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Q32. International Motors (IM) currently shows a pension asset of $1.2 billion on its balance sheet. Upon further inspection it is ffice ffice" />
discovered that IM’s pension is actually under funded by $1.3 billion. What adjustments would an analyst make to modify the
balance sheet of IM to include this discrepancy?
A) Eliminate the pension asset, increase long-term liabilities by $2.5 billion, and reduce equity by $2.5 billion.
B) Increase long-term liabilities by $1.3 billion, and reduce equity by $1.3 billion.
C) Eliminate the pension asset, increase long-term liabilities by $1.3 billion, and reduce equity by $2.5 billion.
Correct answer is C)
The reduction in equity is calculated as the net result of a reduction in assets (-$1.2 billion) and an increase in liabilities (-$1.3 billion).
Q33. The UNI Company Balance Sheet
As of December 31, 2002
(in millions)
|
|
2001 |
2002 |
|
|
2001 |
2002 |
|
Cash |
$50 |
$60 |
Accounts payable |
$100 |
$150 |
|
Accounts receivable |
100 |
110 |
Long-term debt |
400 |
300 |
|
Inventory |
200 |
180 |
Common Stock |
50 |
50 |
|
|
Retained earnings |
400 |
500 |
|
Fixed assets (gross) |
800 |
900 |
Total liabilities and equity |
$950 |
$1,000 |
|
Accumulated depreciation |
200 |
250 |
|
|
Fixed assets (net) |
600 |
600 |
|
Total assets |
$950 |
$1,000 |
The UNI Company Income Statement
For year ended December 31, 2002
(in millions)
|
Sales |
$1,000 |
|
Cost of goods sold (COGS) |
600 |
|
Depreciation |
50 |
|
Selling, general, and administrative expenses (SG&A) |
160 |
|
Interest expense |
23 |
|
Income before taxes |
$167 |
|
Tax |
67 |
|
Net income |
$100 |
Additional information:
- UNI uses the last in, first out (LIFO) inventory valuation method. The LIFO reserve is $20 for 2002 and $10 for 2001.
- UNI leases equipment. These leases are classified as operating leases and require annual, end-of-year payments of $10 million for each of the next 5 years.
The balance in inventory at the end of 2002 using first in, first out (FIFO) inventory valuation is:
A) $190 million.
B) $180 million.
C) $200 million.
Correct answer is C)
FIFO inventory = LIFO inventory + LIFO reserve
FIFO inventory = $180 + 20 = $200
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发表于 2009-3-3 12:36
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