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Instructions

Solve all 5 comprehensive problems on the same sheet as the problem in this Excel file.  Each problem is worth 10%.
Use formulas to calculate all cells that require a numeric answer. Simply inserting a number does not earn credit, you must use formulas to compute the answers.
When preparing journal entries, use correct journal entry format. List all debits before credits Indent credit accounts and amounts To indent credit accounts, add "........." in front of the account name to shift the account to the right of the debit account
Be sure to solve all 5 problems in this spreadsheet.
CAVEATS:
This is an individual graded assignment. You may reference course materials posted in to complete this exam.

TVM Table pv of $1

Present value interest factor of $1 per period at i% for n periods, PVIF(i,n).
Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0.99009901 0.98039216 0.97087379 0.96153846 0.95238095 0.94339623 0.93457944 0.92592593 0.91743119 0.90909091 0.90090090 0.89285714 0.88495575 0.87719298 0.86956522 0.86206897 0.85470085 0.84745763 0.84033613 0.83333333
2 0.98029605 0.96116878 0.94259591 0.92455621 0.90702948 0.88999644 0.87343873 0.85733882 0.84167999 0.82644628 0.81162243 0.79719388 0.78314668 0.76946753 0.75614367 0.74316290 0.73051355 0.71818443 0.70616482 0.69444444
3 0.97059015 0.94232233 0.91514166 0.88899636 0.86383760 0.83961928 0.81629788 0.79383224 0.77218348 0.75131480 0.73119138 0.71178025 0.69305016 0.67497152 0.65751623 0.64065767 0.62437056 0.60863087 0.59341581 0.57870370
4 0.96098034 0.92384543 0.88848705 0.85480419 0.82270247 0.79209366 0.76289521 0.73502985 0.70842521 0.68301346 0.65873097 0.63551808 0.61331873 0.59208028 0.57175325 0.55229110 0.53365005 0.51578888 0.49866875 0.48225309
5 0.95146569 0.90573081 0.86260878 0.82192711 0.78352617 0.74725817 0.71298618 0.68058320 0.64993139 0.62092132 0.59345133 0.56742686 0.54275994 0.51936866 0.49717674 0.47611302 0.45611115 0.43710922 0.41904937 0.40187757
6 0.94204524 0.88797138 0.83748426 0.79031453 0.74621540 0.70496054 0.66634222 0.63016963 0.59626733 0.56447393 0.53464084 0.50663112 0.48031853 0.45558655 0.43232760 0.41044225 0.38983859 0.37043154 0.35214233 0.33489798
7 0.93271805 0.87056018 0.81309151 0.75991781 0.71068133 0.66505711 0.62274974 0.58349040 0.54703424 0.51315812 0.48165841 0.45234922 0.42506064 0.39963732 0.37593704 0.35382953 0.33319538 0.31392503 0.29591792 0.27908165
8 0.92348322 0.85349037 0.78940923 0.73069021 0.67683936 0.62741237 0.58200910 0.54026888 0.50186628 0.46650738 0.43392650 0.40388323 0.37615986 0.35055905 0.32690177 0.30502546 0.28478237 0.26603816 0.24867052 0.23256804
9 0.91433982 0.83675527 0.76641673 0.70258674 0.64460892 0.59189846 0.54393374 0.50024897 0.46042778 0.42409762 0.39092477 0.36061002 0.33288483 0.30750794 0.28426241 0.26295298 0.24340374 0.22545607 0.20896683 0.19380670
10 0.90528695 0.82034830 0.74409391 0.67556417 0.61391325 0.55839478 0.50834929 0.46319349 0.42241081 0.38554329 0.35218448 0.32197324 0.29458835 0.26974381 0.24718471 0.22668360 0.20803738 0.19106447 0.17560238 0.16150558
