CHAPTER 24 FULL DISCLOSURE IN FINANCIAL REPORTING. IFRS questions are available at the end of this chapter. TRUE-FALSE Conceptual

Transcription

1 CHAPER 24 ULL DICLOURE IN INANCIAL REPORING IR questions re ville t the en of this hpter. RUE-ALE Coneptul Answer. Desription s ffete y AB stnrs. EC reporting requirements. Definition of ounting poliies. Relte prty trnstions islosure. Post-lne-sheet islosures. AB 131 requirements Allotion of joint or ommon osts. Dislosure of mjor ustomers. Reporting uner the integrl pproh. Aounting priniples in interim reports. Reporting extrorinry items in interim reports. Computing txes in n interim perio. Opinions issue y uitor. Definition of qulifie opinion. Mngement s isussion n nlysis setion. Informtion provie y MD&A setion. Definition of finnil projetion. innil forest vs. finnil projetion. ruulent finnil reporting. Internl environment influenes.. Desription P P 37. Dislosure of signifint ounting poliies. Dislosure of inventory ounting poliy. Definition of errors n irregulrities. ull islosure priniple esription. APB Opinion. 22 islosure. Relte prty trnstions. Post-lne-sheet events. usequent events islosure. Reognition of susequent events. Revenue of segment. egment revenue test. egment revenue test. Dislosure of operting segment informtion. Bses of reporting isggregte informtion. s reonile in segment reporting. Aounting priniples use in interim reports. Plnne volume vrine in interim perio. MULIPLE CHOICE Coneptul Answer

2 24-2 est Bnk for Intermeite Aounting, hirteenth Eition 38. Interim finnil reporting. MULIPLE CHOICE Coneptul ont. Answer N/o. Desription P *48. *49. *50. *51. *52. *53. *54. *55. Applition of ounting priniples on interim reporting. Methos of inventory vlution yer en vs. interim. Prtil LIO liquition reporte in interim sttements. Dislosing informtion in interim sttements. Extrorinry items in interim reports. Issuing qulifie opinion. s overe in MD&A setion. Differene etween finnil forest n finnil projetion. Dislosures in finnil forests. Ai-test rtio n urrent rtio. Reeivles turnover rtio. Rte of return on ommon stok equity. Pyout rtio. Mesure of long-term solveny. Numer of times interest erne. Using verge mounts. Limittions of rtio nlysis. P hese questions lso pper in the Prolem-olving urvivl Guie. hese questions lso pper in the tuy Guie. * his topi is elt with in n Appenix to the hpter. MULIPLE CHOICE Computtionl Answer. Desription *60. *61. *62. *63. *64. *65. *66. *67. *68. *69. *70. *71. *72. Determine reportle operting segments. Bonus expense in first qurter interim inome sttement. Property txes n plnt repirs reognize in interim perio. Inventory loss reflete in interim sttements. Clulte the urrent rtio. Clulte the numer of times interest ws erne. Clulte ook vlue per shre of ommon stok. Clulte rte of return on ommon stok equity. Clulte reeivles turnover. Clulte inventory turnover. Clulte the profit mrgin on sles. Clulte the rte of return on ommon stok equity. Determine ook vlue per shre. Clulte the i-test rtio. Clulte the i-test rtio. Reeivles turnover. Clulte inventory turnover.

3 ull Dislosure in innil Reporting MULIPLE CHOICE CPA Apte Answer. Desription *81. *82. *83. ignifint ounting poliies islose for plnt ssets. Criteri for reporting isggregte informtion. Ientifition of reportle segments. Ientifition of reportle segment. Avertising osts yer en vs. interim reporting. otl expense to e reporte in interim sttements. Extrorinry loss reporte in interim sttements. Extrorinry gin reporte in interim sttements. Ai-test rtio n inventory turnover rtio. Ai-test rtio n et to totl ssets rtio. Reeivles turnover n pyout rtio. EXERCIE E24-84 E24-85 E24-86 E24-87 E24-88 E24-89 *E24-90 *E24-91 *E24-92 Desription tes to finnil sttements. egment reporting. egment reporting. Interim reports. Inventory n ost of goos sol t interim tes. orests. innil sttement nlysis. elete finnil rtios. Computtion of selete rtios. PROBLEM P24-93 P24-94 Desription egment Reporting. Interim Reports. CHAPER LEARNING OBJECIVE 1. Review the full islosure priniple n esrie implementtion prolems. 2. Explin the use of notes in finnil sttement preprtion. 3. Disuss the islosure requirements for mjor usiness segments. 4. Desrie the ounting prolems ssoite with interim reporting. 5. Ientify the mjor islosures in the uitor's report. 6. Unerstn mngement s responsiilities for finnils. 7. Ientify issues relte to finnil forests n projetions. 8. Desrie the profession's response to fruulent finnil reporting. *9. Unerstn the pproh to finnil sttement nlysis. *10. Ientify mjor nlyti rtios n esrie their lultion. *11. Explin the limittions of rtio nlysis. 24-3

4 24-4 est Bnk for Intermeite Aounting, hirteenth Eition UMMARY O LEARNING OBJECIVE BY QUEION Ite yp P 45. Ite yp P P yp Ite yp Ite Lerning Ojetive Lerning Ojetive Lerning Ojetive Lerning Ojetive Lerning Ojetive Lerning Ojetive 6 y Ite yp 24. E E 93. P E E P E Ite yp E te: Ite Lerning Ojetive Lerning Ojetive 8 E Lerning Ojetive Lerning Ojetive 11 = rue-lse = Multiple Choie E = Exerise P = Prolem E E

