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1.A component of an enterprise that may earn revenues and incur expenses, and about which management evaluates separate financial information in deciding how to allocate resources and assess performance is a(n) a.identifiable segment. b.operating segment. c.reportable segment. d.industry segment. 2.An entity is permitted to aggregate operating segments if the segments are similar regarding the a.nature of.
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21.Which of the following does not have to be disclosed in interim reports? a.Seasonal costs or expenses. b.Significant changes in estimates. c.Disposal of a segment of a business. d.All of these must be disclosed. 22.For interim financial reporting, the effective tax rate should reflect               Anticipated              Extraordinary tax creditsitems a.YesYes b.YesNo c.NoYes d.NoNo 23.Companies using the LIFO method may encounter a liquidation.
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Problems 8-1Peete Company purchased Snead Company common stock through open-market purchases as follows: ACQUIRED DATESHARESCOST 1/1/031,500$ 40,000 1/1/043,30080,000 1/1/056,600 215,000 Snead Company had 12,000 share of $20 par value common stock outstanding during the entire period.  Snead had the following retained earnings balances on the relevant dates: January 1, 2003$ 73,000 January 1, 200425,000 January 1, 2005120,000 December 31, 2005240,000 Snead.
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14-3Bass Industries operates in four different industries.  Information concerning the operations of these industries for the year 2004 is:      Revenue     IndustryOperatingSegment SegmentTotalIntersegmentProfit (Loss)Assets A$  7,000$1,500              $ 1,600$ 10,800 B5,000800              (1,000)9,600 C26,0005,000              2,000              33,600 D    62,000-0-                16,400    66,000 $100,000              $19,000              $120,000 Required: Complete the following schedule to determine which of the above segments must be treated as reportable segments.                  10%.
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21.The division of profits would be:    $4,000 and $6,000    $10,000 and $-0-    $6,000 and $4,000    $5,000 and $5,000 22.If their agreement specifies that salaries are allowed only to the extent of income, based on a prorata share of their salary allowances, the division of profits would be:    $4,000 and $6,000    $10,000.
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13-5Prepare a schedule to compute the translation gain or loss, assuming the temporal method of translation.  Round numbers to the nearest dollar. 13-6          Bass Corporation, a U.S. Company, formed a subsidiary with a new company in London on January 1, 2004 by investing 500,000 British pounds in exchange for all of.
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8-3Pryor Company purchased 20,000 shares of Saver Company's common stock for $430,000 on January 1, 2003.  At that time Saver Company had $250,000 of $10 par value common stock and $150,000 of retained earnings.  Saver Company's income earned and increase in retained earnings             during 2003 and 2004 were: 20032004 Income earned$130,000$180,000 Increase in.
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9-5On January 1, 2004, Petty Company acquired 90% of the common stock of Stark Company for $360,000 and 20% of the preferred stock for $35,000.  On this date Stark Company reported the following account balances: Common stock ($10 par value)$300,000 Preferred stock ($100 par value, 9%, cumulative, nonparticipating, liquidation value equal to par value)150,000 Other.
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Problems 13-1Ramsey, Inc. owns a company that operates in France.  Account balances in francs for the subsidiary are shown below: 2004 January 1December 31 Cash and Receivables              24,000              26,000 Supplies              1,000               500 Property, Plant, and Equipment              52,500              49,000 Accounts Payable              (11,500)              (5,500) Long-term Notes Payable              (19,000)              (11,000) Common Stock              (30,000)              (30,000) Retained Earnings              (17,000)              (17,000) Dividends-Declared & Paid on Dec.
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11.Selected data for a segment of a business enterprise are to be separately reported in accordance with SFAS No. 131 when the revenues of the segment is 10% or more of the combined a.net income of all segments reporting profits. b.external and internal revenue of all reportable segments. c.external revenue of all reportable.
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1.Which of the following statements relating to differences in worldwide accounting standards and practices is not correct? Goodwill is not amortized in some countries until it is apparent that it has diminished in value. The pooling of interests method of recording a business combination is permitted in only a few countries. In the.