11 0.89632372 0.80426304 0.72242128 0.64958093 0.58467929 0.52678753 0.47509280 0.42888286 0.38753285 0.35049390 0.31728331 0.28747610 0.26069765 0.23661738 0.21494322 0.19541690 0.17780973 0.16191904 0.14756502 0.13458799
12 0.88744923 0.78849318 0.70137988 0.62459705 0.55683742 0.49696936 0.44401196 0.39711376 0.35553473 0.31863082 0.28584082 0.25667509 0.23070589 0.20755910 0.18690715 0.16846284 0.15197413 0.13721953 0.12400422 0.11215665
13 0.87866260 0.77303253 0.68095134 0.60057409 0.53032135 0.46883902 0.41496445 0.36769792 0.32617865 0.28966438 0.25751426 0.22917419 0.20416450 0.18206939 0.16252796 0.14522659 0.12989242 0.11628773 0.10420523 0.09346388
14 0.86996297 0.75787502 0.66111781 0.57747508 0.50506795 0.44230096 0.38781724 0.34046104 0.29924647 0.26333125 0.23199482 0.20461981 0.18067655 0.15970999 0.14132866 0.12519534 0.11101916 0.09854893 0.08756742 0.07788657
15 0.86134947 0.74301473 0.64186195 0.55526450 0.48101710 0.41726506 0.36244602 0.31524170 0.27453804 0.23939205 0.20900435 0.18269626 0.15989075 0.14009648 0.12289449 0.10792701 0.09488817 0.08351604 0.07358606 0.06490547
16 0.85282126 0.72844581 0.62316694 0.53390818 0.45811152 0.39364628 0.33873460 0.29189047 0.25186976 0.21762914 0.18829220 0.16312166 0.14149624 0.12289165 0.10686477 0.09304053 0.08110100 0.07077630 0.06183703 0.05408789
17 0.84437749 0.71416256 0.60501645 0.51337325 0.43629669 0.37136442 0.31657439 0.27026895 0.23107318 0.19784467 0.16963262 0.14564434 0.12521791 0.10779969 0.09292589 0.08020735 0.06931709 0.05997992 0.05196389 0.04507324
18 0.83601731 0.70015937 0.58739461 0.49362812 0.41552065 0.35034379 0.29586392 0.25024903 0.21199374 0.17985879 0.15282218 0.13003959 0.11081231 0.09456113 0.08080512 0.06914427 0.05924538 0.05083044 0.04366713 0.03756104
19 0.82773992 0.68643076 0.57028603 0.47464242 0.39573396 0.33051301 0.27650833 0.23171206 0.19448967 0.16350799 0.13767764 0.11610678 0.09806399 0.08294836 0.07026532 0.05960713 0.05063708 0.04307664 0.03669507 0.03130086
20 0.81954447 0.67297133 0.55367575 0.45638695 0.37688948 0.31180473 0.25841900 0.21454821 0.17843089 0.14864363 0.12403391 0.10366677 0.08678229 0.07276172 0.06110028 0.05138546 0.04327955 0.03650563 0.03083619 0.02608405
25 0.77976844 0.60953087 0.47760557 0.37511680 0.29530277 0.23299863 0.18424918 0.14601790 0.11596784 0.09229600 0.07360809 0.05882331 0.04710195 0.03779016 0.03037764 0.02446528 0.01974029 0.01595695 0.01292189 0.01048260
30 0.74192292 0.55207089 0.41198676 0.30831867 0.23137745 0.17411013 0.13136712 0.09937733 0.07537114 0.05730855 0.04368282 0.03337792 0.02556505 0.01962702 0.01510305 0.01164824 0.00900376 0.00697493 0.00541491 0.00421272
35 0.70591420 0.50002761 0.35538340 0.25341547 0.18129029 0.13010522 0.09366294 0.06763454 0.04898607 0.03558410 0.02592363 0.01893953 0.01387569 0.01019366 0.00750889 0.00554588 0.00410672 0.00304881 0.00226911 0.00169300
40 0.67165314 0.45289042 0.30655684 0.20828904 0.14204568 0.09722219 0.06678038 0.04603093 0.03183758 0.02209493 0.01538441 0.01074680 0.00753117 0.00529427 0.00373324 0.00264047 0.00187312 0.00133266 0.00095087 0.00068038
50 0.60803882 0.37152788 0.22810708 0.14071262 0.08720373 0.05428836 0.03394776 0.02132123 0.01344854 0.00851855 0.00541815 0.00346018 0.00221859 0.00142810 0.00092280 0.00059855 0.00038968 0.00025462 0.00016698 0.00010988

