank (Multiple Choice) Question 03
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Difficulty: Easy
Learning Objective: 6Indicate the factors used to determine the price and the method of payment for a business combination.
Section Reference: 1.5
4) The objectives of FASB 141R (Business Combinations) and FASB 160 (Noncontrolling Interests in Consolidated Financial Statements) are as follows:
a) to improve the relevance, comparability, and transparency of financial information related to business combinations.
b) to eliminate the amortization of Goodwill. c) to facilitate the convergence project of the FASB and the International Accounting Standards Board. d) to improve the relevance, comparability, and transparency of financial information related to business combinations and to eliminate the amortization of Goodwill.
Answer: d
Question Title:Test Bank (Multiple Choice) Question 04
Difficulty: Medium
Learning Objective:9Discuss the Statements of Financial Accounting Concepts (SFAC).
Section Reference: 1.1
5) A business combination in which the boards of directors of the potential combining companies negotiate mutually agreeable terms is a(n):
a) agreeable combination.
b) friendly combination.
c) hostile combination.
d) unfriendly combination.
Answer: b
Question Title:Test Bank (Multiple Choice) Question 05
Difficulty: Easy
Learning Objective: 4Identify defensive tactics used to attempt to block business combinations.
Section Reference: 1.2
6) A merger between a supplier and a customer is a(n):
a) friendly combination.
b) horizontal combination.
c) unfriendly combination.
d) vertical combination.
Answer: d
Question Title:Test Bank (Multiple Choice) Question 06
Difficulty: Easy
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Learning Objective: 2Identify the major reasons firms combine.
Section Reference: 1.3
7) The impairment standard as it relates to goodwill is an example of a:
a) consumption of benefit approach.
b) loss or lack of benefit approach.
c) component of other comprehensive income.
d) direct matching of expenses to revenues.
Answer: b
Question Title:Test Bank (Multiple Choice) Question 07
Difficulty: Easy
Learning Objective: 9Discuss the Statements of Financial Accounting Concepts (SFAC).
Section Reference: 1.11
8) The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called:
a) poison pill.
b) pac-man defense.
c) greenmail.
d) white knight.
Answer: c
Question Title:Test Bank (Multiple Choice) Question 08
Difficulty: Meduim
Learning Objective: 4Identify defensive tactics used to attempt to block business combinations.
Section Reference: 1.2
9) The third period of business combinations started after World War II and is called:
a) horizontal integration.
b) merger mania.
c) operating integration.
d) vertical integration.
Answer: b
Question Title:Test Bank (Multiple Choice) Question 09
Difficulty: Easy
Learning Objective: 1
Describe historical trends in types of business combinations.
Section Reference: 1.4
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10) Which of the following is not a component of other comprehensive income under GAAP?
a) earnings.
b) gains and losses that bypass earnings.
c) impairment losses.
d) accumulated other comprehensive income.
Answer: d
Question Title:Test Bank (Multiple Choice) Question 10
Difficulty: Easy
Learning Objective: 9Discuss the Statements of Financial Accounting Concepts (SFAC).
Section Reference: 1.10
11) When a new corporation is formed to acquire two or more other corporations and the acquired corporations cease to exist as separate legal entities, the result is a statutory:
a) acquisition.
b) combination.
c) consolidation.
d) merger.
Answer: c
Question Title:Test Bank (Multiple Choice) Question 11
Difficulty: Easy
Learning Objective: 5Distinguish between an asset and a stock acquisition.
Section Reference: 1.5
12) The excess of the amount offered in an acquisition over the prior stock price of the acquired firm is the:
a) bonus.
b) goodwill.
c) implied offering price.
d) takeover premium.
Answer: d
Question Title:Test Bank (Multiple Choice) Question 12
Difficulty: Easy
Learning Objective: 6Indicate the factors used to determine the price and the method of payment for a business combination.
Section Reference: 1.6
13) The difference between normal earnings and expected future earnings is:
a) average earnings.
b) excess earnings.
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c) ordinary earnings.
d) target earnings.
