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1、ChangesinAccountingPrinciplesAssumeaclientoperatingonacalendaryearusedtheweightedaveragemethodforinventorycostingthroughtheendof2009,andthatendinginventoryat12/31/2009was$700.In2010,theclientchangedtotheFIFOmethod.HadtheFIFOmethodbeenused,theinventoryat12/31/2009wouldhavebeen$9
2、00.Assumethechangeisalsobeingmadefortaxpurposeandthattheclient’seffectivetaxratein2009and2010is40%.InventoryDVLIFOYearEndingInventory@CYPricePriceIndex2001(baseyear)$20,0001.002002$23,1001.052003$27,2501.092004$27,6001.152005$32,4001.20Coupons·Facevalue$500·Expirationdate12/31/
3、X1·Handlingfeepaidtomerchants20%·Normaltimemerchantstaketoprocesscoupons:onemonth·Paymentstomerchantsin20X9·Totalcouponsexpectedtoberedeemed:60%Howtodeterminetheunredeemedcouponsliabilities?EPS:WeightedaverageoutstandingcommonstocksharescalculationOn1/1100,000sharesofcommonstoc
4、kareoutstanding.On4/180,000sharesareissuedOn7/1a10%stockdividendisissuedOn9/118,000sharesoftreasurystockarerepurchasedOn12/31a2for1stocksplitoccurs.Calculatetheweightedaveragenumberofsharesofcommonstockoutstandingat12/31TDRAssumetheclienthas$500notepayableoutstandingsince1/1/20
5、09,withinterestpaymentsdueattheendofeachcalendaryearuntilthenotematures.At12/31/209,theclientisunabletomaketherequiredannualinterestpayment,andthecreditoragreestorestructurethedebtbyforgivingthemissedpayment,reducingtheprincipalonthenoteto$400,andrequiring10%,interestpaymentson
6、12/31/2010and12/31/2011,withthenoteprincipaldue12/31/2011DeferredTaxExample:Theclienthasprepaida$50expenseatthestartoftheyearthatisforthenext5years.Foraccountingpurposetheexpenseis$50/5=$10.Fortaxpurpose,theclientdeductall$50expensestoday.Currenttaxrateis20%andthefuturetaxratei
7、s30%.Forbookpurposeandtaxpurpose,thenetincomebeforetheexpenseoftheprepaidassetsis$150for2001and$200for2002.FairValueHedgeAssumetheclientisanoildistributor,andhaspurchased100milliongallonsofgasolinefromitssupplierrefineryonOct1atacosto$0.7pergallon.Theyplantoselltheoiltovariousa
8、irlinesinearlyJan,butareconcernedthat,inthemeantime,th
