ECON 726 Problem Set #2
1. LEASE ACCOUNTING
On January 1, 2010, two identical companies, Romulus Co. and Remus Inc., lease similar
assets with the following characteristics:
Economic life of 8 years and a Lease term of 6 years.
ii. Lease payments of $1
ECON 726 Quiz #1 Answers
1) THE MECHANICS OF SHENANIGANS
i. Outline a strategy you could use to make at the end of each of Quarter
ECON 726 ADVANCED FINANCIAL STATEMENT ANALYSIS FINAL EXAM SPRING 2006
You must answer all questions on this exam on your own. You are NOT allowed to collaborate with anyone from class. You may use a CFA Institute approved calculator in answering the exam.
ECON 726 PS #3 INTERCORPORATE INVESTMENTS
1. INTERCORPORATE INVESTMENTS
Tracinda Corp. acquires 100,000 shares of GM Corp. on January 1, 2006 at $26.00 per
share. Relevant data for GM Corp are:
Earnings per share
Dividend per share
Recording Revenue too Soon (front-end load)
Revenue should be recorded after the earning process has been completed and an
exchange has occurred.
1. Recording Revenue when future services remain to be provided.
EX. Change accounting and then recording alm
MSFA 726 Problem Set #2
1. Analyze the article in the Earnings Quality Reading involving Brightpoint and AIGs insurance contract
from the earnings quality readings. Using a framework involving Balance Sheets, Income and Cash
Flow Statements over 2+ years
ECON 726 Problem Set #5
1. Merger Accounting Question
Cable Co. acquired 100% of the Common Stock of Movies, Inc. on Sept. 30, 2005 for
$100 million cash (paid to Movies, Inc. shareholders).
- The equity of Movies Inc. was surrendered for the cash.
ECON 726 Problem Set #6
1. Pension Plan Accounting
Detroit Auto Co. has a defined benefit plan covering its US employees. The expected rate of
return on plan assets on January 1, 2006 was 8.75% but decreased to 8.50% on Dec. 31, 2006.
Amounts are in '000'
ECON 726 PROBLEM SET #4
Google decides to buy another software company to add to its ability to compete in the lucrative online advertising
market. It is currently in the process of taking over this company, whom we will refer to as Wron