If the Company has to prepare financial statements on March 31st, what would the entry be? A Debit to the Put Option and a a. Credit Unrealized holding gain – Income Statement $805 b. Credit Unrealized holding gain – OCI $805 c. Credit Unrealized holding gain – Income Statement $95 d. Credit Unrealized holding gain – OCI $95 e. None of the above 3. Good Citizen, Inc. incurred their first loss during this fiscal year on both their financial statements and tax returns.
This choice does, however, affect how individual shareholders’ accounts are reported in the balance sheet. Formally retiring shares restores the balances in both the common stock account and paid-in capital - excess of par to how those balances would have looked if the shares never had been issued. Any net increase in assets produced from the sale and ensuing repurchase is reflected as Paid-in capital—share repurchase. On the other hand, any net decrease in assets resulting from the sale and subsequent repurchase is repeated as a subtraction of retained earnings. Inversely, when a share repurchase is seen as treasury stock, the cost of the treasury stock is naturally disclosed as a decrease in total shareholders’ equity.
Christopher Nelson Intermediate Accounting II Research Case 1 1. As of December 31, 2011, what amount, if any , of sales taxes due should be recognized in eVade’s financial statements? Assuming the financial statements for year ending 12/31/2011 have not been issued, an adjustment to sales tax liability can be recognized for the entire $25,000.000. As well, affected prior period statements will need to be re-stated. This is consistent with FASB codification ASC250-10-45-23 2.
I have determined that you have to account for all qualified business expenses and only net income will be taxable. 2. Jane Smith tax issues: a. What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for federal income tax purposes? If the mortgage is paid off, you'll lose the mortgage deduction on your federal income taxes.
Case 1 Solution: Problem Identification: How should a company report, if at all, cash and non-cash transactions owed to an entity’s financial subsidiary? Keywords: Cash flows; financ* subsidiaries; operating income. Conclusion: Per ASC 230-10-50-5), Mead should exclude transactions that involve no cash payments or receipts. However, per 230-10-45-17, it should record cash payments to GMCC for repayments of principle (and interest thereon) due to suppliers or their subsidiaries as operating cash (out) flows. Case 2: Narda Corporation agreed to sell all of its capital stock to Effie Corporation for three monthly payments of $200,000.
It also refers to the worth of the asset. The relevance of market value to accelerated depreciation is that market valuation through accelerated depreciation creates a market for used assets and their sell until they are valueless. Inter-period tax allocation becomes present when there are differences between income tax rules and GAAP rules. An example of this is shown in inter-period tax allocations relevance to depreciation. Depreciation for income tax is based on income tax code and requires that equipment be depreciated over 7 years.
Alternatives: A. Recognize compensation expense at each year end and disclose swap transactions in the notes to the financial statements: Record the following entry at year end Dr. Compensation Expense XXX Cr. Paid-in Capital-Stock Options XXX This will reduce pre tax income and increase total paid-in capital B. Disclosure in notes to financial statements only IV.
Since debt and equity levels are closely related there is an analysis called the “DuPont model” that systematically breaks ROE into components so that each can be evaluated. ROE = NI x EBT x EBIT x Sales x Total assets EBT EBIT Sales Total assets Common equity EBT = earnings before taxes. The first ratio measures the proportion of earnings before tax that is kept by the company. EBIT = earnings before interest and taxes. The second ratio measures the effect of interest; it indicates the proportion of earnings before interest and tax that is retained after paying interest.
This memo addresses the issue of St. Andrews Hospital’s debt covenant requiring the company to report cash from operations of $1,000,000 at the end of each year of operations. A debt covenant is an agreement between a company and its creditors to operate within certain limits. The debt covenant not only specifies the numbers that should be met, but also exactly how they should be calculated for the purposes of the debt covenant. The supervisor, Julie Peterson, wants Steve Savage, the controller, to either decrease the accounts receivable balance or increase the accounts payable balance in order to increase the balance of cash from operations by year-end to meet the requirements of the debt covenant. Steve has eliminated the possibility of decreasing accounts receivable because most revenue payments come from slow paying insurance companies.
* Journalize and Post Adjusting Entries – On page J2 of the General Journal expenses incurred and revenues earned, not recorded on daily entries, are recorded. * Prepare an Adjusted Trial Balance – All the account balances are entered to generate financial statements; providing the equity of the total Credits and Debits after all the adjustments are made. * Prepare Financial Statements – This step can be prepared by using the adjusted trial balance 10 column worksheet and can be done periodically, monthly, quarterly, or annually. * Journalize and Post Closing Entries – After this step all temporary accounts will have zero balances and is recorded on page J3 of the General Journal. This step can be done annually.