(Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows

Exercise 2-2 (E2-2). Qualitative Characteristics. The qualitative characteristics that make accounting information useful for decision-making purposes are as follows.

Relevance Timeliness Representational faithfulness
Reliability Verifiability Comparability
Predictive value Neutrality Consistency
Feedback value

Instructions
Identify the appropriate qualitative characteristic(s) to be used given the information provided below.
(a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles.
(b) Quality of information that confirms users' earlier expectations.
(c) Imperative for providing comparisons of a company from period to period.
(d) Ignores the economic consequences of a standard or rule.
(e) Requires a high degree of consensus among individuals on a given measurement.
(f) Predictive value is an ingredient of this primary quality of information.
(g) Two qualitative characteristics that are related to both relevance and reliability.
(h) Neutrality is an ingredient of this primary quality of accounting information.
(i) Two primary qualities that make accounting information useful for decision-making purposes
(j) Issuance of interim reports is an example of what primary ingredient of relevance

Click here for the solution: (Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows

ACC 421 Week 3 During 2007 Pierson Company started a construction job with a contract price of $1,500,000

ACC 421 Week Three (Week 3)

Exercise 18-4 (E18-4) (Recognition of Profit on Long-Term Contracts) During 2007 Pierson Company started a construction job with a contract price of $1,500,000. The job was completed in 2009. The following information is available.

2007 2008 2009
Costs incurred to date $400,000 $935,000 $1,070,000
Estimated costs to complete 600,000 165,000 –0–
Billings to date 300,000 900,000 1,500,000
Collections to date 270,000 810,000 1,425,000

Instructions
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
(b) Prepare all necessary journal entries for 2008.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used.

Click here for the solution: (Recognition of Profit on Long-Term Contracts) During 2007 Pierson Company started a construction job with a contract price of $1,500,000

(Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods

ACC 421 Week 5

Exercise 6-5 (E6-5) (Computation of Present Value)
Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.
(a) $30,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $30,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.

Click here for the solution: (Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods

(Unknown Periods and Unknown Interest Rate) Consider the following independent situations

ACC 421 Week 5

Exercise 6-10 (E6-10) (Unknown Periods and Unknown Interest Rate)
Consider the following independent situations. (a) Mike Finley wishes to become a millionaire. His money market fund has a balance of $92,296 and has a guaranteed interest rate of 10%. How many years must Mike leave that balance in the fund in order to get his desired $1,000,000? (b) Assume that Serena Williams desires to accumulate $1 million in 15 years using her money market fund balance of $182,696. At what interest rate must Serena’s investment compound annually?

Click here for the solution: (Unknown Periods and Unknown Interest Rate) Consider the following independent situations

(SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below

ACC 421 Week 5

Exercise 23-11 (E23-11) (SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below

AND SO ON

Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2008.

Instructions
Prepare a statement of cash flows using the indirect method.

Click here for the solution: (SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below

ACC 421 Week 5 (SCF-Direct Method) Data for Pat Metheny Company are presented in E23-11

ACC 421 Week 5

Exercise 23-12 (E23-12) (SCF-Direct Method) Data for Pat Metheny Company are presented in E23-11.

Instructions
Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

Click here for the solution: ACC 421 Week 5 (SCF-Direct Method) Data for Pat Metheny Company are presented in E23-11

(Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract

ACC 421 Week 3

Exercise 18-5 (E18-5) (Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Beth Botsford uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2007, follow.
Balance Sheet
Accounts receivable—construction contract billings $21,500
Construction in progress $65,000
Less: Contract billings 61,500
Cost of uncompleted contract in excess of billings 3,500
Income Statement
Income (before tax) on the contract recognized in 2007 $18,200

Instructions
(a) How much cash was collected in 2007 on this contract?
(b) What was the initial estimated total income before tax on this contract?

Click here for the solution: (Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract

ACC 421 Week 4 (Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should

ACC 421 Week 4

Exercise 24-2 (E24-2) (Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.

______ 1. Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end.
______ 2. Introduction of a new product line.
______ 3. Loss of assembly plant due to fire.
______ 4. Sale of a significant portion of the company’s assets.
______ 5. Retirement of the company president.
______ 6. Prolonged employee strike.
______ 7. Loss of a significant customer.
______ 8. Issuance of a significant number of shares of common stock.
______ 9. Material loss on a year-end receivable because of a customer’s bankruptcy.
______ 10. Hiring of a new president.
______ 11. Settlement of prior year’s litigation against the company.
______ 12. Merger with another company of comparable size.

Click here for the solution: ACC 421 Week 4 (Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should

ACC 421 Week 5 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc

ACC 421 Week Five (Week 5)

Problem 6-7 (P6-7) (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc.

(a) Derek Lee Inc. has $572,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Lee select? Assume the interest rate is constant over the entire investment.

(b) Derek Lee Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?

(c) Derek Lee Inc. loans money to John Kruk Corporation in the amount of $600,000. Lee accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Lee needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Lee will receive on the sale of the note?

(d) Derek Lee Inc. wishes to accumulate $1,300,000 by December 31, 2017, to retire bonds outstanding. The company deposits $300,000 on December 31, 2007, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2017. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)

Click here for the solution: ACC 421 Week 5 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc

CA1-12 (Accounting Pronouncements) Standard setting bodies have issued a number of authoritative pronouncements

ACC 421 CA1-12 (Accounting Pronouncements) Standard setting bodies have issued a number of authoritative pronouncements. A list is provided on the left, below, with a description of these pronouncements on the right.
Instructions
Match the description to the pronouncements.

1. _____ Staff Positions
2. _____ Interpretations (of the Financial Accounting Standards Board)
3. _____ Statement of Financial Accounting Standards
4. _____ EITF Statements
5. _____ Opinions
6. _____ Statement of Financial Accounting Concepts

(a) Official pronouncements of the APB.
(b) Sets forth fundamental objectives and concepts that will be used in developing future standards.
(c) Primary document of the FASB that establishes GAAP.
(d) Provides additional guidance on implementing or applying FASB Standards or Interpretations.
(e) Provides guidance on how to account for new and unusual financial transactions that have the potential for creating diversity in financial reporting practices.
(f) Represent extensions or modifications of existing standards

Click here for the solution: CA1-12 (Accounting Pronouncements) Standard setting bodies have issued a number of authoritative pronouncements

(Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations

ACC 421  Week Four (Week 4)

Exercise 5-5 (E5-5) (Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion.

AND SO ON

Instructions
Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $160,000 and for the office equipment, $105,000. The allowance for doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability.

Click here for the solution: (Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations

Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter

ACC 421 Week Two (Week 2)

Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter.
1. Economic entity assumption 5. Historical cost principle 9. Materiality
2. Going concern assumption 6. Matching principle 10. Industry practices
3. Monetary unit assumption 7. Full disclosure principle 11. Conservatism
4. Periodicity assumption 8. Cost-benefit relationship

Instructions
Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a letter more than once.
(a) Allocates expenses to revenues in the proper period.
(b) Indicates that market value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.)
(c) Ensures that all relevant financial information is reported.
(d) Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.)
(e) Anticipates all losses, but reports no gains.
(f) Indicates that personal and business record keeping should be separately maintained.
(g) Separates financial information into time periods for reporting purposes.
(h) Permits the use of market value valuation in certain specific situations.
(i) Requires that information significant enough to affect the decision of reasonably informed users should be disclosed. (Do not use full disclosure principle.)
(j) Assumes that the dollar is the “measuring stick” used to report on financial performance.

Click here for the solution: Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter