kunci jawaban intermediate accounting

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    CHAPTER 3

    QUESTIONS

    1. Three elements, as defined by the FASB,

    are contained in a balance sheet: assets,liabilities, and equity. These elementsmeasure the worth of an enterprise at agiven point in time. The balance sheet thusreports what resources an enterprise hasand who has claim against thoseresources. Two other elements,investments by owners and distribution toowners,are related to the equity element.nformation concerning the change inequity is often contained in a separatestatement that supplements the balancesheet.

    2. n order to meet the definition of an asset,an item need not be associated with certainfuture benefit. To ac!nowledge theuncertainty inherent in business, thedefinition of an asset stipulates that thefuture benefit need be only probable.

    3. Some liabilities, such as accounts payableand long"term debt, are denominated inprecise monetary terms. #owever, theamounts of many liabilities must beestimated based on e$pectations aboutfuture events.

    4. The difference between current assets andcurrent liabilities, referred to as workingcapital,is a commonly used measure of theliquidity of an enterprise. t helps todetermine whether the company will beable to meet its current debt with availableassets and still continue normal operations.

    5. a. Assets are classified as current if

    %&' the asset will be reali(ed in cashduring the normal operating cycleof the business or & year,whichever is longer, or

    %)' the asset will be sold or consumed

    within a normal operating cycle or& year, whichever is longer.

    b. *iabilities are classified as current ifliquidation of the liability is e$pected torequire%&' the use of current assets, or%)' the creation of other current

    liabilities.

    6. a. +ash is classified as noncurrent when

    it is a part of a fund that will be used todischarge noncurrent obligations. Suchfunds include bond retirement funds,pension funds, and preferred stoc!redemption funds. +ash to be used forthe acquisition of land, buildings, andequipment or cash received on long"term deposits from customers wouldalso be reported as noncurrent.

    b. eceivables not reportable as currentassets would include those arising fromunusual transactions, such as the saleof land, buildings, and equipment or

    advances to affiliates or employeesthat would not be collectible within &)months.

    7. f a short"term loan is e$pected to berefinanced or paid bac! with the proceedsof a replacement loan, the e$isting short"term loan is not classified as current. Thisis true as long as the intent of the companyis to refinance the loan on a long"termbasis and the company-s intent isevidenced by an actual refinancing afterthe balance sheet date or by the e$istenceof an e$plicit refinancing agreement.

    . a. A sub/ective acceleration clause is aprovision in a debt instrument thatspecifies some general conditionspermitting a lender to unilaterallyaccelerate the due date.

    b. An ob/ective acceleration clause is aprovision in a debt instrument thatspecifies conditions that can cause thedebt to be immediately callable0 fore$ample, failure to earn a certainreturn on the assets or to ma!e aninterest payment.

    c. f a noncurrent debt instrument

    contains a sub/ective accelerationclause and the invo!ing of the clause isdeemed probable, the liability shouldbe classified as current. f invo!ing ofthe clause is deemed reasonablypossible, but not probable, theobligation should continue to bereported as a noncurrent liability,

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    with a note to describe the contingency.f a debt instrument contains anob/ective acceleration clause and theconditions that trigger the call haveoccurred, the debt should be classifiedas current. 3$ceptions are %&' thecreditor has waived the right todemand payment for a period thate$tends beyond the debtor-s normaloperating cycle, or %)' the debtor hascured the deficiency after the balancesheet date but before the statementsare issued, and the debt is not callablefor a period that e$tends beyond thedebtor-s normal operating cycle.

    9. Contingent liabilitiesmay or may not giverise to actual obligations0 estimatedliabilitiesare !nown to e$ist but the amountis not definitely !nown. A company could,for e$ample, win or lose a lawsuit, but it isactually liable for income ta$. The e$actamount of the income ta$ is un!nown untilthe final ta$ return is completed. The ta$liability may have to be estimated at thetime financial statements are prepared.

    10. 4ith a proprietorship, owner-s equity isreported with a single capital account. n apartnership, separate capital accounts areestablished for each partner. n acorporation, a distinction is made betweencontributed capital and retained earnings.

