Premium Essay

An Accounting Case

In: Business and Management

Submitted By pamlar
Words 599
Pages 3
SHEPPARD’S
Accounting game 1:

Deyonne’s assets: 1. 400 sheep 2. 20 acres of land 3. A one-room cabin 4. A plow 5. Two carts 6. An ox
Deyonne’s liabilities and deduction of assets: 1. 35 sheep 2. 3 sheep

Due to the information, 20 acres of land equal 80 sheep according to the exchange rate of last year, a one-room cabin equal 3 acres of land and equal 12 sheep finally, a plow equals 2 goat and equal 2/3 sheep according to last year’s exchange rate and 2 carts which were traded with a poor acre of land equals 8 sheep plus 400 sheep. So Deyonne’s total assets are 500(2/3) sheep. Deyonne’s liabilities and assets deduction are 35 sheep plus 3 sheep, which will come to 38 sheep, therefore, his total net assets are 462(2/3) sheep.

Batonne’s assets: 1. 360 sheep 2. 30 acres of land (which were trade with 35 sheep 10 years ago) 3. 10 acres of land (which were trade current year) 4. 10 goats ( 3 goat equals 1 sheep according to last year’s price) 5. An ox ( equals 3 sheep) 6. A two-room cabin (worth 3 acres of land) Explanations: 1. Although Batonne obtained 20 acres of land 10 years ago with 35 sheep, the worth of land increased to 4 sheep per acre of land. So all the land should be converted to sheep according to this later price. 2. There is no exchange price for the poor land, so it is assumed that the price for poor land is also 4 sheep per acre of land. 3. Because the order Batonne’s wife received cannot satisfy the requirement of revenue confirmation, the revenue of this order cannot be confirmed as income, therefore, cannot be confirmed as assets either. Based on the information, 40 acres of land equal 160 sheep, 10 goats equal 3(1/3) sheep, an ox equals 3 sheep, and a two-room cabin worth 12 sheep plus 360 sheep. Therefore, Batonne’s total assets...

Similar Documents

Premium Essay

Accounting Case

...ACCT 4400 Case Set 1 Case Set 1 covers Ethics and Professionalism in Auditing, and consists of the following cases: Case 1-1: Accounting Scandal Case 1-2: Audit Dilemma Case 1-3: Independence Case 1-1: Accounting Scandal This case focuses on the Diamond Foods accounting scandal. To complete this assignment, you should first conduct research using the Internet to better understand Diamond Foods and its fraud. Second, answer the following questions. Questions: 1. What was the motivation for the Diamond Foods scandal? Be specific, simply stating “greed” is insufficient. 2. (a) In general, what is a conflict of interest? (b) What role did the board of directors at Diamond Foods play in creating conflicts of interest at the company? (c) How should an auditor have responded to the conflicts of interest at Diamond Foods? 3. (a) What are momentum payments? (b) What was the role of momentum payments in the Diamond Foods scandal? 4. How did Diamond Foods fund its aggressive growth strategy of multiple acquisitions during a short period of time? Case 1-2: Audit Dilemma Assume that you have just started as a staff auditor at a large accounting firm. For your first audit, you are assigned to E&K books, a public company. Your firm has been auditing this client for several years, and has always given E&K clean opinions. A senior, Ella, will lead fieldwork on the E&K audit. You are glad to be working with Ella......

Words: 923 - Pages: 4

Premium Essay

Accounting Case

...Acquisition of Legal Subsidiary in Bankruptcy Parent Co. (Parent) is a nonpublic company with two wholly owned subsidiaries, Poor Son Co. (Poor Son), a nonpublic company, and Rich Grandson Co. (Rich Grandson), a public entity registered with the SEC. Rich Grandson was transferred to Parent by Poor Son in 2006. Parent, Poor Son, and Rich Grandson each prepare stand-alone financial statements in accordance with U.S. GAAP. This case addresses the accounting by Parent and Poor Son and does not address any accounting associated with Rich Grandson. Bankruptcy In January 2007, Poor Son filed a voluntary petition for reorganization under Chapter 11 of the U.S. bankruptcy code because of its inability to meet obligations as they became due. Specifically, Poor Son incurred significant levels of bank debt in prior years, and because of deteriorating business conditions, was no longer able to support that level of debt. Parent concluded that as a result of the bankruptcy, it lost control of Poor Son and deconsolidated Poor Son from its financial statements. Parent cited the following to support a loss of control: • The bankruptcy court imposed a corporate governance stipulation under which Parent lost its ability to unilaterally remove and replace three out of the five members comprising Poor Son’s board of directors. • In 2008, Poor Son filed an action against Parent seeking to void the transfer of Rich Grandson as a fraudulent transfer, and seeking the return of its interest......

