Required
1. Explain to Mr. Bilodeau what is meant by “reporting on a restricted- fund accounting basis” according to the CICA Handbook.
2. Advise Mr. Bilodeau on the appropriate accounting for the above issues assuming that GD decides to report on a restricted-fund accounting basis.
a. Assume Nina’s marginal tax rate at retirement is 30 percent.
Consolidated financial statements will be prepared to combine the financial statements for the two companies. The management of Pepper is concerned about not exceeding a debt-to-equity ratio of 3:1 because of a covenant in a borrowing agreement with its bank. It wants to see how these consolidated statements would differ under two different methods of reporting: acquisition and new entity. Management also has the following questions when reporting this business combination:
• Why, under the acquisition method, is one set of assets and liabilities adjusted to fair value, whereas the other set is left at carrying amount?
• Given that under the acquisition method we can measure and report the net assets at fair values at the date of acquisition, why would we not report fair values at each subsequent reporting date?
• Which balance sheet best reflects the economic reality of the business combination?
Required:
Prepare a consolidated balance sheet at the date of acquisition under the two methods and respond to the questions asked by management.
This Discussion Board calls for a measure of creative role playing.
Use the structure of water molecule to explain why it is polar
Required:
1. Compute the cost of sales under the FIFO and weighted- average inventory costing methods.
2. Prepare a statement of earnings through pretax earnings for each method.
3. Rank the two methods with regard to favourable cash flow, and explain the basis for your ranking.
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