Solution manual accounting 21e by warreni ch 14

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Solution manual accounting 21e by warreni ch 14

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CHAPTER 14 INCOME TAXES, UNUSUAL INCOME ITEMS, AND INVESTMENTS IN STOCKS CLASS DISCUSSION QUESTIONS a Current liability b Long-term liability or deferred credit (following the Long-Term Liabilities section) This is an example of a fixed asset impairment Thus, a loss of $130 million should be disclosed on the income statement as a separate line item above the income from continuing operations, and the plant and equipment should be written down to their appraised value ($20 million) The severance costs are a current period expense associated with downsizing operations Thus, a restructuring charge should be recognized on the income statement (above income from continuing operations) and any liability recognized As payments are made to employees, the liability is decreased Extraordinary items: Gain on condemnation of land, net of applicable income tax of $60,000 $90,000 The urban renewal agency’s acquisition of the property may be viewed as a form of expropriation under paragraph 23 of Accounting Principles Board Opinion No 30, Reporting the Results of Operations— Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions Paragraph 23 says a gain or loss from sale or abandonment of property, plant, or equipment used in the business should be included as an extraordinary item if it is the direct result of an expropriation Accordingly, the gain should be reported as an extraordinary item in the income statement The “loss from discontinued operations” of $2.3 billion should be identified on the income statement as discontinued operations and should follow the presentation of the results of continuing operations (sales less the customary costs and expenses) The data on discontinued operations (identity of the segment, date of 10 11 12 131 disposal, etc.) should be disclosed in a note Readers of the financial statements should be able to assume that the successive financial statements of a business are based consistently on the same generally accepted accounting principles Therefore, significant changes in accounting methods must be disclosed so that the reader is alerted to the effect of those changes on the financial statements a Yes, the $0.45-per-share gain should be reported as an extraordinary item b Operations appear to have declined The earnings per share for the current year that is comparable to the preceding year’s earnings per share of $1.10 is $0.93 ($1.38 – $0.45) a Examples of other comprehensive income items include foreign currency items, pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities b No Other comprehensive income does not affect the determination of net income or retained earnings A business may purchase stocks as a means of earning a return (income) on excess cash that it does not need for its normal operations In other cases, a business may purchase the stock of another company as a means of developing or maintaining business relationships with the other company A business may also purchase common stock as a means of gaining control of another company’s operations On the balance sheet, temporary investments in marketable securities are reported at their fair market values, net of any applicable income taxes related to any unrealized gains or losses Unrealized gains or losses (net of applicable taxes) should be reported as either an addition to or deduction from net income in income arriving at comprehensive 132 13 a The equity method b Investments 14 Investment in Gestalt Corporation 15 a Minority interest b Preceding stockholders' equity, usually in the Long-Term Liabilities section 16 Investment in Affiliates 2,400,000 Income of Affiliates 2,400,000 133 EXERCISES Ex 14–1 Apr 15 Income Tax Expense Cash 70,000 June 15 Income Tax Expense Cash 70,000 Sept 15 Income Tax Expense Cash 70,000 Dec 31 Income Tax Expense Income Tax Payable Deferred Income Tax Payable 150,000* 70,000 70,000 70,000 40,000 110,000** *[($900,000 × 40%) – (3 × $70,000)] = $150,000 **[($800,000 × 40%) – (3 × $70,000)] = $110,000 Jan 15 Income Tax Payable Cash 110,000 110,000 Ex 14–2 2005 Dec 31 Income Tax Expense Deferred Income Tax Payable Income Tax Payable 920,000 120,000* 800,000** *$300,000 × 40% = $120,000 **$2,000,000 × 40% = $800,000 2006 Dec 31 Income Tax Expense Deferred Income Tax Payable Income Tax Payable **$2,500,000 × 40% = $1,000,000 880,000 120,000 1,000,000** Ex 14–3 a Depreciation expense per year: $100,000,0 00  $20,000,00 = $8,000,000 per year 10 years December 31, 2006 net book value (carrying value) prior to impairment adjustment: Fiber optic network cost Less accumulated depreciation Fiber optic net book value $100,000,000 16,000,000 $ 84,000,000 b 2006 Dec 31 Loss from Fixed Asset Impairment Fixed Assets—Fiber Optic Network 39,000,000* 39,000,000 *$84,000,000 – $45,000,000 c Balance sheet: Fixed assets—Fiber optic network Less accumulated depreciation Fixed assets—Fiber optic network net book value *$100,000,000 – $39,000,000 $61,000,000* 16,000,000 $ 45,000,000 Ex 14–4 a 2006 Dec 31 Loss from Fixed Asset Impairment 99,000,000 Fixed Assets—Buildings and Improvements 80,000,000 Fixed Assets—Land 8,000,000 Fixed Assets—Equipment 11,000,000 b On December 31, 2006, management determined that one of the resort properties was permanently impaired due to the discovery of an adjacent toxic chemical waste site Bookings to this property have dropped significantly, and it was determined that the property had to abandoned As a result, a $99 million asset impairment loss was recognized in 2006, reflecting the fair value of assets associated with this site, as detailed in the following table: Buildings and improvements Land Equipment Total impairment $80,000,000 8,000,000 11,000,000 $ 99,000,000 Ex 14–5 a 2006 Nov Restructuring Charge Employee Termination Obligation 3,600,000 3,600,000 Average salary Planned number of positions eliminated Total annual salary eliminated Average tenure Severance rate Total severance $ 60,000 × 150 $ 9,000,000 × yrs × 5% $ 3,600,000 b 2006 Dec 15 Employee Termination Obligation Cash 960,000 Average salary Number of positions eliminated Average tenure Severance rate Total severance 960,000 $ 60,000 × 40 × yrs × 5% $960,000 c Balance sheet disclosure: Current liabilities: Employee termination obligation $2,640,000 Note disclosure: On November 1, 2006, the board of directors approved a plan to eliminate 150 headquarter positions due to a decline in demand for the company’s products A severance plan was approved and communicated to employees providing termination benefits to employees terminated between December 1, 2006, and April 1, 2007 Accordingly, a restructuring charge of $3,600,000 was recognized in 2006 for the accrued termination benefits Of this amount, $960,000 was distributed to terminated employees in 2006 The remaining $2,640,000 was recognized as a current liability and will be paid to employees terminated during the first three months of 2007 Ex 14–6 a Closing and relocation costs Employee severance costs Contract termination costs Total restructuring charge $ 500,000 2,419,200* 120,000 $ 3,039,200 *Employee severance costs: Number of hours per month Labor rate per hour Monthly wage per employee Number of employees Total monthly wages Severance rate Total termination benefit 180 hrs × $12.00 $ 2,160 × 280 $ 604,800 × 400% $ 2,419,200 b 2006 July Restructuring Charge Restructuring Obligation 3,039,200 3,039,200 Note: The obligation is not “employee termination obligation” because there are several types of restructuring charges included in the total Thus, the account Restructuring Obligation is used to represent the total obligation c 2006 Oct 15 Restructuring Obligation Cash 604,800 $604,800 = $2,419,200 ÷ d Balance sheet disclosure: Current liability: Restructuring obligation $1,814,400 $1,814,400 = $604,800 × remaining installments Note: All other estimated restructuring payments were made in 2006 604,800 Ex 14–6 (Concluded) e Note disclosure: On July 