The Equity Method Of Accounting For Investments

The Equity Method of Accounting for Investments
Chapter 1 the equity method of accounting for investments Chapter Outline I. Three methods are
principally used to account for an investment in equity securities. A. Fair–value method: applied by
an investor when only a small percentage of a company's voting stock is held. 1. Income is
recognized when dividends are declared. 2. Portfolios are reported at market value. If market values
are unavailable, investment is reported at cost. B. Consolidation: when one firm controls another
(e.g., when a parent has a majority interest in the voting stock of a subsidiary or control through
variable interests (FIN 46R), their financial statements are consolidated and reported for the
combined entity. ... Show more content on Helpwriting.net ...
B. Payments made in excess of underlying book value can sometimes be identified with specific
investee accounts such as inventory or equipment. C. An extra acquisition price can also be assigned
to anticipated benefits that are expected to be derived from the investment. For accounting purposes,
these amounts are presumed to reflect an intangible asset referred to as goodwill. Goodwill is
calculated as any excess payment that is not attributable to specific accounts. For the year 2002 and
beyond, goodwill is no longer amortized. V. Deferral of unrealized gains in inventory A. Gains
derived from intercompany transactions are not considered completely earned until the transferred
goods are either consumed or resold to unrelated parties. B. Downstream sales of inventory 1.
"Downstream" refers to transfers made by the investor to the investee. 2. Intercompany gains from
sales are initially deferred under the equity method and then recognized as income at the time of the
inventory's eventual disposal. 3. The amount of gain to be deferred is the investor's ownership
percentage multiplied by the markup on the merchandise remaining at the end of the year. C.
Upstream sales of inventory 1. "Upstream" refers to transfers made by the investee to the investor. 2.
Under the equity method, the deferral process for unrealized gains is identical for upstream
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Essay on Fi 360 Midterm
Unit 5 : Week Five – Midterm
Time Remaining:
1. The ultimate owner(s) of an ongoing corporation are (Points : 2) the federal government. the debt
holders. the equity holders. the executive staff of the corporation.
2. Which of the following is a valid criticism concerning the goal of firms to maximize profits?
(Points : 2) profit maximization ignores expenses profit maximization is completely unrelated to
shareholder wealth profit maximization may ignore the timing of those profits there are no valid
criticisms of profit maximizing firms
3.
Balance Sheet: 12/31/04
Assets
2004
2003
Cash and Marketable Securities
10
80 ... Show more content on Helpwriting.net ...
Balance Sheet: 12/31/04
Assets
2004
2003
Cash and Marketable Securities

10
80
Accounts Receivable
375
315
Inventories
615
415
Total Current Assets
1,000
810
Net plant and equipment
1,000
870
TOTAL ASSETS
2,000
1,680
Liabilities and Equity
2004
2003
Accounts Payable
60
40

Chapter 7 Solution
Chapter 7 – Consolidated Financial Statements – Ownership Patterns And Income Taxes
CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – OWNERSHIP PATTERNS AND
INCOME TAXES
Answers to Problems 1. D 2. B 3. D 4. C 5. C 6. C 7. A Damson 's accrual–based income:
Operational income ................................................................... Defer unrealized gain
................................................................ Damson 's accrual–based income .......................................
Crimson 's accrual–based income: Operational income ...................................................................
Investment Income (90% of Damson's realized income) ....... Crimson 's accrual–based income ...
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13. C Because fair value of the subsidiary 's assets exceeds the tax basis by $100,000 a deferred tax
liability of $30,000 (30%) must be recorded. Goodwill is then computed as follows: Consideration
transferred ...................................... Fair value ............................................................... Deferred tax
liability ................................................. Goodwill ....................................................................
$420,000 $400,000 (30,000) 370,000 $50,000
14. (35 Minutes) (Series of reporting and consolidation questions pertaining to a father–son–
grandson combination. Includes unrealized inventory gains) a. Consideration transferred (by Tree)
............................. Noncontrolling interest fair value ................................. Limb's business fair value
............................................. Book value ............................................................... Trade name
...................................................................... Life ..................................................................................
Annual amortization ...................................................... 14. (continued) Consideration transferred for
Leaf (by Limb) .............. Noncontrolling interest fair value ................................. Leaf's business fair
value ............................................. Book value

Money, Bond, Returns, And Amortization Schedule Essay
Money, Bond Returns, and Amortization Schedule The three financial markets, money, bonds and
mortgage markets play a large role in the financial industry. Money markets are highly liquid
investments that are held for one year or less, and include Treasury Bills. Furthermore, bonds are
long term investments issued by corporations and the U.S. government and are held for more than
one year. The mortgage market creates loans used to finance the real estate market, once mortgages
are issued on a property, banking institutions securitize the mortgages and sell them on the
secondary market (CSU Global, 2016). Therefore, these three financial markets are very broad in
nature, which can cause a great impact on the financial market.
Treasury Bills Money market securities are short term instruments created by governments and
corporations to obtain short term funding. Treasury bills (T–bills) are common instruments used in
the money market and are issued by the U.S. government. Moreover, T–bills are used by the
government to refinance maturing debt and to cover budget deficits. The Federal Reserve also uses
T–bills as one of their main ways to implement monetary policy (Saunders & Cornett, 2015). If a
one purchases a T–bill that is 90 days from maturity, for $9,970 and with a face value of $10,000,
the quoted yield is 1.200%, the bond equivalent yield is 1.2201% and the EAR is 1.222% (see Table
1).
Table 1
Calculation for T–Bill Quoted Yield, Bond Equivalent Yield and EAR

Jackson Enterprises Case
Xinyun Zhang
ACCT325
Individual Case
Goodwill Impairment at Jackson Enterprises Case
1. When is a company required to perform the two–step test for goodwill impairment? Explain in
your own words and provide citation from the ASC.
Goodwill is considered impaired when the implied fair value of goodwill in a reporting unit of a
company is less than its carrying amount, or book value, including any deferred income taxes. By
qualitative factors, if the fair value is less than its book value (likelihood more than 50%), two step
of the goodwill impairment test is necessary. According to ASC 350–20–35–2 and
3(A&B&D), if the company determines that it is not more likely than not that fair value is
less than the book value, it does ... Show more content on Helpwriting.net ...
| ASC 350–20–35–3C(a) | The stock price decreased from $27 to $23 in 2014. | ASC 350–20–35–
3C(e) |
ZD Qualitative Factors | Citation | Because of the enhancement of the competitive advantage of our
nation's farmers and ranchers, the government creates a business– friendly atmosphere for the
company. This could decrease operation cost. The government may give some grants to help
company. | ASC 350–20–35–3C(b) | ZD will dominate its competitors in manufacturing process
management which results in a cost advantage, as long as the patent is approved for manufacturing
process. | ASC 350–20–35–3C(c) | ZD has reduced its utility costs by 15% for two years. Due to
these utility cost reduction, ZD earns a state–administered manufacturer energy savings incentive
subsidy. | ASC 350–20–35–3C(c) |
According the above assessment of qualitative factors for both companies, I think that the goodwill
impairment test is necessary for Dynamic because Dynamic has many negative impacts. Although
the Dynamic has 3% of gross profit margins over competitors, it was not enough to offset the
negative impacts; I think that the goodwill impairment test is not necessary for ZD. Due to ZD
shows all positive impacts improving operation condition.
3. Based upon the information in the case, should Dynamic and ZD be combined or separated for

