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Accounting-Stewart Company acquired Meyer Manufacturing on January




Question;12. Stewart Company acquired Meyer Manufacturing on January;1, 2013 for $6,800,000 and recorded goodwill of $1,800,000 as a result of that;purchase. At December 31, 2013, Meyer Manufacturing Division had a fair value;of $4,600,000. The net identifiable assets of the Division, excluding goodwill;had a fair value of $3,200,000 at that time. What amount of loss on impairment;of goodwill should Stewart record in 2013?;$ -0-;$2,200,000;$1,400,000;$400,000;13. Lillian Properties leased a building to Hopping;Industries for a ten year term at an annual rental of $250,000. The lease began;January 1, 2013, at which time Lillian received $1,000,000 covering the first;two years' rent of $500,000 and a security deposit of $500,000. The deposit;will not be returned to Hopping upon expiration of the lease, but will be;applied to payment of rent for the last two years of the lease. What portion of;the $1,000,000 should be shown as current and long-term liabilities, respectively;in Lillian's December 31, 2013 balance sheet?;(Answers shown with Current Liabilities listed first;Long-term Liabilities listed second.);$500,000 and $500,000;$250,000 and $500,000;$500,000 and $250,000;-0- and $1,000,000;15. On January 1, 2014, Huntington Corporation issued eight;year bonds with a face value of $8,000,000 and a stated interest rate of 6%;payable semiannually on June 30 and December 31. The bonds were sold to yield;8%. Table values are;What is the issue price of the bonds?;$8,990,400;$7,360,000;$7,078,560;$7,068,480;16. On December 31, 2013, the 11% bonds payable of Goodly;Corporation had a carrying amount of $2,040,000. The bonds, which had a face;value of $2,000,000 were issued at a premium to yield 10%. Goodly uses the;effective-interest method of amortization. Interest is paid on June 30 and;December 31. On July 1, 2014, several years before their maturity, Goodly;retired the bonds at 103. The interest payment on June 30, 2014 was made as;scheduled. The loss on retirement, ignoring taxes, is;$40,000;$28,000;$20,000;$ -0-;18. On January 1, 2013, Martin Corporation signed a ten-year;noncancelable lease for machinery. The terms of the lease called for Martin to;make annual payments of $250,000 at the end of each year for ten years with;title to pass to Martin at the end of this period. The machinery has an;estimated useful life of 20 years and no salvage value. Martin uses the;straight-line method of depreciation for all of its fixed assets. Martin;accounted for this lease transaction as a capital lease. The lease payments;were determined to have a present value of $1,840,023 at an effective interest;rate of 6%. With respect to this capitalized lease, Martin should record for;2013;Depreciation expense of $184,002 and interest expense;of $150,000.;Depreciation expense of $92,001 and interest expense of;$110,401.;Depreciation expense of 184,002 and interest expense of;$110,401.;Lease expense of $250,000.;19. On December 31, 2014, Pacific Rail Corporation leased a;train car from Southern Transportation Company for a ten year period expiring;December 30, 2024. Equal annual payments of $160,000 are due on December 31 of;each year, beginning with December 31, 2014. The lease is properly classified;as a capital lease on Pacific Rail's books. The present value at December 31;2014 of the ten lease payments over the lease term discounted at 8% is;$1,159,502. Assuming the first payment is made on time, the amount that should;be reported by Pacific Rail Corporation as the lease liability on its December;31, 2014 balance sheet is;$1,440,000;$1,159,502;$1,066,742;$999,502;20. Colfax Corporation enters into an agreement with;Reynolds Rentals on January 1, 2014 for the purpose of leasing a machine to be;used in its manufacturing operations. The term of the noncancelable lease is 4;years with no renewal option. Payments of $200,000 are due on December 31 of;each year. The fair value of the machine on January 1, 2014, is $700,000. The;machine has a remaining economic life of 10 years, with no salvage value. The;machine reverts to the lessor upon termination of the lease. Colfax Corporation's;incremental borrowing rate is 8% per year. Colfax does not have knowledge of;the 6% implicit rate used by Reynolds. The factor for the present value of an;ordinary annuity of 1, for 4 periods at 8% is 