1, 2006, the board of directors of the company approved and announced a restructuring plan that resulted in a $3,039,200 charge in 2006 consisting of the following items: Closing and relocation costs Employee severance costs Contract termination costs Total restructuring charge $ 500,000 2,419,200 120,000 $ 3,039,200 The restructuring was caused by unfavorable publicity regarding the caffeine content of our juice products The adverse publicity reduced the demand for our products, requiring us to consolidate operations by closing one of our juice plants and eliminating 280 direct labor positions On December 31, 2006, there remains a current restructuring obligation of $1,814,400, primarily related to employee severance agreements Note: While no information was provided in the exercise, it is likely that the factory building is also impaired requiring a write-down and appropriate disclosures Ex 14–7 a 2006 Dec 31 Loss from Fixed Asset Impairment Fixed Assets—Tractor-Trailers 15,000,000* 15,000,000 *($34,000,000 – $9,000,000) × 60% Dec 31 Restructuring Charge Employee Termination Obligation 650,000* 650,000 *65 employees × $10,000 b December 31, 2006 balance sheet disclosures: Fixed assets: Tractor-trailers Less accumulated depreciation Tractor-trailer net book value $19,000,000 (9,000,000) $10,000,000 Current liabilities: Employee termination obligation $650,000 Note: On December 31, 2006, the board of directors approved and communicated a restructuring plan in response to low-cost competition in the company’s service market The plan calls for the sale of 50 tractor-trailers and elimination of 50 drivers and 15 staff personnel Due to the general overcapacity in the transportation market, tractor-trailer market values are estimated to be 40% of the existing book value, causing us to recognize an unrecoverable loss on fixed asset impairment of $15,000,000 in 2006 for the entire fleet In addition, a severance plan was approved for the eliminated positions The charge for employee severance was $650,000 for 2006, all of which is currently payable at the end of the fiscal year It is estimated that all severance obligations will be satisfied by the end of the first quarter in 2007 c 2007 Mar 14 Employee Termination Obligation Cash 650,000 650,000 Prob 14–3A SURF’S UP CORPORATION Income Statement For the Year Ended July 31, 2006 Sales Cost of merchandise sold Gross profit Operating expenses: Selling expenses Administrative expenses Total operating expenses Income from operations before other items Other expenses, income, and special charges: Loss from restructuring charge Fixed asset impairment Interest expense Interest revenue Income from continuing operations before income tax Income tax expense Income from continuing operations Loss from discontinued operations Less applicable income tax Income before extraordinary item Extraordinary item: Gain on condemnation of land Less applicable income tax Net income Earnings per common share: Income from continuing operations Loss on discontinued operations Income before extraordinary item Extraordinary item Net income *($400,000 – $100,000) ÷ 250,000 shares $ 2,600,000 984,000 $ 1,616,000 $ 540,000 140,000 $ $(300,000) (60,000) (7,500) 1,500 680,000 936,000 $ 366,000 570,000 170,000 400,000 $ (80,000) 320,000 $ 20,000 340,000 $ $ 104,000 24,000 $ 30,000 10,000 $ $ $ 1.20* (0.32) 0.88 0.08 0.96 Prob 14–3A (Continued) SURF’S UP CORPORATION Retained Earnings Statement For the Year Ended July 31, 2006 Retained earnings, August 1, 2005 Net income Less dividends declared: Cash dividends Stock dividends Increase in retained earnings Retained earnings, July 31, 2006 $ 4,231,600 $340,000 $180,000 40,000 220,000 120,000 $ 4,351,600 SURF’S UP CORPORATION Balance Sheet July 31, 2006 Assets Current assets: Cash Temporary investments in marketable equity securities at cost Plus unrealized gain Temporary investments in marketable at market value Accounts receivable Less allowance for doubtful accounts Merchandise inventory, at lower of cost (FIFO) or market Interest receivable Prepaid