Premium Essay

Intermediate Accounting Ii

In: Business and Management

Submitted By bansach
Words 107484
Pages 430
SCHAUM’S OUTLINE OF

THEORY AND PROBLEMS
OF

INTERMEDIATE ACCOUNTING II
Second Edition

BARUCH ENGLARD, M.S., M.B.A., CPA Associate Professor of Accounting The College of Staten Island The City University of New York

SCHAUM’S OUTLINE SERIES

New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto

Copyright © 2007, 1992 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-151048-6 The material in this eBook also appears in the print version of this title: 0-07-146974-5. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com or (212) 904-4069. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works…...

Similar Documents

Premium Essay

Intermediate Accounting

...Decreasing current net income. d 31. Single-step income statement advantage. b 32. Single-step income statement. d 33. Methods of preparing income statements. a 34. Income statement presentation. b 35. Event with no income statement effect. c S36. Net income effect. Multiple Choice—Conceptual (cont.) Answer No. Description b P37. Selling expenses. b P38. Reporting merchandise inventory. a 39. Definition of an extraordinary item. d 40. Classification of an extraordinary item. d 41. Identification of an extraordinary item. a 42. Identification of an extraordinary item. d 43. Identification of an extraordinary item. a 44. Presentation of unusual or infrequent items. d 45. Identification of a change in accounting principle. d 46. Classification of extraordinary items. c 47. EPS disclosures on income statement. c 48. Reporting discontinued operations. c S49. Reporting unusual or infrequent items. d 50. Intraperiod tax allocation. d 51. Purpose of intraperiod tax allocation. c 52. Intraperiod tax allocation. d 53. Reporting items net of tax. d 54. Reporting items at gross amount. c 55. Earnings per share disclosure. d 56. EPS disclosures on income statement. d 57. EPS disclosures on income statement. c S58. Earnings per share disclosure. d P59. Reporting correction of an error. c 60. Retained earnings statement. d 61. Prior period adjustment. d 62. Identification of a prior period adjustment. b 63. Reporting......

Words: 4342 - Pages: 18

Premium Essay

Intermediate Accounting

...Check Figures to accompany INTERMEDIATE ACCOUNTING Seventh Edition Spiceland, Sepe and Nelson Chapter 1 BE 1-1 Net income, $208,000 BE 1-2 1. Liabilities BE 1-3 2. The economic entity assumption BE 1-4 1.The matching principle BE 1-5 3. Disagree, matching principle E1-1 Req. 1, Net operating cash flow, Yr. 2, $50,000 Req. 2, Net income, Year 1, $25,000 E1-2 Req. 1, Net income, Year 2, $190,000 E1-5 3. Auditors E1-6 5. Comprehensive income E1-7 8. f E1-8 4. Timeliness E1-9 7. b E1-10 6. The going concern assumption E1-11 2. The periodicity assumption E1-12 1. Disagree, Monetary unit assumption E1-13 4. Agree, Matching principle E1-14 3. g. Matching principle Chapter 2 BE 2-1 4. –180,000, accounts receivable BE 2-2 2. Dr. Salaries expense, $40,000 BE 2-3 Accounts payable balance, $42,000 BE 2-4 2. Dr. Note receivable, $10,000 BE 2-5 1. Dr. Insurance expense, $3,000 BE 2-7 2. Cr. Prepaid advertising, $1,000 BE 2-9 Total operating expenses, $107,000 BE 2-10 Total assets, $91,000 BE 2-11 Cr. Retained earnings, $35,000 BE 2-12 Net income, $143,000 E2-1 6. + $6,000, Prepaid insurance E2-2 3. Dr. Inventory, $90,000 E2-3 Total debits, $471,000 E2-4 2. Cr. Cash, $40,000 E2-5 6. b E2-6 9. I E2-8 4. Dr. Interest expense, $4,000 E2-9 6. Cr. Supplies, $5,250 E2-11 Net income, $101,000 E2-12 Cr. Retained earnings, $177,000 E2-13 Cr. Retained earnings, $66,000 E2-14 Req. 3, Accrued wages,......

