Lesky, has little background in accounting. Today, he walked in to your office and said, “A year ago we bought a piece of land for $100,000. This year, inflation has driven prices up by 6%, and an appraiser just told us we could easily resell the land for $115,000. Yet our balance sheet still shows it at $100,000. It should be valued at $115,000. That’s what it’s worth. Or, at a minimum, at $106,000.” Respond to this statement with specific reference to the accounting principles applicable in this
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may be increased because of the combination only and not as a result of efficient operations. c. Liabilities may be undervalued when the price paid by the investor is allocated to specific liabilities. d. An undue amount of cost may be assigned to goodwill, thus potentially allowing an understatement of pooled earnings. ANS: B DIF: M OBJ: 3, Appendix A Chapter 1 5. Company B acquired the assets (net of liabilities) of Company S exchange for cash. The acquisition price exceeds the fair value
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Napoleon found the Italian system of accounting to be inefficient. 2.Venice’s commerce was driven by sea traffic. 3.The Genoese system was the first to imply that unlike items could be compared in terms of a common monetary unit. 4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it in the 1400s. 5.When hyperinflation exists, alternative systems to historical cost become necessary. 6. The International Accounting Standards Board, an international organization
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Solution Manual Chapter 1 - Accounting for Intercorporate Investments 1. a. If the investor acquired 100% of the investee at book value, the Equity Investment account is equal to the Stockholders’ Equity of the investee company. It, therefore, includes the assets and liabilities of the investee company in one account. The investor’s balance sheet, therefore, includes the Stockholders’ Equity of the investee company, and, implicitly, its assets and liabilities. In the consolidation process,
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Questions 2. How does the concept of consistency aid in the analysis of financial statements? What type of accounting disclosure is required if this concept is not applied? Consistency allows for the same accounting principle from period to period. A change in principle requires statement disclosure. 3. The president of your firm, Lesky and Lesky, has little background in accounting. Today, he walked into your office and said, “A year ago we bought a piece of land for $100,000. This year,
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All Quizzes, Midterm Exam, Final Exam Solution Instant Download Chapter 1 Multiple Choice: 1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States? a. Securities and Exchange Commission b. Financial Accounting Standards Board c. International Accounting Standards Committee d. Internal Revenue Service Answer 2. What historical evidence of the business operations of the private estate of Apollonius was discovered early
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Table of Contents 1.1 Accounting Concepts Definition............................................................................................... 2 1.1.1 Business Entity Concept ........................................................................................................ 5 1.1.2 Money Measurement Concept ............................................................................................... 6 1.1.3 Going Concern Concept ....................................................
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Dollar Tree Financial Statement Analysis DeVry University 8/19/12 Table of Content Introduction-------------------------------------------------------------------------------------------------------------------3 Question 1--------------------------------------------------------------------------------------------------------------------3 Question 2--------------------------------------------------------------------------------------------------------------------4 Question 3----------
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All ACCOUNTING STANDARDS Accounting Standards are the defined accounting policies issued by Government or expert institute. These standards are issued to bring harmonization in follow up of accounting policies. Presently, Institute of Chartered Accountants of India has issued 29 Accounting Standards as listed below. AS 01. AS 02. AS 03. AS 04. AS 05. Policies AS 06. AS 07. AS 08. AS 09. AS 10. AS 11. AS 12. AS 13. AS 14. AS 15. AS 16. AS 17. AS 18. AS 19. AS 20. AS 21. AS 22. AS 23. AS 24. AS 25
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CHAPTER 1 INTERCORPORATE ACQUISITIONS AND INVESTMENTS IN OTHER ENTITIES ANSWERS TO QUESTIONS Q1-1 Complex organizational structures often result when companies do business in a complex business environment. New subsidiaries or other entities may be formed for purposes such as extending operations into foreign countries, seeking to protect existing assets
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