Intermediate Accounting Chapter 4 中级会计学 第四章 课后习题答案

1、chapter 04 - the income statement and statement of cash flows 4-1 chapter 4 the income statement and statement of cash flows questions for review of key topics question 4-5 the term earnings quality refers to the ability of reported earnings (income) to predict a companys future earnings. after all,

2、 an income statement simply reports on events that already have occurred. the relevance of any historical-based financial statement hinges on its predictive value. question 4-7 the process of intraperiod tax allocation matches tax expense or tax benefit with each major component of income, specifica

3、lly continuing operations and any item reported below continuing operations. the process is necessary to achieve the desired result of separating the total income effects of continuing operations from the two separately reported items - discontinued operations and extraordinary items, and also to sh

4、ow the after-tax effect of each of those two components. question 4-9 extraordinary items are material gains and losses that are both unusual in nature and infrequent in occurrence, taking into account the environment in which the entity operates. question 4-11 gaap permit alternative treatments for

5、 similar transactions. common examples are the choice among fifo, lifo, and average cost for the measurement of inventory and the choice among alternative revenue recognition methods. a change in accounting principle occurs when a company changes from one generally accepted treatment to another. in

6、general, we report voluntary changes in accounting principles retrospectively. this means revising all previous periods financial statements as if the new method were used in those periods. in other words, for each year in the comparative statements reported, we revise the balance of each account af

7、fected. specifically, we make those statements appear as if the newly adopted accounting method had been applied all along. also, if retained earnings is one of the accounts whose balance requires adjustment (and it usually is), we revise the beginning balance of retained earnings for the earliest p

8、eriod reported in the comparative statements of shareholders equity (or statements of retained earnings if theyre presented instead). then we create a journal entry to adjust all account balances affected as of the date of the change. in the first set of financial statements after the change, a disc

9、losure note would describe the change and justify the new method as preferable. it also would describe the effects of the change on all items affected, including the fact that the retained earnings balance was revised in the statement of shareholders equity along with the cumulative effect of the ch

10、ange in retained earnings. chapter 04 - the income statement and statement of cash flows 4-2 an exception is a change in depreciation, amortization, or depletion method. these changes are accounted for as a change in estimate, rather than as a change in accounting principle. changes in estimates are

11、 accounted for prospectively. the remaining book value is depreciated, amortized, or depleted, using the new method, over the remaining useful life. question 4-15 comprehensive income is the total change in equity for a reporting period other than from transactions with owners. reporting comprehensi

12、ve income can be accomplished with a separate statement or by including the information in either the income statement or the statement of changes in shareholders equity. question 4-22 u.s. gaap designates cash outflows for interest payments and cash inflows from interest and dividends received as o

13、perating cash flows. dividends paid to shareholders are classified as financing cash flows. ifrs allows more flexibility. companies can report interest and dividends paid as either operating or financing cash flows and interest and dividends received as either operating or investing cash flows. inte

14、rest and dividend payments usually are reported as financing activities. interest and dividends received normally are classified as investing activities chapter 04 - the income statement and statement of cash flows 4-3 brief exercises brief exercise 4-6 white and sons, inc. partial income statement

15、for the year ended december 31, 2011 income before income taxes and extraordinary item . $ 850,000 income tax expense* . 340,000 income before extraordinary item .510,000 extraordinary item: loss from earthquake, net of $160,000 tax benefit .(240,000) net income . $ 270,000 earnings per share: incom

16、e before extraordinary item .$ 5.10 loss from earthquake .(2.40) net income .$ 2.70 *$850,000 x 40% note: restructuring costs, interest revenue, and loss on sale of investments are included in income before income taxes and extraordinary item. chapter 04 - the income statement and statement of cash

17、flows 4-4 brief exercise 4-9 california microtech corporation partial income statement for the year ended december 31, 2011 income from continuing operations before income taxes. $ 5,800,000 income tax expense* . 1,740,000 income from continuing operations . $ 4,060,000 discontinued operations: loss

18、 from operations of discontinued component (including impairment loss of $1,000,000)* . (4,600,000) income tax benefit . 1,380,000 loss on discontinued operations .(3,220,000) net income . $ 840,000 * $5,800,000 x 30% * loss from operations of discontinued component: impairment loss ($8 million book

19、 value less $7 million net fair value)$(1,000,000) operating loss (3,600,000) total before-tax loss$(4,600,000) chapter 04 - the income statement and statement of cash flows 4-5 exercises exercise 4-3 lindor corporation statement of income and comprehensive income for the year ended december 31, 201

20、1 sales revenue .$2,300,000 cost of goods sold . 1,400,000 gross profit . 900,000 operating expenses: selling and administrative. 420,000 operating income . 480,000 other income (expense): interest expense . (40,000) income before income taxes and extraordinary item .440,000 income tax expense *. 13

21、2,000 income before extraordinary item . extraordinary item: gain on litigation settlement (net of $120,000 tax expense) . net income other comprehensive income: unrealized holding gains on investment securities, net of tax . comprehensive income . 308,000 280,000 588,000 56,000 $644,000 earnings pe

22、r share: income before extraordinary item . extraordinary gain . net income . $ 0.31 0.28 $ 0.59 * 30% x $440,000 chapter 04 - the income statement and statement of cash flows 4-6 exercise 4-8 pretax income from continuing operations$14,000,000 income tax expense(5,600,000) income from continuing op

