Question #1. The comparative balance sheets ofSloan Company reveal that the accounts receivable (before deductingallowances) increased by $25,040 in 2013. During the same timeperiod, the allowances for uncollectible accounts increased by$3,200. If Sloan wrote off $420 in 2013 and bad debts expense was1.6% of sales, how much cash was collected from customers duringthe year? Show all your work.
Question #2. Peugeot spent €3,775,000 orresearch and development for a new transmission on its newestmodels. €1,200,000 was research expenses, and the rest wasdevelopment costs, with 60% of that being incurred aftertechnological feasibility was reached in August 1. Peugeot’s fiscalyear begins on February 1. Assume that the new transmission has aneconomic life of 8 years, at which time it will be replaced by anewer transmission. Give me the journal entries for the 1st and 2ndyear for this transmission R&D under IFRS. Show your work.?
Question #3. Monkey Business, an importbusiness, builds special-order yachts. They decide to build one fora customer for at a cost $2,500,000. It will take 2 years (theystart building in June 1, 2007) to build with total costs of$1,900,000: costs of $320,000 in 2007; $1,200,000 in 2008; and theremainder in 2009 (assume they stick to budget). The customer putsa deposit down of $500,000 and pays the remainder in 4installments, each due every 6 months. For each year (2007, 2008,and 2009) compute the revenue expense, and gross profits reportedfor this construction project. Assume they do not have a writtencontract but based on this customer having purchased several yachtsin the past, they believe he will pay for the boat in a timelymanner. Show all your work.
Question #4. SAS Computers owns a patent on acomputer processor. The processor was developed and capitalized ata cost of €2,100,000 in the beginning of 2015. It was expected tobe economically useful for 7 years and have no residual value. Atthe beginning of 2018, a new processor was developed, making theold processor worth €900,000 (independent appraiser) with €200,000total cost to sell. The present value of the processor’s futurecash flows, given the development of the newer processor, isestimated to be €870,000. At this point, it is expected to have auseful life of 4 years with no residual value. Is the processorimpaired in 2018? If it is impaired, prepare the to record theloss. Also prepare the journal entry for amortization in 2018. Showyour work. ?
Question #5. Paris Cosmetics wishes to secure areliable source of a key component in its eyeshadows and itsmanagement is considering two alternative investments. Melonineproduces 3 times the supply Paris Cosmetics needs but the only wayto guarantee the supply it needs is to purchase the entire ordinaryshares of Melonine. They can sell the rest to other manufacturers.JeanPaul produces twice as much of the component that ParisCosmetics needs and Paris Cosmetics would only have to buy 40% ofJeanPaul ordinary shares to insure it could buy 50% of JeanPaul’soutput. The table that follows gives the balance sheet informationfor all 3 companies, prior to the investment by Paris Cosmetics.For the questions below, assume Paris Cosmetics would be able tobuy Melonine’s shares at €830,000 and JeanPaul at $240,000.Melonine’s plant assets were appraised at €200,000, with all of itsremaining assets and liabilities being appraised at valuesapproximating their book values. Produce consolidated balance sheetfor Paris Cosmetics immediately after the acquisition of Melonineand JeanPaul (use the equity method).
| Paris Cosmetics | Melonine | JeanPaul |
| Plant Assets | 400,000 | 150,000 | 50,000 |
| Other Non-cash Assets | 1,750,000 | 980,000 | 600,000 |
| Investment | | | |
| Cash | 2,000,000 | 200,000 | 100,000 |
| Shareholders' Equity | 2,950,000 | 730,000 | 600,000 |
| Liabilities | 1,200,000 | 600,000 | 150,000 |
Purchase of Melonine
Paris Cosmetics Before: | Paris Cosmetics After: | Malonine: | Consolidating Entries: | Paris Cosmetics Consolidated: |
Purchase JeanPaul
Paris Cosmetics Before: | Paris Cosmetics After: | JeanPaul: |
Question #6. On January 1, 2015, ParisCosmetics buys a shop in London for £350,000. They only intend onowning it 5 years because they hope to move to a larger buildingwhich is currently being designed and built. They believe the shopthey currently own will be worth £250,000 in 5 years. Every year,they reappraise the building. The building is determined to beworth £310,000 on Jan.1, 2016, £305,000 on Jan. 1, 2017, £300,000on Jan. 1, 2018, £270,000 on Jan. 1, 2019, and is sold for £250,000on Jan. 1, 2020. The estimates of the residual value and usefullife have never changed over the life of the building. Show theeffects of the building on both the balance sheet and incomestatement using the Reevaluation. Method Model.
Statement of Financial Position
| 2015 | 2016 | 2017 | 2018 | 2019 |
| PPE | | | | | |
| Accumulated Depreciation | | | | | |
| Net PPE | | | | | |
| Revaluation Surplus | | | | | |
| Retained Earnings | | | | | |
Net Income
| 2015 | 2016 | 2017 | 2018 | 2019 |
| Depreciation Expense | | | | | |
| Gain (Loss) on Fair Value | | | | | |
| Net Income | | | | | |
| OCI | | | | | |
| Comprehensive Income | | | | | |
Overall Effects
Depreciation Expense:
Gain (Loss):
Net Income:
OCI:
Comprehensive Income:
