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Virginia Aguilar
Answers (6)
VA
Answered
An impairment loss is reported on the income statement as a/an
A) continuing operations item.
B) extraordinary item.
C) discontinued operations item.
D) accounting change.
A) continuing operations item.
B) extraordinary item.
C) discontinued operations item.
D) accounting change.
On Jul 01, 2024
A
VA
Answered
actions to minimize the likelihood that this practice would occur in your new team.Your answer should also explain why each of theses actions would be effective.
On Jun 02, 2024
The points listed below are based on the ways mentioned in the textbook to manage team norms.However, creative students may present other solutions that are also aligned with the concepts presented in this chapter.
a.When selecting team members, you should try to identify employees who do not engage in the horseplay.For example, you might look at personnel records and speak to current and past supervisors of employees who apply for a position in your unit.
b.During the interview, at the time of job offer and when the person begins work, be sure to discuss the norms that you want the team to adopt and avoid, including the horseplay with forklifts.When the team is formed, you should call a meeting to emphasize the problems resulting from forklift horseplay.Persuasive communication techniques should be used to convince staff members.For example, someone previously injured from these antics could speak to the newly formed team.
c.If possible, the team should be relatively isolated from other units in the organization so that this norm is not adopted through regular discussions with employees from other teams.
d.The team might have a bonus system based on productivity and cost reduction.This might prevent horseplay with forklifts in two ways.First, employees on a team bonus system might view horseplay as a waste of valuable time that could be used more productively.Second, any damage due to these antics would put a financial burden on the team or, at least, reduce its chances of a bonus.
a.When selecting team members, you should try to identify employees who do not engage in the horseplay.For example, you might look at personnel records and speak to current and past supervisors of employees who apply for a position in your unit.
b.During the interview, at the time of job offer and when the person begins work, be sure to discuss the norms that you want the team to adopt and avoid, including the horseplay with forklifts.When the team is formed, you should call a meeting to emphasize the problems resulting from forklift horseplay.Persuasive communication techniques should be used to convince staff members.For example, someone previously injured from these antics could speak to the newly formed team.
c.If possible, the team should be relatively isolated from other units in the organization so that this norm is not adopted through regular discussions with employees from other teams.
d.The team might have a bonus system based on productivity and cost reduction.This might prevent horseplay with forklifts in two ways.First, employees on a team bonus system might view horseplay as a waste of valuable time that could be used more productively.Second, any damage due to these antics would put a financial burden on the team or, at least, reduce its chances of a bonus.
VA
Answered
At a recent professional meeting, two accountants discussed product-costing problems in their respective companies. Both accountants are familiar with ABC systems but neither firm uses this method.
Accountant A reported that part of the problem in product costing in his firm is that there are major differences between product lines as to volume of units, utilisation of various activities, quality assurance requirements established by customers and size of the products. Accountant B noted that in her firm, which produces consumer products, all products undergo the same basic production processes and in the same sequence, but in an increasing variety of colours and packaging modes.
Both accountants are worried about the potential distortion of product costs under their traditional product costing systems.
Which accountant should be more concerned about the potential distortion? Explain.
Accountant A reported that part of the problem in product costing in his firm is that there are major differences between product lines as to volume of units, utilisation of various activities, quality assurance requirements established by customers and size of the products. Accountant B noted that in her firm, which produces consumer products, all products undergo the same basic production processes and in the same sequence, but in an increasing variety of colours and packaging modes.
Both accountants are worried about the potential distortion of product costs under their traditional product costing systems.
Which accountant should be more concerned about the potential distortion? Explain.
On Jun 01, 2024
Accountant A should be more concerned. The variety of product lines made in his firm's facility reflects product diversity at the product line level. In accountant B's firm, there still is only one product line with an increasing number of models based on colour and packaging. While more attention may need to be devoted to assigning the packaging costs (perhaps through a version of operation costing), the situation in that firm is not as severe as in the firm with several product lines.
VA
Answered
Par Inc. purchased 70% of the outstanding voting shares of Sub Inc. for $700000 on July 1, 2020. On that date, Sub Inc. had common shares and retained earnings worth $410,000 and $170,000, respectively. The Equipment had a remaining useful life of 5 years from the date of acquisition. Sub's bonds mature on July 1, 2025. The inventory was sold in the year following the acquisition. Both companies use straight line amortization, and no salvage value is assumed for assets. Par Inc. and Sub Inc. declared and paid $10,000 and $5,000 in dividends, respectively during the year.
Par Inc. uses the Fair Value Enterprise Method to value the non-controlling interest in Sub Inc. on the acquisition date.
