Accounting Periods And Methods - Ch06

Accounting Periods And Methods - Ch06 - CHAPTER 6...

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CHAPTER 6 ACCOUNTING PERIODS AND METHODS SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Partnership tax year Modified 1 2 Fiscal year: natural business year Unchanged 2 3 Converting cash basis income to accrual New method income 4 Change in tax year: short-period tax Unchanged 4 5 Accrual method: required use New 6 Change in accounting method: adjustment Unchanged 6 7 Change in accounting method: adjustment Unchanged 7 8 Ethics problem Unchanged 8 9 Installment method: interest on deferred taxes Unchanged 9 10 Ethics problem Modified 10 11 Installment method: benefits New 12 Installment method: contingent sale price Modified 12 13 Installment method: depreciation and recapture Unchanged 13 14 Installment method: imputed interest Unchanged 14 15 Installment sales between related parties Modified 15 16 Disposition of installment obligations Unchanged 16 17 Long-term contracts: completed contract method Unchanged 17 18 Long-term contracts: percentage of completion Unchanged 18 method 19 Long-term contracts: capitalization versus Unchanged 19 expense 20 Issue recognition Unchanged 20 21 Long-term contract methods Unchanged 21 22 Long-term contract methods Unchanged 22 23 Percentage of completion method Modified 23 24 Inventory capitalization requirements Unchanged 24 25 Lower of cost or market and LIFO Unchanged 25 6-1
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6-2 2003 Entities Volume/Solutions Manual Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 26 Changing from FIFO to LIFO, lower of cost Unchanged 26 or market 27 Dollar-value LIFO Unchanged 27 28 Change in accounting method: inventories Unchanged 28 Bridge Discipline Problem 1 Partnership tax and accounting year Unchanged 1 2 Depreciation Unchanged 2 3 Lower of cost or market Unchanged 3 Research Problem 1 Accounting methods: dollar-value LIFO Unchanged 1 2 Change in accounting method Unchanged 2 3 Qualifying indebtedness New 4 Capitalization of holding costs Unchanged 4 5 Internet Activity Unchanged 5 6 Internet Activity New 7 Internet Activity Unchanged 7 PROBLEM MATERIAL 1. a. Since the majority interest partners' rule is satisfied (i.e., Red, who has a 60% interest, is the majority interest partner), the partnership must have the same tax year as Red (i.e., fiscal year ending March 31). b. Since neither the majority interest partners' rule nor the principal partners' rule is satisfied, the least aggregate deferral method must be used in determining the partnership tax year. Test for Fiscal Year Ending September 30 Months of Partner Year Ends Profit % Deferral Product Red 9/30 30 0 0 Blue 1/31 30 4 1.2 White 6/30 40 9 3.6 Aggregate deferral months 4.8
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6-3 Test for Fiscal Year Ending January 31 Months of Partner Year Ends Profit % Deferral Product Red 9/30 30 8 2.4 Blue 1/31 30 0 0 White 6/30 40 5 2.0 Aggregate deferral months 4.4 Test for Fiscal Year Ending June 30 Months of Partner Year Ends Profit % Deferral Product Red 9/30 30 3 0.9 Blue
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This note was uploaded on 01/24/2010 for the course ACCT 44 taught by Professor Smithysmith during the Spring '10 term at DeVry Chicago.

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Accounting Periods And Methods - Ch06 - CHAPTER 6...

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