5 ull Dislosure in innil Reporting 24-5 RUE-ALE Coneptul 1. AB stnrs iretly ffet finnil sttements, notes to the finnil sttements, n mngement s isussion n nlysis. 2. he EC requires tht ompnies report to it ertin sustntive informtion tht is not foun in their nnul reports. 3. Aounting poliies re the speifi ounting priniples n methos ompny uses n onsiers most pproprite to present firly its finnil sttements. 4. In orer to mke equte islosure of relte prty trnstions, ompnies shoul report the legl form, rther thn the eonomi sustne, of these trnstions. 5. If the loss on n ount reeivle results from ustomer s nkrupty fter the lne sheet te, the ompny only isloses this informtion in the notes to the finnil sttements. 6. AB ttement 131 requires tht generl purpose finnil sttements inlue selete informtion on single sis of segmenttion. 7. he AB requires llotions of joint, ommon, or ompny-wie osts for externl reporting purposes. 8. If 10 perent or more of ompny revenue is erive from single ustomer, the ompny must islose the totl mount of revenue from eh suh ustomer y segment. 9. Compnies shoul report ounting trnstions s they our, n expense reognition shoul not hnge with the perio of time overe uner the integrl pproh. 10. Compnies shoul generlly use the sme ounting priniples for interim reports n for nnul reports. 11. Compnies report extrorinry items in interim reports y prorting them over the four qurters. 12. o ompute the yer-to-te tx, ompnies pply the estimte nnul effetive tx rte to the yer-to-te orinry inome t the en of eh interim perio. 13. In most situtions, n uitor issues qulifie opinion or islims n opinion. 14. A qulifie opinion is issue when the exeption to the stnr opinion is not of suffiient mgnitue to invlite the sttements s whole. 15. Mngement s isussion n nlysis setion overs three finnil spets of n enterprise s usiness-liquiity, profitility, n solveny. 16. he MD&A setion must provie informtion out the effets of infltion n hnging pries, if they re mteril to finnil sttement trens.

6 est Bnk for Intermeite Aounting, hirteenth Eition A finnil projetion is set of prospetive finnil sttements tht present ompny s expete finnil position n results of opertions. 18. he ifferene etween finnil forest n finnil projetion is tht forest provies informtion on wht is expete to hppen, while projetion provies informtion on wht might tke ple. 19. ruulent finnil reporting is intentionl or rekless onut, whether t or omission, tht results in mterilly misleing finnil sttements. 20. Influenes in ompny s internl environment my relte to inustry onitions, poor internl ontrol systems, or legl n regultory onsiertions. rue-lse Answers Coneptul MULIPLE CHOICE Coneptul 21. Whih of the following shoul e islose in ummry of ignifint Aounting Poliies?. ypes of exeutory ontrts. Amount for umultive effet of hnge in ounting priniple. Clims of equity holers. Depreition metho followe 22. An exmple of n inventory ounting poliy tht shoul e islose in ummry of ignifint Aounting Poliies is the. mount of inome resulting from the involuntry liquition of LIO.. mjor klogs of inventory orers.. metho use for priing inventory.. omposition of inventory into rw mterils, work-in-proess, n finishe goos. 23. Errors n irregulrities re efine s intentionl istortions of fts..... Errors Irregulrities

7 ull Dislosure in innil Reporting 24-7 he full islosure priniple, s opte y the ounting profession, is est esrie y whih of the following?. All informtion relte to n entity's usiness n operting ojetives is require to e islose in the finnil sttements.. Informtion out eh ount lne ppering in the finnil sttements is to e inlue in the notes to the finnil sttements.. Enough informtion shoul e islose in the finnil sttements so person wishing to invest in the stok of the ompny n mke profitle eision.. Dislosure of ny finnil fts signifint enough to influene the jugment of n informe reer. he fous of APB Opinion. 22 is on the islosure of ounting poliies. his informtion is importnt to finnil sttement reers in etermining. net inome for the yer.. whether ounting poliies re onsistently pplie from yer to yer.. the vlue of osolete items inlue in ening inventory.. whether the working pitl position is equte for future opertions. If usiness entity entere into ertin relte prty trnstions, it woul e require to islose ll of the following informtion exept the. nture of the reltionship etween the prties to the trnstions.. nture of ny future trnstions plnne etween the prties n the terms involve.. ollr mount of the trnstions for eh of the perios for whih n inome sttement is presente.. mounts ue from or to relte prties s of the te of eh lne sheet presente. P 27. Events tht our fter the Deemer 31, 2011 lne sheet te ut efore the lne sheet is issue n provie itionl eviene out onitions tht existe t the lne sheet te n ffet the relizility of ounts reeivle shoul e. isusse only in the MD&A Mngement's Disussion n Anlysis setion of the nnul report.. islose only in the tes to the innil ttements.. use to reor n justment to B Det Expense for the yer ening Deemer 31, use to reor n justment iretly to the Retine Ernings ount 28. Whih of the following post-lne-sheet events woul generlly require islosure, ut no justment of the finnil sttements?. Retirement of the ompny presient. ettlement of litigtion when the event tht gve rise to the litigtion ourre prior to the lne sheet te.. Employee strikes. Issue of lrge mount of pitl stok 29. Whih of the following susequent events post-lne-sheet events woul require justment of the ounts efore issune of the finnil sttements?. Loss of plnt s result of fire. Chnges in the quote mrket pries of seurities hel s n investment. Loss on n unolletile ount reeivle resulting from ustomer s mjor floo loss. Loss on lwsuit, the outome of whih ws eeme unertin t yer en

8 24-8 est Bnk for Intermeite Aounting, hirteenth Eition 30. Revenue of segment inlues. only sles to unffilite ustomers.. sles to unffilite ustomers n intersegment sles.. sles to unffilite ustomers n interest revenue.. sles to unffilite ustomers n other revenue n gins. 31. An operting segment is reportle segment if. its operting profit is 10% or more of the omine operting profit of profitle segments.. its operting loss is 10% or more of the omine operting losses of segments tht inurre n operting loss.. the solute mount of its operting profit or loss is 10% or more of the ompny's omine operting profit or loss.. none of these. 32. A segment of usiness enterprise is to e reporte seprtely when the revenues of the segment exee 10 perent of the. totl omine revenues of ll segments reporting profits.. totl revenues of ll the enterprise's inustry segments.. totl export n foreign sles.. omine net inome of ll segments reporting profits. 33. All of the following informtion out eh operting segment must e reporte exept. unusul items.. interest revenue.. ost of goos sol.. epreition n mortiztion expense. 34. he profession requires isggregte informtion in the following wys:. prouts or servies.. geogrphi res.. mjor ustomers.. ll of these. 35. In presenting segment informtion, whih of the following items must e reonile to the entity's onsolite finnil sttements? Revenues Operting Profit Loss Ientifile Assets APB Opinion. 28 inites tht. ll ompnies tht issue n nnul report shoul issue interim finnil reports.. the isrete view is the most pproprite pproh to tke in prepring interim finnil reports.. the three si finnil sttements shoul e presente eh time n interim perio is reporte upon.. the sme ounting priniples use for the nnul report shoul e employe for interim reports.

