1. Iris Company decided to change from LIFO to FIFO inventory costing, effective
ID: 2371964 • Letter: 1
Question
1.
Iris Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2012. The following data were available:
Excess of FIFO
Ending Inventory
Pretax Operating
over LIFO
Year
Income using LIFO
Ending Inventory
2012
$40,000
$8,000
2011
20,000
7,000
2010
30,000
4,000
The income tax rate is 40%. The company began operations on January 1, 2010, and has paid no dividends since inception.
What is net income for 2012? ___________
What is restated net income for 2011? ___________
Prepare the 2011 statement of retained earnings as it would appear in the comparative 2011-2012 financial statements.
2.
Spok A Company leased some equipment from another company on January 1, 2010, for a four-year period. Payments of $18,000 were due each December 31. The lease qualified as a capital lease. Assets were depreciated straight-line over the life of the lease. The appropriate interest rate to use was 10%.
Required: Prepare all journal entries for 2010 on Spokane’s books (round to nearest whole number)
3.
Falco Falconhead Supply had three operating segments during 2010. In determining whether these segments are considered reportable segments, Falconhead has gathered the following information:
Segment
A
B
C
Revenues
$ 60,000
$ 80,000
$160,000
Expenses
30,000
50,000
85,000
Assets
200,000
180,000
420,000
In addition, Falconhead has incurred $100,000 of common expenses that can be reasonably allocated to the three segments. A reasonable allocation method is to allocate the common costs to each segment based on the ratio of a segment's assets to total assets of the three segments. 9 points
Required:
Compute the profit (loss) for each operating segment under current GAAP provisions
Excess of FIFO
Ending Inventory
Pretax Operating
over LIFO
Year
Income using LIFO
Ending Inventory
2012
$40,000
$8,000
2011
20,000
7,000
2010
30,000
4,000
Explanation / Answer
visit these link surely you will get your help
http://questionsofaccounting.blogspot.com/2012/09/chapter-8-valuation-of-inventories-cost.html
or
http://connect.mcgraw-hill.com/sites/0077328787/student_view0/ebook/chapter20/chend2/problems.htm
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