Sure corporation operates under ideal conditions of certainty. It acquired its sold asset on January 1, 2015. The asset will yield $600 cash a the end of each year from 2015 to 2017, inclusive, after which it will have no market value and no disposal costs. The interest rate in the economy is 6%. Purchase of the asset was financed by the issuance of common shares. Sure corp will pay a dividend of $50 at the end of 2015 and 2016.
Required:
a. Prepare a balance sheet for Sure Corp. at the end of 2015 and an income statement for the year ended December 31, 2015.
b. Prepare a balance sheet for Sure Corp. as at the end of 2016 and an income state- ment for the year ended December 31, 2016.
c. Under ideal conditions, what is the relationship between present value (i. e., value in use) and market value (i. e., fair value)? Why? Under the real conditions in which accountants operate, to what extent do market values provide a way to implement fair value accounting? Explain.
d. Under real conditions, present value calculations tend to be of low reliability. Why? Does this mean that present value-based accounting for assets and liabilities is not decision useful? Explain.
Accounting Under Ideal Conditions 61
Note: In the following two problems, the capital asset is financed in part by means of interest- bearing bonds. This is not illustrated in the text.
Answers: 3
Business, 22.06.2019 10:10, travisvb
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Exercise 4-9presented below is information related to martinez corp. for the year 2017.net sales $1,399,500 write-off of inventory due to obsolescence $80,440cost of goods sold 788,200 depreciation expense omitted by accident in 2016 43,600selling expenses 65,800 casualty loss 53,900administrative expenses 53,500 cash dividends declared 43,300dividend revenue 22,100 retained earnings at december 31, 2016 1,042,400interest revenue 7,420 effective tax rate of 34% on all items exercise 4-9 presented below is information relateexercise 4-9 presented below is information relate prepare a multiple-step income statement for 2017. assume that 61,500 shares of common stock are outstanding. (round earnings per share to 2 decimal places, e. g. 1.49.)prepare a separate retained earnings statement for 2017. (list items that increase retained earnings first.)
Answers: 2
Sure corporation operates under ideal conditions of certainty. It acquired its sold asset on January...
Mathematics, 07.06.2020 15:57
Mathematics, 07.06.2020 15:57
Mathematics, 07.06.2020 15:57
Mathematics, 07.06.2020 15:57
Business, 07.06.2020 15:57