Questions on Company Accounting
1. award: 0 out of
0.00 points
On January 1, Puckett Company paid $2.64 million for 88,000 shares of Harrison's voting common
stock, which represents a 40 percent investment. No allocation to goodwill or other specific account
was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies
the equity method. Harrison distributed a dividend of $2 per share during the year and reported net
income of $613,000. What is the balance in the Investment in Harrison account found in Puckett's
financial records as of December 31?
$2,709,200.
Acquisition price
$
2,640,000 Equity income ($613,000 × 40%) 245,200 Dividends (88,000 shares × $2) (176,000
)
Investment in Harrison ... Show more content on Helpwriting.net ...
→
$845,400.
The 2012 purchase is reported using the equity method.
Purchase price of Goldman stock
$
735,000 Book value of Goldman stock ($1,500,000 × 40%) (600,000
)
Goodwill
$
135,000 Life of goodwill indefinite
Annual amortization 0
Cost on January 1, 2012

$
735,000 2012 Income accrued ($182,000 × 40%) 72,800 2012 Dividend collected ($90,000 × 40%)
(36,000
)
2013 Income accrued ($182,000 × 40%) 72,800 2013 Dividend collected ($90,000 × 40%) (36,000
)
2014 Income accrued ($182,000 × 40%) 72,800 2014 Dividend collected ($90,000 × 40%) (36,000
)
Investment in Goldman, 12/31/14
$
845,400
5. award: 0 out of
0.00 points
Panner, Inc., owns 20 percent of Watkins and applies the equity method. During the current year,
Panner buys inventory costing $84,700 and then sells it to Watkins for $121,000. At the end of the
year, Watkins still holds only $26,000 of merchandise. What amount of unrealized gross profit must
Panner defer in reporting this investment using the equity method?
→
$1,560.
$12,360.
$7,560.
$5,460. Gross profit rate (GPR): $36,300 ÷ $121,000 = 30%
Inventory remaining at year–end $
26,000
GPR
× 30
%
Unrealized gain $
7,800
Ownership
× 20
%

Intra–entity unrealized gain–deferred $
1,560
6. award: 0 out of
0.00

Difference Between Nab And Telstra
Telstra Uses straight line method, with its useful lives mentioned in its annual report. Although
Telstra has supposedly seen a $67 million decrease in its amortization expense as a result of
reassessment of its useful lives (Note 3.2.2), it is important to note that while NAB has more than
half the value of intangible assets of Telstra, its amortization expense is far less compared to NAB.
This could possibly be due to the variation in the useful lives of its intangible assets, which cannot
be verified since this information has not been disclosed by NAB. In conclusion, it is important to
have a glimpse of the adherence to the standards by NAB and Telstra. Following is a summary of
the standards. AASB 101 Both companies have complied

Acc 561 Week 3 Ebta Essay
Wednesday May 25 at 10:01pm Manage Discussion Entry Glenn reply to Instructor follow–up
Question week 3 DQ 2 o EBITDA – Earnings before interest, taxes, depreciation and amortization is
an indicator of a company's financial performance which is calculated in the following manner:
("EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization Definition |
Investopedia," n.d.) EBITDA = Revenue – Expenses (excluding tax, interest, depreciation and
amortization). EBITDA is essentially net income with interest, taxes, depreciation, and amortization
added back to it, and can be used to analyze and compare profitability between companies and
industries because it eliminates the effects of financing and accounting decisions. ("EBITDA – ...
EBITDA is a good metric to evaluate profitability, but not cash flow. EBITDA also leaves out the
cash required to fund working capital and the replacement of old equipment, which can be
significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's
earnings. When using this metric, it's key that investors also focus on other performance measures to
make sure the company is not trying to hide something with EBITDA. ("EBITDA – Earnings Before
Interest, Taxes, Depreciation and Amortization Definition | Investopedia," n.d.) I would not use
EBITDA in my analysis for picking a portfolio. EBITDA figures can be highly misleading, it's easy
to manipulate and should be taken with a pinch of salt. This can be said for most financial metrics,
but few are as easily and frequently manipulated as EBITDA. ("EBITDA – Earnings Before Interest,
Taxes, Depreciation and Amortization Definition | Investopedia," n.d.) Warren Buffett and other
famous investors have spoken out about their dislike of the EBITDA standard. Buffett in particular
wrote about the financial metric within his 2000 and 2002 annual reports to Berkshire Hathaway
shareholders: (Hargreaves,

Money, Bond, Returns, And Amortization Schedule
Money, Bond Returns, and Amortization Schedule The flow of funds within financial markets is
stimulated by the money, bond and mortgage markets. A money market is the trading of highly
liquid financial instruments with a duration of one year or less and includes the trading of Treasury
bills. Furthermore, bonds are long term investments, with a duration greater than 1 year and are
issued by corporations and the U.S. government. In addition, the mortgage market creates loans to
finance the real estate market. Once mortgages are issued on a property, banking institutions
securitize the mortgages and sell them on the secondary market (CSU Global, 2016). Due to the
scale of these three markets they have an extensive impact on the monetary supply and economy.
Treasury Bills Money market securities are short term instruments created by governments and
corporations to obtain short term funding. Treasury bills (T–bills) are common instruments used in
the money market and are issued by the U.S. government. Moreover, T–bills are used by the
government to refinance maturing debt and to cover budget deficits. The Federal Reserve also uses
T–bills as a fundamental technique to implement monetary policy (Saunders & Cornett, 2015). If a
one purchases a T–bill that is 90 days from maturity, for $9,970 and with a face value of $10,000,
the quoted yield is 1.200%, the bond equivalent yield is 1.2201% and the EAR is 1.222% (see Table
1).
Mortgage Markets In addition, mortgages are

Accounting II Week 2 Exercises and Problems
Exercises and Problems XACC/291 Principles of Accounting II Week 2 February 8, 2015 Exercise
E9–1 The following expenditures relating to plant assets were made by Spaulding Company during
the first 2 months of 2011 (determine cost of the plant acquisitions). 1. Paid $5,000 of accrued taxes
at time plant site was acquired. 2. Paid $200 insurance to cover possible accident loss on new
factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on new delivery
truck. 4. Paid $17,500 for parking lots and driveways on new plant site. 5. Paid $250 to have
company name and advertising slogan painted on new delivery truck. 6. Paid $8,000 for installation
of new factory machinery. 7. Paid $900 for ... Show more content on Helpwriting.net ...
The copyright was acquired in January 2008 and also has a useful life of 10 years. The following
cash transactions may have affected intangible assets during 2012 (Prepare entries to record
transactions related to acquisition and amortization of intangibles; prepare the intangible assets
section). Jan.2 Paid $45,000 legal costs to successfully defend the patent against infringement by
another company. Jan.–June Developed a new product, incurring $230,000 in research and
development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal
life. Sept.1 Paid $125,000 to an X–games star to appear in commercials advertising the company's
products. The commercials will air in September and October. Oct.1 Acquired a copyright for
$200,000.The copyright has a useful life of 50 years. Instructions: (a) Prepare journal entries to
record the transactions above. (b) Prepare journal entries to record the 2012 amortization expense
for intangible assets (amortization Expense– Patents $15,000; Amortization Expense– Copyrights
$7,000). Dec 31 Amortization Expense–Patents $15,000 Dec 31 Amortization

