1.

Iris Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2012. The following data were available:

		Excess of FIFO
		Ending Inventory
	Pretax Operating	over LIFO
Year	Income using LIFO	Ending Inventory
2012	$40,000	$8,000
2011	20,000	7,000
2010	30,000	4,000

The income tax rate is 40%. The company began operations on January 1, 2010, and has paid no dividends since inception.

What is net income for 2012? ___________

What is restated net income for 2011? ___________

Prepare the 2011 statement of retained earnings as it would appear in the comparative 2011-2012 financial statements.

2.

Spok A Company leased some equipment from another company on January 1, 2010, for a four-year period. Payments of $18,000 were due each December 31. The lease qualified as a capital lease. Assets were depreciated straight-line over the life of the lease. The appropriate interest rate to use was 10%.

Required: Prepare all journal entries for 2010 on Spokanes books (round to nearest whole number)

3.

Falco Falconhead Supply had three operating segments during 2010. In determining whether these segments are considered reportable segments, Falconhead has gathered the following information:

	Segment
	A	B	C
Revenues	$ 60,000	$ 80,000	$160,000
Expenses	30,000	50,000	85,000
Assets	200,000	180,000	420,000

In addition, Falconhead has incurred $100,000 of common expenses that can be reasonably allocated to the three segments. A reasonable allocation method is to allocate the common costs to each segment based on the ratio of a segment's assets to total assets of the three segments. 9 points

Required:

Compute the profit (loss) for each operating segment under current GAAP provisions