Words: 631 - Pages: 3

Premium Essay

Accounting Case

...Seligram, Inc.: Electronic Testing Operations 1. What caused the existing system at ETO to fail? 2. Calculate the reported cost of the five components listed in Exhibit 6 using: a. The existing system. b. The system proposed by the accounting manager. c. The system proposed by the consultant. 3. Which system is preferable? Why? 4. Would you recommend any changes to the system you prefer? Why? 5. Would you treat the new machine as a separate cost center or as a part of the main test room? Bridgeton Industries: Automotive Component & Fabrication Plant 1. The official overhead allocation rate used in the 1987 model year strategy study at the Automotive Component and Fabrication Plant (ACF) was 435% of direct labor cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? 2. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? 3. Consider two products in the same product line: Product 1 Product 2 Expected Selling Price $62 $54 Standard Material Cost 16 27 Standard Labor Cost 6 3 Calculate the expected gross margins as a percentage of selling price on each product based on the 1988 and 1990 model year budgets, assuming selling price remains constant and material/labor costs do......

Words: 1915 - Pages: 8

Premium Essay

Accounting Case

...Case 12-02 To Recognize or Not to Recognize, That Is the Question Shakespeare Inc. (“Shakespeare” or the “Company”) is a privately held book printing and publishing company with a December 31 year-end. The summary balance sheet as of December 31, 2010, included: Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Total shareholder equity $ 6,500,000 28,250,000 $34,750,000 $ 4,500,000 13,750,000 $18,250,000 $16,500,000 The summary results of operations for the year ended December 31, 2010, included revenue of $10.7 million and net income of $1.2 million. Shakespeare is planning to issue its financial statements on March 20, 2011. On March 18, 2011, Shakespeare’s management will evaluate new information about one of its accruals and two subsequent events to determine if this information or events represent items that should be recognized or disclosed in the December 31, 2010, financial statements. Medical Benefits Payable For the past several years, Shakespeare has self-insured medical benefits (health and dental) for its employees. The Company records the costs of medical care in the period in which covered events occur and includes its best estimate of the costs that have been incurred but not yet reported (IBNR) in its estimate of the medical benefits payable. Shakespeare looks to the FASB Accounting Standards Codification, which defines IBNR as “losses incurred by the insured entity that have not yet been reported to...

Words: 967 - Pages: 4

Free Essay

Accounting Case

...Legend of 1900 you never really done for as long as you got a good story and someone to tell it to. 只要你有一段精彩的往事,和一个可以向他叙述的人,那么你永远都不会一无所有。 Look at that city,you just can't see an end to it.The end , please! You please just show me where it ends. It's not what I see stoped me , was what I didn't see . What I didn't see , you know that exploding city ,there is everything except an end . It was no end . What I did not see ,it's the whole thing came to an end ,the end of the wold . You take a piano ,keys begin ,keys end . You know there are 88 of them ,nobody can tell you any difference . They are not infinite ,you are infinite . On those keys ,the music that you can make is infinite . I like that .That I can live by . You get me up on that gang(gangplank),and rolling out in front of me a keyboard of millions of keys ,millions of ,billions of keys that never end ,that is the truth Marx ,then they never end . That keyboard is infinite ,and if that keyboard is infinite, then on that keyboard there is no music that you can play . They seating on the rongbanch,that's god's piano . Christ ,did you see the street ,just the street ,there are thousands of them . Then how do you do it down there ,how do you choose just one , one woman , one house , one peace of land belong to your own , one landscape to loke at , one way to die . All that ,well ,just waiting down on you . You don 't even know it come to an end . ...