Bear Stearns & Co Essay
CASE: Quality of Earnings #2 – Bear Stearns & Co
1. What is Blockbuster's amortization timetable? Do you think it is appropriate?
The amortization timetable of Blockbuster is 40 years. In my opinion as an investor's perspective, it
is not appropriate because of this is not as per the SEC standard of 5–7 years. 2. What would be the
impact on Blockbuster's 1988 earnings per share if 5 amortization were applied to this goodwill?
If the 5–year amortization were applied in its place of the 40–year timetable, then it is necessary for
Blockbuster to identify the goodwill in larger amounts. This would increase tax liability of
Blockbuster, which would have represented a loss of $0.09 (0.58 – 0.49) per share | 1988 | 40 Yrs. ...
Over what period does BV depreciate its "base stock" videotapes?
Blockbuster depreciates its "base stock" videotapes over 36–month, using a straight–line
amortization period. 5. What was the effect on earnings per share of the change in depreciation
method for 'hit" tapes (assume that hit tapes made up 25% of new tape purchases, and that the
average hit tape was owned for half the year)?
If the depreciation method changes from straight–line method to accelerated method then,
depreciation expense would be increase and net income would decrease. The EPS ratio would
represent a loss of $0.19 per share.
EPS = (Net Income – Dividend on preferred stock)/Average Outstanding Share | 1988 | 1987 |
Videocassette rental inventory | 76,390,000.00 | 19,600.00 | Less: Accumulated amortization |
(16,096,000.00) | (3,211.00) | Videocassette rental inventory Book Value | 60,294,000.00 | 16,389.00
| New Tape Purchase | 76,373,611.00 | | New "hit" Tape Purchase | 19,093,402.75 | | Depreciation
Under Previous Method for "hit" | 12,728,935.17 | | Depreciation Under New Method "hit" |
3,182,233.79 | | Net Income Before Taxes (before Adjustment) |

Restructure
Intermediate Accounting II
Chapter 20
Accounting for Pensions
Overview of Employer's Accounting for Pension Plans
Defined contribution plan – employer agrees to make a defined contribution to a pension plan
plan participants receive whatever benefits have accumulated
each year, employer records an expense an a related liability for the contribution
Defined benefit plan – employer agrees to provide a benefit at retirement that is defines or fixed by
formula
employer accepts risk of meeting the obligation upon employee's retirement
requires use of complex actuarial estimates
Involves 2 accounting entities
employer sponsor – reports pension expense on the income statement, and ... Show more content on
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interest rate is called the settlement rate (reflects the rates at which pension benefits are expected to
be settled)
Interest for the year is calculated on the PBO at the beginning of the year (ie use simple interest)
in the worksheet, interest is accounted for by debiting Pension expense (income statement account)
and crediting PBO (off–balance sheet account)
Actual Return on Plan Assets
decreases pension expense when return is positive, increases pension expense when return is
negative (ie, the more the assets increase in value, the less the employer has to contribute to cover
pension costs)

df = (change in the FV of the plan assets from the beginning to the end of the year) + benefits paid
to employees – contributions from employer
NOTE: although the actual return on plan assets is measured and disclosed as one of the components
of

Comparing the Disclosure for Intangible Assets of Cls and...
Research report
Topic: Comparing the disclosure for intangible assets of CLS and Acrux
Details: Analyze the disclosure of intangible assets about two selected company CSL and Acrux.
Executive Summary
The Australian Securities & Investments Commission 's (ASIC) Financial Reporting
Surveillance Program was purpose to improve the quality of financial reporting by reviewing the
annual financial reports of two listed companies whether or not compliance with the Corporations
Act and Australian Accounting Standards. Martha Miller who is the Head of the Financial Reporting
Surveillance Program just intended to analyze intangible assets and related disclosures. Thus,
comparing the disclosures for the intangible assets of CSL and Acrux, ... Show more content on
Helpwriting.net ...
In intellectual property assets and software showed its opening balance, closing balance, additions,
disposals, accumulated amortization and impairment currency translation differences and net
amount. Goodwill just showed the opening and closing balance and currency translation difference
not any impairment loss. However, in intangible capital work in progress, it also showed other more
informationabout amount transferred to software intangibles and transferred from PPE. At the end of
the notes 12 of intangible assets, it provided additional information about the amortization charge
that was recognized in general and administration expenses in the statement of comprehensive
income （CSL annual report 2011）and impairment tests for cash generating units containing
goodwill. CSL Behring and CSL Blotheraples all were CSL's goodwill. The total intangible assets in
2011 were lower than before because of amortization in every year.
Furthermore, Acrux limited which was a specialty pharmaceutical company that developed and put
its commercial pharmaceutical products to global markets and using some innovative technology to
administer proven medicines through the skin (Acrux annual report 2011). Acrux had licensed its
technology to Eli Lilly for veterinary healthcare products and it listed in 2004. For their annual
report in 2011, the statement of comprehensive income showed external research and development
expenses and the notes 5 to illustrate. The

Amortization And Impairment Of Goodwill
Amortization Versus Impairment of Goodwill:
Impact on Accounting Quality, Financial Statements' Economic Value, Investors, and Auditors
Accounting Standards Codification (ASC) replaced all U.S. financial accounting standards in July
2009. Consequently, ASC 350, Intangibles – Goodwill and Other, replaced SFAS 142, Goodwill and
Other Intangible Assets in September 2011. Under ASC 350, goodwill must be periodically tested
for impairment. Goodwill impairment is determined through a two–step process outlined in ASC
350. However, in January 2014, an update to ASC 350 was released, which authorized an alternative
method of accounting for goodwill servicing private companies that could consequently reduce their
costs and simplify their accounting methods. Additionally, the international standard for goodwill
impairment, IFRS 3, specifically mandates that companies must annually test goodwill for
impairment. The specifics of the impairment test are entailed in IAS 36 Impairment of Assets, the
international standard for accounting for goodwill associated with business combinations. This
paper will analyze the effects of the accounting policies enacted under these standards and in
particular analyze the efficiency of impairment testing methods versus amortization of goodwill and
the connection of impairment methods with managerial and CEO compensation and earnings
management. Finally, this paper will analyze if impairment testing under ASC 350 and IAS 36 or
amortization, which is

Depreciation And Amortization For Intangible Assets
In accounting the terms depreciation, depletion and amortization often involve the movement of
costs from the balance sheet to the income statement in a systematic and logical manner.
Amortization Expense is an accounting term used as Account Charged for the Amortization or
allocation of Expenses for Prepayments & Intangible Assets. It solely deals with intangible assets
and does not concer tangible assets like land property etc. Intangible Assets include trade names,
trademarks, franchise licenses, patent, copyrights, government licenses, goodwill and other assets
that lack physical substance but provide long–term benefits to the company. Amortization for
Intangible Assets is allocated over the useful life or legal life, whichever is ... Show more content on
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Intangible assets include patents, copyrights, software, contracts, trademarks, trade names, franchise
licenses, government licenses, goodwill, and other items that lack physical substance but provide
longterm benefits to the company.
A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of
the goods of one party from those of others. A service mark is a word, phrase, symbol, and/or design
that identifies and distinguishes the source of a service rather than goods. The term "trademark" is
often used to refer to both trademarks and service marks.
A patent protects an invention and innovations or improvements thereon by providing the inventor
with a set of exclusive rights which prevent others from making, using, offering for sale, or selling
the invention without the consent of the inventor. An idea in itself can not be patented. The idea
must be materialized into an invention, innovative product, device or process that offers new
solutions to a problem in order for the registrant to be able to seek the patent. Patents protect
products in the fields of machinery, manufacturing, composition of matter (a combination of
chemicals), and processes (methods of manufacturing).
Copyrights protect works of authorship and cover: a) works of art (2 or 3 dimensional), b) photos,