expenses Total current assets Property, plant, and equipment: Equipment Less accumulated depreciation Total property, plant, and equipment Intangible assets: Patents Total assets $ 115,500 $ 95,000 15,000 110,000 $276,050 11,500 264,550 551,500 2,500 15,900 $ 1,059,950 $11,819,050 3,050,000 8,769,050 85,000 $ 9,914,000 Prob 14–3A (Concluded) Liabilities Current liabilities: Accounts payable Employee termination obligation Income tax payable Dividends payable Deferred income taxes payable Total current liabilities Deferred credits: Deferred income taxes payable Total liabilities $ 99,500 90,000 55,900 25,000 4,700 $ 275,100 61,000 $ 336,100 Stockholders’ Equity Paid-in capital: Preferred 2/3% stock, $100 par (30,000 shares authorized; 15,000 shares issued) $1,500,000 Excess of issue price over par 240,000 $ 1,740,000 Common stock, $10 par (500,000 shares authorized; 251,000 shares issued) $2,510,000 Excess of issue price over par 996,300 3,506,300 From sale of treasury stock 5,000 Total paid-in capital $ 5,251,300 Retained earnings 4,351,600 $ 9,602,900 Deduct treasury common stock (1,000 shares at cost) (40,000) Accumulated other comprehensive income 15,000 Total stockholders’ equity 9,577,900 Total liabilities and stockholders’ equity $9,914,000 Prob 14–4A 2004 Feb 10 June 15 Dec 15 2007 Jan Apr Investment in Haslam Corporation Stock Cash 192,168 Cash Dividend Revenue 2,800 Cash Dividend Revenue 3,000 Investment in Jacob Inc Stock Cash 1,250,000 Cash Dividend Revenue 2,800 192,168 2,800 3,000 1,250,000 2,800 Memo—Received a dividend of 80 shares of Haslam Corporation stock Number of shares held, 4,080 Cost basis per share, $192,168 ÷ 4,080 shares = $47.10 July 20 Dec 15 31 31 Cash Loss on Sales of Investments Investment in Haslam Corporation Stock 40,950 6,150 Cash Dividend Revenue (4,080 – 1,000 = 3,080 shares; 3,080 × $0.80 = $2,464) 2,464 Cash Investment in Jacob Inc Stock 40,000 Investment in Jacob Inc Stock Income of Jacob Inc ($295,000 × 40% = $118,000) 118,000 47,100 2,464 40,000 118,000 Prob 14–1B and Deferred Income Tax Payable Year First Second Third Fourth Total Income Tax Deducted on Income Statement Income Tax Payments for the Year Year's Addition (Deduction) Year-End Balance $160,000 192,000 240,000 208,000 $800,000 $120,000 168,000 252,000 240,000 $780,000 $ 40,000 24,000 (12,000) (32,000) $ 20,000 $40,000 64,000 52,000 20,000 Prob 14–2B HEALTHY PANTRY INC Income Statement For the Year Ended June 30, 2006 Sales Cost of merchandise sold Gross profit Operating expenses: Selling expenses: Sales commissions expense Advertising expense Depreciation expense—store equipment Miscellaneous selling expense Total selling expenses Administrative expenses: Office salaries expense Rent expense Depreciation expense—office equipment Insurance expense Miscellaneous administrative expense Total administrative expenses Total operating expenses Income from continuing operations before other items Other income, expenses, and special charges: Interest expense Loss from fixed asset impairment Restructuring charge Income from continuing operations before income tax Income tax expense Income from continuing operations Gain from discontinued operations Less applicable income tax Income before extraordinary item Extraordinary item: Loss on condemnation of land Less applicable income tax benefit Net income Earnings per share: Income from continuing operations Gain from discontinued operations Income before extraordinary item Extraordinary item Net income $ 980,000 279,000 $ 701,000 $145,000 46,000 31,000 5,500 $ 60,000 29,000 6,000 9,000 7,500 $227,500 111,500 339,000 $ 362,000 (18,000) (90,000) (150,000) $ 42,500 16,000 $ 24,500 8,000 $ 104,000 32,000 $ 72,000 26,500 $ 98,500 (16,500) $ 82,000 $ $ $ 0.96 0.35 1.31 (0.22) 1.09 Note: Unrealized gain on temporary investments would be an other comprehensive income item, not included on the income statement in determining net income Prob 14–3B SKATE N’ SKI CORPORATION Income Statement For the Year Ended October 31, 2006 Sales Cost of merchandise sold Gross profit