Answer: b
Question Title:Test Bank (Multiple Choice) Question 13
Difficulty: Easy
Learning Objective: 7Calculate an estimate of the value of goodwill to be included in an offering price by discounting expected future excess earnings over some period of years.
Section Reference: 1.8
14) The first step in estimating goodwill in the excess earnings approach is to:
a) determine normal earnings.
b) identify a normal rate of return for similar firms.
c) compute excess earnings.
d) estimate expected future earnings.
Answer: b
Question Title:Test Bank (Multiple Choice) Question 14
Difficulty: Medium
Learning Objective: 7Calculate an estimate of the value of goodwill to be included in an offering price by discounting expected future excess earnings over some period of years.
Section Reference: 1.8
15) Many of FASB’s recent pronouncements indicate a shift away from historical cost accounting toward:
a) an elevated status for the Statements of Financial Accounting Concepts.
b) convergence of standards.
c) fair value accounting.
d) representationally faithful reporting.
Answer: c
Question Title:Test Bank (Multiple Choice) Question 15
Difficulty: Medium
Learning Objective: 9Discuss the Statements of Financial Accounting Concepts (SFAC).
Section Reference: 1.10
16) Estimated goodwill is determined by computing the present value of the:
a) average earnings.
b) excess earnings.
c) expected future earnings.
d) normal earnings.
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Answer: b
Question Title:Test Bank (Multiple Choice) Question 16
Difficulty: Easy
Learning Objective: 7Calculate an estimate of the value of goodwill to be included in an offering price by discounting expected future excess earnings over some period of years.
Section Reference: 1.8
17) Which of the following statements would not be a valid or logical reason for entering into a business combination?
a) to increase market share.
b) to avoid becoming a takeover target.
c) to reduce risk by acquiring established product lines.
d) the operating costs of the combined entity would be more than the sum of the separate entities.
Answer: d
Question Title:Test Bank (Multiple Choice) Question 17
Difficulty: Easy
Learning Objective: 2Identify the major reasons firms combine.
Section Reference: 1.3
18) The parent company concept of consolidation represents the view that the primary purpose of consolidated financial statements is:
a) to provide information relevant to the controlling stockholders.
b) to represent the view that the affiliated companies are a separate, identifiable economic entity.
c) to emphasis control of the whole by a single management.
d) to include only a portion of the subsidiary’s assets, liabilities, revenues, expenses, gains, and losses.
Answer: a
Question Title:Test Bank (Multiple Choice) Question 18
Difficulty
:
Medium
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
19) Which of the following statements is correct?
a) Total elimination is consistent with the parent company concept.
b) Partial elimination is consistent with the economic unit concept.
c) Past accounting standards required the total elimination of unrealized intercompany profit in assets acquired from affiliated companies.
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d) none of these.
Answer: c
Question Title: Test Bank (Multiple Choice) Question 19
Difficulty: Hard
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
20) Under the parent company concept, consolidated net income __________ the consolidated net income under the economic unit concept.
a) is the same as
b) is higher than
c) is lower than
d) can be higher or lower than
Answer: a
Question Title: Test Bank (Multiple Choice) Question 20
Difficulty: Medium
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
21) Under the economic unit concept, noncontrolling interest in net assets is treated as:
a) a liability.
b) an asset.
c) stockholders' equity.
d) an expense.
Answer: c
Question Title: Test Bank (Multiple Choice) Question 21
Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
22) The parent company concept adjusts subsidiary net asset values for the:
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a) differences between cost and fair value.
b) differences between cost and book value.
c) total fair value implied by the price paid by the parent.
d) total cost implied by the price paid by the parent.
Answer: b
Question Title: Test Bank (Multiple Choice) Question 22
Difficulty: Hard
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
23) According to the economic unit concept, the primary purpose of consolidated financial statements is to provide information that is relevant to:
a) majority stockholders.
b) minority stockholders.
c) creditors.
d) both majority and minority stockholders.