9 ull Dislosure in innil Reporting P Ronelli Mnufturing Compny employs stnr ost system. A plnne volume vrine in the first qurter of 2011, whih is expete to e sore y the en of the fisl yer, orinrily shoul. e eferre t the en of the first qurter, regrless of whether it is fvorle or unfvorle.. never e eferre eyon the qurter in whih it ours.. e eferre t the en of the first qurter if it is fvorle; unfvorle vrines re to e reognize in the perio inurre.. e eferre t the en of the first qurter if it is unfvorle; fvorle vrines re to e reognize in the perio inurre. 38. In onsiering interim finnil reporting, how oes the profession onlue tht suh reporting shoul e viewe?. As "speil" type of reporting tht nee not follow generlly epte ounting priniples.. As useful only if tivity is evenly spre throughout the yer so tht estimtes re unneessry.. As reporting for si ounting perio.. As reporting for n integrl prt of n nnul perio. 39. Aounting priniples re moifie for the following t interim tes Losses he following methos of estimting inventory n e use t interim tes for inventory priing. My they lso e use t yer en? Revenue Gross Profit Metho Retil Inventory Metho A ompny tht uses the lst-in, first-out LIO metho of inventory priing fins t n interim reporting te tht there hs een prtil liquition of the se perio inventory level. he eline is onsiere temporry n the prtil liquition is expete to e reple prior to yer en. he mount shown s inventory t the interim reporting te shoul. e shown t the tul level, n ost of sles for the interim reporting perio shoul inlue the expete ost of replement of the liquite LIO se.. e shown t the tul level, n ost of sles for the interim reporting perio shoul reflet the historil ost of the liquite LIO se.. not give effet to the LIO liquition, n ost of sles for the interim reporting perio shoul reflet the historil ost of the liquite LIO se.. e shown t the tul level, n the erese in inventory level shoul not e reflete in the ost of sles for the interim reporting perio.

10 24-10 est Bnk for Intermeite Aounting, hirteenth Eition 42. Compnies shoul islose ll of the following in interim reports exept. si n ilute ernings per shre.. hnges in ounting priniples.. post-lne-sheet events.. sesonl revenue, ost, or expenses. 43. he require pproh for hnling extrorinry items in interim reports is to. prorte them over ll four qurters.. prorte them over the urrent n remining qurters.. hrge or reit the loss or gin in the qurter tht it ours.. islose them only in the notes. If the finnil sttements exmine y n uitor le the uitor to issue n opinion tht ontins n exeption tht is not of suffiient mgnitue to invlite the sttement s whole, the opinion is si to e. unqulifie.. qulifie.. verse.. exeptionl. P he MD&A setion of ompny's nnul report is to over the following three items:. inome sttement, lne sheet, n sttement of owners' equity.. inome sttement, lne sheet, n sttement of sh flows.. liquiity, pitl resoures, n results of opertions.. hnges in the stok prie, mergers, n quisitions. 46. Whih of the following est hrterizes the ifferene etween finnil forest n finnil projetion?. orests inlue omplete set of finnil sttements, while projetions inlue only summry finnil t.. A forest is normlly for full yer or more n projetion presents t for less thn yer.. A forest ttempts to provie informtion on wht is expete to hppen, wheres projetion my provie informtion on wht is not neessrily expete to hppen.. A forest inlues t whih n e verifie out future expettions, while the t in projetion is not suseptile to verifition. 47. A finnil forest per professionl pronounements presents to the est of the responsile prty's knowlege n elief,. n entity's expete finnil position, results of opertions, n sh flows.. n ssessment of the ompny's ility to e suessful in the future.. given one or more hypothetil ssumptions, n entity's expete finnil position, results of opertions, n sh flows.. n ssessment of the ompny's ility to e suessful in the future uner numer of ifferent ssumptions *48. Csh, short-term investments, n net reeivles re the numertor for Ai-est Rtio Current Rtio...

11 ull Dislosure in innil Reporting *49. heoretilly, in omputing the reeivles turnover, the numertor shoul inlue. net sles.. net reit sles.. sles.. reit sles. *50. he rte of return on ommon stok equity is lulte y iviing. net inome y verge ommon stokholers equity.. net inome less preferre iviens y verge ommon stokholers equity.. net inome y ening ommon stokholers equity.. net inome less preferre iviens y ening ommon stokholers equity. *51. he pyout rtio is lulte y iviing. iviens per shre y ernings per shre.. sh iviens y net inome plus preferre iviens.. sh iviens y mrket prie per shre.. sh iviens y net inome less preferre iviens. *52. Whih of the following rtios mesures long-term solveny?. Ai-test rtio. Reeivles turnover. Det to totl ssets. Current rtio *53. he lultion of the numer of times interest is erne involves iviing. net inome y nnul interest expense.. net inome plus inome txes y nnul interest expense.. net inome plus inome txes n interest expense y nnul interest expense.. none of these. *54. When shoul n verge mount e use for the numertor or enomintor?. When the numertor is lne sheet item or items. When the enomintor is lne sheet item or items. When rtio onsists of n inome sttement item n lne sheet item. When the numertor is n inome sttement item or items *55. he si limittions ssoite with rtio nlysis inlue. the lk of omprility mong firms in given inustry.. the use of estimte items in ounting.. the use of historil osts in ounting.. ll of these.

12 24-12 est Bnk for Intermeite Aounting, hirteenth Eition Multiple Choie Answers Coneptul *48. *49. *50. *51. *52. *53. *54 *55. olutions to those multiple hoie questions for whih the nswer is none of these: 31. he solute mount of its profit or loss is 10% or more of the greter, in solute mount, of the omine profit of ll operting segments tht i not inur loss, or the omine loss of ll operting segments tht i inur loss. MULIPLE CHOICE Computtionl 56. Presente elow re four segments tht hve een ientifie y Hley Proutions: egments A B C D otl Revenue Unffilite $255, , ,000 90,000 Operting Profit Loss $30,000 55,000 6,000 4,000 Ientifile Assets $900, , , ,000 or whih of the segments woul informtion hve to e islose in orne with professionl pronounements?. egments A, B, C, n D. egments A, B, n C. egments A n B. egments A n D 57. In Jnury 2011, Post, In. estimte tht its yer-en onus to exeutives woul e $720,000 for he tul mount pi for the yer-en onus for 2010 ws $660,000. he estimte for 2011 is sujet to yer-en justment. Wht mount, if ny, of expense shoul e reflete in Post's qurterly inome sttement for the three months ene Mrh 31, 2011?. $ $165,000.. $180,000.. $720, On Jnury 15, 2011, Vney Compny pi property txes on its ftory uiling for the lenr yer 2011 in the mount of $560,000. In the first week of April 2011, Vney me unntiipte mjor repirs to its plnt equipment t ost of $1,400,000. hese repirs will enefit opertions for the reminer of the lenr yer. How shoul these expenses e reflete in Vney's qurterly inome sttements?

