purchases supplies worth $100 on account. c. At the beginning of January,
Webworks had fourteen keyboards costing $113 each and twenty flash drives
which had been written down to $5 each in December due to obsolescence.
Webworks uses periodic FIFO to cost

indicate that the ability to apply significant influence is missing. Thus, according
to U.S. GAAP, the equity method is applied. Big recognizes its portion of Littles
$200,000 net income as soon as it is earned by the investee. As a 40 Saylor URL:
http:/w

figure of interest. If a business begins to struggle, the time of payment tends to
lengthen because of the difficulty in generating sufficient cash amounts.
Therefore, an unexpected jump in this number is often one of the first signs of
financial problems

estimates are likely to prove wrong, at least in some small amount. What
happens when a figure is reported in a set of financial statements and the actual
total is later found to be different? For example, Wysocki Corporation
recognized an estimated loss

certainly not a minor obligation. In the notes to the financial statements, the
company explains, We provide for estimated product warranty expenses when
we sell the related products. Because warranty estimates are forecasts that are
based on the best Say

requires the recognition of a loss contingency if 1. the loss is deemed to be
probable, and 2. the amount of loss can be reasonably estimated. When both of
these criteria are met, the expected impact of the loss contingency is recorded.
To illustrate, ass

meet those obligations as they come due. In a newspaper account of Advanced
Cell Technology, the following warning was issued: It reported $17 million in
current liabilities, but only $1 million in cash and other current assets, an
indication it could be

References
1. Julian, R., Abel, R., Greig M.: BIBDs with small block size. In: Colbourn, C.J., Dinitz, J.H.
(eds.) The CRC Handbook of Combinatorial Designs, pp. 4147. CRC Press, Inc., Boca Raton
(1996)
2. Allis, V.: Searching for solutions in games and a

Acknowledgments
I would first like to thank my family, D. Beeler, L. Beeler, J. Beeler, and P. Keck
for their love and support throughout my life. I would like to thank my colleagues
R. Gardner, A. Godbole, T. Haynes, M. Helfgott, D. Knisley, R. Price, an

350
Appendices
g(1,1)
Clicking evaluate will yield 528.
Sage will also do partial fraction decompositions. For instance, suppose we want
to find the partial fraction decomposition of
f (x) =
In Sage, we would type
1
.
x 2 5x + 6
f = 1/(x 2 5*x + 6)
to def

Appendices
355
which will be represented by x and y. Again, the group acting on our set will be the
twelfth Dihedral group. The pattern inventory is generated by the code
y = var(y)
D = DihedralGroup(12).cycle_index()
sum([(i[1]*prod([(x j + y j) for j in

Appendices
353
Sage will also give derangements of a set with a little work. We first use the
command
mset = [1,2,3,4]
to define the set we wish to derange. The command
derangements(mset)
followed by evaluate will yield all derangements on [4].
To obtain

equipment over four years and its furniture over five years, using the straightline method. i. The license agreement should be amortized over its one-year life.
ii. QRS Company is selling for $9 per share on January 31. iii. Record cost of
goods sold. E.

use the equity method to account for the investment, regardless of whether or
not it has any influence. 4. _ The higher a companys ROA, the more
efficiently the company is using its assets. 5. _ Gains and losses on availablefor-sale securities do not affe

GAAP, if there is a range of possible losses but no best estimate exists within
that range, the entity records the low end of the range. Under IFRS, the entity
records the midpoint of the range. That is a subtle difference in wording, but it is
one that c

Restatement of financial statements should occur if a company attempts to
mislead investors by understating its liabilities. 5. _ Embedded and extended
warranties should be accounted for in the same way. 6. _ When estimating
its warranty liability, a comp

receipt of these goods is the past event that creates the obligation. Third, the
past transaction or event must create a present obligation. In other words, an
actual debt must exist and not just a potential debt. Ordering a piece of
equipment is a past e

at no charge. Refrigerators break and are fixed as promised. The expense has
already been recognized in the year of sale so the payments made by the
company serve to reduce the recorded liability. They have no additional impact
on net income. Figure 13.13

hopes that the amount received for the extended warranty will outweigh the
eventual repair costs. Therefore, the accounting differs here from that
demonstrated for an embedded warranty that was provided to encourage the
sale of the product. Because of the

true? a. Aqua Corporation has a total asset turnover of 1.37 times. b. Hydro
Company is not using is its assets as efficiently as Aqua Corporation. c. Aqua
Corporation has a higher ROA than Hydro Company. Saylor URL:
http:/www.saylor.org/books Saylor.org

company obtains all the outstanding shares of the other so that ownership is
complete. If two companies are brought together to form a third, a merger has
taken place. If one company simply buys another, the transaction is known as an
acquisition. Thomson

originally estimated and recorded balance. 6. Provide the proper reporting rules
for a contingency. Question: The December 31, 2008, balance sheet for E. I. du
Pont de Nemours and Company (better known as DuPont) shows total liabilities
of approximately $

agreements to the contract. Covenants and other terms. Notes and bonds can
contain an almost infinite list of other agreements. Many of these are promises
made by the debtor to help ensure that money will be available to make
required payments. For exampl

ownership is no more than 50 percentmust be accounted for in one of three
ways depending on the degree of ownership and the intention of the investor.
Figure 12.15 Comparison of Three Methods to Account for Investments Saylor
URL: http:/www.saylor.org/boo

companies have a periodic need to raise money for operations and capital
improvements. Debt financing is common although it leads to an interest charge
and the possibility of bankruptcy. The cost of debt is offset somewhat in that
interest expense is tax

the idea of disclosing income in two different ways makes sense. Having said
that, if I were a shareholder of Yahoo! I would want to ask, Why these numbers
are so far apart? What exactly is included in (or excluded from) each of these
income figures? Is t

of each of the subsidiarys assets and liabilities is added to the book value of
those same accounts within the parents financial records. However, the initial
adjustments made at the date of acquisition to establish fair value must
continue to be included

18
1 Preliminaries
Exercise 1.5.10 Show that in every group of n people, where n 2, there are at
least two people that know the same number of people within the group. We assume
that A knows himself and that A knows B if and only if B knows A.
Exercise 1.

14
1 Preliminaries
Theorem 1.4.4 has broader implications than what is immediately evident. Suppose
that we know |A| and wish to know |B|. If we can find a bijection from A to B, then
we have counted the set B. Further, if |A| = |B| then there should exis