Words: 7295 - Pages: 30

Free Essay

Intermediate Accounting

...to possible gain (gain contingency) or loss (loss contingency) to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur.” Liabilities are contingent on one or more future events to confirm the potential loss, payee, date payable or even existence of the loss. FASB identifies three categories to define the likelihood of losses that include probable, reasonably possible and remote. Liabilities that are probable and can be reasonably estimated should be accrued including pending litigation. The company should disclose the information that it has about the case including the probability of a favorable outcome and similarities to other cases. Kieso, Weygandt, & Warfield. (2012). Intermediate Accounting. 14th ed. Hoboken, NJ: John, Wiley & Sons. (a) Warranty costs are expensed as incurred under the cash-basis method. The costs are charged in the period in which the seller or manufacturer complies with the warranty. No liability is recorded for the future warranty costs and charges are not recorded at the time of sale. This method is normally used when the costs are immaterial or the warranty covers a short period. The cash-basis must be used when a liability is not probable or cannot be reasonably estimated. However, if it is probable that a warranty will occur and the costs can be reasonably estimated, the accrual method must be used. The costs are charged as an expense in the year of the sale. The accrual......

Words: 298 - Pages: 2

Premium Essay

Intermediate Accounting

...the Accumulated depreciation account, the amount is calculated on straight line basis, i.e. cost over its useful years, 10 years. For the year ended 2012, the plant have to be carried at cost less accumulated depreciation. As on 31 December, Creative recorded a net book value of Non-current Asset of $4,500,000 under the category of Plant and Machinery. 1/1/12 Addition: Plant $5,000,000 10years Financed by $5,000,000 8%loan 31/12/12 Depreciation: $500,000 NBV=$4,500,000 Journal: 1/1 Dr Plant and equipment $5,000,000 Cr 8% loan $5,000,000 31/12 Dr P&L- Depreciation $500,000 Cr accumulated depreciation $500,000 Dr P&L – Interest expense Cr Interest payable (ii) 1/1/12 Equipment Production unit $10,000,000 20 years Depre: $500,000 Electrical systems $3,000,000 10 years Depre: $300,000 Sub-assemblies $2,000,000 4 years Depre: $500,000 1/1 Dr Equipment $15,000,000 Cr Bank $15,000,000 31/12 Dr P&L – Depreciation $1300,000 Cr Accumulated depreciation $1300,000 Depreciation is to be calculated by the cost of the non-current asset over its useful life. For the new manufacturing equipment of Creative, the three components are of different useful life although they were acquired on the same date. So, the depreciation in the books of the Creative have to be recorded in three calculations: The depreciation for the year of the Production unit is calculated......

Words: 729 - Pages: 3

Premium Essay

Accounting Ii

...Question 1 Carelessness - Carelessness is the common reasons by which accounting errors may be occur. The person who keeping the books of account must be responsible to his/her job when he/she is careless or not serious may cause such errors happen. Lack of Knowledge - Accounting is based on certain principles and rules. Due to the lack of knowledge of the accounting principles and rules, accounting errors may be occurs. Dishonest of records - If the person who is responsible for keeping books of account is dishonest, he/she may intentionally commit errors in the books of account for the purpose of taking undue advantage. Computer and Software Errors - A professional firm keeps its account records in computer. However, defective computer program and easy access to unauthorized person to the accounting program may also result in the accounting errors. Most of the firm did not update their accounting software may cause many errors in their accounting program. Question 2 Lack of Knowledge - For accountant who is lack of knowledge must take part-time course to update their knowledge which helps in accounting. Besides that, the firm also must providing more training and practice for accountants to update their knowledge and experience to improve their efficiency in his/her job. Carelessness - For person who is newly involved in accounting firm, advice he/she must double check their account works to avoid careless in account records. Senior accountants should...