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Multiple Choice 1.When a partner retires and withdraws assets in excess of his book value, the remaining partners absorb the excess a.equally. b.in their profit-sharing ratio. c.based on their average capital balances. d.based on their ending capital balances. 2.In a partnership, interest on capital investment is accounted for as a(n) a.return on investment. b.expense. c.allocation of net income. d.reduction of.
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Problems 14-1The following information is available for Torrey Company for 2004: a.In early April Torrey made major repairs to its equipment at a cost of $45,000.  These repairs will benefit the remainder of 2004 operations. b.At the end of May, Torrey sold machinery with a book value of $25,000 for $31,000. c.An inventory loss.
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11.Simms Corporation is an 80% owned subsidiary of Pitts Company. Simms  purchased bonds of Pitts Company for $103,000.  Pitts Company reported the bond liability on the date of purchase at $100,000 less unamortized discount of $10,000.  Assuming that the constructive gain or loss is material, the consolidated income statement should.
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31.Which of the following statements most accurately describes interim period tax expense? a.The best estimate of the annual tax rate times the ordinary income (loss) for the quarter. b.The best estimate of the annual tax rate times income (loss) for the year to date less tax expense (benefit) recognized in previous interim.
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10-1 Chapter 10 Insolvency – Liquidation and Reorganization Problems 10-1          On January 1, 2004, Kmart owed City Bank $800,000, under an 8% note with three years remaining to maturity.  Due to financial difficulties, Kmart was unable to pay the previous year’s interest.  City Bank agreed to settle Kmart’s debt in exchange for land.
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10-1 Chapter 10 Insolvency – Liquidation and Reorganization 11.Which statement with respect to gains and losses on troubled debt restructuring is correct?    Creditors losses on restructuring are extraordinary.    Debtor’s gains and losses on asset transfers and debtor’s gains on restructuring are combined and treated as extraordinary.    Debtor gains and creditor losses on restructuring.
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6-7On January 1, 2004, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000.  At that time, Salem Company had common stock of $550,000 and retained earnings of $155,000.  Porter Company uses the cost method to record its investment in Salem Company.  Differences between the.
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13-6          Using the information provided in Problem 13-6, use the temporal method instead of the current rate method. Required:  Prepare the subsidiary’s: Translated workpapers (round to the nearest dollar) Translated income statement Translated balance sheet From the Jeter 2e Study Guide: 13-8 On January 1, 2004, Paisano Company, a U.S. corporation, acquired 100% of the common.
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7-3Preston Company owns 104,000 of the 130,000 shares outstanding of Stine Corporation.  Stine Corporation sold equipment to Preston Company on January 1, 2003 for $740,000.  The equipment was originally purchased by Stine Corporation on January 1, 1999 for $1,280,000 and at that time its estimated depreciable life was 8 years. .
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11.If assets on the initial balance sheet are fairly valued, Ace and Bell consent and Dent pays Carr $75,000 for his interest; the revised capital balances of the partners would be a.Ace, $105,000; Bell, $165,000; Dent, $150,000. b.Ace, $105,000; Bell, $165,000; Dent, $140,000. c.Ace, $100,000; Bell, $160,000; Dent, $150,000. d.Ace, $100,000; Bell, $160,000; Dent,.
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Multiple Choice 1.When translating foreign currency financial statements for a company whose functional currency is the U.S. dollar, which of the following accounts is translated using historical exchange rates? Notes PayableEquipment a.YesYes b.YesNo c.NoNo d.NoYes 2.Under the temporal method, monetary assets and liabilities are translated by using the exchange rate existing at the a.beginning of the current year b.date.
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10-1 Chapter 10 Insolvency – Liquidation and Reorganization Multiple Choice 1.A corporation that is unable to pay its debts as they become due is: bankrupt. overdrawn. insolvent. liquidating. 2.When a business becomes insolvent, it generally has three possible courses of action.  Which of the following is not one of the three possible courses of action? the debtor and its.
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12-5On October 1, 2003, Kline Company shipped equipment to a foreign customer for a foreign currency (FC) price of FC 1,000,000 due on January 31, 2004.  All revenue realization criteria were satisfied and accordingly the sale was recorded by Kline Company on October 1.  Simultaneously, Kline entered into a forward.