Words: 402 - Pages: 2

Free Essay

Accounting Case

...instead of weekend one), just because he ignored the difference time between India time and US time. on the other hand, Devilal didn’t contact Nick at his home just because of avoiding personal conflicts. Also I think that the Dubai Team has to take some responsibility, because they caused the queue which was sent to the wrong place. 2 What role did diversity play on this team? Generallyspeaking in this case, diversity caused a negative (or disadvantage) role. Instead the diversity caused innovation and productivity. Diversity here in this case caused conflicts and unfair feelings. Such as the conflicts between Mumbai team and Dubai team, the conflicts between Paris team and the US team and so on. What should James do in the short and long-term? Short run: James should make sure that there always someone standby 24 hours no mater the day time or the night to get the info updated in time. And also he should build a channel that all the top managers have the proper ways to get the info if there is something emergency happen. Long run: The most important thing here in the case is that James should build a fair and trust work environment to make employees working in a respectable way. And also James should try to communicate with the employees frequently not matter the region and the...

Words: 282 - Pages: 2

Premium Essay

Accounting Case

...Problem 12.61 Kitchen Appliances Inc. is a multi-division company with each major product-line managed by a separate division. Divisional managers have complete autonomy with respect to operating and investment decisions. The company evaluates its division managers on ROI, calculated as operating income before taxes (for that year) divided by net book value of assets (at the beginning of that year). The firm pays particular attention to year-over-year growth in ROI as well as budget-actual comparison of the measure. Wendy Miller is the manager of the dishwasher division. Wendy expects that the operating income for the current year will be $2,400,000 before taxes. Given a net asset base of $6,800,000, the division’s ROI would be a healthy 35 percent, well above the average return from other divisions. This performance has been fairly representative of the way things have been going for Wendy. She expects a similar performance next year as well, and is looking forward to her promotion into the C-suite (the corporate office). Toward the end of the current year, an investment opportunity arises for Wendy – the possibility of introducing a new dishwasher model with improved features. The following table presents some salient financial information that Wendy’s managers put together for her evaluation: |Incremental cash outlay for additional equipment |$1,500,000 | |Useful life |10...

Words: 1242 - Pages: 5

Premium Essay

Accounting Case

...1. How many of its common shares is Merck authorized to issue as of 12/31/11? Merck authorized 6,500,000,000 shares. 2. How many of its common shares has Merck actually issued as of 12/31/11? Merck issued 3,576,948,356 shares. 3. How many of its common shares does Merck hold in its treasury as of 12/31/11? 536,109,713 shares 4. How many of Merck’s common shares are outstanding as of 12/31/11? 3,040,838,643 shares 5. How many of its shares did it repurchase during 2011? 58,000,000 shares 6. How much per share, on average, did Merck pay to buy back its stock in 2011? Price per share = 1,921,000,000/58,000,000= $33.12/share 7. Why doesn’t Merck treat its Treasury Stock as an asset on its balance sheet? Briefly explain. Merck's Treasury Stock is not an asset account. It is Merck’s own stock. Merck buys it back to reduce its outstanding stock available on the market. Merck can not legally invest in its own stock and can not make profit from its own stock. It is considered as a contra equity account that reduces shareholder equity on the balance sheet. 8. How much did Merck declare during 2011 in dividends to its common shareholders? $4,818,000,000 9. How much did Merck pay during 2011 in dividends to its common shareholders? $4,691,000,000 10. Record the summary journal entry that Merck would make for its common stock dividend activity during 2011...