Words: 800 - Pages: 4

Premium Essay

Intermediate Accounting

...INTERMEDIATE (FINANCIAL) ACCOUNTING I SUBCLASS KLM CASE ANALYSIS QUESTIONS CASE 1 – REVENUE RECOGNITION AND EARNINGS MANAGEMENT INTERMEDIATE (FINANCIAL) ACCOUNTING I SUBCLASS KLM CASE ANALYSIS QUESTIONS CASE 2 – REVENUE RECOGNITION FOR A CONSTRUCTION PROJECT HKU Technology Inc. (Hereafter, HKU Tech) is a large construction contracting firm that serves a variety of industrial customers that purchase machinery and equipment from HKU Tech. HKU Tech’s business primarily involves the design and manufacture of large, industrial machinery and tooling that is used by its customers in manufacturing parts and components for fighter jets, transport planes, and other aerospace-related machinery and equipment. All of HKU Tech’s construction contracts involve the design, development, and manufacture of machines that are unique and customized to the specifications of its customers. HKU Tech negotiates all its contracts with its customers on either a fixed-price or cost-plus basis. HKU Tech has developed an accounting policy to recognize revenue related to its customized construction contracts, which is outlined as follows: The Company performs under a variety of contracts, some of which provide for reimbursement of cost plus fees, and others that are fixed-price-type contracts. Revenues and fees on these contracts are primarily recognized on a contract-by-contract basis using the percentage-ofcompletion method of accounting, which is most often based on contract costs incurred to date......

Words: 1474 - Pages: 6

Premium Essay

Intermediate Accounting

...FASB Accounting Standards Codification Case This case consists of a series of questions. For each question, your mission is to locate the paragraph in the FASB Accounting Standards Codification (ASC) that answers the question. Please CUT AND PASTE the paragraph from the standards into this document for each question and provide a full reference, including the topic, subtopic, section, and paragraph (e.g. “ASC 605-15-25-1”, or “ASC Master Glossary” for definitions). Submit a hard copy of your answers by Wednesday, October 30th 9:00 am. The FASB Codification database is available at: http://aaahq.org/ascLogin.cfm Student Access Username: AAA51226 Password: KMFpjSW 1.   To gain familiarity with the content and organization of the FASB’s Accounting Standard Codification (ASC), use the general topics presented below and determine where the following accounting terms would be located. Topical Categories:         Section # General Principles ................................... 100 Presentation .............................................. 200 Assets........................................................... 300 Liabilities...................................................... 400 Equity........................................................... 500 Revenue........................................................ 600 Expenses..................................................... 700 Broad Terms............................................... 800 Industry.................

Words: 2093 - Pages: 9

Premium Essay

Intermediate Accounting

...Company Name: GCL-Poly Energy Holdings Limited Stock Code: 3800 To: Albert From: XXX Date: 28/10/2014 Subject: The accounting requirements for leases BACKGROUND | As per our discussion, I have reviewed the consolidated financial statement of the GCL-Poly Energy Holdings Limited for the last year ended 31 December, 2013. For your reference, I would like to answer your question to facilitate your decision of lending the money as an investment that why the leased assets do should be recorded as the company’s assets under the accounting standard even the assets are not under the name of GCL. As per the financial statements, we can extract the following details: Obligation under finance lease – due within one year $654,197 Obligation under finance lease – due after one year $1,416,322 Explanation of accounting treatments In accordance to the IAS 17: Leases, it defines a finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred. This means that even if the titles of the assets are not transferred, if the lessee bears the responsibility to the assets’ risks and rewards such as the repairs and maintenances, depreciation and any related expenses, together with the lease term covering the major useful lives of the assets, the company should reflect the assets under the non-current assets. This is more likely to reflect the true and fair financial......