Answer: d
Question Title: Test Bank (Multiple Choice) Question 23
Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
24) Which of the following statements is correct?
a) The economic unit concept suggests partial elimination of unrealized intercompany profits.
b) The parent company concept suggests partial elimination of unrealized intercompany profits.
c) The economic unit concept suggests no elimination of unrealized intercompany profits.
d) The parent company concept suggests total elimination of unrealized intercompany profits.
Answer: b
Question Title: Test Bank (Multiple Choice) Question 24
Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
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Section Reference: 1.9
25) When following the parent company concept in the preparation of consolidated financial statements, noncontrolling interest in combined income is considered a(n):
a) prorated share of the combined income.
b) addition to combined income to arrive at consolidated net income.
c) expense deducted from combined income to arrive at consolidated net income.
d) deduction from current assets in the balance sheet.
Answer: c
Question Title: Test Bank (Multiple Choice) Question 25
Difficulty: Medium
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
26) When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the:
a) book values of subsidiary assets and liabilities.
b) fair values of subsidiary assets and liabilities.
c) general price level adjusted values of subsidiary assets and liabilities.
d) fair values of parent company assets and liabilities.
Answer: b
Question Title: Test Bank (Multiple Choice) Question 26
Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
27) The view that consolidated financial statements represent those of a single economic entity with several classes of stockholder interest is consistent with the:
a) parent company concept.
b) current practice concept.
c) historical cost company concept.
d) economic unit concept.
Answer: d
Question Title: Test Bank (Multiple Choice) Question 27
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Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
28) The view that the noncontrolling interest in income reflects the noncontrolling stockholders' allocated share of consolidated income is consistent with the:
a) economic unit concept.
b) parent company concept.
c) current practice concept.
d) historical cost company concept.
Answer: a
Question Title: Test Bank (Multiple Choice) Question 28
Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
29) The view that only the parent company's share of the unrealized intercompany profit recognized by the selling affiliate that remains in assets should be eliminated in the preparation of consolidated financial statements is consistent with the:
a) economic unit concept.
b) current practice concept.
c) parent company concept.
d) historical cost company concept.
Answer: c
Question Title: Test Bank (Multiple Choice) Question 29
Difficulty: Medium
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
Question Type: Essay
30) Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. The excess earnings approach is frequently used. Identify the steps used in this approach to estimate goodwill.
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Answer:The excess earnings approach to estimating goodwill includes the following steps: (a) Identify a normal rate of return for firms similar to the company being targeted, (b) Apply the identified rate of return of the level of identifiable assets (or net assets) of the target to approximate what would be normal earnings in this industry, (c) Estimate the expected future earnings of the target, (d) Subtract the normal earnings from
the expected target earnings to compute “excess earnings”, and (e) Assume an appropriate time period and a discount rate to compute the discounted value of the excess earnings − the estimated goodwill.
Question Title: Test Bank (Essay) Question 01
Difficulty: Medium
Learning Objective: 7Calculate an estimate of the value of goodwill to be included in an offering price by discounting expected future excess earnings over some period of years.
Section Reference: 1.8
31) The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Briefly explain the differences between the concepts.
Answer:Under the parent company concept, the consolidated financial statements reflect the stockholders’ interests in the parent, plus their undivided interests in the net assets of the parent's subsidiaries. The focus is on the interests of the parent's shareholders.
Under the economic entity concept, control of the whole by a single management is emphasized. With this concept, consolidated financial statements are intended to provide information about a group of legal entities
− a parent company and its subsidiaries − operating as a single unit.
Question Title: Test Bank (Essay) Question 02
Difficulty: Easy
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
32) Hopkins Company is considering the acquisition of Richfield, Inc. To assess the amount it might be willing to pay, Hopkins makes the following computations and assumptions.
A. Richfield, Inc. has identifiable assets with a total fair value of $6,000,000 and liabilities of $3,700,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 25% higher than book value, and land with a fair value 50% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Richfield, Inc.
