P6-2 (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.
(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund earns 8% interest, compounded annually?
(b) Robert Hitchcock is 40 years old today and he wishes to accumulate $500,000 by his sixty-fifth birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his fortieth through his sixty-fourth birthdays. What annual deposit must Robert make if the fund will earn 12% interest compounded annually?
(c) Diane Ross has $20,000 to invest today at 9% to pay a debt of $47,347. How many years will it take her to accumulate enough to liquidate the debt?
(d) Cindy Houston has a $27,600 debt that she wishes to repay 4 years from today; she has $19,553 that she intends to invest for the 4 years. What rate of interest will she need to earn annually in order to accumulate enough to pay the debt?
Click here for the solution: (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns
Showing posts with label appropriate. Show all posts
Showing posts with label appropriate. Show all posts
Tuesday, April 12, 2016
Monday, October 26, 2015
Indicate with the appropriate letter the nature of each situation described below
E 20-18 Classifying accounting changes
Indicate with the appropriate letter the nature of each situation described below
Type of change
PR change in principle reported retrospectively
PP change in principle reported prospectively
E change in estimate
EP change in estimate resulting from a change in principle
R change in reporting entity
N not an accounting change
1. Change from declining balance depreciation to straight-line
2. Change in the estimate useful life of office equipment
3. Technological advance that renders worthless a patent with an unamortized cost of $45,000.
4. Change from determining lower of cost or market for the inventories by the individual item approach to the aggregate approach.
5. Change from LIFO inventory costing to the weighted-average inventory costing.
6. Settling a lawsuit for less than the amount accrued previously as a loss contingency.
7. Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years.
8. Change by the retail store from reporting bad debt expense on a pay-as-you-go basis to the allowance method.
9. A shift of certain manufacturing overhead cost to inventory that previously were expensed as incurred to more accurate measure cost of goods sold. (Either method is generally acceptable).
10. Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated.
Click here for the solution: Indicate with the appropriate letter the nature of each situation described below
Indicate with the appropriate letter the nature of each situation described below
Type of change
PR change in principle reported retrospectively
PP change in principle reported prospectively
E change in estimate
EP change in estimate resulting from a change in principle
R change in reporting entity
N not an accounting change
1. Change from declining balance depreciation to straight-line
2. Change in the estimate useful life of office equipment
3. Technological advance that renders worthless a patent with an unamortized cost of $45,000.
4. Change from determining lower of cost or market for the inventories by the individual item approach to the aggregate approach.
5. Change from LIFO inventory costing to the weighted-average inventory costing.
6. Settling a lawsuit for less than the amount accrued previously as a loss contingency.
7. Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years.
8. Change by the retail store from reporting bad debt expense on a pay-as-you-go basis to the allowance method.
9. A shift of certain manufacturing overhead cost to inventory that previously were expensed as incurred to more accurate measure cost of goods sold. (Either method is generally acceptable).
10. Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated.
Click here for the solution: Indicate with the appropriate letter the nature of each situation described below
Tuesday, September 8, 2015
In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
1. In a business combination, the appropriate accounting for an excess
of current fair values the combinee's identifiable net assets over the
combinor's cost is to: (Points : 1)
2. Which of the following is not included in the combinor's cost of a combinee in a business combination? (Points : 1)
3. Slocum Corporation and Merton Company, both publicly owned companies, are planning a merger, with Slocum being the survivor. Which of the following is a requirement of the merger? (Points : 1)
4. On January 31, 2006, the home office of Wall Company collected a trade account receivable of Doris Branch. The accounting for this transaction by Wall Company should include a: (Points : 1)
5. Both a home office and a branch use the periodic inventory system. If at the end of an accounting period the balance of the branch's Home Office ledger account does not agree with the balance of the home office's Investment in Branch account because of a shipment of merchandise in transit from the home office to the branch: (Points : 1)
6. If both the home office and the branch of a business enterprise use the periodic inventory system, the home office's Shipments to Branch ledger account: (Points : 1)
7. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)
8. Among the journal entries (explanation omitted) in the accounting records of the home office of Price Company was the following:
Office Equipment: Lang Branch 12,500
Investment in Lang Branch 12,500
This journal entry indicates that: (Points : 1)
9. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)
10. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)
Click here for the solution: In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
2. Which of the following is not included in the combinor's cost of a combinee in a business combination? (Points : 1)
3. Slocum Corporation and Merton Company, both publicly owned companies, are planning a merger, with Slocum being the survivor. Which of the following is a requirement of the merger? (Points : 1)
4. On January 31, 2006, the home office of Wall Company collected a trade account receivable of Doris Branch. The accounting for this transaction by Wall Company should include a: (Points : 1)
5. Both a home office and a branch use the periodic inventory system. If at the end of an accounting period the balance of the branch's Home Office ledger account does not agree with the balance of the home office's Investment in Branch account because of a shipment of merchandise in transit from the home office to the branch: (Points : 1)
6. If both the home office and the branch of a business enterprise use the periodic inventory system, the home office's Shipments to Branch ledger account: (Points : 1)
7. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)
8. Among the journal entries (explanation omitted) in the accounting records of the home office of Price Company was the following:
Office Equipment: Lang Branch 12,500
Investment in Lang Branch 12,500
This journal entry indicates that: (Points : 1)
9. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)
10. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)
Click here for the solution: In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
Monday, August 31, 2015
For each situation listed below, indicate by letter the appropriate qualitative characteristic(s) or accounting concept(s) applied
For each situation listed below, indicate by letter the appropriate qualitative characteristic(s) or accounting concept(s) applied. A letter may be used more than once, and more than one characteristic or concept may apply to a particular situation. Explain why you chose your answer.