Words: 952 - Pages: 4

Premium Essay

P&G Intermediate Ii

...and makes it more visible for the reader which allows less room for error. If the information is right there in the statement rather than on the side somewhere else, it is much less likely to be overlooked. The second technique, which is the technique that P&G uses in its financials, is a note which is used whenever it is difficult for the company to show any additional information as a parenthetical explanation. According to the textbook, “companies commonly use notes to disclose the following: the existence and amount of any preferred stock dividends in arrears, the terms of or obligations imposed by purchase commitments, special financial arrangements and instruments, depreciation policies, any changes in the application of accounting principles, and the existence of contingencies” (Wiley pg. 195). As a result of this it is critical that notes present all the facts as thoroughly as possible because it is not directly in the body of the statement, it needs to explain everything. If a note is poorly presented, then it runs the risk of misleading the reader, rather than helping them. The notes should confirm and add useful information, not cause confusion and add to the list of the questions that the reader may have. The third technique is cross-reference and contra items, where a company will “cross-reference” an asset and a liability directly on the balance sheet. When using contra account on the balance sheet, a company reduces an asset, liability, or......

Words: 1810 - Pages: 8

Premium Essay

Accounting Ii

...services, or a charge against available funds in settlement of an obligation as evidenced by a source document like invoice, voucher, receipt, etc. All payments made by a company can be broadly categorized into capital expenditure and revenue expenditure. Capitol expenditure is an amount spent to acquire or enhance a productive asset to increase the capacity or efficiency of a company for more than an accounting period is defined as capital expenditure. That is, simply, capital expenditure is the expenditure made with the intension of getting the benefit from that expenditure for more than one year (usually accounting period is one year). For example, amount spent on long-term assets like machinery, plants, buildings, etc, either to improve or to acquire, is capital expenditure. Normally capital expenditure is capitalized in the books of accounts and then that amount will be depreciated over the useful life of the assets. It is also known as capital spending. It is essential to understand the differences between capital expenditure and revenue expenditure as the accounting treatments are different. Revenue expenditure is cash or resources spent on sales revenue generation or for maintaining a revenue-generating asset is defined as revenue expenditure. Revenue expenditure is an expenditure, which is made with an intension of getting some benefits within a short period of time (mostly, less than a year). Revenue expenditures are recurring in nature such as......

Words: 442 - Pages: 2

Premium Essay

Intermediate Accounting

...Exercises 1, 2, 3, 5 1, 5, 6 2 1 3 14, 15 24, 25 Kieso, Intermediate Accounting, 15/e, Solutions Manual 4 1 (For Instructor Use Only) 10-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives Questions Brief Exercises Concepts for Analysis Exercises Problems 1, 2, 3, 4, 5, 11, 12, 13 1, 2, 3, 4, 5, 6, 11 CA10-1 4, 5, 6, 11, 12 3 CA10-2 1. Describe property, plant, and equipment. 1 2. Identify the costs to include in initial valuation of property, plant, and equipment. 2, 3, 4, 5, 6, 21 3. Describe the accounting problems associated with self-constructed assets. 8 4. Describe the accounting problems associated with interest capitalization. 8, 9, 10, 11 2, 3, 4 5, 6, 7, 8, 9, 10 5, 6, 7 CA10-3 5. Understand accounting issues related to acquiring and valuing plant assets. 7, 12, 14, 16, 17, 19, 20, 22 5, 6, 7, 8, 9, 10, 11, 12 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 3, 4, 8, 9, 10, 11 CA10-4, CA10-6 6. Describe the accounting treatment for costs subsequent to acquisition. 6, 13, 15, 18 13 21, 22, 23 7. Describe the accounting treatment for the disposal of property, plant, and equipment. 7, 23 14, 15 24, 25 10-2 Copyright © 2013 John Wiley & Sons, Inc. 1 Kieso, Intermediate Accounting, 15/e, Solutions Manual CA10-5, CA10-6 2, 4 (For Instructor......