B. Richfield, Inc.'s pretax incomes for the years 2014 through 2016 were $470,000, $570,000, and $370,000,
respectively. Hopkins believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments for the following items included in pretax earnings:
Depreciation on Buildings (each year)
380,000
Depreciation on Equipment (each year)
30,000
Extraordinary Loss (year 2016)
130,000
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Salary Expense (each year) 170,000
C. The normal rate of return on net assets for the industry is 15%.
Required:
A. Assume that Hopkins feels that it must earn a 20% return on its investment, and that goodwill is determined by capitalizing excess earnings. Based on these assumptions, calculate a reasonable offering price for Richfield, Inc. Indicate how much of the price consists of goodwill.
B. Assume that Hopkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Based on these assumptions, calculate a reasonable offering price for Richfield, Inc. Indicate how much of the price consists of goodwill.
Answer:
A. Normal earnings for similar firms = ($6,000,000 - $3,700,000) × 15% = $345,000
Expected earnings of target:
Pretax income of Richfield, Inc., 2014
$470,000
Subtract: Additional depreciation on buildings
($380,000 × .25)
(95,000)
Target's adjusted earnings, 2014
375,000
Pretax income of Richfield, Inc., 2015
$570,000
Subtract: Additional depreciation on buildings
(95,000)
Target's adjusted earnings, 2015
475,000
Pretax income of Richfield, Inc., 2016
$370,000
Add: Extraordinary loss
130,000
Subtract: Additional depreciation on buildings
(95,000)
Target's adjusted earnings, 2016
405,000
Target's three year total adjusted earnings
1,255,000
Target's three year average adjusted earnings
418,333
Excess earnings of target = $418,333 – $345,000 = $73,333 per year
$73,333
Present value of excess earnings (perpetuity) at 20%: 20%
= $366,665 (Estimated Goodwill)
Implied offering price = $6,000,000 - $3,700,000 + $366,665 = 2,666,665.
B.
Excess earnings of target (same as in A): $73,333
Present value of excess earnings (ordinary annuity) for five years at 15%; $73,333 × 3.35216 = $245,824
Implied offering price = $6,000,000 - $3,700,000 + $245,824 = $2,545,824.
Note: The salary expense and depreciation on equipment are expected to continue at the same rate, and thus do not necessitate adjustments.
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Question Title: Test Bank (Problem) Question 1-1
Difficulty: Hard
Learning Objective: 7Calculate an estimate of the value of goodwill to be included in an offering price by discounting expected future excess earnings over some period of years.
Section Reference: 1.8
33) Eden Company is trying to decide whether to acquire Bloomington Inc. The following balance sheet for
Bloomington Inc. provides information about book values. Estimated market values are also listed, based upon Eden Company's appraisals.
Bloomington Inc.
Book Values
Bloomington Inc.
Market Values
Current Assets
$ 450,000
$ 450,000
Property, Plant & Equipment (net)
1,140,000
1,300,000
Total Assets
$1,590,000
$1,750,000
Total Liabilities
$700,000
$700,000
Common Stock, $10 par value
280,000
Retained Earnings
610,000
Total Liabilities and Equities
$1,590,000
Eden Company expects that Bloomington will earn approximately $290,000 per year in net income over the next five years. This income is higher than the 14% annual return on tangible assets considered to be the industry "norm."
Required:
A. Compute an estimation of goodwill based on the information above that Eden might be willing to pay (include in its purchase price), under each of the following additional assumptions:
(1) Eden is willing to pay for excess earnings for an expected life of 4 years (undiscounted).
(2) Eden is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return.
(3) Excess earnings are expected to last indefinitely, but Eden demands a higher rate of return of 20% because of the risk involved.
B. Determine the amount of goodwill to be recorded on the books if Eden pays $1,300,000 cash and assumes Bloomington's liabilities.
Answer:
A.
Normal earnings for similar firms (based on tangible assets only) = $1,750,000 × 14% = $245,000
Excess earnings = $290,000 - 245,000 = $45,000
(1) Goodwill based on four years excess earnings undiscounted.
Goodwill = ($45,000)(4 years) = $180,000
(2)
Goodwill based on four years discounted excess earnings
Goodwill = ($45,000)(2.91371) = $131,117
(present value of an annuity factor for n=4, I=14% is 2.91371)
(3)
Goodwill based on a perpetuity
Goodwill = ($45,000)/.20 = $225,000
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B.
