Companies report prior period adjustments, net of any income tax effects in the:
A. Balance sheet.
B. Income statement.
C. Statement of retained earnings.
D. Statement of cash flows.
E. No disclosure is required.
Answer: C
You might also like to view...
Which of the following is the best description of intellectual property?
A) physical property, such as land and housing B) anything that a person thinks C) property that is the result of mental creativity D) property that is considered to be very fruitful
Long-term investments in held-to-maturity debt securities are accounted for using the:
A. Equity method. B. Cost method without amortization. C. Fair value method with fair value adjustment to income. D. Cost method with amortization. E. Fair value method with fair value adjustment to equity.
The Kansas City Southern Railroad (KCSR) currently has a levered capital structure, but it is considering a proposal to issue new equity (@$15/share) and use the proceeds to retire its debt
Selected financial information for KCSR is provided in the table below. Assume that KCSR generates perpetual annual EBIT at a constant level. Assume that all cash flows occur at the end of the year and we are currently at the beginning of a year. Assume that taxes are zero. Assume that all of net income is paid out as a dividend. Assume that the debt is perpetual with an annual coupon rate of 4% (and yield of 4%). Assume that individual investors can borrow and lend at the same interest rate (and with the same terms) as corporations. Charlie Jones, an engineer for the railway, owns 100 shares of KCSR. Charlie receives annual dividend income of $260 under the current capital structure. Charlie likes the lower risk and the return on investment that he could earn under the proposed all-equity capital structure, but Kansas City Southern has announced that it will not go forward with the change in capital structure. If Charlie sells 40 shares and lends the proceeds, then what is his return on investment? Capital Structure Capital Structure Levered All Equity EBIT $300,000 $300,000 Debt, D $1,000,000 $0 Cost of Debt, kd 4% N/A Shares Outstanding 100,000 200,000 Stock Price $15.00 $15.00 Earnings per share $2.60 Dividend per share $2.60 A) 10.00% B) 12.00% C) 12.33% D) 15.50% E) 17.33%
Samantha died on January 18, 2018. Her husband Dave lived by himself until he remarried in 2019. What was Dave's filing status in 2018 and 2019?
A. Married filing jointly in 2018; single in 2019. B. Surviving spouse in 2018 and 2019. C. Married filing jointly in 2018; surviving spouse in 2019. D. Surviving spouse in 2018; single in 2019.