23、erations8,400,000 less: net income7,200,000 loss from discontinued operations$1,200,000 $1,200,000 60%* = $2,000,000 = before tax loss from discontinued operations. *1-tax rate of 40% = 60% pretax income of division$4,000,000 add: loss from discontinued operations2,000,000 impairment loss$6,000,000

24、fair value of divisions assets$11,000,000 add: impairment loss 6,000,000 book value of divisions assets$17,000,000 chapter 04 - the income statement and statement of cash flows 4-7 exercise 4-11 requirement 1 this is a change in accounting estimate. requirement 2 $2,400,000cost $240,000 previous ann

25、ual amortization ($2,400,000 10 years) x 21/2 yrs. 600,000 amortization to date (2009-2011) 1,800,000book value 5 yrs. estimated remaining life (given) $ 360,000 new annual amortization chapter 04 - the income statement and statement of cash flows 4-8 exercise 4-22 tiger enterprises statement of cas

26、h flows for the year ended december 31, 2011 ($ in thousands) cash flows from operating activities: net income$ 900 adjustments for noncash effects: depreciation expense240 changes in operating assets and liabilities: decrease in accounts receivable 80 increase in inventory(40) increase in prepaid i

27、nsurance (30) decrease in accounts payable(60) decrease in administrative and other payables (100) increase in income taxes payable 50 net cash flows from operating activities$1,040 cash flows from investing activities: purchase of plant and equipment (300) cash flows from financing activities: proc

28、eeds from issuance of common stock 100 proceeds from note payable 200 payment of dividends (1) (940) net cash flows from financing activities(640) net increase in cash 100 cash, january 1 200 cash, december 31$ 300 (1) retained earnings, beginning$540 + net income 900 - dividends x x = $940 retained

29、 earnings, ending$500 chapter 04 - the income statement and statement of cash flows 4-9 exercise 4-23 the t-account analysis of the transactions related to operating cash flows is shown below. to derive the cash flows, the beginning and ending balances in the related assets and liabilities are inser

30、ted, together with the revenue and expense amounts from the income statements. in each balance sheet account, the remaining (plug) figure is the other half of the cash increases or decreases. cash flows (operating) (a.) 7,080(b.) 130 (c.) 3,460 (d.) 1,900 (e.) 550 sales revenue accounts receivable 1

31、/1 830(a.) 7,080 7,000 7,000 12/31 750 prepaid insurance insurance expense 1/1 20 (b.) 130100 100 12/31 50 accounts payable inventory cost of goods sold (c.) 3,460 1/1 3601/1 6003,360 3,360 3,400 3,400 12/31 30012/31 640 admin. & other payables admin. & other expense (d.) 1,900 1/1 400 1,800 1,800 1

32、2/31 300 income taxes payable income tax expense (e.) 550 1/1 150 600 600 12/31 200 based on the information in the t-accounts above, the operating activities section of the scf for tiger enterprises would be as shown next. chapter 04 - the income statement and statement of cash flows 4-10 exercise

33、4-23 (concluded) tiger enterprises statement of cash flows for the year ended december 31, 2011 ($ in thousands) cash flows from operating activities: collections from customers$ 7,080 prepayment of insurance (130) payment to inventory suppliers (3,460) payment for administrative & other exp. (1,900

34、) payment of income taxes (550) net cash flows from operating activities $ 1,040 chapter 04 - the income statement and statement of cash flows 4-11 cpa / cma review questions cpa exam questions 1. c. u.s. gaap requires that discontinued operations be disclosed separately below income from continuing

35、 operations. 2. d. other than sales, cogs, and administrative expenses, only the gain or loss from disposal of equipment is considered part of income from continuing operations. income from continuing operations was ($5,000,000 - 3,000,000 - 1,000,000 + 200,000) = $1,200,000. 3. a. in a single-step

36、income statement, revenues include sales as well as other revenues and gains. sales revenue$187,000 interest revenue10,200 gain on sale of equipment 4,700 total$201,900 the discontinued operations and the extraordinary gain are reported below income from continuing operations. 4. a. the $400,000 imp

37、airment loss and the $1,000,000 loss from operations should be combined for a total loss of $1,400,000. 5. d. the change in the estimate for warranty costs is based on new information obtained from experience and qualifies as a change in accounting estimate. a change in accounting estimate affects c

38、urrent and future periods and is not accounted for by restating prior periods. the accounting change is a part of continuing operations. 6. a. dividends paid to shareholders is considered a financing cash flow, not an operating cash flow. 7. c. issuing common stock for cash is considered a financing

39、 cash flow, not an investing cash flow. chapter 04 - the income statement and statement of cash flows 4-12 cma exam questions 1. d. discontinued operations and extraordinary gains and losses are shown separately in the income statement, below income from continuing operations. the cumulative effect

40、of most voluntary changes in accounting principle is accounted for by retrospectively revising prior years financial statements. 2. c. the operating section of a retailers income statement includes all revenues and costs necessary for the operation of the retail establishment, e.g., sales, cost of g

41、oods sold, administrative expenses, and selling expenses. 3 a. extraordinary items should be presented net of tax after income from operations. chapter 04 - the income statement and statement of cash flows 4-13 problems problem 4-9 requirement 1 diversified portfolio corporation statement of cash flows for the year ended december 31, 2011 cash flows