Goodwill = Cost less fair value of net assets
Goodwill = ($1,300,000 - ($1,750,000 - $700,000)) = $250,000
Question Title: Test Bank (Problem) Question 1-2
Difficulty: Hard
Learning Objective: 7Calculate an estimate of the value of goodwill to be included in an offering price by discounting expected future excess earnings over some period of years.
Section Reference: 1.8
34) Park Company acquired an 80% interest in the common stock of Southdale Company for $1,540,000 on July 1, 2016. Southdale Company's stockholders' equity on that date consisted of:
Common stock
$800,000
Other contributed capital
400,000
Retained earnings
330,000
Required:
Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the:
(1)
parent company concept.
(2)
economic unit concept.
Answer:
1.
Total book value of Southdale's net assets
($800,000 + $400,000 + $330,000)
$1,530,000
Noncontrolling interest %
× .2
Noncontrolling interest in net assets
$306,000
2.
Total fair value of Southdale's net assets ($1,540,000/.8)
$1,925,000
Noncontrolling interest %
× .2
Noncontrolling interest in net assets
$385,000
Question Title: Test Bank (Problem) Question 1-3
Difficulty: Medium
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
Section Reference: 1.9
35) The following balances were taken from the records of S Company:
Common stock (1/1/13 and 12/31/13)
$720,000
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Retained earnings 1/1/13
$160,000
Net income for 2016
180,000
Dividends declared in 2016
(40,000)
Retained earnings, 12/31/13
300,000
Total stockholders' equity on 12/31/13
$1,020,000
P Company purchased 75% of S Company's common stock on January 1, 2014 for $900,000. The difference between implied value and book value is attributable to assets with a remaining useful life on January 1, 2016 of ten years.
Required:
A.
Compute the difference between cost/(implied) and book value applying:
1.
Parent company theory.
2.
Economic unit theory.
B.
Assuming the economic unit theory:
1.
Compute noncontrolling interest in consolidated income for 2016.
2.
Compute noncontrolling interest in net assets on December 31, 2016.
Answer:
A1. Cost of investment
$900,000
Equity acquired .75($720,000 + $160,000)
660,000
Difference (parent company theory)
$240,000
2. Implied value of S Company ($900,000/.75)
$1,200,000
Book value of S Company ($720,000 + $160,000)
880,000
Difference (economic unit theory)
$320,000
B1. Noncontrolling interest in consolidated income:
.25[$180,000 - ($320,000/10)]
$37,000
2. Noncontrolling interest in net assets:
.25[$1,020,000 + (9/10 × $320,000)]
$327,000
Question Title: Test Bank (Problem) Question 1-4
Difficulty: Hard
Learning Objective: 8Describe the two alternative views of consolidated financial statements: the economic entity and the parent company concepts.
Section Reference: 1.9
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SQU E-LEARNING SYSTEM (ACADEMIC) E-LEARNING SERVICES SQU LIBRARIES SQU PORTALATTENDANCE
The correct answer is: OMR 35,200
Question
10
Company XYZ is currently producing AND selling 10,000 units of product A. At this level, the total product cost was $60,000.
This included $10,000 direct materials, $20,000 direct labor and $30,000 manufacturing overhead cost, which included 20%
variable manufacturing overhead cost. The selling and administrative expenses were $100,000, which included $60,000
variable selling and administrative costs. Assume that the selling price per unit $20, how much was the total contribution
margin?
Theorrect
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a. $134,000
b. None of the given answers
C. $40,000
d. $104,000
e. $194,000
The correct answer is: $104,000
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INTERMED. ACCOUNTING (ACC 3110/312
Kieso, Intermediate Accounting, 16e
actice
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Assignment
Gradebook
ORION
gnment
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FULL SCREEN
CALCULATOR
Exercise 17-10
At December 31, 2017, the available-for-sale debt portfolio for Sheffield, Inc. is as follows.
Unrealized
Gain (Loss)
Fair Value
Security
Cost
$(11,375 )
$68,250
$79,625
A
6,825
63,700
56,875
B
11,375
116,025
104,650
C
$247,975
6,825
$241,150
Total
1,820
Previous fair value adjustment balance-Dr.