Changes in treatment of goodwill due to IFRS 3
Changes in treatment of goodwill due to IFRS 3 Paper On 19th November 2013 at the Berlin School
of Economics and Law Study programme: Accounting and Controlling Matriculation year: 2013
Matriculation number: 412410 Semester: Winter semester Table of contents 1.
Introduction.................................................................................. 2 2. Prior treatment of
goodwill................................................................. 2 2.1 Goodwill
amortization.................................................................. 3 3. Goodwill after adoption of IFRS
3........................................................ 3 3.1 Impairment of
goodwill................................................................ 3 4.
Conclusion.................................................................................... 4 Reference
list................................................................................. 5 List of
abbreviations........................................................................ 6 1. Introduction During last few ... Show
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But more important question is whether this really led to better quality and transparency of
accounting. 4. Conclusion Main focus of IASB for introducing new standard for business
combinations was that financial statements of companies became more realistic and to represent real
economic position and value of a company. Therefore restriction to acquisition method as the only
option for business combination is the advantage of new standard since using this method,
companies do not have a choice whether to recognize goodwill arising from business combinations.
Amortization was changed with impairment because amortization of goodwill can lead to arbitrary
accounting according to IASB (Shinhan Financial Group n.d., p. 4). Problem arising is that
impairment test and determination of recoverable amount require an active market with homogenies
assets and available prices which is hard to determine as far as intangibles are concerned.
Consequently, this leads to more subjective decisions regarding measurement and leaves a lot of
space for management impact on goodwill. Therefore aim of IASB for transparency and full fair
value model is not realized. Although IASB and FASB are making a lot of efforts, universally
accepted treatment of goodwill still does not exist. Therefore this will remain controversial topic
among economists until creators of financial standards find better solution for goodwill accounting.
Reference

My Firm 's Services Regarding Proper Accounting Practices...
It has come to my understanding that you requested my firm's services regarding proper accounting
practices for the acquisition of long term debentures. Therefore, I write to you this memo to address
some issues you might be having with your newly obtained debt and to explain how to properly
amortize it. I have been informed that you already have an accounting expert that advised you to use
the Straight Line method of amortization for the discount on the bond. My expertise lies on the
Effective–Interest method of amortization. 1. Determining Bond Price To determine the price of the
bond, the face value of the bond must be brought to its present value. The rationale behind this
comes from an investment principle that considers that the money given up in the present could
yield a gain in the long term if used as an investment. To arrive to the present value, we use a market
rate that represents the yield the average investor would require to spend money in a new venture (in
this particular case, 11%). Therefore, even though the Bond's face value might be $1,000,000, your
company is expected to get $924,623.74. The difference between this two numbers, $75,376.26, is
considered a discount that you allow for offering a rate that is lower than the rate requested by the
investors (in this case, 9%). 2. Amortization of Discount I took the liberty of creating an
amortization schedule to help you visualize the immediate difference between straight–line and
effective interest methods

Essay on Benihana
Benihana –––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––– 1.
––––––––––––––––––––––––––––––––––––––––––––––––– What is the Benihana concept?
Benihana restaurants are traditional Japanese hibachi steakhouses, which feature the Japanese
cooking method known as teppanyaki. There are key attributes that separate Benihana from other
restaurants. One is true Japanese authenticity. Every item that is used in construction of a restaurant
is 100% authentic and imported from Japan. In addition, each restaurant is built by Japanese
carpenters. All chefs at Benihana are native Japanese with three year formal apprenticeship. The ...
Besides being profitable, we can measure Benihana's success by customer satisfaction. According to
exhibit 4, over 46% of customers come to Benihana for good food, with 13% for atmosphere and
food preparation. Over 77% of customers rate food as being excellent and 71% rate service to be
excellent. There are certain areas of operational improvement that can make Benihana even more
successful. As atmosphere / ambiance are only a small portion of why people come to eat at
Benihana, I don't think that Americans really appreciate that every item at the restaurant is imported
from Japan. Benihana should use locally available materials and carpenters. By doing so, Benihana
can dramatically reduce its cost to of setup and will allow for faster expansion. The cost factor is one
of the major concerns for Benihana's growth. Each new unit costs $300,000. In order to reduce the
startup cost, Benihana must find revisit its operating model and re–evaluate what is the most
important to the customers. Looking back at exhibit 4, majority of respondents valued quality and
taste of the food, service and preparation of food. These are the qualities that truly separate
Benihana from other restaurants. Changing Benihana's staffing model, including training, and the
use of materials and labor from Japan, will most certainly minimize new unit cost.
––––––––––––––––––––––––––––––––––––––––––––––––– 3. Prepare an

Analysis Of The North American Market Richardson
In the North American market Richardson's has a strength in dominating particular regions such as
Kansas, Texas and Oklahoma where they receive 75% of their companies sales. This allows them to
have lower shipping costs and possibly lower advertising costs in the areas because they have
regular customers who are returning to buy items because Richardson's strong brand equity can
bring trust and low searching costs. Having most of their sales in a particular region is also a
disadvantage for the company because if something were to happen in that region that slowed down
income for the farmers in the area (drought or disaster) Richardson's sales would be in trouble. This
is because the company relies on a particular region for sales and the company is not well
diversified within other regions of the United States, which creates risk within such a specific
market. Richardson Manufacturing has seen a cumulative increase in net sales of 11% (Sheet 1, L4)
within the domestic market which is great because it shows their sales have increased over the past 4
years. At the same time, there is a lot of volatility in the net sales as the growth percentage goes fro
2% to 19% and eventually back to only 7% growth. This lack of consistent growth may mean a
market that is changing or relying too much on external factors and so Richardson's team should be
aware of the variability. The cumulative net profit increase of about 50% (Sheet 1, cell L18) shows
that Richardson's net profit on

Ch10 Beechy3e case 3 solution Essay
Solutions for some acct 400 cases here –
http://novellaqalive2.mheducation.com/sites/dl/premium/0070930317/instructor/237732/
Chapter 10 Suggested Time
Case 10–1 Good Quality Auto Parts 10–2 Canadian Wilderness Wonders Inc 10–3 Provincial Hydro
10–4 May Company
10–5 Canadian Energy Corporation
Assignment 10–1 Amortization policy 10 10–2 Amortization policy 15 10–3 Amortization
computation 15 10–4 Amortization computation (*W) 25 10–5 Amortization schedule 30 10–6
Analysis of four amortization methods–maximize income (*W) 20 10–7 Interpreting amortization
disclosures 20 10–8 Identify amortization methods–amortization schedules 15 10–9 Identify,
recalculate amortization 20 10–10 ... Show more content on Helpwriting.net ...
If rates are different for similar assets, comparability is also hurt; again, disclosure is important.
7. A firm would consider the following factors in their choice of amortization methods: nature and
use of asset, corporate reporting objectives, industry norms, parent company preferences, the desire
to minimize future (deferred) taxes, and the accounting system costs associated with a given
method.
8. An asset with a thirty–year life will be amortized over a shorter period when it is expected to be
used (will generate revenue) for the shorter period.
9. The straight–line method reports depreciation as a variable amount per unit of output and a fixed
amount per period, whereas the productive output method reports depreciation as a fixed amount per
unit of output and a variable amount per period.
10. Straight–line amortization is likely popular because it is simple to calculate, logically appealing,
rational and systematic, often portrays the pattern of benefits received (equal each period), and
because it provides a stable expense pattern.
11. Accelerated methods of amortization result in a periodic amortization charge that is less in each
succeeding period than the prior period. There are a number of variations of the accelerated
methods, such as the declining balance method and the sum–of–the–years'–digits method. These
methods are appropriate when an asset contributes to revenue