TVM Table PV Annuity

Present value interest factor of an (ordinary) ANNUITY of $1 per period at i% for n periods, PVIFA(i,n).
Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0.99009901 0.98039216 0.97087379 0.96153846 0.95238095 0.94339623 0.93457944 0.92592593 0.91743119 0.90909091 0.90090090 0.89285714 0.88495575 0.87719298 0.86956522 0.86206897 0.85470085 0.84745763 0.84033613 0.83333333
2 1.97039506 1.94156094 1.91346970 1.88609467 1.85941043 1.83339267 1.80801817 1.78326475 1.75911119 1.73553719 1.71252333 1.69005102 1.66810244 1.64666051 1.62570888 1.60523187 1.58521441 1.56564206 1.54650095 1.52777778
3 2.94098521 2.88388327 2.82861135 2.77509103 2.72324803 2.67301195 2.62431604 2.57709699 2.53129467 2.48685199 2.44371472 2.40183127 2.36115260 2.32163203 2.28322512 2.24588954 2.20958496 2.17427293 2.13991677 2.10648148
4 3.90196555 3.80772870 3.71709840 3.62989522 3.54595050 3.46510561 3.38721126 3.31212684 3.23971988 3.16986545 3.10244569 3.03734935 2.97447133 2.91371230 2.85497836 2.79818064 2.74323501 2.69006180 2.63858552 2.58873457
5 4.85343124 4.71345951 4.57970719 4.45182233 4.32947667 4.21236379 4.10019744 3.99271004 3.88965126 3.79078677 3.69589702 3.60477620 3.51723126 3.43308097 3.35215510 3.27429365 3.19934616 3.12717102 3.05763489 2.99061214
6 5.79547647 5.60143089 5.41719144 5.24213686 5.07569207 4.91732433 4.76653966 4.62287966 4.48591859 4.35526070 4.23053785 4.11140732 3.99754979 3.88866752 3.78448269 3.68473591 3.58918475 3.49760256 3.40977722 3.32551012
7 6.72819453 6.47199107 6.23028296 6.00205467 5.78637340 5.58238144 5.38928940 5.20637006 5.03295284 4.86841882 4.71219626 4.56375654 4.42261043 4.28830484 4.16041973 4.03856544 3.92238013 3.81152759 3.70569514 3.60459176
8 7.65167775 7.32548144 7.01969219 6.73274487 6.46321276 6.20979381 5.97129851 5.74663894 5.53481911 5.33492620 5.14612276 4.96763977 4.79877029 4.63886389 4.48732151 4.34359090 4.20716251 4.07756576 3.95436567 3.83715980
9 8.56601758 8.16223671 7.78610892 7.43533161 7.10782168 6.80169227 6.51523225 6.24688791 5.99524689 5.75902382 5.53704753 5.32824979 5.13165513 4.94637184 4.77158392 4.60654388 4.45056624 4.30302183 4.16333249 4.03096650
10 9.47130453 8.98258501 8.53020284 8.11089578 7.72173493 7.36008705 7.02358154 6.71008140 6.41765770 6.14456711 5.88923201 5.65022303 5.42624348 5.21611565 5.01876863 4.83322748 4.65860363 4.49408629 4.33893487 4.19247209
11 10.36762825 9.78684805 9.25262411 8.76047671 8.30641422 7.88687458 7.49867434 7.13896426 6.80519055 6.49506101 6.20651533 5.93769913 5.68694113 5.45273302 5.23371185 5.02864438 4.83641336 4.65600533 4.48649989 4.32706007
12 11.25507747 10.57534122 9.95400399 9.38507376 8.86325164 8.38384394 7.94268630 7.53607802 7.16072528 6.81369182 6.49235615 6.19437423 5.91764702 5.66029213 5.42061900 5.19710722 4.98838748 4.79322486 4.61050411 4.43921673