$5,005
Fair value adjustment-Dr.
On January 20, 2018, Sheffield, Inc. sold security A for $68,705. The sale proceeds are net of brokerage fees.
Sheffield Inc. reports net income in 2017 of $546,000 and in 2018 of $637,000. Unrealized holding gains and gains equal
$182,000 in 2018.
Prepare a statement of comprehensive income for…
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PRINCIPLES OF ACCOUNTING (ACCT 201
Kimmel, Accounting, 7e
Study & Practice
Assignment
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CALCULATOR
FULL SCREEN
PRINTER VERSION
4BACK
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nework
e5-01
Exercise 5-03
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these
transactions occurred.
5-05
Sept. 6 Purchased calculators from Wildhorse Co. at a total cost of $1,680, terms n/30.
Paid freight of $60 on calculators purchased from Wildhorse Co.
Returned calculators to Wildhorse Co. for $65 credit because they did not meet specifications.
Sold calculators costing $520 for $670 to Fryer Book Store, terms n/30.
Granted credit of $35 to Fryer Book Store for the return of one calculator…
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Jefferson Memorial Hospital is an investment center as a division of Hospitals United. During the past year, Jefferson reported an after-tax income of $7 million. Total interest
expense was $3,000,000, and the hospital tax rate was 30%. Total assets totaled $69.9 million, and non-interest-bearing current liabilities were $22,700,000. The required rate of
return established by Jefferson is equal to 17% of invested capital.
What is the residual income of Jefferson Memorial Hospital? Enter your answer in whole dollar.
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Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 12%. The
patent is expected to generate the following amounts of annual income and cash flows:
Year 1
Year 2
Year 3
Year 4
Net income
$5,100
$6,500
$6,300
$3,000
Operating cash flows
17,000
18,300
18,450
15,100
(Click here to see present value and future value tables)
A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar.
B. What happens if the required rate of return increases?
If the required rate of return increases,
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During the current year, Sokowski Manufacturing earned income of $332,760 from total sales of $5,640,000 and average capital assets of $12,000,000.
A. Based on this information, calculate asset turnover. If required, round your answer to two decimal places.
times
B. Assume sales margin is 5.9%, what is the total ROI for the company during the current year?. If required, round your answer to one decimal place.
%
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Florist Grump, Inc., had beginning retained earnings of $137,000. During the year, Florist Grump had net income of $63,000 and declared
and paid dividends of $18,000. What will be shown for ending retained earnings on Florist Grump's year-end balance sheet?
QUESTION 9
For the year ended December 31, Year 2
For the year ended December 31, Year 1
Revenues
$ 7,500
$ 500
Expenses
1,500
Net Income
December 31, Year 2
December 31, Year 1
Assets
$ 16,500
$ 1,000
500
Liabilities
Stock
300
300
Retained Earnings
1.$
200
Assume Year1 is the company's first year of business and there were $100 dividends in Year 1 and $100 dividends in Year 2. After
determining the missing amounts ($
Earnings 1.$
in the above…
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During the current year, Sokowski Manufacturing earned income of $327,600 from total sales of $5,200,000 and average capital assets of $12,200,000. What is the sales margin? If
required, round your answer to one decimal place.
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INTERMED. ACCOUNTING (ACC 3110/
Kieso, Intermediate Accounting, 16e
ice
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Gradebook
Assignment
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CALCULATOR
Exercise 17-22
Whispering Company has the following investments as of December 31, 2017:
$1,570,000
Investments in common stock of Laser Company
Investment in debt securities of FourSquare Company
$3,180,000
In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2017.
Whispering's stock investments does not result in significant influence on the operations of Laser Company. Whispering's
debt investment is considered held-to-maturity. At December 31, 2018, the shares in Laser Company are valued at
$1,120,000; the debt investment securities of FourSquare are valued at $2,310,000. Assume that these…
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Redbird Company is considering a project with an initial investment of $300,000 in new equipment that will yield annual net cash flows of $57,626 each year over its seven-year life.
