FinancialAccounting2th财务会计ReviewCases全套复习案例.docx
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FinancialAccounting2th财务会计ReviewCases全套复习案例.docx
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FinancialAccounting2th财务会计ReviewCases全套复习案例
ReviewCase1:
MechanicalTechnologyIncorporated
MechanicalTechnologywasincorporatedin1961.Itsprincipalbusinessisthedevelopmentandcommercializationofmicrofuelcellsandthedevelopmentandsalesofprecisioninstrumentation.
Overthelastfiveyears,MechanicalTechnologyhasstrengtheneditscommitmenttoandinvolvementinthenewenergysector.TheCompanyhassoldoffnon-corebusinessesandrestructureditsbalancesheetinordertoimplementitscorebusinessstrategy,whichistodevelopnewenergytechnologiesandfurtherstrengthenitsoperation.
Anincomestatement,balancesheet,statementofcashflows,statementofshareholders’equity,andseveralnotesappearattheendofthiscase.
Required:
Thefollowingquestionsallrelatetothesestatements.Explainandjustifyallanswers.
a.ExplainthechangeinthebalanceintheretainedearningsaccountfromSeptember30,
2000,toSeptember30,2001.
b.Whyisthe“lossonsaleoffixedassets”addedtonetincomeinthecashflowstatementinordertoobtaincashflowfromoperations?
Bespecific.
c.WhatisMechanicalTechnology’scomprehensiveincome(loss)totalfortheyearendedSeptember30,2001?
Whatisthesingleitemaccountingforthelargestdifferencebetweennetincomeandcomprehensiveincomefortheyear?
d.Accountspayablerelateonlytopaymentstosuppliersofinventory.During2001,byhowmuchdidthe“costofsales”(assumeallrelatedtoinventory)differfromthecashpaymentsmadetothesuppliersoftheinventory?
e.Whatwasthebaddebtexpenserelatingtoallaccountsandnotesreceivable(bothshort-andlong-term)inthe2001incomestatement?
Explain.
f.Explainthechanges(listallofthemajortransactionswhichaccountforchange)inthebalancesofthe“property,plantandequipment--gross”and“accumulateddepreciation”accounts.(Hint:
consideralloftheinformationinthecashflowstatementaswellasthefootnoteinformation).Provideajournalentryforeachadditionorsubtractionineachofthet-accounts.
PP&E(gross)AccumulatedDepreciation
Beg.bal..?
?
?
?
Beg.bal.
Additions?
?
?
?
SubtractionsSubtractions?
?
?
?
Additions
End.Bal.?
?
?
?
End.bal.
g.Whatwastheamountofthe“minorityinterest”claimagainstconsolidatednetassetsintheconsolidatedfinancialstatementsatthetimethelessthanwhollyownedsubsidiarywassetupduringthe2001fiscalyear?
h.Werethereanytreasurystocktransactions(purchasesorsales)duringthe2001fiscalyear?
Howcanyoutell?
Bespecific.
i.Whyis“Stockdividend”subtractedfromnetincomeinthecashflowstatementinordertoobtaincashflowfromoperations?
Makeajournalentrytorecordreceiptofthisdividend.
j.MechanicalTechnologyusesFIFOasitsinventoryflowassumption.Thefollowinghypotheticalinformationrelatestoinventoryvaluation.HowmuchhigherorlowerwouldMechanicalTechnology’sfiscal2001pretaxnetincomehavebeenifithadusedLIFOinsteadofFIFOforitsinventoryaccounting?
InventoriesconsistofthefollowingatSeptember30,2001:
(Dollarsinthousands)
20012000
Finishedgoods$272$150
Workinprocess693249
Rawmaterials,componentsand
assemblies709794
FIFOinventoryvalue$1,674$1,193
Less:
LIFOreserve120100
LIFOinventoryvalue$1,554$1,093
k.SupposethatonOctober1,2001,MechanicalTechnologyisconsideringraising$1,000thousandforgeneralcorporatepurposes.Itisconsideringtwoalternatives.(Forpurposesofthisproblem,makeallinterestandcouponcalculationsonanannualbasis.)
1.Issueazero-couponbond.Getthe$1,000thousandnowandrepayallprincipalandinterestattheendofthreeyears.Themarketinterestrateonthebondwouldbe10%.
2.Issue,atfacevalue,a10%couponbondwithafacevalueof$1,000thousand.Thebondmaturesinthreeyearsandtherelevantrateofinterestis10%
i.Makethejournalentriestorecordtheissueofthebondundereachofthealternatives.
ii.Whatistheamountofinterestexpensetobereportedinthefiscal2002incomestatementundereachofthealternatives?
iii.Whatistheamountofinterestexpensetobereportedinthefiscal2003incomestatementundereachofthealternatives?
iv.WhatisthebookvalueofthebondonOctober1,2003,exactlyoneyearpriortomaturity,undereachofthealternatives?
v.Supposethebondunderalternative2sellsinthemarketfor$1,100thousandonOctober1,2003.MakethejournalentrytorecordthebuybackofthebondbyMechanicalTechnologyonthatdate.
vi.IfthemarketrateofinterestforzerocouponbondsofthetypeissuedbyMechanicalTechnologyfallsto6%onSeptember30,2003whatwillbethemarketvalueofthealternative1bond?
vii.Supposethepurchaserofthezero-couponbondclassifiesitasanavailable-for-salesecurity.Whatvaluewillthebondhaveonthepurchaser’sbalancesheetatthecloseofbusinessonSeptember30,2003,iftheassumptionsofvi.prevail?
l.SummarizedbelowisfinancialinformationforPlugPowerandSatCon,thetwocompaniesaccountedforbyusingtheequitymethodbyMechanicalTechnology.MechanicalTechnologyowns24.9%ofPlugPowerand8.05%ofSatCon.Bookvalueapproximatesmarketvalueforallofthenumbersinthefollowingtable.
