Examination card №7
on the discipline “Financial Accounting II”
for the 3rd year students
What is a noncontrolling interest?
Determine the present value of the following single amounts:
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2013, for $400 million. At the date of purchase, the book value of Vancouver’s net assets was $775 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $5 million for the inventory and by $20 million for the plant facilities. The estimated useful life of the plant facilities is 16 years. All inventory acquired was sold during 2013. Vancouver reported net income of $140 million for the year ended December 31, 2013. Vancouver paid a cash dividend of $30 million.
Required:
Prepare all appropriate journal entries related to the investment during 2013.
What amount should Northwest report as its income from its investment in Vancouver for the year ended December 31, 2013?
What amount should Northwest report in its balance sheet as its investment in Vancouver?
Lecturer A. Kaldarova ______________________
Confirmed at the meeting of the department of "Socio-Economic Disciplines"
Minute №____ from ____ of 2015.
The dean of the faculty "International Educational Programs"
Ronald Voogdt _____________
name signature
Examination card №8
on the discipline “Financial Accounting II”
for the 3rd year students
Describe three types of company combination with examples.
Universal Leasing leases electronic equipment to a variety of businesses. The company’s primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term direct financing leases. Universal earns interest under these arrangements at a 10% annual rate. The company leased an electronic typesetting machine it purchased for $30,900 to a local publisher, Desktop Inc., on December 31, 2012. The lease contract specified annual payments of $8,000 beginning January 1, 2013 , the inception of the lease, and each December 31 through 2014 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2015, the end of the lease term, for $12,000 when it was expected to have a residual value of $16,000.
Required:
Show how Universal calculated the $8,000 annual lease payments for this direct financing lease.
Prepare an amortization schedule that describes the pattern of interest revenue for Universal Leasing over the lease term.
Prepare the appropriate entries for Universal Leasing from the inception of the lease through the end of the Lease term.
Listed below are ten independent situations. For each situation indicate (by letter) whether it will create a deferred tax asset (A), a deferred tax liability (L), or neither (N).
Situation:
_____ 1. Advance payments on insurance deductible when paid.
_____ 2. Estimated warranty costs, tax deductible when paid.
_____ 3. Rent revenue collected in advance; cash basis for tax purposes.
_____ 4. Interest received from investments in municipal bonds.
_____ 5. Prepaid expenses tax deductible when paid.
_____ 6. Operating loss carryforward.
_____ 7. Operating loss carryback.
_____ 8. Straight-line depreciation for financial reporting; MACRS for tax purposes.
_____ 9. Organization costs expensed when incurred, tax deductible over 15 years.
_____ 10. Life insurance proceeds received upon the death of the company president.
Lecturer A. Kaldarova ______________________
Confirmed at the meeting of the department of "Socio-Economic Disciplines"
Minute №____ from ____ of 2015.
The dean of the faculty "International Educational Programs"
Ronald Voogdt _____________
name signature