The company's minimum required rate of return is 12%.
(Click here to see present value and future value tables)
A. What is the internal rate of return?
B. Should Redbird accept the project based on IRR?
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HW #10 - Chpt 22
1 eBook
еВook
E Print Item
Professional Fees Earned Budget for a Service Company
Rollins and Cohen, CPAS, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been
estimated for the month ending January 31, 20Y7:
Billable Hours
Audit Department:
Staff
27,900
Partners
4,200
Tax Department:
Staff
20,400
Partners
2,600
Small Business Accounting Department:
>
Staff
3,300
Partners
500
The average billing rate for staff is $115 per hour, and the average billing rate for partners is $235 per hour.
Prepare a professional fees earned budget for Rollins and Cohen, CPAS, for the month ending January 31, 20Y7.
ROLLINS AND COHEN, CPAS
Professional Fees…
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- Class Specifi + CLA Annotated B WileyPLL X WOMEN EM THE LIVED E https://edugen.wileyplus.com/edugen/student/mainfr.uni I Log C WileyPLUS: MyWileyPLUS I Help | Contact Us INTERMED. ACCOUNTING (ACC 3110/312 Kieso, Intermediate Accounting, 16e actice Downloadable eTextbook Assignment Gradebook ORION gnment NEXT BACK PRINTER VERSION FULL SCREEN CALCULATOR Exercise 17-10 At December 31, 2017, the available-for-sale debt portfolio for Sheffield, Inc. is as follows. Unrealized Gain (Loss) Fair Value Security Cost $(11,375 ) $68,250 $79,625 A 6,825 63,700 56,875 B 11,375 116,025 104,650 C $247,975 6,825 $241,150 Total 1,820 Previous fair value adjustment balance-Dr. $5,005 Fair value adjustment-Dr. On January 20, 2018, Sheffield, Inc. sold security A for $68,705. The sale proceeds are net of brokerage fees. Sheffield Inc. reports net income in 2017 of $546,000 and in 2018 of $637,000. Unrealized holding gains and gains equal $182,000 in 2018. Prepare a statement of comprehensive income for…arrow_forwardHello, I need help solving this accounting problem.arrow_forwardHello, I need help solving this accounting problem.arrow_forward
- Hello, I need help solving this accounting problem.arrow_forwardM Inbox - merc4365@fredonia.edu X A edugen.wileyplus.com/edugen/student/mainfr.uni nail O YouTube Maps Welcome, Joseph -. O New Tab WileyPLUS: HyWileyPLUS I Hele I Contact Us I PLUS PRINCIPLES OF ACCOUNTING (ACCT 201 Kimmel, Accounting, 7e Study & Practice Assignment Gradebook ORION Downloadable eTextbook Open Assignment CALCULATOR FULL SCREEN PRINTER VERSION 4BACK NE RESOURCES nework e5-01 Exercise 5-03 Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred. 5-05 Sept. 6 Purchased calculators from Wildhorse Co. at a total cost of $1,680, terms n/30. Paid freight of $60 on calculators purchased from Wildhorse Co. Returned calculators to Wildhorse Co. for $65 credit because they did not meet specifications. Sold calculators costing $520 for $670 to Fryer Book Store, terms n/30. Granted credit of $35 to Fryer Book Store for the return of one calculator…arrow_forwardgeNOWv2 | Online teachir + eAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false cel Your. F Startup Opportuniti. V How brands are co.. Assignment Practic... A COVID-19 Student. . C20-128PRO1-2016. O Final Exam Review -. G Professional Certific. Jefferson Memorial Hospital is an investment center as a division of Hospitals United. During the past year, Jefferson reported an after-tax income of $7 million. Total interest expense was $3,000,000, and the hospital tax rate was 30%. Total assets totaled $69.9 million, and non-interest-bearing current liabilities were $22,700,000. The required rate of return established by Jefferson is equal to 17% of invested capital. What is the residual income of Jefferson Memorial Hospital? Enter your answer in whole dollar. Previous Nextarrow_forward
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