The Equity Method Records Dividends
3. The equity method records dividends received from an investee as a reduction in the investment
account, not as dividend income to avoid reporting the income from the investee twice. The equity
method is used when an investor has the ability to significantly influence over the operating and
financing decisions of an investee. Because dividends represent financing decisions, the investor
may have the ability to influence dividend timing. If dividend were record as revenue managers
could affect reported income in a way that does not reflect actual performance.
6. The equity method has been criticized because it emphasizing the 20–50 percent of voting stock
in determining significant influence versus control, allowing off–balance sheet ... Show more
content on Helpwriting.net ...
13. Downstream sales are made to investee while upstream sales are made by investee. The direction
of intra–entry sales has no affect on reported equity method balances for investments when
significant influence exists, it has definite consequences when financial control requires the
consolidation of financial statements, as discussed in Chapter 5.
23a. Since the equity method has been used since date of sale the equity accrual must be recorded
based on recognizing 40% of Brooks reported income. Any dividends reported by Brooks must be
record by Einstein as a reduction in the book value of the investment account. Lastly, amortization
entries of specific allocations within the purchase price must be record up to August 1. The
amortization entries establish an appropriate book value as of the date of sale. The amount of the
book value equal to the portion of shares sold is removed in order to compute the resulting gain or
loss.
b. How Einstein accounts for this investment after August 1 depends on if significant influence is
retained. If so he should continue to use the equity method if not fair–value method should be used.
c. Einstein must first record an equity balance that includes both the accrual and amortization prior
to August 1. Next he should record a

Balance Sheet and Cost
E12–1 (Classification Issues–Intangibles) Presented below is a list of items that could be included in
the intangible assets section of the balance sheet.
Instructions
(a) Indicate which items on the list would generally be reported as intangible assets in the balance
sheet. (b) Indicate how, if at all, the items not reportable as intangible assets would be reported in
the financial statements. 1. Investment in a subsidiary company.
2. Timberland.
3. Cost of engineering activity required to advance the design of a product to the manufacturing
stage.
4. Lease prepayment (6 months' rent paid in advance).
5. Cost of equipment obtained.
6. Cost of searching for applications of new research findings.
7. Costs ... Show more content on Helpwriting.net ...
The amortization expense is 75,000/12=$6,250
.
Dec 31 ,2012
Amortization expense 6,250
Patents 6,250
E12–12 (Accounting for Goodwill)
The entry in Graff's books is
Cash 100,000
Land 120,000
Buildings 200,000
Equipment 170,000
Copyrights 30,000
Liabilities 350,000
Fair value of net assets 270,000
Cash 380,000
Goodwill=380,000–270,000=$110,000
E12–16 (Accounting for R&D Costs) Margaret Avery Company from time to time embarks on a
research program when a special project seems to offer possibilities. In 2011, the company expends
$325,000 on a research project, but by the end of 2011 it is impossible to determine whether any

benefit will be derived from it.Instructions
(a) What account should be charged for the $325,000, and how should it be shown in the financial
statements?
The amount of $325,000

Accounting 110
Camosun College Financial Accounting Acct110 PRACTICE Final Exam
B. Edwards
Name: ____________________________________________________________
___________________ Question One: A/R and Bad debts (15 minutes)
Read each transaction and record the appropriate journal entry for Morrison Consultants, which has
a June 30 year end. Explanations are NOT required. 1. On June 30 2011, Morrison prepares an aging
schedule of accounts receivable that shows estimated uncollectible accounts of $5,200. Before
journal entries, the Allowance for Doubtful accounts has a debit balance of $300 and Accounts
Receivable has a balance of $85,000. 2. On July 5, Morrison was notified that Sperry Ltd has
declared bankruptcy and Morrison writes off its A/R ... Show more content on Helpwriting.net ...
4|Page
Camosun College Financial Accounting Acct110 PRACTICE Final Exam
B. Edwards
Question Four: Financial Statements (15 minutes)
From the following list of accounts prepare the ASSET section of the Balance Sheet for Camosun
Developers for December 31, 2011. Accounts payable ............................................... $10,000
Accounts receivable ........................................... 260,000 Accumulated Amortization, Building
................... 370,000 Accumulated Amortization, Furniture & Fixtures . 310,000 Allowance for
Doubtful Accounts .......................... 70,000 Building .............................................................. 900,000
Cash ................................................................... 200,000 Cost of Goods Sold
.............................................. 75,000 Furniture & Fixtures ............................................ 800,000
Interest Expense .................................................... 2,000 Inventory
............................................................ 330,000 Land ...................................................................
740,000 Notes payable (due in 5 years) ............................. 33,000 Prepaid expenses
................................................. 30,000 Sales Returns and Allowances ............................... 1,500 Note
Receivable

Essay on Learnrite.Com Minicase
LearnRite.com offers e–commerce service for children's edutainment products and services. The
word edutainment is used to describe software that combines educational and entertainment
components. Valuable product information and detailed editorial comments are combined with a
wide selection of products for purchase to help families make their children's edutainment decisions.
A team of leading educators and journalists provide editorial comments on the products sold by the
firm. LearnRite targets highly educated, convenience–oriented, and value–conscious families with
children under the age of twelve, estimated to be about 35 percent of Internet users.
The firm's warehouse distribution model results in higher net margins, as well as ... Show more
He holds a BS degree in electrical engineering from an Indian technology institute and an MBA
from a major U.S. university. Sean Davidson, director of technology, has more than ten years of
experience in software development and integration. Walter Vu has almost ten years of experience in
sales and business development in the software industry, including positions at Claris and Maxis.
Mitch Feldman, director of marketing, was responsible for the marketing communications function
and the Internet operations of a large software company for six years. Management strives for
continual improvement in ease of user interface, personalized services, and amount of information
supplied to customers.
The total market for children's entertainment is estimated to be $35 billion annually. Toys account
for about $20 billion in annual spending. Summer camps are estimated to generate $6 billion
annually. This is followed by children's videos and video games at $4 billion each. Children's
software sales currently generate about $1 billion per year in revenues, and industry sales are
expected to grow at a 30 percent annual rate over the next several years.
LearnRite has made the following five–year revenue projections:
A. Project industry sales for children's software through 2015 based on the information provided
above.
B. Calculate the year–to–year annual sales growth rates for LearnRite.
C. Estimate LearnRite's expected market share in each year

Goodwill Impairment Report
Amortization Versus Impairment of Goodwill: Impact on Accounting Quality, Financial Statements'
Economic Value, Investors, and Auditors Accounting Standards Codification (ASC) replaced all
U.S. financial accounting standards in July 2009. Consequently, ASC 350, Intangibles – Goodwill
and Other, replaced SFAS 142, Goodwill and Other Intangible Assets in September 2011. Under
ASC 350, goodwill must be periodically tested for impairment. Goodwill impairment is determined
through the standard detailing a two–step process. However, in January 2014, ASC 350 was updated
by authorizing an alternative method of accounting for goodwill servicing private companies that
could consequently reduce their costs and simplify their accounting methods. Additionally, ... Show
more content on Helpwriting.net ...
The research specifically examined firms' when SFAS 142 (today ASC 350) required companies to
conduct goodwill impairment testing. Goodwill impairment testing detailed under the U.S. FASB
and international IASB revealed that goodwill impairment testing under both bodies can illustrate
firms' economic conductions and that managers are precise in working to decrease costs associated
with contracting (Godfrey and Koh 117). The authors further explain that their findings are in
support of those who believe that the phenomenon of goodwill impairment testing required through
the introduction of SFAS 142 (now ASC 350) are "a means of providing information relevant to
users of financial statements. These findings are supplemented by evidence that the amount of
goodwill written off is associated with firm size and leverage" (Godfrey and Koh 138).
Consequently, this could be linked to the study concluding that investors view recognition of
goodwill impairment as a indicator of decreased financial health for a firm and consequently, greater
risk as an investment. Therefore, these companies underperformed when they publicly announced
their respective recognition of goodwill impairment. This study illustrates how the goodwill testing
system under the FASB and IASB provides useful information to investors promoting intelligent
investing decisions based on the economic