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12-6          On November 1, 2003, Bisk Corporation, a calendar-year U.S. Corporation, invested in a speculative contract to purchase 500,000 euros on January 31, 2004, from a German brokerage firm.  Bisk agreed to buy 500,000 euros at a fixed price of $1.16 per euro.  The brokerage firm agreed to send 500,000.
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11.The amount of the gain on sale of the 1,000 shares that should be recorded on the books of Polk Company is a.$17,000. b.$42,500. c.$24,000. d.$50,000. e.none of these. 12.As a result of the sale, Polk Company's Investment in Salt account should be credited for a.$55,000. b.$68,750. c.$40,000. d.$47,500. e.none of these. 13.Assuming no other equity transactions, the amount of the difference.
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Multiple Choice 1.Which of the following methods of allocating the gain or loss on an intercompany bond retirement is the soundest conceptually? a.The gain (loss) is allocated to the company that issued the bonds. b.The gain (loss) is allocated to the company that purchased the bonds. c.The gain (loss) is allocated to the parent.
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8-5              P Company purchased 48,000 shares of the common stock of S Company for $600,000 on January 1, 2001, when S’s stockholder’s equity consisted of $5 par value, Common Stock at $300,000 and Retained Earnings of $400,000.  The difference between cost and book value relates to goodwill. On January 2, 2004,.
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10-1 Chapter 10 Insolvency – Liquidation and Reorganization 10-1          Anderson Corporation incurred major losses in 2003 and entered into voluntary Chapter 7 bankruptcy in the early part of 2004.  By June 1, all assets were converted into cash, the secured creditors were paid, and $50,000 in cash was left to pay the.
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13-3Accounts are listed below for a foreign subsidiary that maintains its books in its local currency.  The equity interest in the subsidiary was acquired in a purchase transaction.  In the space provided, indicate the exchange rate that would be used to translate the accounts into dollars assuming the functional currency.
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7-5On January 1, 2003, Poland Company purchased equipment from its 80%-owned subsidiary for $1,200,000.  On the date of the sale, the carrying value of the equipment on the books of the subsidiary company was $900,000. The equipment had a remaining useful life of six years on January 2003.  On January.
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Multiple Choice 1.When the parent company sells a portion of its investment in a subsidiary, the workpaper entry to adjust for the current year's income sold to noncontrolling stockholders includes a a.debit to Subsidiary Income Sold. b.debit to Equity in Subsidiary Income. c.credit to Equity in Subsidiary Income. d.credit to Subsidiary Income Sold. 2.A parent company.
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6-5 The following balances were taken from the records of S Company: Common stock$1,000,000 Retained earnings, 1/1/04              $580,000 Net income for 2004              1,200,000 Dividends declared in 2004                (620,000) Retained earnings, 12/31/04  1,160,000 Total stockholders' equity, 12/31/04$2,160,000 P Company owns 80% of the common stock of S Company.  During 2004, P Company purchased merchandise from S Company.
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11.When preparing consolidated financial statement workpapers, unrealized intercompany gains, as a result of equipment or inventory sales by affiliates, are allocated proportionately by percent of ownership between parent and subsidiary only when the selling affiliate is a.the parent and the subsidiary is less than wholly owned. b.a wholly owned subsidiary. c.the subsidiary and.
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11.The following balance sheet accounts of a foreign subsidiary at December 31, 2004, have been translated into U.S. dollars as follows:      Translated at       Current RatesHistorical Rates Accounts receivable, current$400,000$440,000 Accounts receivable, long-term200,000216,000 Inventories carried at market120,000132,000 Goodwill  160,000  180,000 $880,000$968,000 What total should be included in the translated balance sheet at December 31, 2004, for the above items? .
