Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue;

Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue; capital lease; sublease of a leased asset

“I don't see that in my intermediate accounting text I saved from college,” you explain to another member of the accounting division of Dowell Chemical Corporation. “This will take some research.” Your comments pertain to the appropriate accounting treatment of a proposed sublease of warehouses Dowell has used for product storage.

Required:
1. After the first full year under the warehouse lease, what is the balance in Dowell's lease liability? An amortization schedule will be helpful in determining this amount.
2. After the first full year under the warehouse lease, what is the carrying amount (after accumulated depreciation) of Dowell's leased warehouses?
3. Obtain the relevant authoritative literature on accounting for derecognition of capital leases by lessees using the FASB's Codification Research System. You might gain access from the FASB website (www.fasb.org), from your school library, or some other source. Determine the appropriate accounting treatment for the proposed sublease. What is the specific Codification citation that Dowell would rely on to determine:
a. if the proposal to sublease will qualify as a termination of a capital lease, and
b. the appropriate accounting treatment for the sublease?
4. What, if any, journal entry would Dowell record in connection with the sublease?

Click here for the solution: Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue;

The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2010

The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2010.

In 2010, 15,000 shares were authorized and 7,000 shares of common stock ($50 par value) were is- sued at a price of $57. In 2011, 1,000 shares were issued as a stock dividend when the stock was selling for $60. Three hundred shares of common stock were bought in 2012 at a cost of $64 per share. These 300 shares are still in the company treasury.

In 2011, 10,000 preferred shares were authorized and the company issued 5,000 of them ($100 par value) at $113. Some of the preferred stock was reacquired by the company and later reissued for $4,700 more than it cost the company.

The corporation has earned a total of $610,000 in net income after income taxes and paid out a total of $312,600 in cash dividends since incorporation.

Instructions
Prepare the stockholders equity section of the balance sheet in proper form for Vicario Corporation as of December 31, 2012. Account for treasury stock using the cost method.


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For Lobes Company, the relevant range of production is 40-80% of capacity

BE5-2 For Lobes Company, the relevant range of production is 40-80% of capacity. At 40% of capacity, a variable cost is $4,000 and fixed cost is 6,000. Diagram the behavior of each cost within the relevant range assuming the behavior is linear.

Click here for the solution: For Lobes Company, the relevant range of production is 40-80% of capacity