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Chapter 24: 17Q (page 1445)
What are the accounting problems related to the presentation of interim data?
The presentation of interim data supports at least the essence of an interim financial report and standards of acknowledgment and estimate in monetary explanations displayed for the interim period.
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Keystone Corporation’s financial statements for the year ended December 31, 2017, were authorized for issue on March 10, 2018. The following events took place early in 2018.
Instructions
Discuss how the preceding subsequent events should be reflected in the 2017 financial statements.
Carlton Company is involved in four separate industries. The following information is available for each of the four industries.
Operating Segment | Total Revenue | Operating Profit (Loss) | Identifiable Assets |
W | \( 60,000 | 15,000 | \)167,000 |
X | 10,000 | 3,000 | 83,000 |
Y | 23,000 | (2,000) | 21,000 |
Z | 9,000 | 1,000 | 19,000 |
\(102,000 | \)17,000 | $290,000 |
Instructions
Determine which of the operating segments are reportable based on the:
b) Operating profit (loss) test.
The controller for Lafayette Inc. recently commented, “If I have to disclose our segments individually, the only people who will gain are our competitors and the only people that will lose are our present stockholders.” Evaluate this comment.
(Dividend Policy Analysis) Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through the retention of earnings. A stock or a cash dividend has never been declared. Presented below is a brief financial summary of Matheny Inc.’s operations.
(\(000 omitted) | |||||
2018 | 2017 | 2016 | 2015 | 2014 | |
Sales revenue | \)20,000 | \(16,000 | \)14,000 | \(6,000 | \)4,000 |
Net income | 2,400 | 14,000 | 800 | 700 | 250 |
Average total assets | 22,000 | 19,000 | 11,500 | 4,200 | 3,000 |
Current assets | 8,000 | 6,000 | 3,000 | 1,200 | 1,000 |
Working capital | 3,600 | 3,200 | 1,200 | 500 | 400 |
Common shares: Number of shares Outstanding (000) Average market price | 2,000 \(9 | 2,000 \)6 | 2,000 $4 | 20 - | 20 - |
Instructions
The following information was described in a note of Canon Packing Co.
“During August, Holland Products Corporation purchased 311,003 shares of the Company’s common stock which constitutes approximately 35% of the stock outstanding. Holland has since obtained representation on the Board of Directors.”
“An affiliate of Holland Products Corporation acts as a food broker for Canon Packing in the greater New York City marketing area. The commissions for such services after August amounted to approximately $20,000.”
Why is this information disclosed?
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