The balance sheets of both companies, as well as Sub's fair values immediately following the acquisition are shown below:
Par Inc. Sub Inc. Sub Inc. (carrying value) (carrying value) (fair value) Cash $600,000$515,000$515,000 Accounts Receivable $140,000$85,000$85,000 Inventory $60,000$45,000$60,000 Investment in Sub Inc. $700,000 Equipment (net) $50,000$180,000$185,000 Land $115,000$200,000 Total Assets $1,550,000$940,000 Current Liabilities $100,000$280,000$280,000 Bonds Payable $160,000$80,000$60,000 Common Shares $800,000$410,000 Retained Earnings $490,000$170,000 Total Liabilities and Equity $1,550,000$940,000\begin{array}{|l|r|r|r|} \hline& \text { Par Inc. } & \text { Sub Inc. } & \text { Sub Inc. } \\\hline & \text { (carrying value) } & \text { (carrying value) } & \text { (fair value) } \\\hline \text { Cash } & \$ 600,000 & \$ 515,000 & \$ 515,000 \\\hline \text { Accounts Receivable } & \$ 140,000 & \$ 85,000 & \$ 85,000 \\\hline \text { Inventory } & \$ 60,000 & \$ 45,000 & \$ 60,000 \\\hline \text { Investment in Sub Inc. } & \$ 700,000 & & \\\hline \text { Equipment (net) } & \$ 50,000 & \$ 180,000 & \$ 185,000 \\\hline \text { Land } & & \$ 115,000 & \$ 200,000 \\\hline \text { Total Assets } & \$ 1,550,000 & \$ 940,000 \\\hline \text { Current Liabilities } & \$ 100,000 & \$ 280,000&\$280,000 \\\hline \text { Bonds Payable } & \$ 160,000 & \$ 80,000&\$60,000 \\\hline\text { Common Shares }&\$800,000&\$410,000\\\hline\text { Retained Earnings }&\$490,000&\$170,000\\\hline\text { Total Liabilities and Equity }&\$1,550,000&\$940,000\\\hline\end{array} Cash Accounts Receivable Inventory Investment in Sub Inc. Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Par Inc. (carrying value) $600,000$140,000$60,000$700,000$50,000$1,550,000$100,000$160,000$800,000$490,000$1,550,000 Sub Inc. (carrying value) $515,000$85,000$45,000$180,000$115,000$940,000$280,000$80,000$410,000$170,000$940,000 Sub Inc. (fair value) $515,000$85,000$60,000$185,000$200,000$280,000$60,000 The following are the financial statements for both companies for the fiscal year ended June 30, 2021:
Income Statements
Sales $800,000$300,000 Investment Revenue $21,000 Less: Expenses: Cost of Goods Sold $240,000$180,000 Depreciation $10,000$20,000 Interest Expense $12,000$40,000 Other Expenses $8,000$10,000 Net Income $551,000$50,000\begin{array}{|l|r|r|}\hline \text { Sales } & \$ 800,000 & \$ 300,000 \\\hline \text { Investment Revenue } & \$ 21,000 & \\\hline \text { Less: Expenses: } & & \\\hline \text { Cost of Goods Sold } & \$ 240,000 & \$ 180,000 \\\hline \text { Depreciation } & \$ 10,000 & \$ 20,000 \\\hline \text { Interest Expense } & \$ 12,000 & \$ 40,000 \\\hline \text { Other Expenses } & \$ 8,000 & \$ 10,000 \\\hline \text { Net Income } & \$ 551,000 & \$ 50,000\\\hline\end{array} Sales Investment Revenue Less: Expenses: Cost of Goods Sold Depreciation Interest Expense Other Expenses Net Income $800,000$21,000$240,000$10,000$12,000$8,000$551,000$300,000$180,000$20,000$40,000$10,000$50,000 Retained Earnings Statements
Balance, July 1, 2020 $490,000$170,000 Net Income $551,000$50,000 Dividends $(10,000)$(5,000) Balance, June 30,2021$1,031,000$215,000\begin{array}{|l|r|r|}\hline \text { Balance, July 1, 2020 } & \$ 490,000 & \$ 170,000 \\\hline \text { Net Income } & \$ 551,000 & \$ 50,000 \\\hline \text { Dividends } & \$(10,000) & \$(5,000) \\\hline \text { Balance, June } 30,2021 & \$ 1,031,000 & \$ 215,000\\\hline\end{array} Balance, July 1, 2020 Net Income Dividends Balance, June 30,2021$490,000$551,000$(10,000)$1,031,000$170,000$50,000$(5,000)$215,000 Balance Sheets