Case Study: Almarai Company
Strategy Formulation & Selection Problem Statement & Sub–problems
Almarai suffers from a decrease in net income (net income include sales, cross profit and operating
income) due to its low purchasing value due to its economic value and some political matters. In this
table we review the net income of Almarai Company from 2005 to 2016 and how the net profit
increased when things were normal but in the period the current company is experiencing a decline
in its sales as seen in (https://www.argaam.com)
Performance
Competition
Political problems
Problem
Weak performance of staff which affects production
Increase competitors
Some political problems in the region have affected the company's sales in some countries
Sub–problem
Competition in the market share
Routine performance and lack creative things
Increase the number of products by competitors ... Show more content on Helpwriting.net ...
Alternative Definitions
Many solutions have to be proposed to return the profits of the company to normal in the market and
avoid the proportion of the decline in the simple stock market and this table helps to propose
solutions and choose the best solution through the classification of solutions and choose the highest
assessment. S1, S2 and S3 are the alternative solution and will evaluate each alternative solution
based on Increase profit, Reduce Costs, Increase future opportunities, Competitive Advantage (M1,
M2,M3 and

An Annual Report On Balance Sheet And Income Statement
Assignment– Chapter II
Supriya Karki
JWU: J02065735 Date: September 20, 14
(2–1) Define each of the following terms:
a. Annual report; balance sheet; income statement
Annual Report: An annual report is a complete report on the company's activities throughout the
preceding year. Basically an annual report measures a corporation's financial health. They make
prediction about future prospects by focusing on the past and present financial performance of the
company.
Balance Sheet: Balance sheet is a convenient means of organizing and summarizing what a firm
owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm's
equity) at a given point of time. The accounting equation, also known as the balance sheet identity,
is the basis of accounting system: Assets= Liability + Stockholder's Equity.
Income Statement: Income statement is mainly the report on Income. Its accounting definition is
"Income= Revenue – Expenses". Income statement shows how much it has cost the bank to acquire
its deposits and other funds sources and to generate revenues from the uses the bank has made of
those funds. It is also known as profit and loss statement or Statement of revenue and expense.
b. Common stockholders' equity, or net worth; retained earnings
Common stockholders' equity, or Net worth: As we know that the stockholders' equity represents the
owner's claims on the assets of the business. These claims arise

Blockbuster Essay
Criticisms of Blockbuster by Seidler
1. The bulk of 1988 per share earnings were due to
a) Very slow goodwill amortization
b) Stretched out life for "hit" tapes
c) Nonrecurring items of initial franchise fees, area development fees and sales to new franchises.
2. Steeper growth curve resulting from acquisitions that were treated as pooling
3. Inflation of sales in the fourth quarter. Revenues are recognized when products are shipped with
no indication that the stores purchasing were actually open for business.
4. Running out of cash
Our position –
1. On the EPS related issues
a) Regarding the goodwill amortization issue, we suggest a position that is in between the current
BV practice (40 years) and Bear's recommendation (5 ... Show more content on Helpwriting.net ...
We do not agree with BV's practice of recognizing the revenue upon shipping the supplies because
without acceptance of supplies by stores, it does not satisfy the requirement of completing all
activities that lead to completion of the critical event.
4. We agree that BV ran out of cash. The net working capital was –$10384M and Accounts Payable
tripled. We also agree with the double counting and mismatch in financial statements.
A3
Part 1 – Concerns that have been addressed
1–b. The "hit" tapes are now being amortized over a much shorter period – The costs of non–base
stock videocassettes (generally greater than four copies per title for each store i.e. "hits") are
amortized on an accelerated basis over three months to an estimated $4 salvage value.
2. Acquisitions treated as pooling – All acquisitions were accounted for under the purchase method
and accordingly the operating results of the acquired businesses are included in the consolidated
results of operations of the company since their respective date of acquisition.
3. Critical event for sale of supplies to stores – BV is using a rental library approach for supplies for
the new stores. Revenue–sharing allows BV to purchase videocassettes at a lower product cost than
traditional buying arrangements.

Part 2 – Concerns that remain
1–a. The goodwill continues to be amortized over a period of 40 years.
1–c The nonrecurring items mentioned by Seidler

Sir X Inc. : Transforming Visions Into Innovations
Companies' overview
Sir–X Inc. – Transforming visions into innovations
Sir–X Inc. is the world's largest manufacturer of dental technology and an innovation leader in
dentistry. The company develops, manufactures and markets a complete line of dental products,
including, restoration systems, digital intra–oral, panoramic and 3D imaging systems, dental
treatment centers, hand pieces and hygiene systems (2015).
Founded in 1882, Sir–X Inc. is a dental device company headquartered in the U.S. The company is
engaged in the manufacture and development of dental equipment, systems and solutions for
dentists. It offers products in four segments, namely, Dental CAD/CAM Systems, Imaging Systems,
Treatment Centers and Instruments. Sir–X operates ... Show more content on Helpwriting.net ...
Sir–X currently employs more than 260 engineers and scientists, and over the past six years has
invested more than $250 million in research and development (R&D). The commitment to
reinvesting in innovation gives the confidence that Sir–X's technologies will continue to drive the
advancement of dentistry (Sirona Inc., 2015).
For years, Sir–X has been the innovation frontrunner in the dental equipment market. Sir–X is
developing and producing a full range of advanced treatment centers, imaging systems, instruments,
hygiene systems, and dental CAD/CAM systems. The company is constantly working to further
develop its products and services in a future–oriented way.
Sir–X draws upon global expertise from nearly 3,000 employees located around the world. The
products are widely used by dental practices, clinics, and laboratories in more than 135 countries
and for more than 130 years. Sir–X is at home throughout the world and is continuously investing in
research and development (Sirona Inc., 2015).
Dent–Y Inc. – Deliver solutions "For Better Dentistry"
Dent–Y Inc. is a leading manufacturer and distributor of dental and other consumable healthcare
products. The company's broad global product platform helps dental professionals serve patients '
oral health care for a lifetime, from preventive services to tooth replacement. Dent–X oral health
products range from general dental

Accounting: Questions and Answers
Write a paper discussing the importance of a business applying the following accounting principles:
preparing necessary journal entries to record the issuance of bonds; the periodic interest;
amortization of bond premiums and discounts; calculate depreciation and amortization expense
using various methods...and give an example for each. preparing necessary journal entries to record
the issuance of bonds.
The journal entries are crucial in order to trace the issuance of the bonds. Any corporation that is
preparing to issue or sell a bond to investors will have to predict the interest rate that will appear on
the face of the bond and in the legal contract. Writing the issued bond down as journal entry can
help the corporation trace it and see whether it was indeed worthwhile.
The corporation would also want to track which of its bonds have been sold for face value and
which have been sold at discount price thereby losign value for the corporation. A separate journal
entry will be made for discount bonds called Discount on Bonds Payable and this will be put on the
Balance sheet with Bonds Payable. In other words, if this bond is a long–term liability both
Discount on Bonds Payable and Bonds Payable will be placed in a particular journal entry that will
demarcate it as the corporation's liabilities.
Corporation s also have to conduct amortization . The relevant journal entry account in this case will
involve the account Interest Expense.
Then there is also

