For each of the following items, indicate whether the item should be reflected in the 2011 financial statements for Tindall Company. If the item should be reflected, indicate whether it should be reported in the financial statements themselves or by note disclosure.
(a) As of December 31, 2011, the company holds $12.1 million of its own stock that it purchased in the open market and is holding for possible reissuance.
(b) As of December 31, 2011, the company was in violation of certain loan covenants. The violation does not cause the loans to be callable immediately but does increase the interest charge by 2.0%.
(c) The company?s reported Provision for Income Taxes includes $4.2 million in current taxes and $7.8 million in deferred taxes.
(d) As of December 31, 2011, accounts receivable in the amount of $7.1 million are estimated to be uncollectible.
(e) The Environmental Protection Agency is investigating the company?s procedures for disposing of toxic waste. Outside consultants have estimated that the company may be liable for fines of up to $10 million.
(f) During 2011, the company had a gain on the sale of manufacturing assets.
(g) During 2011, a long-term insurance agreement was signed. The company paid five years of insurance premiums in advance.
(h) The company uses straight-line depreciation for all tangible, long-term assets.
(i) During 2011, the company hired three prominent research chemists away from its chief competitor.
(j) Reported long-term debt is composed of senior subordinated bonds payable, convertible bonds payable, junior subordinated bonds payable, and capital lease obligations.
(k) Early in 2012, a significant drop in raw material prices caused the company?s stock price to rise in anticipation of sharply increased profits for the year.
This question was answered on: Jul 11, 2017
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