Operating expenses: Selling expenses Administrative expenses Total operating expenses Income from operations before other items Other expenses, income, and special charges: Loss from fixed asset impairment Restructuring charge Interest expense Interest revenue Income from continuing operations before income tax Income tax expense Income from continuing operations Loss from discontinued operations Less applicable income tax Income before extraordinary item Extraordinary item: Gain on condemnation of land Less applicable income tax Net income $2,020,000 732,000 $1,288,000 $ 400,000 100,000 500,000 $ 788,000 $(200,000) (90,000) (8,000) 5,000 $ 76,800 28,800 $ 60,000 24,000 Earnings per common share: Income from continuing operations Loss on discontinued operations Income before extraordinary item Extraordinary item Net income *($289,000 – $100,000 preferred dividends) ÷ 150,000 common shares 293,000 $ 495,000 206,000 $ 289,000 48,000 $ 241,000 36,000 $ 277,000 $ $ $ 1.26* 0.32 0.94 0.24 1.18 Prob 14–3B (Continued) SKATE N’ SKI CORPORATION Retained Earnings Statement For the Year Ended October 31, 2006 Retained earnings, November 1, 2005 Net income Less dividends declared: Cash dividends Stock dividends Increase in retained earnings Retained earnings, October 31, 2006 $2,446,150 $277,000 $140,000 60,000 200,000 77,000 $2,523,150 SKATE N’ SKI CORPORATION Balance Sheet October 31, 2006 Assets Current assets: Cash Temporary investment in marketable equity securities—at cost Less unrealized loss in temporary investments Accounts receivable Less allowance for doubtful accounts Notes receivable Merchandise inventory, at lower of cost (FIFO) or market Interest receivable Prepaid expenses Total current assets Property, plant, and equipment: Equipment Less accumulated depreciation Total property, plant, and equipment Intangible assets: Patents Total assets $ 145,500 $145,000 24,000 $309,050 21,500 121,000 287,550 77,500 425,000 2,500 15,900 $ 1,074,950 $9,541,050 3,050,000 6,491,050 55,000 $ 7,621,000 Prob 14–3B (Concluded) Liabilities Current liabilities: Accounts payable Employee benefit obligation Income tax payable Dividends payable Deferred income taxes payable Total current liabilities Deferred credits: Deferred income taxes payable Total liabilities Stockholders’ Equity Paid-in capital: Preferred 2/3% stock, $100 par (30,000 shares authorized; 15,000 shares issued) $1,500,000 Excess of issue price over par 240,000 Common stock, $15 par (400,000 shares authorized; 152,000 shares issued) $2,280,000 Excess of issue price over par 894,750 From sale of treasury stock Total paid-in capital Retained earnings Deduct treasury common stock (2,000 shares at cost) Less accumulated other comprehensive loss Total stockholders’ equity Total liabilities and stockholders’ equity $ 89,500 60,000 55,900 30,000 4,700 $ 240,100 $ 21,000 261,100 $1,740,000 3,174,750 16,000 $4,930,750 2,523,150 $7,453,900 70,000 24,000 7,359,900 $ 7,621,000 Prob 14–4B 2004 Jan July Dec 2007 Jan July Investment in Davidson Corporation Stock Cash 201,468 Cash Dividend Revenue 3,900 Cash Dividend Revenue 4,200 Investment in Comstock Inc Stock Cash 760,000 Cash Dividend Revenue 3,900 201,468 3,900 4,200 760,000 3,900 Memo—Received a dividend of 90 shares of Davidson Corporation stock Number of shares held, 3,090 Cost basis per share, $201,468 ÷ 3,090 shares = $65.20 Oct 23 Dec 10 31 31 Cash Investment in Davidson Corporation Stock Gain on Sale of Investments 58,360 Cash Dividend Revenue (3,090 – 750 = 2,340 shares; 2,340 × $1.50 = $3,510) 3,510 Cash Investment in Comstock Inc Stock 32,000 Investment in Comstock Inc Stock Income of Comstock Inc ($350,000 × 30% = $105,000) 105,000 48,900 9,460 3,510 32,000 105,000 SPECIAL ACTIVITIES Activity 14–1 Yes In this case, the equity method is required because Goodyear owns enough of the voting stock of the investee to have a significant influence over its operating and financing policies Activity 14–2 FLEET SHOES, INC Vertical Analysis of Income Statement For the Years Ended December 31, 2005 and 2006 2005 