    11. The three ma/or categories in a

    corporation5s equity section are:%&' +ontributed capital, including both

    capital stoc! at par and additional paid"in capital

    %)' etained earnings%6' 7ther equity, such as treasury stoc!,

    unreali(ed gains and losses onavailable"for"sale securities, foreigncurrency translation ad/ustments, andunreali(ed gains and losses onderivatives.

    12. 7ffset balances are used to ad/ust thegross amount of balance sheet items to

    arrive at proper valuations. For e$ample,allowance for doubtful accounts is properlyoffset against the gross amount of accountsreceivable to show the net amountestimated collectible. t is generally notproper to offset an asset account against aliability

    or owners- equity account because such anoffset would not be for the purpose ofcorrectly valuing either account but ratherto condense financial data at the e$penseof adequate disclosure.

    13. Assets are usually presented in the order of

    their liquidity, with the most liquid itemslisted first.

    14. Financial ratios are mathematicalrelationships between financial statementamounts. For e$ample, return on equity isnet income divided by owners5 equity.

    15. Asset turnover ratio %total sales divided bytotal assets' is a measure of the number ofdollars of sales generated by each dollar ofassets. The higher the asset turnover ratio,the more efficient the company is in usingits assets to generate sales.

    16. eturn on equity is an indicator of theoverall performance of a company. eturnon equity measures the percentage returnon the stoc!holders5 investment and iscomputed as net income divided by totalequity.

    17. There are at least four types of notes usedby management to support the financialstatements and provide users withadditional relevant information. They maybe classified as follows.

    %a' Summary of significant accountingpolicies

    %b' Additional information, both numericaland descriptive, to support summarytotals included in the financialstatements

    %c' nformation about items that does notmeet the recognition criteria but that isstill useful to decision ma!ers

    %d' Supplementary schedules required bythe FASB or the S3+ to fulfill the fulldisclosure principle

    18. The FASB must maintain a balancebetween conceptual purity and businesspracticality. 4hen a conceptually correct

    recognition standard is critici(ed asimpractical, one FASB approach is torequire only the disclosure of theinformation rather than its formalrecognition. This sometimes mollifiesbusinesses- complaints about impracticality.For e$ample, the FASB decided to requireonly note disclosure of stoc! option

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    values in response to businesses-complaints about the proposed recognitionof those values as compensation e$pense.

    19. Separate supplementary information orschedules may be included to disclosesegment information0 details about

    property, plant, and equipment and short"term borrowing0 and trend data for periodsbeyond those included in the basicstatements.

    20. f a subsequent event provides additionalinformation about items included in thefinancial statements, especially thosewhose value has been estimated, the newinformation should be used to ma!ead/ustments to the amounts in thestatements. The event itself does notactually change the value but merelyprovides additional information about

    conditions that e$isted at the balance sheetdate. For e$ample, the filing of a

    ban!ruptcy petition by a ma/or customerprovides additional data concerning thecollectibility of accounts receivable. Theconditions that led to the ban!ruptcy wereprobably present at the balance sheet datebut may not have been !nown to thepreparer of the statements until theban!ruptcy filing too! place. 8nder thesecircumstances, Allowance for 9oubtful

    Accounts may need ad/ustment to properlyreflect the net reali(able value ofreceivables.

    21. any assets are reported at historical cost,which is usually less than mar!et value,and other assets %such as homegrowngoodwill' are not included in the balancesheet at all. Accordingly, the balance sheetnumbers are often a very poor reflection ofwhat a company is worth. Typically, a goingconcern is worth significantly more than thereported boo! value of equity.

    ISCUSSION CASES

    !"#$""!%& Ca"e 3'1

    1. The equity shown on the balance sheet %assets ; liabilities' can be thought of as a rough measure ofthe worth of the company. Accordingly, a company-s net worth can never e$ceed the amount of its

    assets. #owever, assets are reported at their historical cost, which in some cases differs greatlyfrom the mar!et value of the assets. *and purchased for .D?

    +learly the mar!et values each of these companies more than their balance sheets value them. Themar!et values such things as customers, historical performance, future e$pectations, andcontributions of management and employees. Eone of these factors shows up as an account on acompany-s balance sheet yet the mar!et values them.

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    6. icrosoft 6.)@eneral 3lectric 6.4al"art D.=erc! 62.ntel 6).Dfi(er >D.D

    ATCT ).)3$$on ).+oca"+ola D2.+isco Systems &)6.D

    n general, the following types of firms have higher3 ratios than average.