13 ull Dislosure in innil Reporting /31/11 $140,000 $140,000 $560,000 $490,000 hree Months 6/30/11 $606,667 $1,540,000 $1,400,000 $490,000 Ene 9/30/11 $606,667 $140,000 $ -0$490, /31/11 $606,667 $140,000 $ -0$490,000 An inventory loss from mrket eline of $1,600,000 ourre in My 2011, fter its Mrh 31, 2011 qurterly report ws issue. ne of this loss ws reovere y the en of the yer. How shoul this loss e reflete in the ompny's qurterly inome sttements? hree Months Ene 3/31/11 6/30/11 9/30/11 12/31/11. $ -0$ -0$ -0$1,600,000. $ -0$533,333 $533,333 $533,333. $ -0$1,600,000 $ -0$ -0. $400,000 $400,000 $400,000 $400,000 Use the following informtion for questions 60 through 63. Informtion for Rmirez Corp. is given elow: Rmirez Corp. Blne heet Deemer 31, 2011 Assets Csh Aounts reeivle net Inventories Plnt n equipment, net of epreition Ptents Other intngile ssets otl Assets $ 100, , , ,000 87,000 25,000 $2,336,000 Equities Aounts pyle $ 210,000 eerl inome tx pyle 63,000 Misellneous rue pyles 75,000 Bons pyle 10%, ue ,000 Preferre stok $100 pr, 6% umultive nonprtiipting 250,000 Common stok no pr, 20,000 shres uthorize, issue n outstning 375,000 Retine ernings 813,000 resury stok 500 shres of preferre 75,000 otl Equities $2,336,000 Rmirez Corp. Inome ttement Yer Ene Deemer 31, 2011 Net sles Cost of goos sol Gross profit Operting expenses inluing on interest expense Inome efore inome txes Inome tx Net inome $3,000,000 2,000,000 1,000, , , ,000 $ 350,000

14 24-14 est Bnk for Intermeite Aounting, hirteenth Eition Aitionl informtion: here re no preferre iviens in rrers, the lnes in the Aounts Reeivle n Inventory ounts re unhnge from Jnury 1, 2011, n there were no hnges in the Bons Pyle, Preferre tok, or Common tok ounts uring Assume tht preferre iviens for the urrent yer hve not een elre. *60. At Deemer 31, 2011, the urrent rtio ws , , , *61. he numer of times interest ws erne uring 2011 ws *62. At Deemer 31, 2011, the ook vlue per shre of ommon stok ws. $ $ $ $ *63. he rte of return for 2011 se on the yer-en ommon stokholers' equity ws , , , ,188. Use the following informtion for questions 64 through 69. he following t re provie: Csh Aounts reeivle net Inventories Plnt ssets net Aounts pyle xes pyle Bons pyle 10% Preferre stok, $50 pr Common stok, $10 pr Pi-in pitl Retine ernings Net reit sles Cost of goos sol Operting expenses Net inome Deemer $ 375,000 $ 250, , , , ,000 2,000,000 1,625, , ,000 50,000 25, , , , , , , , ,000 1,000, ,000 3,200,000 2,100, , ,000

15 ull Dislosure in innil Reporting Aitionl informtion: Depreition inlue in ost of goos sol n operting expenses is $305,000. On My 1, 2011, 15,000 shres of ommon stok were issue. he preferre stok is umultive. he preferre iviens were not elre uring *64. he reeivles turnover for 2011 is. 3, , , , *65. he inventory turnover for 2011 is. 3, , , , *66. he profit mrgin on sles for 2011 is. 1,100 3, , ,100 2, ,100. *67. he rte of return on ommon stok equity for 2011 is , , , ,000. *68. he ook vlue per shre of ommon stok t 12/31/11 is. 1, , , , *69. At Deemer 31, 2011, the i-test rtio ws , , *70. Presente elow is informtion relte to olert Compny. Current Assets Csh hort-term investments Aounts reeivle Inventories Prepi expenses otl urrent ssets $ 8, , , ,000 60,000 $560,000

16 24-16 est Bnk for Intermeite Aounting, hirteenth Eition otl urrent liilities re $200,000. Wht is the i-test rtio?. 2.8 to to to to 1. *71. Perez Compny's net ounts reeivle were $600,000 t Deemer 31, 2010 n $660,000 t Deemer 31, Net sh sles for 2011 were $390,000. he ounts reeivle turnover for 2011 ws 7.0. Wht were Perez's totl net sles for 2011?. $2,730,000.. $4,410,000.. $4,800,000.. $4,020,000. *72. During 2011, Quirk, Inorporte purhse $3,200,000 of inventory. he ost of goos sol for 2011 ws $3,600,000 n the ening inventory t Deemer 31, 2011, ws $400,000. Wht ws the inventory turnover for 2011? Multiple Choie Answers Computtionl 59. *60. *61. *62. *63. *64. *65. *66. *67. *68. *69. *70. *71. * MULIPLE CHOICE CPA Apte 73. Whih of the following fts onerning plnt ssets shoul e inlue in the summry of signifint ounting poliies? Depreition Metho Composition rr, In. is multiivisionl orportion whih hs oth intersegment sles n sles to unffilite ustomers. rr shoul report segment finnil informtion for eh ivision meeting whih of the following riteri?. egment profit or loss is 10% or more of onsolite profit or loss.. egment profit or loss is 10% or more of omine profit or loss of ll ompny segments.. egment revenue is 10% or more of omine revenue of ll the ompny segments.. egment revenue is 10% or more of onsolite revenue.