1. Goodwill is recorded in the accounts only when it arises from the purchase of another entity at a price higher than the fair market value of the purchased entity's identifiable assets.
2. Land is valued at cost.
3. All payments out of petty cash are debited to Miscellaneous Expense.
4. Plant assets are classified separately as land or buildings, with an accumulated depreciation account for buildings.
5. Periodic payments of $1,500 per month for services of H. Hay, who is the sole proprietor of the company, are reported as withdrawals.
6. Small tools used by a large manufacturing firm are^ recorded as expenses when purchased.
7. Investments in equity securities are initially recorded at cost.
8. A retail store estimates inventory rather than taking a complete physical count for purposes of preparing monthly financial statements.
9. A note describing the company's possible liability in a lawsuit is included with the financial statements even though no formal liability exists at the balance sheet date.
10. Depreciation on plant assets is consistently computed each year by the straight-line method.
a) Understandability
b) Verifiability
c) Timeliness
d) Representational faithfulness
e) Neutrality
f) Relevance
g) Going concern
h) Economic entity
i) Historical cost
j) Measurability
k) Materiality
l) Comparability
Click here for the solution: For each situation listed below, indicate by letter the appropriate qualitative characteristic(s) or accounting concept(s) applied
1. Goodwill is recorded in the accounts only when it arises from the purchase of another entity at a price higher than the fair market value of the purchased entity's identifiable assets.
2. Land is valued at cost.
3. All payments out of petty cash are debited to Miscellaneous Expense.
4. Plant assets are classified separately as land or buildings, with an accumulated depreciation account for buildings.
5. Periodic payments of $1,500 per month for services of H. Hay, who is the sole proprietor of the company, are reported as withdrawals.
6. Small tools used by a large manufacturing firm are^ recorded as expenses when purchased.
7. Investments in equity securities are initially recorded at cost.
8. A retail store estimates inventory rather than taking a complete physical count for purposes of preparing monthly financial statements.
9. A note describing the company's possible liability in a lawsuit is included with the financial statements even though no formal liability exists at the balance sheet date.
10. Depreciation on plant assets is consistently computed each year by the straight-line method.
a) Understandability
b) Verifiability
c) Timeliness
d) Representational faithfulness
e) Neutrality
f) Relevance
g) Going concern
h) Economic entity
i) Historical cost
j) Measurability
k) Materiality
l) Comparability
Click here for the solution: For each situation listed below, indicate by letter the appropriate qualitative characteristic(s) or accounting concept(s) applied
Sunday, July 19, 2015
Using the appropriate interest table, compute the present values of the
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) $50,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $50,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $50,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.
Click here for the solution: Using the appropriate interest table, compute the present values of the
(a) $50,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $50,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $50,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.
Click here for the solution: Using the appropriate interest table, compute the present values of the
You have two assets and must calculate their values today based on their different payment streams and appropriate required returns
E6–6 You have two assets and must calculate their values today based on their different payment streams and appropriate required returns. Asset 1 has a required return of 15% and will produce a stream of $500 at the end of each year indefinitely. Asset 2 has a required return of 10% and will produce an end-of-year cash flow of $1,200 in the first year, $1,500 in the second year, and $850 in its third and final year.
Click here for the solution: You have two assets and must calculate their values today based on their different payment streams and appropriate required returns
Click here for the solution: You have two assets and must calculate their values today based on their different payment streams and appropriate required returns
Thursday, June 18, 2015
(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
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
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