($inthousands)
PlugPowerSatCon
Currentassets$111,212$24,935
Noncurrentassets53,60718,560
Currentliabilities7,7375,271
Noncurrentliabilities6,5345,773
Stockholders’equity150,54832,451
i.Ifthesetwoaffiliateswereconsolidatedinsteadofbeingaccountedforundertheequitymethod,howmuchlargerorsmallerwouldlong-term(non-current)liabilitieshavebeen?
Assumetherearenointercompanyliabilities.
ii.Assuming(i),howwouldtheconsolidatedratiooflong-term(noncurrent)liabilitiestostockholders’equitychange?
iii.Underconsolidation,asin(i),howmuchlargerwouldtotalassetsbe?
Assumethattherearenointercompanyassetsorliabilities.
iv.WhydoyouthinkMechanicalTechnologyusestheequitymethodtoaccountforitsownershipinSatCon,whileonlyowning8.05%ofthecompany?
MECHANICALTECHNOLOGYINCORPORATEDANDSUBSIDIARIES
BalanceSheets
(dollarsinthousands)
Assets
2001
2000
CurrentAssets:
Cashandcashequivalents
$9,807
$1,552
Restrictedcashequivalents
78
1,142
Securitiesavailableforsale
6,704
-
Accountsreceivable,lessallowancesof$0in2001and2000
586
693
Inventories
1,674
1,193
Notesreceivable-current,lessallowanceof$0in2001and$250in2000
250
94
Deferredincometaxes
2,052
979
Prepaidexpensesandothercurrentassets
1,108
331
TotalCurrentAssets
$22,259
$5,984
Derivativeasset
220
-
Property,plantandequipment,net
1,581
529
Notesreceivable-noncurrent,lessallowanceof$660in2001and2000
-
97
Holdings,atequity(Note7)
47,197
64,356
Holdings,atcost
-
6,050
TotalAssets
$71,257
$77,016
LiabilitiesandShareholders'Equity
CurrentLiabilities:
Lineofcredit(Note11)
$5,000
$27,000
Accountspayable
807
283
Accruedliabilities
1,945
1,603
Accruedliabilities-relatedparties
3
9
Incometaxespayable
25
9
Contingentobligationtocommonstockwarrantholders
288
-
Netliabilitiesofdiscontinuedoperations
358
231
TotalCurrentLiabilities
$8,426
$29,135
Long-TermLiabilities:
Deferredincometaxesandothercredits
8,453
2,852
TotalLiabilities
$16,879
$31,987
Minorityinterests
$331
$-
Shareholders'Equity
Commonstock,parvalue$1pershare,authorized75,000,000;35,505,010issuedin2001and35,437,285in2000
$35,505
$35,437
Paid-in-capital
65,103
54,790
Accumulateddeficit
(41,328)
(45,169)
$59,280
$45,058
AccumulatedOtherComprehensiveLoss:
Unrealizedlossonavailableforsalesecurities,netoftax
(5,204)
-
Commonstockintreasury,atcost,20,250sharesin2001and2000
(29)
(29)
TotalShareholders'Equity
$54,047
$45,029
TotalLiabilitiesandShareholders'Equity
$71,257
$77,016
MECHANICALTECHNOLOGYINCORPORATEDANDSUBSIDIARIES
IncomeStatements
(dollarsinthousands)
2001
2000
1999
Netsales
$7,298
$5,558
$12,895
Costofsales
3,150
2,587
8,249
Grossprofit
$4,148
$2,971
$4,646
Selling,generalandadministrativeexpenses
6,159
4,864
4,949
Productdevelopmentandresearchcosts
3,684
2,034
1,105
Operatingloss
$(5,695)
$(3,927)
$(1,408)
Interestexpense
(1,970)
(1,943)
(106)
Lossonderivatives
(1,266)
-
-
Gainonderivatives,Companystock
922
-
-
Gainonsaleofholdings,net
28,838
-
-
Gainonsaleofsubsidiary
-
1,262
-
Other(expense)income,net
(93)
(309)
185
Income(loss)fromcontinuingoperationsbeforeincometaxes,equityinholdings'lossesandminorityinterests
$20,736
$(4,917)
$(1,329)
Incometax(expense)benefit
(7,524)
1,927
(37)
Equityinholdings'losses(netoftaxbenefitof$9,722in2001,$10,219in2000and$0in1999)
(17,072)
(15,849)
(9,363)
Minorityinterestinlossesofconsolidatedsubsidiary
123
-
-
Lossfromcontinuingoperations
$(3,737)
$(18,839)
$(10,729)
Incomefromdiscontinuedoperations(netoftaxesof$157in2000and$0in1999)
-
243
41
Lossbeforecumulativeeffectsofchangesinaccountingprinciples
$(3,737)
$(18,596)
$(10,688)
CumulativeeffectofaccountingchangeforderivativefinancialinstrumentsforCompany'sownstock,netoftax
1,468
-
-
Cumulativeeffectofaccountingchangeforderivativefinancialinstruments,netofta
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