Words: 291 - Pages: 2

Premium Essay

Accounting Case

...We have been asked by the directors of Belamy Corporation (BC), a company owned by Lipopro Inc (LI) which produces patented medicines, to give advice as to the potential financial reporting implications of the various alternatives for acquiring Caligon Inc (CI). CI is a wholly owned pharmaceutical subsidiary of Davison Corporation (DC), which has recently been de-emphasizing its own research efforts in favor of licensing products from other companies. BC is looking to acquire a pharmaceutical company such as CI to which it will transfer existing licensed products as the current licensing agreements expire. Through the analysis of three alternative acquisition arrangements, BC will gain an understanding of all possible implications and will be able to make decisions accordingly. These three alternatives must each be accounted for as business combinations, which occur when there is a transaction in which the acquirer obtains control of one or more business. In each alternative, BC would acquire control of CI, which can be seen through BC’s rights to their returns as well as having the ability to affect these returns with the power held in the business. Alternative 1 suggests a share for share exchange in which BC issues new shares totaling 40% of outstanding shares for 100% of the shares of CI. Since the acquirer is issuing its own shares as consideration transferred, we must determine the fair value of these shares using the current trading value of $25. For the 7 200 000...

Words: 1150 - Pages: 5

Free Essay

Accounting Case

...contributed by M? Conclusion Due to the contribution, M should recognize a total gain of $43,000, of which $30,000 is attributable to the contribution of the land. X recognizes no gain or loss. The gain recognized by M increases X’s basis in the land to $55,000. Analysis Internal Revenue Code (I.R.C.) § 362(a) states that if property was acquired by a corporation in connection with a transaction to which § 351 applies, the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain recognized to the transferor on such transfer. In this case, M’s basis in the land is $25,000. Therefore the gain recognized by M on this transaction needs to be determined. Although no gain or loss is recognized in a § 351 transfer [I.R.C. § 351(a)], I.R.C. § 351(b) requires that the transferor recognize gain to the extent that other property (“boot”) is received. In M’s case, he received boot, which is cash, of $50,000. This is the maximum amount of gain he can recognize on this transaction. However, M transferred multiple assets. This complicated the computation for gain recognized. According to Revenue Ruling (Rev. Rul.) 68-55, the amount of gain recognized should be computed on an asset-by-asset basis. Each asset must be considered transferred separately in exchange for a portion of each category of consideration received. The fair market value (FMV) of each category of consideration received is separately allocated to the transferred assets in......

Words: 530 - Pages: 3

Free Essay

Accounting Case

...After reading the case, we need to figure out three questions, which are a. FFC’s determination of whether the respective markets for the instruments were active or inactive and whether there was a significant decease in the volume and level of activity for the instruments. b. The valuation technique used by FFC c. The classification in the fair value hierarchy for each input into the fair value measurement and how these classifications affects classification in the fair value hierarchy of the entire instrument. We will answer these questions by each instrument separately: First, Collateralized Debt Obligation (CDO) Before September30th, 2010, FFC was in an active market, and it determined the fair value of the CDO by using a market-based valuation technique that relies on inputs such as quotes prices for similar CDO securities and requires only insignificant adjustments. After that, there was a significant decrease in the volume and level of activities and the CDO’s market was not active. Besides, significant adjustments are required to determine fair value as of the measurement date given the lack of recent and relevant transactions. The valuation techniques FFC used for CDO is income approach, because this way could maximize the use of relevant observable input and minimize the use of unobservable inputs. There are two factors FFC mainly considered in the fair value measurement. Frist, FFC considered the implied rate of return on September 30, 2010,......

Words: 470 - Pages: 2

Free Essay

Accounting Case

...Memo: To: Edward Sloane, Senior Audit Partner From: David Mynarski, CGA Date: January 15, 20X5 Re: Analysis of Issues for Vehicles for Hope Ltd. (VHL) Audit I have identified issues pertaining to the 2014 audit of VHL, based on the information provided in my meeting with VHL’s Accountant today. I have provided an analysis and recommendations for each of these issues. Financial Accounting Issues Under the Deferral method of accounting that VHL adheres to, the land, building and equipment donation by the Board member would be recorded as revenue and matched to expenses in the year the related costs of maintaining / operating these items are incurred. However, since VHL follows Part III of the CICA Handbook – Accounting and under Part III, an entity has a choice between recording restricted contributions under the Deferral or the Restricted Fund method. I recommend VHL choose the Restricted Fund method of accounting. This would allow VHL to separate their contributions into specific funds, based on what the funds are used for, eliminating the need to defer recognition of the donation revenue. Under the Restricted Fund method, the donated land, building and equipment would be recorded in the capital asset fund in the 2014 year, and the donation for automotive toolkits would be recorded in the restricted fund in 2014, since it is to be used for a specific purpose. Any other non-restricted, non-capital funds donated to VHL would be recorded in the Current...

