ACCT 302
Q 1. Presented below are selected amounts from the separate unconsolidated financial statements of Poe Corp. and its 90%-owned subsidiary, Shaw Co., at December 31,2002.
Additional information as follow:
Additional information:
• On January 2, 20X2, Poe, Inc. purchased 90% of Shaw Co.’s 100,000 outstanding common stock for cash of $155,000. On that date the fair value of the noncontrolling interest was $1.70 per share. On that date, Shaw’s stockholders’ equity equalled $150,000 and the fair values of Shaw’s identifiable assets and liabilities equalled their carrying amounts. Poe has accounted for the purchase as an acquisition.
Calculate the amounts that will appear on Poe’s consolidated financial statement on December 31, 20X2.
1. Cash (0.5 mark)
2. Goodwill (0.5 mark)
3. Equipment (0.5 mark)
4. Common stock (0.5 mark)
5. Investment in Shaw (0.5 mark)
6. Dividends (0.5 mark)
7. Bonds payable (0.5 mark)
8. Non-controlling interest (0.5 mark)
Q2: Differentiate between stock acquisition and assets acquisition? (1 mark)
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ACCT 321
Q – State whether these statements are true or false.Discuss why the false statements are false.
a.An entity is likely to be a governmental entity if a controlling majority of its governing body is appointed by governmental officials.
b.The objective of a government is to provide services to its constituents.
c.AICPA pronouncements have approximately the same level of authority as articles appearing in the Journal of Accountancy.
d.The objective of a not-for-profit organization is to provide services to its constituents.
e.By definition, all funds have cash, financial resources, and capital resources.
f.The objective of a business organization is to enhance the wealth of its owners.
Q- A department of a local government began operations at the beginning of the current fiscal year with $250,000 cash.During the fiscal year, the department made cash disbursements for the following:
#Salaries and other personnel costs, $100,000
#Office rent and utilities, $24,000
#Retirement of debt principal, $10,000; payment of interest, $2,200
#Purchased equipment at the beginning of the fiscal year for $30,000; the equipment is expected to last 6 years and have a salvage value of $6,000
#Photocopier rental, $10,500
Based on the preceding transactions, compute total annual expenditures for this department assuming it performs governmental-type activities and is accounted for in the General Fund.
Then compute total annual expenses for this department assuming it performs activities within an Enterprise Fund.
Q- The council of the Town of Tulia approved the 2013 budget as follows:
Budgeted 2013 revenues from:
Property taxes$5,000,000
Sales taxes$1,000,000
Appropriations for 2013:
Salaries$4,600,000
Materials$1,200,000
Equipment$100,000
During 2013, the town’s mayor presented the council with a budget revision to increase the amount of appropriation for salaries by $10,000.The council approved this budget revision.
Required:
a.Prepare the general journal entry necessary to initially record the budget.
b.Prepare the general journal entry necessary to record the budget revision.
Q. Following is a trial balance for Nadia Day Care, as of July 31, 2013, the end of its first month of business. Based on the trial balance, prepare an income statement for the month ended July 31, 2013, and a balance sheet as of July 31, 2013.
DebitsCredits
Cash$27,400
Accounts receivable500
Prepaid rent2,500
Equipment6,000
Accumulated depreciation, equipment $100
Accounts payable300
Salaries payable240
Interest payable133
Notes payable 20,000
Capital 10,000
Revenues 11,500
Operating expense1,000
Salary expense1,840
Utility expense300
Interest expense133
Rent expense2,500
Depreciation expense100
Totals $42,273$42,273
ACCT 422
Q. Depreciation rates used in financial accounting shall not be used in tax accounting whereas tax law gives tax credits to tax payers by using accelerated depreciation rates for some groups of assets
Required: State depreciation rates under the Article 17 of the Saudi Income.
Q. The paragraph (e) in the article 17 of the Saudi income tax explained how depreciation expense is calculated for any group of assets
Required:
- Discuss In Detail This Article
- Give a numerical example explaining the applicability of the paragraph (e) in the article 17 of the Saudi income tax.
(Answer in your own words DO NOT copy from the Law).
Q. Resident Bank fully owned by Sweden investors has the following selected items drawn from its accounting books (Amounts in Saudi Riyal)
|
Account |
Amount |
Deductible |
Non-deductible |
|
Allowance For Loan Losses |
840,000 |
||
|
Employees’ share in retirement fund. |
190,000 |
||
|
Bad debt (written off) |
18,340 |
||
|
Donations to the Help the Poor Organization (non-licensed in Saudi) |
11,350 |
||
|
Depreciation for New computers purchased to be used on research and development |
35,100 |
||
|
Old employees’ reunion party expenses |
3,000 |
||
|
Bank’ share in retirement fund within the limit in the law. |
145,000 |
||
|
Loss on denoted assets |
8,000 |
||
|
Income tax paid to tax and zakat authority |
150,000 |
Required: check mark items in the table below either deductible or non-deductible under income tax law in the kingdom.
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