Several months after Ames Company's 2011 financial statements were issued, Ames disposed of a segment of the business that accounted for 20% of its revenues in 2011. Ames presented information showing approximately what the 2011 numbers would have looked like if the sale had occurred earlier. This presentation is referred to as O Pro forma financial information O None of the above/below O Prospective financial information O Historical financial statements

Several months after Ames Company's 2011 financial statements were issued, Ames disposed of a segment of the business that accounted for 20% of its revenues in 2011. Ames presented information showing approximately what the 2011 numbers would have looked like if the sale had occurred earlier. This presentation is referred to as O Pro forma financial information O None of the above/below O Prospective financial information O Historical financial statements

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Finley Corporation had income from continuing operations of $10,600,000 in 2017. During 2017, it disposed of its restaurant division at an after-tax loss of $189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2017 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Finley had 10,000,000 shares of common stock outstanding during 2017. Prepare a partial income statement for Finley beginning with income from continuing operations.
After conducting a thorough review of the company’s fi nancial statements, Martinez concludes the following:Conclusion 1 Although Stellar’s fi nancial statements adhere to generally accepted accounting principles (GAAP), Stellar understates earnings in periods whenthe company is performing well and overstates earnings in periods whenthe company is struggling.Conclusion 2 Stellar most likely understated the value of amortizable intangibles whenrecording the acquisition of Solar, Inc. last year. No goodwill impairmentcharges have been taken since the acquisition.Conclusion 3 Over time, the accruals component of Stellar’s earnings is large relative tothe cash component.Conclusion 4 Stellar reported an unusually sharp decline in accounts receivable in thecurrent year, and an increase in long-term trade receivables.2 . Based on Conclusion 2, after the acquisition of Solar, Stellar’s earnings are most likely :A . understated.B . fairly stated.C . overstated
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Camille, Incorporated, sold $147,000 in inventory to Eckerle Company during 2023 for $245,000. Eckerle resold $109,000 of this merchandise in 2023 with the remainder to be disposed of during 2024. Required: Assuming that Camille owns 34 percent of Eckerle and applies the equity method, what journal entry is recorded at the end of 2023 to defer the intra-entity gross profit? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. 1.Record the entry at the end of 2023 to defer unrealized gross profit.
Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $622,000 in cash. Annual excess amortization of $11,300 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $465,000, an Rambis reported a $211,000 balance. Herbert reported internal net income of $43,500 in 2020 and $56,900 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $22,100 in 2020 and $35,500 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. • If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? • What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is…