Words: 1221 - Pages: 5

Premium Essay

Accounting Case

...Case 3.1: While in Napal, McCoy describes his experiences with Sadhu on the mountainside as a breakdown of ethics on the corporate and individual level; in this comparison the hiking party would be the institution and Sadhu the individual. With that said typically speaking individuals within a firm may find their needs overwhelmed and under recognized as the specific interests of the firm itself are at the fore front. Again this correlates to the treatment of Sadhu by the hikers on the trip. With respect to the Ethical Dissonance Model the incident in question can be classified as low ranking concerning the corporate and individual ethics model. In short each hiker justified their actions as doing what they could to assist Sadhu, but in essence each hiker passed the safety and responsibility of Sadhu to the next hiker, rather than ensuring the gentlemen’s wellbeing through until the end. It became apparent that each hiker was concerned about their own self-interests rather than the interests and wellbeing of Sadhu.            McCoy reached stage two in Kohlberg’s Stages of Moral Development. He wanted to satisfy his own needs of fulfilling his dream of completing this hike and making it to the holy shrines. He felt that his responsibilities with the Sadhu were complete after he helped to get him clothed and checked that he was still alive, so he continued on his hike. Stephen made it to stage 3, fairness to others. He felt that he had an obligation to make sure that the...

Words: 655 - Pages: 3

Premium Essay

Case for Accounting Class

...INTRODUCTION Revenue recognition is one of the top causes for financial statement restatements. In addition, revenue recognition is an area commonly questioned by the Securities and Exchange Commission (SEC) staff in their review of public filings and resultant comment letter process. Furthermore, revenue recognition is often prey to financial fraud. Coverage of revenue recognition in intermediate accounting courses is typically limited to learning and applying the criteria for revenue recognition outlined in the Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Concepts No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, to routine transactions and topics, such as long-term construction contracts and installment sales (FASB 1984). While these topics are important, there are literally hundreds of revenue-generating transactions that are not covered in the traditional financial accounting sequence. These are their stories (for any Law and Order fans): Case One: Facts Consumer Cleaning Products Corporation (CCPC) is a public company with a calendar yearend. CCPC manufactures detergent that is ultimately purchased (and used) by consumers. The supply chain consists of the following: * CCPC sells its detergent to a wholesaler; * The wholesaler sells the detergent to a retailer; and * The retailer sells the detergent to a consumer. CCPC launches a new detergent, Fresh & Bright, on......

Words: 1413 - Pages: 6

Premium Essay

Cases in Accounting Practices

...Cases from Management Accounting Practice Volume 15 edited by Wayne Bremser Villanova University Jim Mackey California State University Sacramento The American Accounting Association (Management Accounting Section) Institute of Management Accountants (Committee on Academic Relations) Published by Institute of Management Accountants 10 Paragon Drive, Montvale, NJ 07645-1760 Claire Barth, editor and compositor Copyright © 2000 by Institute of Management Accountants. All rights reserved. IMA publication number 00355 ISBN 0-86641-291-3 Preface T he cases in this volume were presented at the Management Accounting Section of the American Accounting Association’s 2000 annual meeting in Mesa, Arizona. The cases describe the implementation and application of management accounting innovations to systems designed to support the maintenance and creation of value in the modern enterprise. Each of the cases presents an application of management accounting techniques to support change management. Starting with an excellent review of the strategic management of new product lines by Mercedes Benz, Tom Albright contributes an interesting and insightful picture of how target costs need to consider both current and strategic value issues. Mercedes’ use of a target cost index to integrate cost and strategic value is particularly interesting. The next three cases focus on the implementation and use of the balanced scorecard and performance measures to......

Words: 6154 - Pages: 25