    Firms with strong future growth possibilities Firms with earnings for the year lower than average because of a nonrecurring event %e.g., a

    large write"off, a natural disaster' Firms with substantial unrecorded assets %e.g., appreciated land, unrecorded goodwill'

    n general, the following types of firms have lower3 ratios than average.

    Firms with earnings for the year higher than average because of a nonrecurring event %e.g., aone"time gain'

    Firms perceived as being very ris!y

    !"#$""!%& Ca"e 3'2

    The claim against AT+ represents a contingent liability. +ontingent liabilities are accounted for accordingto management5s estimate of the probability that the contingent obligation will become an actualobligation.

    robable: The liability %and a corresponding loss or e$pense' should be recogni(ed. ossible: The contingent loss is disclosed in a note to the financial statements. emote: Eo accounting action is necessary.

    Because AT+ has offered to settle out of court, management may view the li!elihood of losing the caseas probable. f so, a liability should be recogni(ed. Because AT+ has offered ==,=== to settle the case,the recogni(ed liability should be at least that much. Alternatively, the settlement offer may be /ust a legal

    strategy, and AT+5s management may not thin! that loss of the case is probable. f so, only notedisclosure is necessary.

    !"#$""!%& Ca"e 3'3

    This case presents the challenge of translating the facts of a realistic situation into the classification usedto recogni(e contingent losses. Students could be polled as to their views of the probability of loss basedon the stated facts. Since 9it!a 3ngineering has signed a guarantee, it seems that some payment willhave to be made because of *iberty-s ban!ruptcy. 7nly the amount is uncertain. The most li!ely liabilityamounts are ==,===,

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    Eotes are an integral part of financial statements, but they are often ignored by financial statement userswho assume the notes are too technical and detailed and not really relevant to decision ma!ing. Eotesdo sometimes contain fairly technical and comple$ information. Such information, however, is includedbecause management and the independent auditors determined that the information is relevant andmaterial and that the benefits to users e$ceed the cost of providing the information. n short, notes areconsidered useful to decision ma!ers and should not be ignored. 3$cello-s management should not havedeleted the notes when submitting the financial statements, and the ban! should not have accepted thestatements without the related notes.

    !"#$""!%& Ca"e 3'5

    Ban!America......................................................................... 9Gelly Services........................................................................ AHahooI ................................................................................ +c9onald-s............................................................................ 3+onsolidated 3dison.............................................................. B

    The power"generating facilities of utilities form a large portion of their assets and are shown on thebalance sheet as plant and equipment. #owever, c9onald-s also has a great deal of plant andequipment. n fact, the balance sheets of a utility company and of a fast"food company loo! similar. nthis instance, +onsolidated 3dison is B and c9onald-s is 3.

    Gelly Services is A. Because service companies have low levels of fi$ed assets and low levels ofinventory, company A matches this profile. Also, because service companies typically don-t have manytangible long"term assets to serve as collateral, they also don-t have high levels of long"term debt andequity percentage is high.

    Ban!America is recogni(able by its high level of other current liabilities %9'. Far and away the largestliability of a ban! is its deposit liability. A ban! borrows money from its depositors %deposit liability' andloans it to its borrowers %loans receivables'.

    The nternet company HahooI is company +. t has no long"term debt and few long"term assets. Thebul! of Hahoo-s assets are invested in other current assets.

    !"#$""!%& Ca"e 3'6

    1. Steps to avoid violating the current ratio constraint: 8se FF7 instead of *F7, causing current assets to increase by =,===. +ancel plans to declare and pay cash dividends ne$t year.

    +urrent ratio without changes:%6>

    7ther steps might include issuing new stoc!.

    The ban!s probably anticipated the cancellation of dividends, the issuance of new stoc!, and thetransformation of short"term debts into long"term debts.

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    7ne way to eliminate accounting changes as a way to bypass loan covenants is to write thecovenant in terms of a certain set of accounting principles. For e$ample, for purposes ofdetermining whether the covenant is violated or not, the current ratio would be computed using the*F7 inventory valuation method, whether the borrowing company was still using *F7 or not.

    A lender mig...

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