17 ull Dislosure in innil Reporting Unruh Corp. n its ivisions re engge solely in mnufturing opertions. he following t onsistent with prior yers' t pertin to the inustries in whih opertions were onute for the yer ene Deemer 31, Assets Inustry Revenue Profit 12/31/11 A $ 8,000,000 $1,320,000 $16,000,000 B 6,400,000 1,120,000 14,000,000 C 4,800, ,000 10,000,000 D 2,400, ,000 5,200,000 E 3,400, ,000 5,600,000 1,200, ,000 2,400,000 $26,200,000 $4,560,000 $53,200,000 In its segment informtion for 2011, how mny reportle segments oes Unruh hve?. hree. our. ive. ix 76. he following informtion pertins to Nixon Corp. n its ivisions for the yer ene Deemer 31, les to unffilite ustomers $2,500,000 Intersegment sles of prouts similr to those sol to unffilite ustomers 750,000 Interest erne on lons to other operting segments 50,000 Nixon n ll of its ivisions re engge solely in mnufturing opertions. Nixon hs reportle segment if tht segment's revenue exees. $330,000.. $325,000.. $255,000.. $250, Avertising osts my e rue or eferre to provie n pproprite expense in eh perio for Interim Yer-en innil Reporting innil Reporting Myo Corp. hs estimte tht totl epreition expense for the yer ening Deemer 31, 2011 will mount to $300,000, n tht 2011 yer-en onuses to employees will totl $600,000. In Myo's interim inome sttement for the six months ene June 30, 2011, wht is the totl mount of expense relting to these two items tht shoul e reporte?. $0.. $150,000.. $450,000.. $900,000.

18 24-18 est Bnk for Intermeite Aounting, hirteenth Eition 79. in Corp. h the following trnstions uring the qurter ene Mrh 31, 2011: Loss from hurrine mge Pyment of fire insurne premium for lenr yer 2011 $350, ,000 Wht mount shoul e inlue in in's inome sttement for the qurter ene Mrh 31, 2011? Extrorinry Loss Insurne Expense. $350,000 $500,000. $350,000 $125,000. $87,500 $125,000. $0 $500, or interim finnil reporting, n extrorinry gin ourring in the seon qurter shoul e. reognize rtly over the lst three qurters.. reognize rtly over ll four qurters with the first qurter eing restte.. reognize in the seon qurter.. islose y note only in the seon qurter. *81. How is the verge inventory use in the lultion of eh of the following? Ai-est Quik Rtio Inventory urnover Rtio. Numertor Numertor. Numertor Denomintor. t Use Denomintor. t Use Numertor *82. Whih of the following rtios isre useful in ssessing ompny's ility to meet urrent mturing or short-term oligtions? Ai-est Rtio Det to otl Assets Rtio.... *83. Whih of the following rtios shoul e use in evluting the effetiveness with whih the ompny uses its ssets? Reeivles urnover Pyout Rtio.... Multiple Choie Answers CPA Apte *81. *82. *83.

19 ull Dislosure in innil Reporting DERIVAION Computtionl. Answer Derivtion 56. Revenue test: otl revenue = $1,170,000 10% = $117,000. Operting profit test: $55,000 10% = $5,500. Asset test: otl ssets = $2,375,000 10% = $237, $720,000 4 = $180, $560,000 4 = $140,000. $1,400,000 3 = $466,667 + $140,000 = $606, Coneptul. *60. $100,000 + $650,000 + $813,000 1,563 = $210,000 + $63,000 + $75, *61. $500,000 + $625, = $625, *62. $375,000 + [$813, $250,000] = $ ,000 *63. $350, $250,000 = 335 1,173. $375,000 + [$813, $250,000] *64. $3,200,000 = 3, $300,000 + $400,000 2 *65. $2,100,000 = 2, $650,000 + $550,000 2 *66 $375,000 $3,200,000 = 375 3,200. *67. $375,000 $500, [$600,000 + $400,000 + $1,000,000 $50,000 + $450,000 + $325,000 + $875,000] 2 = 325 1,800. *68. $600,000 + $400,000 + $1,000,000 $50,000 = 1, ,000

20 24-20 est Bnk for Intermeite Aounting, hirteenth Eition DERIVAION Computtionl ont.. Answer Derivtion *69. $375,000 + $400,000 = $275,000 + $50,000 *70. $8,000 + $150,000 + $122,000 = 1.40 to 1. $200,000 *71. X $390,000 = 7.0, X = $4,800,000. $600,000 + $660,000 2 *72. $3,600,000 + $400,000 $3,200,000 = $800,000. $3,600,000 = 6. $800,000 + $400,000 2 DERIVAION CPA Apte. Answer Derivtion 73. Coneptul. 74. Coneptul. 75. Revenue test: $26,200,000 10% = $2,620,000 Profit test: $4,560,000 10% = $456,000 Asset test: $53,200,000 10% = $5,320,000 A, B, C, E. 76. $2,500,000 + $750,000 10% = $325, Coneptul. 78. $300,000 + $600,000 2 = $450, Extrorinry loss = $350,000 Insurne expense = $500,000 4 = $125, Coneptul. *81. Coneptul. *82. Coneptul. *83. Coneptul.

21 ull Dislosure in innil Reporting EXERCIE Ex tes to finnil sttements. An rtile in Dun's Review me the following omments: "Every other yer, sy, ompnies shoul print the notes in ig type n the se figures in smller ones." Instrutions Are notes onsiere s prt of the finnil sttements n wht si purpose o they serve? Wht re the generl types of notes? olution tes re n integrl prt of the finnil sttements of usiness enterprise. tes re the ountnt's mens of more fully islosing t relevnt to the interprettion of the sttements. Informtion pertinent to speifi finnil sttement items n e expline in qulittive terms, n supplementry t of quntittive nture n e provie to expn on the informtion in the finnil sttements. Restritions impose y finnil rrngements or si ontrtul greements n e expline in notes. he more ommon types of notes islose suh items s the following: 1 ounting methos use, 2 ontingent ssets or liilities, 3 exmintion of reitor lims, 4 lims of equity holers, n 5 exeutory ommitments. Ex egment reporting. he innil Aounting tnrs Bor requires the reporting of isggregte finnil t out the ifferent types of usiness tivities in whih n enterprise engges. Instrutions Ientify 4 of the 6 items of isggregte informtion the AB requires tht n enterprise report. olution he AB requires tht n enterprise report the following isggregte informtion: 1. Generl informtion out its operting segments. 2. egment profit n loss n relte informtion. 3. egment s totl ssets. 4. Reonilition of the totl of operting segments profits n losses to its inome efore inome txes. 5. Informtion out prouts n servies n geogrphi res. 6. otl mount of revenues erive from mjor ustomers.