13 12.13374007 11.34837375 10.63495533 9.98564785 9.39357299 8.85268296 8.35765074 7.90377594 7.48690392 7.10335620 6.74987040 6.42354842 6.12181152 5.84236151 5.58314696 5.34233381 5.11827990 4.90951259 4.71470933 4.53268061
14 13.00370304 12.10624877 11.29607314 10.56312293 9.89864094 9.29498393 8.74546799 8.24423698 7.78615039 7.36668746 6.98186523 6.62816823 6.30248807 6.00207150 5.72447561 5.46752915 5.22929906 5.00806152 4.80227675 4.61056717
15 13.86505252 12.84926350 11.93793509 11.11838743 10.37965804 9.71224899 9.10791401 8.55947869 8.06068843 7.60607951 7.19086958 6.81086449 6.46237882 6.14216799 5.84737010 5.57545616 5.32418723 5.09157756 4.87586282 4.67547264
16 14.71787378 13.57770931 12.56110203 11.65229561 10.83776956 10.10589527 9.44664860 8.85136916 8.31255819 7.82370864 7.37916178 6.97398615 6.60387506 6.26505964 5.95423487 5.66849669 5.40528823 5.16235386 4.93769985 4.72956054
17 15.56225127 14.29187188 13.16611847 12.16566885 11.27406625 10.47725969 9.76322299 9.12163811 8.54363137 8.02155331 7.54879440 7.11963049 6.72909298 6.37285933 6.04716076 5.74870404 5.47460533 5.22233378 4.98966374 4.77463378
18 16.39826858 14.99203125 13.75351308 12.65929697 11.68958690 10.82760348 10.05908691 9.37188714 8.75562511 8.20141210 7.70161657 7.24967008 6.83990529 6.46742046 6.12796587 5.81784831 5.53385071 5.27316422 5.03333087 4.81219482
19 17.22600850 15.67846201 14.32379911 13.13393940 12.08532086 11.15811649 10.33559524 9.60359920 8.95011478 8.36492009 7.83929421 7.36577686 6.93796928 6.55036883 6.19823119 5.87745544 5.58448778 5.31624087 5.07002594 4.84349568
20 18.04555297 16.35143334 14.87747486 13.59032634 12.46221034 11.46992122 10.59401425 9.81814741 9.12854567 8.51356372 7.96332812 7.46944362 7.02475158 6.62313055 6.25933147 5.92884090 5.62776734 5.35274650 5.10086214 4.86957973
25 22.02315570 19.52345647 17.41314769 15.62207994 14.09394457 12.78335616 11.65358318 10.67477619 9.82257960 9.07704002 8.42174466 7.84313911 7.32998498 6.87292744 6.46414909 6.09709197 5.76623361 5.46690585 5.19514796 4.94758702
30 25.80770822 22.39645555 19.60044135 17.29203330 15.37245103 13.76483115 12.40904118 11.25778334 10.27365404 9.42691447 8.69379257 8.05518397 7.49565344 7.00266411 6.56597964 6.17719850 5.82938962 5.51680595 5.23465837 4.97893640
36 30.10750504 25.48884248 21.83225250 18.90828195 16.54685171 14.62098713 13.03520776 11.71719279 10.61176282 9.67650816 8.87859438 8.19241421 7.59785101 7.07898708 6.62313689 6.22011919 5.86170579 5.54120148 5.25312201 4.99294584
40 32.83468611 27.35547924 23.11477197 19.79277388 17.15908635 15.04629687 13.33170884 11.92461333 10.75736020 9.77905072 8.95105082 8.24377668 7.63437564 7.10504094 6.64177837 6.23349709 5.87133459 5.54815188 5.25815331 4.99659811
50 39.19611753 31.42360589 25.72976401 21.48218462 18.25592546 15.76186064 13.80074629 12.23348464 10.96168290 9.91481449 9.04165318 8.30449849 7.67524158 7.13265646 6.66051466 6.24625906 5.88006071 5.55414098 5.26227908 4.99945058