Words: 18805 - Pages: 76

Free Essay

Intermediate Accounting

...Financial Accounting Standards Board The Financial Accounting Standards Board (FASB) has been the assigned organization in a private sector for establishing standards. These standards are important to be useful because it allows investors to make informed decisions. Financial information must be reliable, consistent and transparent. Since 1973, FASB has been part of a structure that’s independent of all other business and professional organizations. The rest of the parts are Financial Accounting Foundation (FAF), Financial Accounting Standards Advisory Council (FASAC), Governmental Accounting Standards Board (GASB) and Governmental Accounting Standards Advisory Council (GASAC). The role of monitoring and controlling business reporting and accounting practices in a modern organization is to establish and improve standards of financial accounting. FASB has a board full of members that participate in accomplishing the mission. There are 7 board members as well as several staff members that help assist. The board members are: * Russell Golden is a chairman. He began in July of 2013. He served six years as a staff member (technical Director) for the FASB before he got appointed to the chairmen. His term will end in 2017, but then he can get an appointment to an additional 3 more years. He is also chaired in FASB’S emerging issues task force. * James Kroeker is the vice chairman. He was appointed in September 2013. He served as the deputy managing partner for......

Words: 2085 - Pages: 9

Premium Essay

Study Guide Intermediate Ii

...Intermediate Accounting II Study Guide Final Exam 1. Liabilities are a. any accounts having credit balances after closing entries are made. b. deferred credits that are recognized and measured in conformity with generally accepted accounting principles. c. obligations to transfer ownership shares to other entities in the future. d. obligations arising from past transactions and payable in assets or services in the future. 2. Which of the following is a characteristic of a current liability but not a long-term liability? a. Unavoidable obligation. b. Present obligation that entails settlement by probable future transfer or use of cash, goods, or services. c. Liquidation is reasonably expected to require use of existing resources classified as current assets or create other current liabilities. d. Transaction or other event creating the liability has already occurred. 3. An employee's net (or take-home) pay is determined by gross earnings minus amounts for income tax withholdings and the employee's a. portion of FICA taxes and unemployment taxes. b. and employer's portion of FICA taxes, and unemployment taxes. c. portion of FICA taxes, unemployment taxes, and any voluntary deductions. d. portion of FICA taxes and any voluntary deductions. 4. Which of the following best describes the cash basis method of accounting for warranty costs? a. Expensed when liability is accrued. b. Expensed when......

Words: 8322 - Pages: 34

Premium Essay

Intermediate Accounting

...following statements is not an objective of financial reporting? (Points: 5) Provide information that is useful in investment and credit decisions. Provide information about enterprise resources, claims to those resources, and changes to them. Provide the liquidation value of a company. Provide information that is useful in assessing cash flow prospects. 2. (TCO A) The Financial Accounting Standards Board employs a "due process" system which (Points: 5) has all CPAs in the United States vote on a new Statement. enables interested parties to express their views on issues under consideration. identifies the accounting issues that are the most important. requires that all accountants receive a copy of financial standards. 3. (TCO A) The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the (Points: 5) SEC AICPA IASB GASB 4. (TCO A) The cash method of accounting: (Points: 5) is used by most publicly-traded corporations for financial statement purposes. is not in accordance with the matching principle for most publicly-traded corporations. is often used on the income statement by large, publicly-held companies. All of the above is true. 5. (TCO A) Which of the following is an ingredient of relevance? (Points: 5) ......

Words: 831 - Pages: 4

Premium Essay

Accounting Ii

...The Company Play Book – The Operating Budget Accounting is the language of business; the operating budget is the company play book for the coming year. With the operating budget the company can forecast the overall health of the enterprise. Management is able to foresee the financial strength of the company based on the sales revenue, Cost of Goods Sold (COGS), the operation expense that then provides the budgeted income statement. Although good management is required to ensure a company’s fiscal health, the operation budget if well planned is the actual path that will ensure success. The operating budget is a part of the Master Budget. What makes it so important is that it contains the projected operating net income for the business. What are the elements that make up a budget? “The operating budget is the set of budgets that project sales revenue, cost of goods sold, and operating expenses, leading to the budgeted income statement that projects operating income for the period.” (Horngren, Harrison, & Oliver, 2012 pg. 1056). Sales revenue in the operating budget is the guideline that assists in letting managers know the health of the company. The sales revenue projects the number of units to be sold, and the timeline for the payments for the units. The forecasting for sales is a science unto itself. The company determines the amount of units by historical reference, the life cycle of the product, the financial market (example if we are in a recession we do......

Words: 1232 - Pages: 5