22 24-22 est Bnk for Intermeite Aounting, hirteenth Eition Ex egment reporting. inney Compny's onense inome sttement is presente elow: Revenues Expenses Cost of goos sol Operting n ministrtive expenses Depreition expense Inome efore txes Inome tx expenses Net inome $1,000,000 $400, ,000 40, , , ,000 $ 252,000 Ernings per shre 100,000 shres $2.52 he following t is ompile reltive to inney's operting segments: Perent Ientifie with egment Hotels Grins Cny Revenues 42% 50% 8% Cost of goos sol Operting n ministrtive expense Depreition expense Inlue in the mounts llote to eh segment on the ove perentges re the following expenses whih relte to generl orporte tivities: Operting egment Hotels Grins Cny otls Operting n ministrtive expense $12,000 $9,000 $3,000 $24,000 Depreition expense 3,500 4,000 2,500 10,000 Instrutions Prepre sheule showing the mounts istriute to eh segment. Bse only on the ove informtion, whih segments must e reporte n why? olution Revenues 1 Expenses Cost of goos sol 1 Operting n min. expense 2 Depreition expense 3 otl expenses Operting profit Operting egment Hotels Grins Cny otls $420,000 $500,000 $80,000 $1,000, ,000 58,000 14, ,900 $155,100 1 otl times segment perentge. 2 Hotels = $200,000 35% $12,000 = $58,000 Grins = $200,000 50% $9,000 = $91,000 Cny = $200,000 15% $3,000 = $27, ,000 91,000 12, ,800 $200,200 12,000 27,000 2,300 41,300 $38,700 $ 400, ,000 30, , ,000

23 ull Dislosure in innil Reporting olution ont. 3 Hotels = $40,000 46% $3,500 = $14,900 Grins = $40,000 42% $4,000 = $12,800 Cny = $40,000 12% $2,500 = $2,300 wo segments, Hotels n Grins, must e reporte euse they stisfy the revenue test; tht is, the segment's revenues re 10% or more of the omine revenues of ll operting segments. In ition, the Hotels n the Grins segments meet the 10% of the operting profit test. Ex Interim reports. A few yers go, pulishing ompny in the fourth qurter h net profit figure tht exeee sles for tht qurter. uh sitution s this suggests tht some iffiult ounting issues re involve in interim reporting. Instrutions Wht re the mjor ounting prolems relte to interim reports? Wht prolem exists with inome txes in interim reports n how oes GAAP reommen tht txes e reporte? Wht oes GAAP require? Mny emiins hve ttempte to preit the yer's net inome fter the first qurter's inome is reporte. hese ttempts re generlly unsuessful, no mtter how sophistite the preition moel. Wht might e the reson for this inility to preit? olution he mjor ounting issues relte to interim reporting re the tretment of 1 extrorinry items, 2 nnully etermine items suh s inome txes, pension osts, exeutive ompenstion se on nnul net inome, n 3 the prolem of sesonlity. he si question with inome txes is whether in the preprtion of interim inome sttements the provision for txes shoul reflet the ntiipte effetive tx rte for the yer or e ompute on the sis of tul results for tht interim perio. APB Opinion. 28 reommens tht t the en of eh interim perio the ompny shoul mke its est estimte of the effetive tx rte expete to e pplile for the full fisl yer. he rte so etermine shoul e use in proviing for inome txes on urrent yer-to-te sis. AB Interprettion. 18 requires tht the estimte nnul effetive tx rte e pplie to the yer-to-te "orinry" inome t the en of eh interim perio to ompute the yerto-te tx. urther, the interim perio tx relte to orinry inome shll e the ifferene etween the mount so ompute n the mounts reporte for previous interim perios of the fisl perio. he preition moels re proly unsuessful euse ountnts hve not trete the prolem of sesonlity orretly in their interim reports. he prolem with the onventionl pproh is tht fixe nonmnufturing osts re not hrge in proportion to sles. Rther, these osts re hrge s inurre, or spre evenly over the four qurters. As result, it is extremely iffiult to mke urte preitions euse some rtifiil onepts re use for mthing purposes.

24 24-24 est Bnk for Intermeite Aounting, hirteenth Eition Ex Inventory n ost of goos sol t interim tes. Disuss how inventory n ost of goos sol my e ffore speil ounting tretment t interim tes. olution he following exeptions re pproprite t interim reporting tes:. Compnies my use the gross profit metho for interim inventory priing.. When LIO inventories re liquite t n interim te n re expete to e reple y yer en, ost of goos sol shoul e se on expete replement ost of the liquite LIO se rther thn historil ost.. Inventory mrket elines shoul not e eferre eyon the interim perio unless they re temporry n no loss is expete for the fisl perio. Reoveries of suh losses on the sme inventory in lter interim perios shll e reognize s gins.. Plnne vrines uner stnr ost system whih re expete to e sore y yer en my e eferre. Ex orests. Reent proposls y investors n others hve suggeste tht orportions inlue finnil forests in their nnul reports. It further hs een suggeste tht the CPA ttest to those forests. Instrutions Wht rguments re vne to support the pulition of suh forests? Wht rguments re vne tht oppose the pulition of suh forests? olution he si rgument for the pulition of finnil forests in orporte nnul reports is to provie the investor with itionl informtion out the future tivities of the ompny upon whih to se investment eisions. A seon rgument is tht some investors hve ess to the forest t urrently; it woul e more equitle if ll investors h ess to suh informtion. he ttesttion y the CPA to suh forest t woul provie the forest t with reliility n permit the investor to hve onfiene in the forest. A thir rgument is tht irumstnes now hnge so rpily tht historil informtion is no longer equte for preition. One rgument rise ginst the pulition of suh forests is the expettion tht mngement woul present onservtive forest in orer to "look goo" when tul results of the yer re in. A seon point often onsiere is the prospet tht the forest woul provie ompetitors with onfientil informtion thus enngering usiness strtegy n the performne of the firm. A thir rgument is tht forests re nrrow estimtes, whih mkes them iffiult to interpret given tht the future is not ertinty, n s result investors my e misle y them.