Par Inc. Sub Inc. Cash $647,500$665,000 Accounts Receivable $250,000$35,000 Investment in Sub $717,500 Inventory $90,000$45,000 Equipment (net) $750,000$170,000 Land $115,000 Total Assets $2,455,000$1,030,000 Current Liabilities $464,000$325,000 Bonds Payable $160,000$80,000 Common Shares $800,000$410,000 Retained Earnings $1,031,000$215,000 Total Liabilities and Equity $2,455,000$1,030,000\begin{array}{|l|r|r|}\hline & \text { Par Inc. } & \text { Sub Inc. } \\\hline \text { Cash } & \$ 647,500 & \$ 665,000 \\\hline \text { Accounts Receivable } & \$ 250,000 & \$ 35,000 \\\hline \text { Investment in Sub } & \$ 717,500 & \\\hline \text { Inventory } & \$ 90,000 & \$ 45,000 \\\hline \text { Equipment (net) } & \$ 750,000 & \$ 170,000 \\\hline \text { Land } & & \$ 115,000 \\\hline \text { Total Assets } & \$ 2,455,000 & \$ 1,030,000 \\\hline \text { Current Liabilities } & \$ 464,000 & \$ 325,000 \\\hline \text { Bonds Payable } & \$ 160,000 & \$ 80,000 \\\hline \text { Common Shares } & \$ 800,000 & \$ 410,000 \\\hline \text { Retained Earnings } & \$ 1,031,000 & \$ 215,000 \\\hline \text { Total Liabilities and Equity } & \$ 2,455,000 & \$ 1,030,000 \\\hline\end{array} Cash Accounts Receivable Investment in Sub Inventory Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Par Inc. $647,500$250,000$717,500$90,000$750,000$2,455,000$464,000$160,000$800,000$1,031,000$2,455,000 Sub Inc. $665,000$35,000$45,000$170,000$115,000$1,030,000$325,000$80,000$410,000$215,000$1,030,000 Both companies use a FIFO system, and Sub's entire inventory on the date of acquisition was sold during the following year. During 2020, Sub Inc. borrowed $10,000 in cash from Par Inc. interest free to finance its operations. The amount remains unpaid as of June 30, 2021. The Par uses the Equity Method to account for its investment in Sub Inc. Corp.
Prepare Par's consolidated income statement for the year ended June 30, 2021. Show the allocation of consolidated net income between the controlling and non-controlling interests.
Par Inc. uses the Fair Value Enterprise Method to value the non-controlling interest in Sub Inc. on the acquisition date.
The balance sheets of both companies, as well as Sub's fair values immediately following the acquisition are shown below:
Par Inc. Sub Inc. Sub Inc. (carrying value) (carrying value) (fair value) Cash $600,000$515,000$515,000 Accounts Receivable $140,000$85,000$85,000 Inventory $60,000$45,000$60,000 Investment in Sub Inc. $700,000 Equipment (net) $50,000$180,000$185,000 Land $115,000$200,000 Total Assets $1,550,000$940,000 Current Liabilities $100,000$280,000$280,000 Bonds Payable $160,000$80,000$60,000 Common Shares $800,000$410,000 Retained Earnings $490,000$170,000 Total Liabilities and Equity $1,550,000$940,000\begin{array}{|l|r|r|r|} \hline& \text { Par Inc. } & \text { Sub Inc. } & \text { Sub Inc. } \\\hline & \text { (carrying value) } & \text { (carrying value) } & \text { (fair value) } \\\hline \text { Cash } & \$ 600,000 & \$ 515,000 & \$ 515,000 \\\hline \text { Accounts Receivable } & \$ 140,000 & \$ 85,000 & \$ 85,000 \\\hline \text { Inventory } & \$ 60,000 & \$ 45,000 & \$ 60,000 \\\hline \text { Investment in Sub Inc. } & \$ 700,000 & & \\\hline \text { Equipment (net) } & \$ 50,000 & \$ 180,000 & \$ 185,000 \\\hline \text { Land } & & \$ 115,000 & \$ 200,000 \\\hline \text { Total Assets } & \$ 1,550,000 & \$ 940,000 \\\hline \text { Current Liabilities } & \$ 100,000 & \$ 280,000&\$280,000 \\\hline \text { Bonds Payable } & \$ 160,000 & \$ 80,000&\$60,000 \\\hline\text { Common Shares }&\$800,000&\$410,000\\\hline\text { Retained Earnings }&\$490,000&\$170,000\\\hline\text { Total Liabilities and Equity }&\$1,550,000&\$940,000\\\hline\end{array} Cash Accounts Receivable Inventory Investment in Sub Inc. Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Par Inc. (carrying value) $600,000$140,000$60,000$700,000$50,000$1,550,000$100,000$160,000$800,000$490,000$1,550,000 Sub Inc. (carrying value) $515,000$85,000$45,000$180,000$115,000$940,000$280,000$80,000$410,000$170,000$940,000 Sub Inc. (fair value) $515,000$85,000$60,000$185,000$200,000$280,000$60,000 The following are the financial statements for both companies for the fiscal year ended June 30, 2021:
Income Statements
Sales $800,000$300,000 Investment Revenue $21,000 Less: Expenses: Cost of Goods Sold $240,000$180,000 Depreciation $10,000$20,000 Interest Expense $12,000$40,000 Other Expenses $8,000$10,000 Net Income $551,000$50,000\begin{array}{|l|r|r|}\hline \text { Sales } & \$ 800,000 & \$ 300,000 \\\hline \text { Investment Revenue } & \$ 21,000 & \\\hline \text { Less: Expenses: } & & \\\hline \text { Cost of Goods Sold } & \$ 240,000 & \$ 180,000 \\\hline \text { Depreciation } & \$ 10,000 & \$ 20,000 \\\hline \text { Interest Expense } & \$ 12,000 & \$ 40,000 \\\hline \text { Other Expenses } & \$ 8,000 & \$ 10,000 \\\hline \text { Net Income } & \$ 551,000 & \$ 50,000\\\hline\end{array} Sales Investment Revenue Less: Expenses: Cost of Goods Sold Depreciation Interest Expense Other Expenses Net Income $800,000$21,000$240,000$10,000$12,000$8,000$551,000$300,000$180,000$20,000$40,000$10,000$50,000 Retained Earnings Statements
Balance, July 1, 2020 $490,000$170,000 Net Income $551,000$50,000 Dividends $(10,000)$(5,000) Balance, June 30,2021$1,031,000$215,000\begin{array}{|l|r|r|}\hline \text { Balance, July 1, 2020 } & \$ 490,000 & \$ 170,000 \\\hline \text { Net Income } & \$ 551,000 & \$ 50,000 \\\hline \text { Dividends } & \$(10,000) & \$(5,000) \\\hline \text { Balance, June } 30,2021 & \$ 1,031,000 & \$ 215,000\\\hline\end{array} Balance, July 1, 2020 Net Income Dividends Balance, June 30,2021$490,000$551,000$(10,000)$1,031,000$170,000$50,000$(5,000)$215,000 Balance Sheets
Par Inc. Sub Inc. Cash $647,500$665,000 Accounts Receivable $250,000$35,000 Investment in Sub $717,500 Inventory $90,000$45,000 Equipment (net) $750,000$170,000 Land $115,000 Total Assets $2,455,000$1,030,000 Current Liabilities $464,000$325,000 Bonds Payable $160,000$80,000 Common Shares $800,000$410,000 Retained Earnings $1,031,000$215,000 Total Liabilities and Equity $2,455,000$1,030,000\begin{array}{|l|r|r|}\hline & \text { Par Inc. } & \text { Sub Inc. } \\\hline \text { Cash } & \$ 647,500 & \$ 665,000 \\\hline \text { Accounts Receivable } & \$ 250,000 & \$ 35,000 \\\hline \text { Investment in Sub } & \$ 717,500 & \\\hline \text { Inventory } & \$ 90,000 & \$ 45,000 \\\hline \text { Equipment (net) } & \$ 750,000 & \$ 170,000 \\\hline \text { Land } & & \$ 115,000 \\\hline \text { Total Assets } & \$ 2,455,000 & \$ 1,030,000 \\\hline \text { Current Liabilities } & \$ 464,000 & \$ 325,000 \\\hline \text { Bonds Payable } & \$ 160,000 & \$ 80,000 \\\hline \text { Common Shares } & \$ 800,000 & \$ 410,000 \\\hline \text { Retained Earnings } & \$ 1,031,000 & \$ 215,000 \\\hline \text { Total Liabilities and Equity } & \$ 2,455,000 & \$ 1,030,000 \\\hline\end{array} Cash Accounts Receivable Investment in Sub Inventory Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Par Inc. $647,500$250,000$717,500$90,000$750,000$2,455,000$464,000$160,000$800,000$1,031,000$2,455,000 Sub Inc. $665,000$35,000$45,000$170,000$115,000$1,030,000$325,000$80,000$410,000$215,000$1,030,000 Both companies use a FIFO system, and Sub's entire inventory on the date of acquisition was sold during the following year. During 2020, Sub Inc. borrowed $10,000 in cash from Par Inc. interest free to finance its operations. The amount remains unpaid as of June 30, 2021. The Par uses the Equity Method to account for its investment in Sub Inc. Corp.