Financial Performance : Ritz Carlton Laguna Niguel...
Financial Performance
According to Strategic Hotels and Resorts, The Ritz–Carlton Laguna Niguel earnings before
interest, tax, depreciation and amortization were equal to $29.8 million dollar in 2014. The
properties earning had grown 27.6% from the previous year. Its average daily room rate came out to
be $420.85 in 2014 with 69.3% occupancy equalling $291.82 revenue per available room. The
properties revenue grew 9.4% from the previous year.
Competitive Advantages & Shortcomings
The Ritz–Carlton believes that they are "ladies and gentlemen serving ladies and gentlemen" and
further explain that, "the genuine care and comfort of [their] guests is [their] highest mission". They
place great importance on personal service and excellent facilities. To remain competitively strong,
corporate executives say they've started serving some drinks at lower rates in order to draw in locals,
whom they further hope will book sales in there additional services like events and overnight stays.
"[They're] seeing a greater variety of people coming because [they're] competing with the local
bars," David Murphy, the companies Vice President stated. Shortcomings that have been mentions
several times via reviews all have to do with conferences happening at the hotel. Guests are upset
that the hotel restaurants and bars are filled with businessmen and women and are irritated that the
events held outside could be heard through their hotel rooms. Other reviews complained that the
service wasn't up to

Acct 551
E12–1 (Classification Issues–Intangibles) Presented below is a list of items that could be included in
the intangible assets section of the balance sheet.
1. Investment in a subsidiary company.
2. Timberland.
3. Cost of engineering activity required to advance the design of a product to the manufacturing
stage.
4. Lease prepayment (6 months' rent paid in advance).
5. Cost of equipment obtained.
6. Cost of searching for applications of new research findings.
7. Costs incurred in the formation of a corporation.
8. Operating losses incurred in the start–up of a business.
9. Training costs incurred in start–up of new operation.
10. Purchase cost of a franchise.
11. Goodwill generated internally.
12. Cost of testing in search for ... Show more content on Helpwriting.net ...
It is expected that this product will generate cash flows for an indefinite period of time. The license
has an initial term of 5 years but by paying a nominal fee, Palmiero can renew the license
indefinitely for successive 5–year terms. What amount should be amortized for the year ended
December 31, 2012?
1 . Alatorre should report the patent at $600,000 (net of $400,000 accumulated amortization) on the
balance sheet. The computation of accumulated amortization is as follows.
Amortization for 2005 and 2006 ($1,000,000/10) X 2 $200,000
2007 amortization: ($1,000,000 – $200,000) ÷ (6 – 2) 200,000
Accumulated amortization, 12/31/07 $400,000
2. Alatorre should amortize the franchise over its estimated useful life.
Because it is uncertain that Alatorre will be able to retain the franchise at the end of 2015, it should
be amortized over 10 years. The amount of amortization on the franchise for the year ended
December 31, 2007, is
$40,000: ($400,000/10).
3. These costs should be expensed as incurred. Therefore $275,000 of organization expense is
reported in income for 2007.

4. Because the license can be easily renewed (at nominal cost), it has an indefinite life. Thus, no
amortization will be recorded. The license will be tested for impairment in future periods.
E12–5 (Correct Intangible Asset Account) As the recently appointed auditor for Hillary Corporation,
you have been asked to examine

acct450 ch3
1. award: 0 out of 0.00 points Willkom Corporation bought 100 percent of Szabo, Inc., on January 1,
2011. On that date, Willkom's equipment (10–year life) has a book value of $472,500 but a fair
value of $629,500. Szabo has equipment (10–year life) with a book value of $283,000 but a fair
value of $440,000. Willkom uses the equity method to record its investment in Szabo. On December
31, 2013, Willkom has equipment with a book value of $330,750 but a fair value of $530,250. Szabo
has equipment with a book value of $198,100 but a fair value of $409,100. What is the consolidated
balance for the Equipment account as of December 31, 2013? rev: 10_01_2012 $685,850. $528,850.
$939,350. → $638,750. Willkom's equipment book ... Show more content on Helpwriting.net ...
Consolidated retained earnings (initial value method) $ Consolidated retained earnings (partial
equity method) $ Under each of the following situations, what is the Investment in Rambis account
balance on Herbert's books on January 1, 2013? b–1. The parent uses the equity method. Investment
$ b–2. The parent uses the partial equity method. Investment $ b–3. The parent uses the initial value
method. Investment $ Under each of the following situations, what is Entry *C on a 2013
consolidation worksheet? (Leave no cells blank. If no entry is required, select "No Journal Entry
Required" in the account field and zero (0) in the amount field.) c–1. The parent uses the equity
method. Date General Journal Debit Credit January 1, 2013 No Journal Entry Required No Journal
Entry Required c–2. The parent uses the partial equity method. Date General Journal Debit Credit
January 1, 2013 Retained Earnings, 1/1/13 Investment in Rambis c–3. The parent uses the initial
value method. Date General Journal Debit Credit January 1, 2013 Investment in Rambis Retained
Earnings, 1/1/13 rev: 02_07_2013_QC_26416 Explanation: a. Consolidated retained earnings–
equity method Herbert (parent)

Ancient Documents
Chapter 13
AFTER–TAX COST OF CALLING BOND ISSUE
|Total call premium per bond |x x x |
|Less: (1 – Tax rate) per bond |(xx) |
|After–tax cost of calling bond issue |xxx |
A13–2. After–tax cost of calling bond issue = Total call premium ( (1 – Tax rate)
| |Call Premium |Total Call |After–Tax Cost |
|Bond |per Bond |Premium |of Calling Issue |
|A |$50 |$ 600,000 |$ 360,000 |
|B |30 |600,000 ... Show more content on Helpwriting.net ...
Find the net present value of refunding decision.
A13–5. Steps in bond refunding decision: (1) Calculate the initial investment required to call the old
bond issue and float the new one; (2) Find the annual cash flow savings from the new versus old
bond issue; and, (3) Find the net present value of refunding decision. Answers to parts (a)–(f) of this
problem will be determined with this procedure.
(1) Finding the Initial Investment for the Bond Refunding Decision
(a) Call premium before tax [($1,090 – $1,000) ( 50,000 bonds] $4,500,000 Less: Taxes (0.40 (
$4,200,000) (1,800,000) After–tax cost of call premium $2,700,000
(b) Floatation cost of new bond (500,000)
(c) Overlapping interest on old bond (none) 0 (d) Tax savings from unamortized discount on old
bond (The old bonds were issued at par, so no unamortized discount) 0
(e) Tax savings from unamortized floatation of old bond (15 ÷ 20 ( $350,000 ( 0.40) (105,000)
Initial investment $2,095,000

(2) Finding the Annual Cash Flow Savings for the Bond Refunding Decision
Old bond
(a) Interest cost Before tax (0.09 ( $50,000,000) $4,500,000 Less: Taxes (0.40 ( $4,500,000)
(1,800,000) After–tax interest cost $2,700,000
(b) Tax savings from amortization of discount

ACC 291 Week 2
E9–1
The following expenditures relating to plant assets were made by Spaulding Company during the
first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the
machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one–year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the ... Show more content on Helpwriting.net ...
Instructions
(a) Compute depreciation expense for 2011 and 2012 using (1) the straight–line method, (2) the
units–of–activity method, and (3) the double–declining balance method.
Pg. 404–407
Straight–line method– 30,000– 2,000 = 28,000 / 8 = $3,500 annually
2011– $ 3,500–––– worth $26,500
2012– $ 3,500–––– worth $23,000
Units–of–activity method– 28,000/100,000= $0.28 unit
2011– $0.28 x 15,000 = $4,200
2011– $0.28 x 12,000= $3,360
Double–declining balance method
2011– 30,000 x 12.5% (100/8) = $3,750
2012– 26,250 (30,000 – 3,750) x 12.5% = $3,281.35

