INTERMEDIATE ACCOUNTING
8th Edition
ISBN: 9780078025839
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 1, Problem 1.11E
Basic assumptions and principles
• LO1–8, LO1–9
Identify the accounting concept that was violated in each of the following situations.
1. Pastel Paint Company purchased land two years ago at a price of $250,000. Because the value of the land has appreciated to $400,000, the company has valued the land at $400,000 in its most recent
2. Atwell Corporation has not prepared financial statements for external users for over three years.
3. The Klingon Company sells farm machinery. Revenue from a large order of machinery from a new buyer was recorded the day the order was received.
4. Don Smith is the sole owner of a company called Hardware City. The company recently paid a $150 utility bill for Smith’s personal residence and recorded a $150 expense.
5. Golden Book Company purchased a large printing machine for $1,000,000 (a material amount) and recorded the purchase as an expense.
6. Ace Appliance Company is involved in a major lawsuit involving injuries sustained by some of its employees in the manufacturing plant. The company is being sued for $2,000,000, a material amount, and is not insured. The suit was not disclosed in the most recent financial statements because no settlement had been reached.
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PROBLEM 7: MULTIPLE CHOICE
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Problem 08-42 (Algo) [LO 8-1, 8-9]
Five years ago, Firm SJ purchased land for $101,000 with $10,000 of its own funds and $91,000 borrowed from a commercial bank.
The bank holds a recourse mortgage on the land. For each of the following independent transactions, compute SJ's positive or
negative cash flow. Assume that SJ is solvent, any recognized loss is fully deductible, and SJ's marginal tax rate is 21 percent.
Required:
a. SJ sells the land for $34,000 cash and the buyer's assumption of the $80,000 principal balance of the mortgage.
b. SJ sells the land for $114,000 cash and pays off the $80,000 principal balance of the mortgage.
c. SJ sells the land for $82,500 cash and pays off the $80,000 principal balance of the mortgage.
d. SJ defaults on the $80,000 mortgage. The bank forecloses and sells the land at public auction for $64,100. The bank notifies SJ
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e. SJ defaults on the $80,000 mortgage. The bank forecloses and…
Problem 6-22 (Algo) (LO 6-2)
On December 31, 2023, Petra Company invests $45,000 in Valery, a variable interest entity. In contractual agreements completed on
that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately
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b. If the carrying amount of the marketing…
Chapter 1 Solutions
INTERMEDIATE ACCOUNTING
Ch. 1 - Prob. 1.1QCh. 1 - What is meant by the phrase efficient allocation...Ch. 1 - Identify two important variables to be considered...Ch. 1 - What must a company do in the long run to be able...Ch. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Explain what is meant by: The benefits of...Ch. 1 - Prob. 1.17QCh. 1 - Briefly define the financial accounting elements:...Ch. 1 - Prob. 1.19QCh. 1 - What is the going concern assumption?Ch. 1 - Prob. 1.21QCh. 1 - Prob. 1.22QCh. 1 - What are two advantages to basing the valuation of...Ch. 1 - Describe how revenue recognition relates to...Ch. 1 - What are the four different approaches to...Ch. 1 - In addition to the financial statement elements...Ch. 1 - Briefly describe the inputs that companies should...Ch. 1 - Prob. 1.28QCh. 1 - Prob. 1.29QCh. 1 - Prob. 1.30QCh. 1 - Prob. 1.31QCh. 1 - Prob. 1.32QCh. 1 - Accrual accounting LO12 Cash flows during the...Ch. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Prob. 1.3BECh. 1 - Basic assumptions and principles LO17 through...Ch. 1 - Prob. 1.5BECh. 1 - Prob. 1.6BECh. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Prob. 1.3ECh. 1 - Prob. 1.4ECh. 1 - Prob. 1.5ECh. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Concepts; terminology; conceptual framework LO17...Ch. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Basic assumptions and principles LO18, LO19...Ch. 1 - Prob. 1.12ECh. 1 - Prob. 1.13ECh. 1 - Prob. 1.14ECh. 1 - Prob. 1.15ECh. 1 - Prob. 1CPACh. 1 - Prob. 2CPACh. 1 - Prob. 3CPACh. 1 - Prob. 4CPACh. 1 - Prob. 5CPACh. 1 - Prob. 6CPACh. 1 - Prob. 7CPACh. 1 - Prob. 8CPACh. 1 - Prob. 9CPACh. 1 - Prob. 10CPACh. 1 - Prob. 1CMACh. 1 - Prob. 2CMACh. 1 - Prob. 3CMACh. 1 - Prob. 1.1BYPCh. 1 - Research Case 12 Accessing SEC information through...Ch. 1 - Prob. 1.3BYPCh. 1 - Prob. 1.4BYPCh. 1 - Ethics Case 18 The auditors responsibility LO14...Ch. 1 - Prob. 1.9BYPCh. 1 - Judgment Case 110 GAAP, comparability, and the...Ch. 1 - Prob. 1.11BYPCh. 1 - Prob. 1.12BYPCh. 1 - Analysis Case 113 Expense recognition LO19...Ch. 1 - Prob. 1.14BYPCh. 1 - Prob. 1.15BYPCh. 1 - Prob. 1.16BYP
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