Sales Cost of merchandise sold Gross profit Selling and administrative expenses Loss on fixed asset impairment Income from operations Income tax expense Net income $430,000 100.0% 193,500 45.0 $236,500 55.0 107,500 25.0 0.0 $129,000 30.0 51,600 12.0 $ 77,400 18.0% 2006 $510,000 100.0% 224,400 44 $285,600 56.0 122,400 24.0 102,000 20.0 $ 61,200 12.0 24,480 4.8 $ 36,720 7.2% The operating income is 30% of sales in 2005, but only 12% of sales in 2006 Net income dropped from $77,400 to $36,720 This would seem to indicate a large reduction in performance in 2006 However, the loss on the fixed asset impairment, which is unusual, is 20% of sales Without this loss, the income from operations would have been 32% of sales, or points better than 2005 Combining this with growing sales from $430,000 to $510,000 would indicate that the company is doing well on a recurring basis There is some concern that management was unable to successfully complete the software project Order management is an important capability for a retailer, so this event should not be completely ignored The loss clearly indicates a failed effort at meeting an important operational objective This need is still outstanding, will require future effort, and may limit future growth However, the financial numbers would seem to indicate that the recurring, or core, earnings and growth are on track Activity 14–3 This was a controversial decision at the time The FASB’s position was not based on the infrequency or unusual character of the incident The FASB is not saying that it views these as “normal” operating risks Rather, the FASB was more practical in realizing that it would be very difficult to segregate 9/11 costs from normal business costs The FASB was concerned that if the incident was allowed “extraordinary” treatment, then companies would put all costs, including the impact of reduced sales and other indirect impact, into this classification It was concerned that nondirectly affected firms would disclose 9/11 extraordinary items for business downturn related events Rather than facing this prospect, the FASB decided that it would be best to avoid the issue altogether by stating that this was not an extraordinary reporting event In stating this, it was saying the economic impact of 9/11 was a general business condition that impacted many firms, and thus, not extraordinary Furthermore, it avoided requiring auditors to distinguish between direct and indirect impacts Activity 14–4 a The “other” comprehensive income or loss for the period is the difference in the accumulated other comprehensive income shown on the balance sheet [($249) – ($207)] between the two comparative periods, or a $42 other comprehensive loss b The other comprehensive loss items are adjustments to stockholders’ equity that not flow through the income statement The FASB created this category of disclosure to recognize economic events that impact stockholders’ equity but are considered too controversial to be included in earnings In a sense, this is a “middle ground” solution where the items are not ignored, nor are they considered part of net income Activity 14–5 As long as you pay your full amount of taxes owed on the due date of your return, plus any interest or penalty for underpaying estimated taxes, it is appropriate to intentionally underpay your estimated taxes Most individuals attempt to pay only the minimum amount for estimated taxes for the very reason that Steph indicated That is, paying the minimum allows you to use your money as long as possible Since the Internal Revenue Service does not pay interest on overpayments, it does not make sense to pay more than the minimum of estimated taxes If you pay less than the minimum required, however, you will be subject to paying IRS interest and penalties Activity 14–6 No Although Reed will not be lying about the amount of total earnings per share of $1.05, it would be clearly misleading not to identify the impact of the extraordinary gain of $0.20 related to the selling of the land In addition to being unethical and