in the amounts above. All amounts are before taxes: Extraordinary gain Correction of a 20Y0 revenue understatement Loss from operations of a discontinued textiles division Gain on sale of the textiles division Omission of depreciation charges from January and February 20Y1 $31‚000 $50‚000 $22‚000 $60‚000 $10‚000 Prepare a partial income statement for 20Y1 starting with Income From Continuing Operations before Taxes. What is the 12/31/Y1 balance in the Retained Earnings
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Integrated Case 3-16 D¡¦Leon Inc.‚ Part I Financial Statements and Taxes Donna Jamison‚ a 2000 graduate of the University of Florida with 4 years of banking experience‚ was recently brought in as assistant to the chairman of the board of D¡¦Leon Inc.‚ a small food producer that operates in north Florida and whose specialty is high-quality pecan and other nut products sold in the snack-foods market. D¡¦Leon¡¦s president‚ Al Watkins‚ decided in 2004 to undertake a major expansion and to ¡§go
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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
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title to assets may be desirable as a hedge against inflation. 2. Interest rates for leasing often are higher and a profit factor may be included in addition. 3. In some cases‚ owning the asset provides unique tax advantages‚ such as when bonus depreciation is permitted. (c) Since a long-term noncancelable lease which is used as a financing device generally results in
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project is expected to produce annual sales of $75‚000 with associated costs of $57‚000. The project has a 5-year life. The company uses straight-line depreciation to a zero book value over the life of the project. The tax rate is 30 percent. What is the operating cash flow for this project? OCF = net income + depr (Sales-cost) * (1-T) + depreciation * T OCF = (Sales – Costs)(1 – tC) + tCDepreciation OCF = 75000-57000)(1 – 0.3) + 0.3($115‚000/5) = 18000*.7 = 12600 + 6900 =19500 XYZ is
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on 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)? Because of the change method of the depreciation from a straight line to the accelerated‚ therefore‚ there is recognition of a more depreciation expense up front and there is no decrease that is experienced. There is also a decrease in the ESP ratio
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successor auditor failed to request this information from the newly acquired Little Drummer Boy Inc. By requesting this information and communicating with the predecessor auditor‚ the successor auditor could have reviewed the working papers of depreciation expense and also become clear of the reasoning for the useful lives used in the
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CHAPTER 2 FINANCIAL STATEMENTS‚ CASH FLOW‚ AND TAXES True/False Easy: (2.1) Annual report F K Answer: a EASY 1. The annual report contains four basic financial statements: the income statement‚ balance sheet‚ statement of cash flows‚ and statement of stockholders’ equity. a. True b. False (2.1) Annual report and expectations F K Answer: a EASY 2. The primary reason the annual report is important in finance
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Was the existing system adequate in the past? Why or why not? Why is it no longer adequate? The existing system was adequate in the past due to heavy reliance on direct labor hours. The ETO served as a central cost center‚ and transferred the costs to other divisions at direct costs plus allocated burden. Being in the late 1970s and early 1980s‚ technology testing of components required fewer cycles‚ and less complicated structures. Hence‚ such testing on products could be carried out by direct
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changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. In 1984‚ the Corporation has computed depreciation expense on plants‚ machinery and equipment using the straight-line method for financial reporting purposes. Prior to 1984‚ the Corporation used principally accelerated methods for its U.S. operating plants. 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change affect profits in future years? The cumulative
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