3.31213. The factor for the;present value of an ordinary annuity of 1, for 4 periods at 6% is 3.46511. What;type of lease is this from Colfax Corporation's point of view?;Capital lease;Operating lease;Sales-type lease;Direct-financing lease;21. Roberts Corporation has 150,000 shares of $10 par common;stock authorized. The following transactions took place during 2013, the first;year of the corporation's existence;Sold 20,000 shares of common stock for $14 per share;Issued 20,000 shares of common stock in exchange for legal services;valued at $300,000;At the end of Roberts' first year, total paid-in capital;amounted to;$580,000;$300,000;$280,000;$150,000;22. On June 15, Handel Corporation reacquired 10,000 shares;of its $10 par value common stock for $22 per share. Handel uses the cost;method to account for treasury stock. The journal entry to record the;reacquisition of the stock should debit;Treasury Stock for $100,000;Treasury Stock for $220,000;Common Stock for $100,000;Common Stock for $100,000 and Paid-in Capital in Excess;of Par for $120,000;23. The fair value of Willow Company's common stock was $57;per share at December 31, 2013 and $63 per share at December 31, 2014. Willow;acquired 7,000 shares of its own common stock at $60 per share on March 10;2014, and sold 5,000 of these shares at $65 per share on September 25, 2014.;Willow Company uses the cost method to account for treasury stock. The journal;entry to record the sale of the treasury stock should credit;Treasury Stock for $300,000 and Retained Earnings for;$25,000;Treasury Stock for $285,000 and Retained Earnings for;$40,000;Treasury Stock for $300,000 and Paid-in Capital from;Treasury Stock for $25,000;Treasury Stock for $325,000;25. Farnsworth Inc. declared a $500,000 cash dividend. It;currently has 10,000 shares of 8%, $100 par value cumulative preferred stock;outstanding. It is one year in arrears on its preferred stock. How much cash;will Farnsworth distribute to the common stockholders?;$420,000;$500,000;$160,000;$340,000;26. Weston Corporation owned 80,000 shares of Brandt;Corporation, purchased in 2008 for $320,000. On December 20, 2013, Weston;declared a property dividend of all of its Brandt Corporation shares on the;basis of one share of Brandt for every 10 shares of Weston common stock held by;its shareholders. The property dividend was distributed on January 10, 2014. On;the declaration date, the aggregate market price of the Brandt Corporation;shares held by Weston was $610,000. The entry to record the declaration of the;dividend would include a debit to Retained Earnings (property dividends;declared) of;$320,000;$610,000;$290,000;$ -0-;27. Harping Corporation declared an $800,000 dividend;$200,000 of which was liquidating. How would this distribution affect Retained;Earnings and Additional Paid-in Capital, respectively?;(Answer is shown with Retained Earning listed first;Additional Paid-in Capital listed second.);No effect, $800,000 Decrease;$800,000 Decrease, No effect;$600,000 Decrease, $200,000 Decrease;No effect, No effect;28. After several profitable years, Pear Corporation's stock;price had increased by 10-fold. Management prefers the stock price to be within;range of the majority of potential investors, and on June 30, 2013, split its;stock 2-for-1. Prior to the split, Pear's stockholders' equity section showed;Common Stock, 2,000 shares at $100 par. After the split, Pear's stockholders;equity section showed;Common stock, 4,000 shares at $50 par;Common stock, 2,000 shares at $200 par;Common stock, 1,000 shares at $200 par;Common stock, 4,000 shares at $100 par;34. Jolly?s Corner Market made credit sales during the month;of October of $225,000. The sales are subject to a 6% sales tax that was also;collected. Which of the following would be included in the summary journal;entry to reflect the sale transactions?;Debit Accounts Receivable for $238,500;Credit Sales Taxes Payable for $12,736;Credit Sales Revenue for $212,264;Debit Sales Taxes Payable for $13,500;40. Monroe Company owes $1 million that is due on January;15. The company borrows $600,000 on January 8 (5-year note) and uses the;proceeds to pay down the $1 million note and uses other cash to pay the;balance. How much of the $1 million note is classified as long-term in the;December 31 financial statements.;$1,000,000;$0;$600,000;$400,000


Paper#41291 | Written in 18-Jul-2015

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