... the following entry:
Bad Debt Expense $ 150 , 256 .20
Allowance for Doubtful
Accounts $ 150 , 256 .20
14 Critical Financial Accounting Problems
fully amortized, and the face value of the bond is equal ... 12/31/98 $ 751 ,312.20
2. Present value of $800,000 due in 3 years at
10% compounded annually (800,000 ϫ 0. 751 32) $601, 056 .00
3. Loss due to impairment ( 751 ,312.20 Ϫ 601, 056...
... restructured cash flows ϭ $5, 567,448
32 Critical Financial Accounting Problems
Dukes, J. C., and H. G. Hunt III. ‘‘An Empirical Examination of Debt Covenant
Restrictions and Accounting Related Debt ... Earnings ($ 650 ,000 Ϫ
$600,000) 50 ,000
Cash ($130 ϫ 5, 000) 650 ,000
B. Assuming a call price of $110, the following entry is made at recall:
Preferred Stock, $100 par 50 0,0...
... Deferred tax expense for 19 95 $900
4. Current tax expense for 19 95 4 ,50 0
5. Total income tax expense for 19 95 $5, 400
The basic entry is as follows:
Income Tax Expense $5, 400
Deferred Tax Liability ... ($ 250 ,000)
Loss: Income Tax Benefit for
Operating Loss Carryback
52 ,50 0
($197 ,50 0)
Notice that ($ 250 ,000) net operating loss for 19 95 is higher than the
$200,000 taxable inc...
... 152 Critical Financial Accounting Problems
terest in the production and dissemination of segment sales and earning
data. Those studies relying mostly on survey data include Backer and
McFarland,
24
Mautz
25
and ... Disclosure by Diver-
sified Firms and Security Prices: A Comment.’’ Accounting Review 50
(October 19 75) , pp. 818–21.
160 Critical Financial Accounting...
... $50 ,000 ( $55 0,000 Ϫ $50 0,000). The Dole Com-
pany’s share is $ 15, 000 ( $50 ,000 ϫ 30%). The share per year is $1 ,50 0
( 15, 000/10).
5. To depreciate goodwill
Revenue from Investment
(ordinary) $ 750
Investment ... The problem
is known as accounting for income tax allocation, and is the subject of
58 Critical Financial Accounting Problems
2. The investor holds between 20...
... 45, 000
Cumulative effect of a change in
accounting principle (7,000)
Total $58 ,000
B. The Preschel Company had the following tax rates for 19 95.
$0 Ϫ $50 ,000 15%
$50 ,000 Ϫ $ 75, 000 25%
over $ 75, 000 ... Richard E. Flaherty, and Melvin C. O’Connor, Inter-
mediate Accounting, 5th ed. (New York: McGraw-Hill, 19 95) , p. 855 .
8. Bill D. Jarnagin, Financial Accounting Standard...