unprofessional, Reed may violate federal securities laws if he sells his stock after the announcement In this case, it might be alleged that Reed traded on “insider” information for his own profit Activity 14–7 To be classified as an extraordinary item, an event must meet both of the following requirements: a Unusual nature—The event should be significantly different from the typical or the normal operating activities of the entity b Infrequent occurrence—The event should not be expected to recur often Events that meet both of the preceding requirements are uncommon Usually, extraordinary items result from natural disasters, such as floods, earthquakes, and fires Thus, your first impression might be that the frost damage for Orlando Fruit would qualify as an extraordinary item However, this is not the case In an accounting interpretation of a similar case, it was ruled that frost damage experienced by a Florida citrus grower did not meet the criterion of “infrequent” in occurrence Frost damage is normally experienced in Florida every three to four years Thus, the history of past losses would suggest that such damage can be expected to occur again in the foreseeable future The fact that Orlando Fruit had not had frost damage in the previous five years is not sufficient to meet the infrequency of occurrence criterion It would, however, be acceptable to identify the losses from frost damage as a separate line item above the income from continuing operations Activity 14–8 Note to Instructors: The purpose of this activity is to familiarize students with extraordinary items and discontinued operations reported by real companies and to determine the impact of these items on earnings per share The following is an example from R.J Reynolds’ comparative income statements, beginning with income for continuing operations before taxes: 2002/12/31 Income from continuing operations before income taxes $683,000,000 Provision for income taxes 265,000,000 Income from continuing operations $418,000,000 Discontinued operations: Gain (loss) on sale of discontinued businesses, net of income taxes [(2002—$22; 2001—$(5)] 40,000,000 Income before extraordinary item and cumulative effect of accounting change $458,000,000 Extraordinary item—gain on acquisition, net of $0 income taxes Cumulative effect of accounting change, net of $328 income taxes (502,000,000) Net income (loss) $ (44,000,000) Basic income (loss) per share: Income from continuing operations $ 4.71 Gain (loss) on sale of discontinued businesses 0.45 Extraordinary item—gain on acquisition Cumulative effect of accounting change (5.66) Net income (loss) $ (0.50) 2001/12/31 2000/12/31 $ 892,000,000 448,000,000 $444,000,000 $ 748,000,000 396,000,000 $ 352,000,000 (9,000,000) $435,000,000 $ 352,000,000 1,475,000,000 $435,000,000 $1,827,000,000 $ 4.57 $ 3.48 (0.09) 0 $ 48 14.56 $ 18.04 The extraordinary item was related to the acquisition of Nabisco ... items and cumulative effect of a change in accounting method Extraordinary item Cumulative effect of change in accounting method Net income The restructuring charge is not an extraordinary item... for the $14 million reduction The two best explanations are a dividend by Toys-Japan to Toys “R” Us, which would reduce the investment account, or an outright sale of common stock, which would... satisfied by the end of the first quarter in 2007 c 2007 Mar 14 Employee Termination Obligation Cash 650,000 650,000 Ex 14 8 a Special Charges Fixed Assets—Property, Plant, and Equipment

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Mục lục

  • CHAPTER 14 Income taxes, Unusual income items, and investments in stocks

    • CLASS DISCUSSION QUESTIONS

    • EXERCISES

      • Ex. 14–2

      • Ex. 14–9

      • Ex. 14–11

      • Ex. 14–16

      • Ex. 14–19

      • Ex. 14–22

      • Ex. 14–23

      • Ex. 14–24

      • Ex. 14–25

      • Ex. 14–26

    • PROBLEMS

    • Special activities

      • Activity 14–2

      • Activity 14–4

      • Activity 14–6

      • Activity 14–7

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