Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Following Changes Have Been Made to the Assignments Problem Change Amount To: Ex 20-18 changed to Ex 20-17 Change the following ending balances: Cost

The Following Changes Have Been Made to the Assignments Problem Change Amount To: Ex 20-18 changed to Ex 20-17 Change the following ending balances: Cost 60,000 Pb 21-11 change to exercise 21-27, use indirect method Change the following ending balances: Cash 26 Accounts receivable 178 Prepaid insurance 7 Inventory 285 Liabilities: Accounts payable 87 Accrued expenses 6 Notes payable 50 Bonds payable 160 Pb 21-14 * The addition of 519 to building was a lease transaction and therefore is not included in cash flow Change the following ending balances: Cash 207 Accounts receivable 96 Less: Allowance -25 Prepaid expenses 27 Inventory 165 Liabilities: Accounts payable 25 Accrued liabilities 112 Notes payable 75 Mortgage payable 111 Bonds payable 95 Exercise 20-17 Requirement 1 Depreciation expense Accumulated depreciation Calculation of annual depreciation after the estimate change: Cost Old annual depreciation Depreciation to date Book value Revised residual value Revised depreciable base Estimated remaining life $ New annual depreciation Requirement 2 Depreciation expense Accumulated depreciation Calculation of annual depreciation after the estimate change: $40,000 Cost Previous depreciation: 2009: 2010: Depreciation to date Book value Revised residual value Revised depreciable base Estimated remaining life: 8years 2011 depreciation Analysis Case 20-10 Requirement 1 DRS's change in depreciation method for computers represents a change ??????????????????????? This is because a change in the depreciation method is adopted to reflect a change in (a) ??????????????? (b) ???????????????????, or (c) ?????????????????. Accordingly, the company reports the change ???????????????????????????????????????? The undepreciated cost remaining at the time of the change would be depreciated ???????????????????????????? The change in residual value for the office building is a change ??????????????????????? The company reports the ??????????????????????????/ The undepreciated cost remaining at the time of the change would be reduced ?????????????????????????/ and the resulting amount would be depreciated ?????????????????????????????????????? DRS's change in the specific subsidiaries constituting the group of companies for which consolidated financial statements are presented is a change in ????????????????????????? This change is disclosed ??????????????????????????????????/ In the initial set of financial statements occurring after the change, the nature of and reason for the change must be ??????????????????????????????? Requirement 2 COMPLETED USE FOR REFERENCE Applying the same accounting principles from one reporting period to another enhances the comparability of accounting information across accounting periods. The FASBs conceptual framework describes consistency as one of the important qualitative characteristics of accounting information. When accounting changes occur, the usefulness of the comparative financial statements is enhanced with retrospective application of those changes, especially when assessing trends. If a change in accounting principle occurs, the nature and effect of a change should be disclosed. Disclosure is desirable because of the presumption that an accounting principle once adopted will not change. Exercise 21-27 Balance Sheet Assets: 12/31/2010 Debit Credit 12/31/2011 Cash 110 48 Accounts receivable 132 a 200 Prepaid insurance 3 b 12 Inventory 175 c 300 Buildings and equip. 350 230 180 400 Less: Acc. depreciation 240 50 119 171 530 841 Liabilities: Accounts payable 100 d 76 Accrued expenses 11 e 3 Notes payable 0 f 98 Bonds payable 0 g 192 Shareholders' Equity: Common stock 400 400 Retained earnings 19 h i 72 530 841 ***Given amounts - Sale and purchase of equipment 103 Net income 50 Dividends Inflows Outflows Operating activities: Net income i Increase in accounts receivable a Increase in prepaid insurance b Increase in inventory c Depreciation 50 171 Decrease in accounts payable d Decrease in accrued liabilities e Net cash flow Net cash flows Investing activities: Sale of building 180 230 Purchase of building Net cash flow Net cash flows Financing activities: Issuance of note payable f Issuance of bonds payable g Payment of cash dividends h Net cash flow Change in cash Beg bal End bal Problem 21-14 Surmise Company Spreadsheet for the Statement of Cash Flows Dec.31 Changes Dec. 31 2010 Debits Credits 2011 Balance Sheet Assets: Cash 40 (16) Changed Accounts receivable 96 (5) Changed Less: Allowance (4) (3) Changed Prepaid expenses 5 (8) Changed Inventory 130 (6) Changed Long-term investment 40 (10) 80 Land 100 100 Buildings and equip. 300 (11) X 411 Less: Acc. depreciation (120) (2) (142) Patent 17 (4) 16 604 Changed Liabilities: Accounts payable 32 (7) Changed Accrued liabilities 10 (9) Changed Notes payable 0 (12) Changed Lease liability 0 X (11) Changed Bonds payable 125 (13) Changed Shareholders' Equity: Common stock 50 (14) 60 Paid-in capital-ex. of par 205 (14) 245 Retained earnings 182 (15) (1) 212 604 Changed X Noncash investing and financing activity Spreadsheet for the Statement of Cash Flows (continued) Dec.31 Changes Dec. 31 2010 Debits Credits 2011 Statement of Cash Flows Operating activities: Net income (1) Adjustments for noncash effects: Depreciation expense (2) Bad debt expense (3) Patent amortization expense (4) Decrease in accounts receivable (5) Increase in inventory (6) Decrease in accounts payable (7) Increase in prepaid expenses (8) Decrease in accrued liabilities (9) Net cash flows 40 Investing activities: Purchase of LT investment (10) Net cash flows (40) Financing activities: Issuance of note payable (12) Retirement of bonds payable (13) Sale of common stock (14) Payment of cash dividends (15) Net cash flows 5 Net increase in cash __ (16) 5 Totals 451 451 COMPLETE STATEMENT BELOW Surmise Company Statement of Cash Flows For year ended December 31, 2011 ($ in millions) Cash flows from operating activities: Net income $ Adjustments for noncash effects: Depreciation expense Bad debt expense Patent amortization expense Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in prepaid expenses Decrease in accrued liabilities Net cash flows from operating activities $40 Cash flows from investing activities: Purchase of long-term investment Net cash flows from investing activities (40) Cash flows from financing activities: Issuance of note payable Retirement of bonds payable Sale of common stock Payment of cash dividends Net cash flows from financing activities Net increase in cash 5 Cash balance, January 1 Cash balance, December 31 $ Noncash investing and financing activities: Acquired buildings by capital lease $111

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost-Benefit Analysis For Public Sector Decision Makers

Authors: Diana Fuguitt

1st Edition

1567202225, 9781567202229

More Books

Students also viewed these Accounting questions

Question

Prove that the vector space P is infinite-dimensional.

Answered: 1 week ago

Question

Describe three forms of conflict from the work of Lewin.

Answered: 1 week ago