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Aatish Mathur(152)
ChandraPrakash(153)
Samridhi Chopra(154)
Shaily(155)
Saurav Jaiswal(156)
Flow Of Presentation
Background
Objectives
Case
analysis
Debt ratios
Summary
Background
Kline
Normans
In
Item 1
In
Normans
Answer
In
However,
Item 2
There
Based
On
Norman
Answer
A
Item 3
In2010 plant maintenance expenditures
were $44,000.
Normally, plant maintenance expense
was about $60,000 a year and $60,000
had indeed been budgeted for 2010.
Management decided, however, to
economize in 2010, even though it was
recognized that the amount would
probably have to be made up in future
years.
Answer
The plant maintenance expense should
be recorded at its actual expenditure of
$44,000.
Thus, $16,000 should be deducted from
plant maintenance expense, increasing
net income and Retained earnings, and
noncurrent liability.
operating expense (less $16,000)
noncurrent liability (less $16,000)
retained earnings (add $16,000)
Item 4
Item 5
The
Answer
Item 6
Answer
Item 7
On
After three years of $13,581 annual yearend lease payments, title to the car would
pass to Norman, which expected to use
the car through at least year-end 2014.
Answer
The $20,000 discount should have been
recorded as a discount deducted from
the face amount of the bond in liabilities.
It matters where the discount appears
because it affects the total assets and
total liabilities amounts as well as
debt/equity ratios.
other deferred charges (less 20,000)
noncurrent liabilities (less 20,000)
Answer
Answer
Interest Expense
$2,800
Capital Lease Obligations 10,781
Cash
13,581