INTERMEDIATE ACCOUNTING, W/CONNECT
9th Edition
ISBN: 9781260681956
Author: SPICELAND
Publisher: MCG
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Chapter 1, Problem 1.11E
Basic assumptions and principles
• LO1–8, LO1–9
Identify the accounting concept that was violated in each of the following situations.
1. Pastel Paint Company purchased land two years ago at a price of $250,000. Because the value of the land has appreciated to $400,000, the company has valued the land at $400,000 in its most recent
2. Atwell Corporation has not prepared financial statements for external users for over three years.
3. The Klingon Company sells farm machinery. Revenue from a large order of machinery from a new buyer was recorded the day the order was received.
4. Don Smith is the sole owner of a company called Hardware City. The company recently paid a $150 utility bill for Smith’s personal residence and recorded a $150 expense.
5. Golden Book Company purchased a large printing machine for $1,000,000 (a material amount) and recorded the purchase as an expense.
6. Ace Appliance Company is involved in a major lawsuit involving injuries sustained by some of its employees in the manufacturing plant. The company is being sued for $2,000,000, a material amount, and is not insured. The suit was not disclosed in the most recent financial statements because no settlement had been reached.
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PROBLEM 7: MULTIPLE CHOICE
Entity A's total expenses for 20x1 were 239,000 before
possible adjustment for the following:
Salaries already earned by employees but not yet paid,
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P22,000
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Problem 6-22 (Algo) (LO 6-2)
On December 31, 2023, Petra Company invests $45,000 in Valery, a variable interest entity. In contractual agreements completed on
that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately
after Petra's investment, Valery presents the following balance sheet:
Cash
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Total assets
$ 45,000
165,000
65,000
$ 275,000
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135,000
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Each of the amounts represents an assessed fair value at December 31, 2023, except for the marketing software.
The December 31 business fair value of Valery is assessed at $180,000.
Required:
a. If the carrying amount of the marketing software was undervalued by $50,000, what amounts for Valery would appear in Petra's
December 31, 2023, consolidated financial statements?
b. If the carrying amount of the marketing…
Problem 6
Ebony Company sold an office equipment with a carrying amount of 739,000, receiving a
noninterest-bearing note due in three years with a face amount of 1,300,000. There is no
established market value for the equipment. The interest rate on similar obligations is estimated at
12%. The present value of 1 at 12% for three periods is .712.
What amount should be reported as gain or loss on the sale and interest income for the first year?
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Interest Income
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b. 168,600. 110,072
c. 186,600. 111,072
d. 110,072. 186,600
Chapter 1 Solutions
INTERMEDIATE ACCOUNTING, W/CONNECT
Ch. 1 - Prob. 1.1QCh. 1 - What is meant by the phrase efficient allocation...Ch. 1 - Identify two important variables to be considered...Ch. 1 - What must a company do in the long run to be able...Ch. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Explain what is meant by: The benefits of...Ch. 1 - Prob. 1.17QCh. 1 - Briefly define the financial accounting elements:...Ch. 1 - Prob. 1.19QCh. 1 - What is the going concern assumption?Ch. 1 - Prob. 1.21QCh. 1 - Prob. 1.22QCh. 1 - What are two advantages to basing the valuation of...Ch. 1 - Describe how revenue recognition relates to...Ch. 1 - What are the four different approaches to...Ch. 1 - In addition to the financial statement elements...Ch. 1 - Briefly describe the inputs that companies should...Ch. 1 - Prob. 1.28QCh. 1 - Prob. 1.29QCh. 1 - Prob. 1.30QCh. 1 - Prob. 1.31QCh. 1 - Prob. 1.32QCh. 1 - Accrual accounting LO12 Cash flows during the...Ch. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Prob. 1.3BECh. 1 - Basic assumptions and principles LO17 through...Ch. 1 - Prob. 1.5BECh. 1 - Prob. 1.6BECh. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Prob. 1.3ECh. 1 - Prob. 1.4ECh. 1 - Prob. 1.5ECh. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Concepts; terminology; conceptual framework LO17...Ch. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Basic assumptions and principles LO18, LO19...Ch. 1 - Prob. 1.12ECh. 1 - Prob. 1.13ECh. 1 - Prob. 1.14ECh. 1 - Prob. 1.15ECh. 1 - Prob. 1.1BYPCh. 1 - Research Case 12 Accessing SEC information through...Ch. 1 - Prob. 1.3BYPCh. 1 - Prob. 1.4BYPCh. 1 - Ethics Case 18 The auditors responsibility LO14...Ch. 1 - Prob. 1.9BYPCh. 1 - Judgment Case 110 GAAP, comparability, and the...Ch. 1 - Prob. 1.11BYPCh. 1 - Prob. 1.12BYPCh. 1 - Analysis Case 113 Expense recognition LO19...Ch. 1 - Prob. 1.14BYPCh. 1 - Real World Case 115 Elements; disclosures; The...Ch. 1 - Prob. 1.16BYPCh. 1 - Target Case LO19 Target Corporation prepares its...
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