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14-5          XYZ Corporation has eight industry segments with sales, operating profit and loss, and identifiable assets at and for the year ended December 31, 2004 as follows: Sales to Unaffiliated Customers Sales to Affiliated Customers Profit or (Loss) Segment Assets Steel $900,000 $100,000 $175,000 $1,500,000 Auto Parts 800,000 ---   300,000 950,000 Coal Mine 400,000 300,000   (200,000) 800,000 Textiles 350,000 150,000 100,000 500,000 Paint 750,000 250,000 200,000 700,000 Lumber 475,000 ---   (50,000) 400,000 Leisure Time 425,000 ---   75,000 300,000 Electronics        400,000 ---                200,000 450,000     Total $4,500,000 $800,000 $800,000 $5,600,000 Required: Identify the segments,.
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10-1 Chapter 10 Insolvency – Liquidation and Reorganization 10-1          On January 2, 2003 Roberts, Inc. was indebted to First Bank under a $20 million, 10% unsecured note.  The note was signed January 2, 1997, and was due December 31, 2006.  Annual interest was last paid on December 31, 2001.  Roberts negotiated a.
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10-1 Chapter 10 Insolvency – Liquidation and Reorganization 10 –7  Miller Corporation is facing bankruptcy proceedings.  A balance sheet dated December 31, 2005 and other information is presented below. Miller Company Balance Sheet December 31, 2005                                                                                                                               Fair Value Cash$15,000 Accounts receivable                                                $10,000 Less:  Allowance for uncollectibles                            1,2008,800$ 8,000 Inventory18,00015,000 Property and equipment (net)45,00030,000 Goodwill  5,000-0- $91,800 Accounts payable$20,000 Accrued liabilities5,000 Long-term notes.
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Problems 12-1On November 1, 2003, Dexter Company sold inventory to a company in England.  The sale was for 300,000 British pounds and payment will be received on February 1, 2004.  On November 1, Dexter entered into a forward contract to sell 300,000 British pounds on February 1 at the forward rate.
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Problems 9-1On January 1, 2004, Paul Company acquired an 80% interest in Stoner Company for $535,000.  Stoner reported common stock of $500,000 and retained earnings of $200,000 on this date.  Any difference between cost and the book value interest acquired is attributable to land. Other information available for Stoner Company is shown.
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11.The exchange rate quoted for future delivery of foreign currency is the definition of a(n) a.direct exchange rate. b.indirect exchange rate. c.spot rate. d.forward exchange rate. 12.A transaction loss would result from a.an increase in the exchange rate applicable to an asset denominated in a foreign currency. b.a decrease in the exchange rate applicable to a liability.
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Multiple Choice 1.In the year a subsidiary sells land to its parent company at a gain, a workpaper entry is made debiting 1. Retained Earnings - P Company. 2. Retained Earnings - S Company. 3. Gain on Sale of Land. a.1 b.2 c.3 d.both 1 and 2. 2.In years subsequent to the year a 90% owned subsidiary sells equipment.
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Problems 11-1Barkley, Inc. maintains its financial statements following non-U.S. GAAP.  The income statement and balance sheet are as follows: Barkley, Inc. Income Statement      2003       2004   .       Sales              2,800,000 FC              3,100,000 FC Cost of Goods Sold              2,100,000              2,260,000 Gross Margin              700,000              840,000 Selling and Administration expense              420,000              430,000 Income before Tax              280,000              410,000 Tax Expense                85,000             .
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12-3United, Inc., a U.S. corporation, entered into a contract on November 1, 2003 to sell two machines to International Company, for 60,000 foreign currency units (FCU).  The machines were to be delivered and the amount collected on March 1, 2004. In order to hedge its commitment, United entered into a forward.
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Multiple Choice 1.A discount or premium on a forward contract is deferred and included in the measurement of the related foreign currency transaction if the contract is classified as a a.hedge of a net investment in a foreign entity. b.hedge of an exposed asset or liability position. c.hedge of an identifiable foreign currency commitment. d.contract.
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Problems 7-1Porter Company, a computer manufacturer, owns 90% of the outstanding stock of Sloan Company.  On January 1, 2004, Porter sold computers to Sloan for $400,000.  The computers, which are inventory to Porter, had a cost to Porter of $280,000.  Sloan Company estimated that the computers had a useful life of.
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