P1_Bonds

Problem 1: Bonds (10 points)
Hint: You will need to use time value of money tables to complete this problem. The present value of $1 and Present Value of an Annuity tables are presented on the previous two tabs. To ensure accuracy, round the time value of money factors to 2 decimal places only. For example, if the factor is 2.57709699, round it to 2.58.
On January 2, 20X1, the Premuroso Company, Inc., a privately held company, issued $1,000,000, 5-year, 10% term bonds, dated January 2, 20X1. The bonds provided for semiannual interest payments to be made on June 30 and December 31 of each year. Terms of the bond indenture allowed the company to call the bonds at 102 after 1 year. The bonds were issued when the market interest rate was 8%. Present value of $1
Premuroso, Inc. uses the effective interest method for amortizing bond discounts and premiums. Present value of an annuity of $1
Premuroso's fiscal year end for financial reporting purposes is December 31. Future value of $1
The company called the bonds at 102 on June 30, 20X2. Future value of an annuity of $1
Calculate the present values of the principal and interest cash flows related to the bonds and the resulting bond issue price. In the Compounding period(s), Interest rate, Payment amount, and Present value columns, select from the option list provided the appropriate value. Each choice may be used once, more than once, or not at all. In the Factor column, find the appropriate time value factors in the references in the exhibits and enter those values in the appropriate cell. Then, use the spreadsheet to calculate the bond issue price in the Present value column based on your entries.
Summary of Facts:
Face of Bonds $1,000,000
Stated Rate of Interest 10% per year
Market Rate of Interest 8% per year
Term of Bonds 5 years
Part A) Compute the price of the bonds using formulas embedded into the cells of the table below.
# of Compounding Periods Effective Interest Rate per Period (%) Payment Amount Which TVM Table? (Select from Dropdown box) Time Value of Money Factor (Round to 2 decimal places) Present Value Possible Points = Points You Earned =
Face of the Bonds 1
Periodic Interest Payments 1
Price of the Bonds = 1
Part B) Prepare the journal entry for the issuance of the bonds.
Bonds issuance:
Accounts Debits Credits
1/2/20X1
1
Part C) Prepare a bond amortization table using the effective interest method.
Effective Interest Method of Amortizing the Bond Premium
Date Interest Payment Interest Expense Amortization of Bond Premium Bond Premium Bonds Payable Book Value
January 2, 20X1
6/30/X1
12/31/X1
6/30/X2
12/31/X2
6/30/X3
12/30X3
6/30/X4
12/31/X4
6/30/X5
12/31/X5
1/1/X6 3
Part D) Prepare the June 30, 20X4 journal entry by referencing cells in the amortization table you created in #2 above. 1
Account Debits Credits
Part E) In your own words, describe why the FASB prefers the effective interest method of amortizing the bond premium. Provide the FASB Codification number that supports your opinion.
2
Total Points 10