(b) Assume that Brainiac uses the straight–line method.
(1) Prepare the journal entry to record 2011 depreciation.
Pg 405
Date Account Title & Explanation Debit Credit
Jan. 31 Depreciation Expense 3,500
Accumulated Depreciation 3,500 (To record annual depreciation on delivery truck) (2) Show how
the truck would be reported in the December 31, 2011, balance sheet.
Date Account Title & Explanation Debit Credit
Dec. 31 Equipment Expenses 26,500 Equipment Depreciation 26,500 (To record annual
depreciation on delivery truck)
E9–12
The following are selected 2011 transactions of Franco Corporation.
Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.
May 1 Purchased for $90,000 a patent with an

Modern-Day Mortgage Amortization Model
III. The Essentials of A Modern–day Mortgage Amortization Model Contrary to popular belief
among some financial analysts, the mortgage crisis of 2008 may have occurred with or without the
existence of subprime mortgages. According to the U.S. Census Bureau, 1744 at their peak rose to
just over 20% of all home mortgages originated, of which 35% defaulted. Subprime mortgage
defaults accounted for approximately 7% of mortgage originated s at their peak. The cumulative
defaults of conventional mortgages from vintage pools of 2007 were over 13%, surpassing subprime
default rates (see Figure V, Fannie Mae 2013). The credit characteristics of Fannie Mae and Freddie
Mac mortgage pools originated between the years 2001–2007 were virtually the same, however ...
Nearly 100% of the three million mortgages originated prior to 2008 still underwater in 2013 would
have been sufficiently de–leveraged under PRAM (Macdonald, [2012], see Fig IV). The data in
Figure III and IV confirms, most of the anchoring principles of the 30–Year mortgage have been lost
due to its inability to reduce mortgage balances quick enough to keep up with our modern–day
economy. The 30–Year mortgage model has proven to be incapable of offsetting the historically low
increase in wages to keep up with the past appreciation in housing and inflation rates (Wolfson,
[2013]) A new amortization model that is mutually beneficial to lenders, borrowers, and bond
investors in today's economy is essential (Jones, [2013]). A modern–day mortgage amortization
model should offer the capability and flexibility to sustain the following factors (Wolfson, [2013]):
It should entice borrowers to stay in their mortgages for a longer period of time (Alexander and
Moloney,

Fin U02A2 Time, Value and Money
TIME VALUE OF MONEY: ANNUITY CASH FLOWS FIN u02a2 Would you rather have a
savings account that paid interest compounded on a monthly basis, or one that compounded interest
on an annual basis? Why? Compound interest arises when interest is added to the principal.
Therefore, the interest that has been added also earns interest. This addition of interest to the
principal is called compounding. If the savings account has $1,000 initial principal and 20% interest
per year, the account will have a balance of $1200 at the end of the first year, $1440 at the end of the
second year. Frequent or monthly compounding increases the future value (Cornett, Adair, &
Nofsinger, 2014, page 109–110). What is an amortization schedule and what are ... Show more
This means that the payments that are made at the end of every period are called ordinary annuity.
This is because ordinary annuity is the usual state of affairs. Under normal circumstances all
annuities are paid at the end of the period. Therefore, when annuity payments are made in advance,
like in house rents, they are called annuity due. The difference in the formula to calculate the two
different types of annuities is very small (Cornett, Adair, & Nofsinger, 2014, page 108). What
is the future value of a $ 500 annuity payment over five years if interest rates are 9 percent?
Recalculate the future value at 8 percent interest, and again at 10 percent interest. FVA5 = $500 x
(1+0.09)5 –1 = $500 x 5.9847 = $2,992.36 0.09 FVA5 = $500 x (1 + 0.08)5 –1 = $500 x 5.8666 =
$2,933.30 0.08 FVA5 = $500 x (1 + 0.10)5 – 1 = $500 x 6.1051 =$3,052.55 0.10 What is the present
value of a $700 annuity payment over four years if interest rates are 10 percent? Recalculate the
present value at 9 percent interest, and again at 11 percent interest. PVA4 = $700 x 1 – __1____ (1 +
0.10)4 = $700 x 3.1698655 = $2,218.91 0.10 PVA4 = $700 x 1 – __1__

Johnson & Johnson : Human Health And Wellbeing Essay
Johnson & Johnson is a multinational company, which specializes in pharmaceuticals, medical
devices and consumer goods. Johnson & Johnson was founded in 1886 in New Brunswick, New
Jersey. The Company has more than 265 operating companies conducting business around the
world. The Company 's primary focus is the products related to human health and wellbeing, and its
continuing effort to diversify its business as well as increase profits by constantly acquiring new
companies. Johnson & Johnson is organized on the principles of decentralized management, where
the executive committee of the company is the principal management group who is responsible for
the domestic and international operations.
The Company is organized into three business segments: Pharmaceutical, Medical Devices and
Consumer. Out of the three, Johnson & Johnson have the highest sales within the pharmaceutical
segment, which contributes over 43% of the company's revenue and generated revenue of about
$32.3 billion in 2014. As a percentage of sales, the pre–tax profits for the pharmaceuticals segment
were 36.2% in 2014. This was achieved due to the strong sales of high margin products.
Pharmaceutical segment has several multi–million dollar drugs covering a broad range of areas such
as neuroscience cardiovascular and metabolism immunology oncology and infectious diseases as
well as vaccines. Products in this segment are distributed directly to retailers, wholesalers, hospitals
and health care professionals for

Financial Management
FNCE 451 DDavis – Homework 4a – Review Questions
1. A 6–year Circular File bond pays interest of $82 annually and sells for $920 . What are its coupon
rate, current yield, and yield to maturity? a. Coupon rate b. Current yield c. Yield to maturity
_____________ %. ____________ %. ___________ %.
2: An example of a firm's financing decision would be: A. acquisition of a competitive firm. B. how
much to pay for a specific asset. C. the issuance of ten–year versus twenty–year bonds. D. whether
or not to increase the price of its products.
3. When corporations need to raise funds through stock issues, they rely upon the: A. primary
market. B. secondary market. C. over–the–counter market. D. centralized NASDAQ exchange. 4.
Which of the ... Show more content on Helpwriting.net ...
B. It is a cumulative number over a long period of time. C. It shows the profitability of a firm after
deducting a calculation of a charge for cost of the capital. D. All of these are correct.
10. Which of the following bonds would be considered to be of investment–grade? A. A C rated
bond. B. A B rated bond. C. A Ba rated bond. D. A Baa rated bond.
11. What is the relationship between an effective annual (compounded) rate (EAR) and the annual
percentage rate (APR) for a loan requiring monthly payments? A. The APR is lower than the
annually compounded rate. B. The APR is higher than the annually compounded rate. C. The APR
equals the annually compounded rate. D. The answer depends on the interest rate.
12. Which of the following characteristics applies to the amortization of a loan such as a home
mortgage? (Amortization = principal payments) A. The amortization decreases with each payment.
B. The amortization increases with each payment. C. The amortization is constant throughout the
loan. D. The amortization fluctuates monthly with changes in interest rates
13. Other things being equal, the more frequent the compounding period, the: A. higher the APR.
B. lower the APR. C. higher the effective annual interest rate. D. lower the effective annual interest
rate
14. What happens when a bond's expected cash flows are discounted at a rate lower than the bond's
coupon rate? A. The price of the bond increases. B. The coupon rate of the bond

The Equity Method Of Accounting For Investments

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