ACC345 Homework template - Module 2

Asked by paulw
Dated: 9th Jul'18 08:54 AM
Bounty offered: $20.00
Homework template - Module 2                                        
Problem 3-3 (page 211-212)                                          
    should be classified as a capital lease because the lease contains a                              
  bargain purchase option.                                        
    should be classified as an operating lease because it does not meet                              
  any of the four criteria for classifying a lease as a capital lease.                                
    should be classified as a capital lease because the lease term is equal                              
  to 80 percent of the estimated economic life of the equipment, which exceeds                              
  the 75 percent or more criterion.                                      
b. Borman records the following liability amounts at inception:                                  
    Borman does not record a liability at the inception of the lease.                              
    Borman records as a liability at the inception of the lease an amount                              
  equal to the present value at the beginning of the lease term of minimum lease                              
  payments during the lease term, excluding that portion of the payments representing                            
  executory costs such as insurance, maintenance, and taxes to be paid by the lessor,                            
  including any profit thereon. However, if the amount so determined exceeds the fair                            
  value of the equipment at the inception of the lease, the amount recorded as a                              
  liability should be the fair value.                                      
    Borman records as a liability at the inception of the lease an amount                              
  determined in the same manner as for Lease J, and the payment called for in the                              
  bargain purchase option should be included in the minimum lease payments.                              
    Borman allocates each minimum lease payment between a reduction                              
  of the liability and interest expense so as to produce a constant periodic rate of                              
  interest on the remaining balance of the liability.                                    
    Borman charges minimum lease (rental) payments to rental expense                              
  as they become payable.                                        
    Borman allocates each minimum lease payment in the same manner                              
  as for Lease J.                                          
Problem 3-6 (page 213-214)                                          
  In the case of environmental liabilities, there are several unknowns that are especially                            
  difficult to predict. The unknowns relate to the clean up and to the lawsuits that result                            
  from the hazardous waste. Select all that apply:                                    
    The company cannot predict the timing of an environmental tragedy such                            
    as that which occurred in the Union Carbide factory.                                
The company knows it will be identified as a potentially responsible party                            
    in a yet uncovered hazardous waste site. This can include a former site of                            
    the company.                                        
If the company is identified as a potentially responsible party, we do not know                            
    the portion of the clean up costs that it will be required to pay.                              
The company knows what costs would be incurred in the actual clean up of                            
    the site.                                          
The company needs to determine which internal costs should be included in the                            
    cost of the clean up. For example, if it uses its laborers for site clean up activities,                            
    the direct cost of labor can become a part of the overall cost of cleanup.                            
The company must guess whether lawsuits will be filed against the company related                          
    to the hazardous waste site.                                      
    The company must estimate the probability of loss or settlement in the lawsuit and                          
    the amount of the damages to be paid                                    
c. Select ONLY three of the following industries you consider likely to face significant environmental                          
    oil producers                                        
    tobacco producers                                        
    clothing retailers                                        
    chemical manufacturers                                      
    accounting firms                                        
    legal practices                                        
Problem 3-7 (page 214, Appendix A47)                                        
b.   is the discount rate for year 11.                                    
Question 4-10                                            
Exercise 4-9                                            
(1)   years                                          
(2)   years                                          
(3)   years                                          
Problem 4-2                                            
Acc345 Homework template - Module 2
Answered by paulw
Expert Rating: 493 Ratings
Dated: 9th Jul'18 08:54 AM
5 words and 2 attachment(s).
Tutorial Rating: Not Rated
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(preview of the tutorial; some sections have been intentionally blurred)


acc345-Homework-template---Module-2.xlsx (30.76 KB)
Preview of acc345-Homework-template---Module-2.xlsx
difference     and   return will     over       No   actual return     cost       from   in the     accordingly,       the   pension cost     result,       used   determining pension     difference       expected   will be     an       The   return subjects     to       volatility   the financial     decreasing       annual   cost As     expected       in   pension expense     between       return   be expensed     the       Accumulated   obligation (ABO)     employer's       pension   on current     compensation       future   Therefore, it     to       obligation   the plan     presently       (ABO)   the employer's     employees'       current   projected compensation     than       it   amount to     current       plan   discontinued presently     obligation       employer's   to employees'     on       current   past compensation     than       it   amount to     current       plan   discontinued presently     3-7       A47)The   benefit obligation     the       employees'   based on     of       compensation   The difference     and       to   inclusion of     of       in   compensation level     In       difference   PBO and     $147       projected   obligation (PBO)     employer's       pension   on future     The       and   is due     inclusion       of   75% increase     compensation       In   11, the     PBO       $113   million The     obligation       employer's   to employees'     on       The   between PBO     is       inclusion   a provision     75%       compensation   by PBO     11,       PBO   ABO is     million       is   pension expense     5       11   there is     of       million  
acc345-Homework-template---Module-2-.xlsx (42.12 KB)
Preview of acc345-Homework-template---Module-2-.xlsx
reality     of   leases, both     capital,       are   liabilities since     money       the   to continue     amounts       surely   be paid     come       issue   arise foran     looking       A   that is     a       be   in the     future       leases   be classified     in       recognition   the balance     revenue       with   of the     as       should   included in     rather       section   it comes     liabilities,       know   to expect     warning       then   to assess     With       arise   clean up     operations       to   for instance,     natural       and   so, how     will       relates   former sites     being       hazardous   people and     If       found   they are     the       cleaning   the unsafe     after       are   lawsuits in     damages       company   are just     variables       For   company that     to       but   not yet     contingent       would   best to     price       in   valuation model     are       legal   due to     than       should   adjusted as     environmental       light   example, following     tragedy,       financial   of Union     downhill       possibility   losses due     factors       as   to face     risk       and   Drilling and     g       wildlife   (2) Heavy     g       explosions);   (3) Tobacco     (e       fires,   conditions) In     the       company   was 8     is       Year   discount rate,     9       in   rate such     this       an   in service     interest       benefit   is computed     beginning-period       by   discount rate     cost       Year   represents the     of       by   employees that     return       stated   $73,400,000 in     This       entered   its entirety     component       because   is accrued     careers       based   PBO formulas     and       material   is found     the       the   assets at     [120]       9   9 00%     the       than   40 million     is       of   market's rates     difference       values   spread over     amount       be   for million     of       in   11 refers     pension       their   in foreign     as       specifically   based on     previous       of   future ones     amount       Year   This difference     between       the   is explained     fact       projected   obligation is     the       future   level instead     the       75%   increase is     PBO       a   pension expense     in       is   to say     Campbell       expense   short for     first       inventory   method resulting     the       to   the goods     out       inventory   an inflationary     price       the   last added     most       to   higher COGS,     of       Sales   Revenue, resulting     much       income   due at