25 ull Dislosure in innil Reporting olution ont. he ttesttion y CPAs lso n e questione. here my e onflit of interest euse the forest in the urrent yer report n the tul results of the next yer re oth uite y the CPA. here woul e onern tht the reporte results might e juste so tht the forest ppers to e orne out y the tul results. Aitionlly, it n e questione tht the CPA hs the trining n qulifitions to ttest to forests. Also, the profession is hesitnt to ttest to forests until the prolem of itionl exposure to liility is lrifie. *Ex innil sttement nlysis. he onense finnil sttements of Mrks Compny for the yers re presente elow: Mrks Compny Comprtive Blne heets As of Deemer 31, 2011 n 2010 Csh Reeivles net Inventories Plnt n equipment Aumulte epreition Aounts pyle Diviens pyle Bons pyle Common stok $10 pr Retine ernings 2011 $ 420, , ,000 1,700, ,000 $2,700, $ 120, , ,000 1,112, ,000 $1,680,000 $ 240, ,000 1,520, ,000 $2,700,000 $ 160,000 40,000-01,200, ,000 $1,680,000 Aitionl t: Mrket vlue of stok t 12/31/11 is $80 per shre. Mrks sol 32,000 shres of ommon stok t pr on July 1, Mrks Compny Conense Inome ttement or the Yer Ene Deemer 31, 2011 les Cost of goos sol Gross profit Aministrtive n selling expense Net inome $2,400,000 1,600, , ,000 $ 300,000 Instrutions Compute the following finnil rtios y pling the proper mounts in the prentheses provie for numertors n enomintors.

26 24-26 est Bnk for Intermeite Aounting, hirteenth Eition *Ex ont.. Current rtio t 12/31/11. Ai test rtio t 12/31/11. Reeivles turnover in Inventory turnover in 2011 e. Profit mrgin on sles in 2011 f. Ernings per shre in 2011 g. Rte of return on ommon stok equity in 2011 h. Prie ernings rtio t 12/31/11 i. Det to totl ssets t 12/31/11 j. Book vlue per shre t 12/31/11 *olution $1,260,000. $240,000 f. $300, ,000 $2,400,000. $380,000 g. $300,000 $1,770,000 $1,600,000. $360,000 h.. $880,000 $240,000 $300,000 e. $2,400,000 $80 $2.21 i. $640,000 $2,700,000 j. $2,060, ,000

27 ull Dislosure in innil Reporting *Ex elete finnil rtios. he following informtion pertins to Wmser Compny: Csh Aounts reeivle Merhnise inventory Plnt ssets net otl ssets $ 40, ,000 75, ,000 $600,000 Aounts pyle Arue txes n expenses pyle Long-term et Common stok $10 pr Pi-in pitl in exess of pr Retine ernings otl equities $ 55,000 25, , ,000 40, ,000 $600,000 Net sles ll on reit Cost of goos sol Net inome $900, ,000 72,000 Instrutions Compute the following: It is not neessry to use verges for ny lne sheet figures involve. Current rtio Inventory turnover Reeivles turnover Book vlue per shre e Ernings per shre f Det to totl ssets g Profit mrgin on sles h Return on ommon stok equity *olution $40,000 + $125,000 + $75,000 $55,000 + $25,000 = $240,000 $80,000 = $675,000 $75,000 = 9 times. $900,000 $125,000 = 7.2 times. $160,000 + $40,000 + $200,000 $160,000 $10 = $25. e $72,000 $160,000 $10 = $4.50. f $55,000 + $25,000 + $120,000 $600,000 = 33.3%.* g $72,000 $900,000 = 8%. h $72,000 $160,000 + $40,000 + $200,000 = 18.0%. *Roune mounts.

28 24-28 est Bnk for Intermeite Aounting, hirteenth Eition *Ex Computtion of selete rtios. he following t is given: Csh Aounts reeivle net Inventories Plnt ssets net Deemer 31, $ 49,000 $ 50,000 68,000 60,000 90, , , ,000 Aounts pyle Wges pyle Bons pyle 10% Preferre stok, $40 pr Common stok, $10 pr Pi-in pitl Retine ernings 55,000 10,000 70, , ,000 80, ,000 Net reit sles Cost of goos sol Net inome 800, , ,000 Instrutions Compute the following rtios: Ai-test rtio t 12/31/11 Reeivles turnover in 2011 Inventory turnover in 2011 Profit mrgin on sles in 2011 e Rte of return on ommon stok equity in 2011 f Book vlue per shre of ommon stok t 12/31/11 *olution $117,000 $65,000 = 1.8. $800,000 [$60,000 + $68,000 2] = 12.5 times. $500,000 [$110,000 + $90,000 2] = 5 times. $100,000 $800,000 = 12.5%. e $100,000 $10,000 [$330,000 + $372,000 2] = 25.6%. f $372,000 12,000 = $31. 40,000 5,000 70, ,000 90,000 65, ,000

29 ull Dislosure in innil Reporting PROBLEM Pr egment reporting. A entrl issue in reporting on operting segments of usiness enterprise is the etermintion of whih segments re reportle. Instrutions 1. Wht re the tests to etermine whether or not n operting segment is reportle? 2. Wht is the test to etermine if enough operting segments hve een seprtely reporte upon, n wht is the guieline on the mximum numer of operting segments to e shown? olution here re three si tests to e pplie to segments of ompny to see if they re signifint enough to e seprtely reportle. If segment meets ny one of the tests, it is eeme signifint n reportle. he first test is se upon revenue. If segment's revenue from sles to unffilite ustomers n intersegment sles n trnsfers is equl to 10 perent or more of the enterprise's omine revenues, the segment is reportle. he seon test is se upon profits or losses. A segment is eeme reportle if the solute mount of its profit or loss is 10 perent or more of the greter, in solute mount, of: he omine profits of ll operting segments reporting profits. he omine losses of ll operting segments reporting losses. hir, segment is signifint n reportle if the ientifile ssets of the segment equl or exee 10 perent of the omine ssets of ll operting segments within the enterprise. inlly, ll segments, whether eeme reportle or not, must e viewe from the stnpoint of interperio omprility euse the primry purpose of presenting segment informtion is to i the finnil sttement reer. 2. he innil Aounting tnrs Bor sttes tht enough operting segments must e seprtely reporte so tht the totl of revenues from sles to unffilite ustomers for the reportle segments equls or exees 75 perent of the omine sles to unffilite ustomers for the entire enterprise. If pplying the presrie tests oes not yiel the require perentge of revenues esrie ove, itionl segments must e reporte on until the 75 perent test is met. he innil Aounting tnrs Bor hs stte tht if n enterprise hs mny reportle segments, enefit to the reer my e lost if more thn 10 segments re reporte. In suh sitution, the or suggests omining relte reportle segments until the totl is ten or fewer.

30 24-30 est Bnk for Intermeite Aounting, hirteenth Eition Pr Interim reporting. Interim finnil reporting hs eome n importnt topi in ounting. here hs een onsierle isussion s to the proper metho of refleting results of opertions t interim tes. Aoringly, the Aounting Priniples Bor issue n opinion lrifying some spets of interim finnil reporting. Instrutions Disuss generlly how revenue shoul e reognize t interim tes n speifilly how revenue shoul e reognize for inustries sujet to lrge sesonl flututions in revenue n for long-term ontrts using the perentge-of-ompletion metho t nnul reporting tes. Disuss generlly how prout n perio osts shoul e reognize t interim tes. Also isuss how inventory n ost of goos sol my e ffore speil ounting tretment t interim tes. Disuss how the provision for inome txes is ompute n reflete in interim finnil sttements. olution les n other revenues shoul e reognize for interim finnil sttement purposes in the sme mnner s revenues re reognize for nnul reporting purposes. his mens normlly t the point of sle or, in the se of servies, t ompletion of the ernings proess. In the se of inustries whose sles vry gretly ue to the sesonl nture of usiness, revenues shoul still e reognize s erne, ut islosure shoul e me of the sesonl nture of the usiness in the notes. In the se of long-term ontrts reognizing ernings on the perentge-of-ompletion sis, the urrent stte of ompletion of the ontrt shoul e estimte n revenue reognize t interim tes in the sme mnner s t the norml yer en. or interim reporting purposes, prout osts osts iretly ttriutle to the proution of goos or servies shoul e mthe with the prout n ssoite revenues in the sme mnner s for nnul reporting purposes. Perio osts osts not iretly ssoite with the proution of prtiulr goo or servie shoul e hrge to ernings s inurre or llote mong interim perios se on n estimte of time expire, enefit reeive, or other tivity ssoite with the prtiulr interim perios. Also, if gin or loss ours uring n interim perio n is type tht woul not e eferre t yer en, the gin or loss shoul e reognize in full in the interim perio in whih it ours. inlly, in lloting perio osts mong interim perios, the sis for llotion must e supportle n my not e se on merely n ritrry ssignment of osts etween interim perios.

31 ull Dislosure in innil Reporting olution ont. he profession llowe for some vrines from the norml metho of etermining ost of goos sol n vlution of inventories t interim tes in APB Opinion. 28, ut these methos re llowle only t interim tes n must e fully islose in note to the finnil sttements. ome ompnies use the gross profit metho of estimting ost of goos sol n ening inventory t interim tes inste of tking omplete physil inventory. his is n llowle proeure t interim tes, ut the ompny must islose the metho use n ny signifint vrines tht susequently result from reonilition of the results otine using the gross profit metho n the results otine fter tking the nnul physil inventory. At interim tes, ompnies using the LIO ost-flow ssumption my temporrily hve reution in inventory level tht results in liquition of se perio lyers of inventory. If this liquition is onsiere temporry n is expete to e reple prior to yer en, the ompny shoul hrge ost of goos sol t urrent pries. he ifferene etween the rrying vlue of the inventory n the urrent replement ost of the inventory is urrent liility for replement of LIO se inventory temporrily eplete. When the temporry liquition is reple, inventory is eite for the originl LIO vlue n the liility is remove. Inventory losses from eline in mrket vlue t interim tes shoul not e eferre ut shoul e reognize in the perio in whih they our. However, if in susequent interim perio the mrket prie of the written-own inventory inreses, gin shoul e reognize for the reovery up to the mount of the loss previously reognize. If temporry eline in mrket vlue elow ost n resonly e expete to e reovere prior to yer en, no loss shoul e reognize. inlly, if ompny uses stnr ost system to ompute ost of goos sol n to vlue inventories, vrines from the stnr shoul e eferre inste of eing immeitely reognize. he Bor sttes tht the provision for inome txes shown in interim finnil sttements must e se upon the effetive tx rte expete for the entire nnul perio for orinry ernings. he effetive tx rte is, in orne with previous APB opinions, se on ernings for finnil sttement purposes s oppose to txle inome whih my onsier temporry ifferenes. his effetive tx rte is the omine feerl n sttes inome tx rte pplie to expete nnul ernings, tking into onsiertion ll ntiipte investment tx reits, foreign tx rtes, perentge epletion, pitl gins rtes, n other ville tx plnning lterntives. Orinry ernings o not inlue unusul or extrorinry items, isontinue opertions, or umultive effets of hnges in ounting priniples, ll of whih will e seprtely reporte or reporte net of their relte tx effet in reports for the interim perio or for the fisl yer. he mount shown s the provision for inome txes t interim tes shoul e ompute on yer-to-te sis. or exmple, the provision for inome txes for the seon qurter of ompny's fisl yer is the result of pplying the expete rte to yer-to-te ernings n sutrting the provision reore for the first qurter. here re severl vriles in this omputtion expete ernings my hnge; tx rtes my hnge, n the yer-to-te metho of omputtion provies the only ontinuous metho of pproximting the provision for inome txes t interim tes. However, if the effetive rte or expete nnul ernings hnge etween interim perios, the hnge is not reflete retrotively ut the effet of the hnge is sore in the urrent interim perio.

32 24-32 est Bnk for Intermeite Aounting, hirteenth Eition IR QUEION rue/lse 1. Due to the roer rnge of options ville uner U.. GAAP ompre to igaap, note islosures re generlly more expnsive uner U.. GAAP thn uner igaap. 2. igaap requires ompnies to prepre interim reports on qurterly sis. 3. igaap requires segment reporting, n uses the mngement pproh to ientify reportle segments. 4. igaap requires ompnies to islose trnstions with relte prties, inluing the nme of the relte prty n ny outful mounts relte to outstning lnes for the relte prty. 5. Neither U.. GAAP nor igaap requires interim reports. Answers to rue/lse: 1. lse 2. lse 3. rue 4. lse 5. rue Multiple Choie 1. If Benjmin Compny n Iris, In. re similr ompnies in every regr, exept Benjmin Compny uses igaap while Iris, In. uses U.. GAAP, whih of the following is true?. Iris, In. is require to issue interim sttements every 6 months.. Benjmin Compny nee not reognize post-lne sheet events.. Benjmin Compny is not require y igaap to issue interim sttements.. All of the ove re true. 2. Benjmin Compny uses igaap, while Iris, In. uses U.. GAAP, for their externl finnil reporting. On Jnury 16, 2011, oth ompnies settle lwsuits relting to inustril ients tht ourre in Benjmin Compny pi $450,000 n Iris, In. pi $230,000. Assuming tht no rul h een previously me, wht mount of loss shoul e reporte on the inome sttement for the yer ene Deemer 31, 2010 for eh ompny? Benjmin Compny Iris, In.. $-0$-0. $450,000 $230,000. $-0$230,000. $450,000 $-0-