Prepare Par's consolidated income statement for the year ended June 30, 2021. Show the allocation of consolidated net income between the controlling and non-controlling interests.
On May 03, 2024
Par Inc.
Consolidated Income Statement
for the Year ended June 30, 2021
Sales $1,100,000 Less: Expenses: Cost of Goods Sold: $435,000($240,000+$180,000)+$15,000 Depreciation $31,000($10,000+$20,000)+$1,000 Interest Expense $56,000($12,000+$40,000)+$4,000 Other Expenses $18,000 Consolidated Net Income $560,000 Less: Non-Controlling ($9,000)($50,000−$15,000−$1,000−$4,000)×30% interest Parent’s Share of CNI $551,000\begin{array}{|l|l|l|}\hline \text { Sales } & \$ 1,100,000 \\\hline \text { Less: Expenses: } & \\\hline \text { Cost of Goods Sold: } & \$ 435,000 & (\$ 240,000+\$ 180,000)+\$ 15,000 \\\hline \text { Depreciation } & \$ 31,000 & (\$ 10,000+\$ 20,000)+\$ 1,000 \\\hline \text { Interest Expense } & \$ 56,000 & (\$ 12,000+\$ 40,000)+\$ 4,000 \\\hline \text { Other Expenses } & \$ 18,000 \\\hline \text { Consolidated Net Income } & \$ 560,000 \\\hline \text { Less: Non-Controlling } & (\$ 9,000) & (\$ 50,000-\$ 15,000-\$ 1,000-\$ 4,000) \times 30 \% \\\text { interest } & & \\\hline \text { Parent's Share of CNI } & \$ 551,000\\\hline\end{array} Sales Less: Expenses: Cost of Goods Sold: Depreciation Interest Expense Other Expenses Consolidated Net Income Less: Non-Controlling interest Parent’s Share of CNI $1,100,000$435,000$31,000$56,000$18,000$560,000($9,000)$551,000($240,000+$180,000)+$15,000($10,000+$20,000)+$1,000($12,000+$40,000)+$4,000($50,000−$15,000−$1,000−$4,000)×30%
Consolidated Income Statement
for the Year ended June 30, 2021
Sales $1,100,000 Less: Expenses: Cost of Goods Sold: $435,000($240,000+$180,000)+$15,000 Depreciation $31,000($10,000+$20,000)+$1,000 Interest Expense $56,000($12,000+$40,000)+$4,000 Other Expenses $18,000 Consolidated Net Income $560,000 Less: Non-Controlling ($9,000)($50,000−$15,000−$1,000−$4,000)×30% interest Parent’s Share of CNI $551,000\begin{array}{|l|l|l|}\hline \text { Sales } & \$ 1,100,000 \\\hline \text { Less: Expenses: } & \\\hline \text { Cost of Goods Sold: } & \$ 435,000 & (\$ 240,000+\$ 180,000)+\$ 15,000 \\\hline \text { Depreciation } & \$ 31,000 & (\$ 10,000+\$ 20,000)+\$ 1,000 \\\hline \text { Interest Expense } & \$ 56,000 & (\$ 12,000+\$ 40,000)+\$ 4,000 \\\hline \text { Other Expenses } & \$ 18,000 \\\hline \text { Consolidated Net Income } & \$ 560,000 \\\hline \text { Less: Non-Controlling } & (\$ 9,000) & (\$ 50,000-\$ 15,000-\$ 1,000-\$ 4,000) \times 30 \% \\\text { interest } & & \\\hline \text { Parent's Share of CNI } & \$ 551,000\\\hline\end{array} Sales Less: Expenses: Cost of Goods Sold: Depreciation Interest Expense Other Expenses Consolidated Net Income Less: Non-Controlling interest Parent’s Share of CNI $1,100,000$435,000$31,000$56,000$18,000$560,000($9,000)$551,000($240,000+$180,000)+$15,000($10,000+$20,000)+$1,000($12,000+$40,000)+$4,000($50,000−$15,000−$1,000−$4,000)×30%
VA
Answered
Rough order of magnitude ROM) is established prior to developing a ballpark estimate.
On May 02, 2024
False