P2_Leases

Problem 2: Leases (10 points)
1. On January 1, 2013, Levin Furniture Company leases office space under a 21-year operating lease agreement. Points Points You
The contract calls for annual rent payments on December 31 of each year during the agreement. Possible Earned
The payments are $19,500 the first year, increasing by $425 each year. The benefits expected by the lessee
using this office space are expected to remain constant over the lease term.
Required:
Record Levin's rent payment at December 31, 2017 (the 5th annual rental payment) and at December 31, 2027 2
(the 15th annual rental payment). (1 for each
Journal Entry)
Account Debit Credit
2. At the beginning of 2018, Advanced Industries acquired a large, custom-made machine with a fair value of
$7,331,130 by signing a three-year lease agreement. The lease is payable in three annual payments of $3.0 million
at the end of each year.
Required:
a. What is the effective annual interest rate implicit in the agreement?
b. Prepare the lessee's journal entries required at the inception of the lease, the first lease payment which is due 2
and paid December 31, 2018, and the second lease payment which is due and paid December 31, 2019.
Date Account Debit Credit 2
January 1, 2018:
December 31, 2018: 2
December 31, 2019:
2
c. Suppose the fair value of the machine and the lessor's implicit interest rate were unknown at the time of the
lease, but you are able to determine that the lessee's incremental borrowing rate of interest for notes of similar
risk was 10%. Prepare the lessee's entry at the inception of the lease. HINT: Use the Time Value of Money tables provided in previous tabs
Total Points = 10
Account Debit Credit

P3_Income Taxes

Problem 3: Income Taxes (10 points)
Zurich Inc. reports pretax financial income of $70,000 in 2017.
The following items cause taxable income to be different from pretax financial income:
a. Depreciation on the tax return is greater than the depreciation on the income statement by $16,000.
b. Rent collected and reported on the tax return is greater than rent recognized on the income statement by $22,000
c. Fines for pollution appear as an expense of $11,000 on the income statement.
Zurich’s tax rate is 30% for all years and the company expects to report taxable income in all future years.
There are no deferred taxes at the beginning of 2017.
Required:
1. Determine the taxable income for 2017? Points Possible Points You Earned
4
2. Determine the deferred tax asset for 2017?
1
3. Determine the deferred tax liability for 2017?
1
4. Record the journal entry for income tax expense for 2017?
Accounts Debits Credits 4
Total points = 10

P4_Consolidations

Problem 4: Consolidations (10 points)
On January 2, Pearl borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Silver. Pearl had no prior equity interest in Silver. Ten equal principal and interest payments begin on December 30. The excess of the implied fair value of Silver Over the carrying amount of its identifiable net assets should be assigned 60% to inventory and 40% to goodwill. Additionally, the fair value of the noncontrolling interest (NCI) is 10% of the implied fair value of the acquiree.
The following are the balance sheets of Pearl and Silver on January 1:
Pearl Silver
Current Assets 70,000 20,000
Non Current Assets 90,000 40,000
Total Assets 160,000 60,000
Current Liabilities 30,000 10,000
Non Current Liabilities 50,000 0
Equity 80,000 50,000
Total Liabilities & Equity 160,000 60,000
On Pearl's January 2 consolidated balance sheet, Possible Points = Points You Earned =
Place Your Answers Below
a) current assets = 2
b) non current assets = 2
c) current liabilities = 2
d) the sum of the non current liabilities and the NCI = 2
e) shareholders equity should be 2
10 0

P5_EPS

Problem 5: Earnings per Share (10 points)
ABC Company had 3 million shares of common stock outstanding for the entire year. The company reported net income of $8 million. ABC has a tax rate of 40%. The average stock price for the company during the year was $12. No dividends were declared or paid during the year. The company had the following potentially dilutive securities outstanding for the entire year.
a. 10,000 bonds , $1,000 par, 8% coupon bonds issued at face value during the prior year. The bonds pay interest annually every December 31. Each bond can be converted into 24 shares of common stock.
b. 200,000 shares of $10 par value cumulative preferred stock issued at par with a dividend rate of 7%. Each share of preferred stock can be converted into one share of common stock.
c. 100,000 stock options that can be exercised in two years. Each option can be exercised for one share of common stock for $15 share.
Questions:
Points Possible Points You Earned
1) Determine the basic earnings per share for the year. 2 points
Basic EPS =
2) Determine the per share effects of the potentially dilutive securities, placing them in order from the most dilutive effect to the least dilutive 3 points
3) Determine the diluted earnings per share for the year 5 points
Diluted EPS =