Take Home Quiz Mid Term Advanced Accounting 2

Problem 1
On November 1, 2012, US Goldman Inc. entered into a 90 day forward contract of 200,000
pounds to anticipate the purchase of inventory. On December 1, 2012 Goldman Inc. agreed with
the vendor. On December 31, 2012 the goods was delivered by vendor and the payment for the
purchase was on February 1, 2013. The inventory was sold on March 25, 2013. The relevant
exchange rates are of dollars per pound:
Date
November
1, 2012
December
1, 2012
December
31, 2012
February
1, 2013
Spot Rate 1.4 1.38 1.45 1.42
Forward Rate:
90 days 1.44 1.40 1.5 1.47
60 days 1.42 1.38 1.48 1.45
30 days 1.38 1.35 1.42 1.4
Required:
Prepare all journal entry for the transaction described above.

Problem 2
On January 1, 2013, Sanders Co. issued a 4-year, $500,000 bonds at 3% fixed interest. The
interest is payable semiannually and the bond was issued at par. Tylor now wants to change the
note to a variable rate note. As a result, on January 1, 2013, Tylor Co. enters into an interest rate
swap where it agrees to receive 3% fixed and pay LIBOR +1.5%. At each 6-month period, the
variable interest rate will be reset. Below are the information about LIBOR rate and fair value of
swaps contract:
LIBOR rate FV of SWAPS
1-Jan-13 1.50% 0
30-Jun-13 2% -20,000
31-Dec-13 1% 35,000
Required:
Prepare journal from January 1, 2013 until December 31, 2013 to record the transaction above.

Problem 3
On December 1, 2008, Merry Corporation acquired 100 shares of Venus Corporation at a cost of
$60 per share. Merry classifies them as available-for-sale securities. On this same date, it decides
to hedge against a possible decline in the value of the securities by purchasing, at a cost of $400,
an at-the-money put option to sell the 100 shares at $60 per share. The option expires on
February 20, 2009. Selected information concerning the fair values of the investment and the
options follow:
Take Home Quiz Mid Term Advanced Accounting 2


Assume that Merry exercises the put option and sells Venus shares on February 20, 2009.
Required:
1) Prepare the entries required on December 1, 2008, to record the purchase of the Venus stock
and the put options.
2) Prepare the entries required on December 31, 2008, to record the change in intrinsic value and
time value of the options, as well as the revaluation of the available-for-sale securities.
3) Prepare the entries required on February 20, 2008, to record the exercise of the put option and
the sale of the securities at that date.

Problem 4
Ridge Company is in the process of determining its reportable segments for the year ended
December 31, 2008. As the person responsible for determining this information, you gather the
following information:

Additional Information:
1. General corporate expense $20
2. Income from equity investment $40
3. General corporate assets $200
4. Equity Investments $500
5. Gross margin for intersegment sales is 20%. Included in intersegment transfer is a transfer of
fixed assets with total transfer $40.
6. Intersegment notes included in segment assets is $50.
Required:
a) Using the appropriate tests, determine which of the industry segments listed above are
reportable for 2008. Show your supporting computations in good form. Indicate whether or not
Ridge's reportable segments satisfy the 75 percent test. Show your supporting computations in
good form.
Take Home Quiz Mid Term Advanced Accounting 2

b) Prepare reconciliation of reportable segment revenue, P/L, and assets to its consolidation.

Problem 5
On January 1, 20X8, a crude-oil-producing company (called ABC Company) issues a one-year
$10,000,000 crude oil knock-in note that guarantees the repayment of the principal and has a 1
percent coupon (0.5% paid semiannually) plus a potential additional return if crude oil prices
increase over specified levels. The contingent payment feature is not separable from the note.
The following based on information the company obtained from its investment advisers:

Also on June 30, 20X8, crude oil price have not increased over specified level and the options
fair value is $ 200,000. On maturity, the option has an intrinsic value $1,000,000.
Required:
a. Determine whether this transaction is an embedded derivative and give explanation!
b. Prepare the journal entry from the issuers side!

Problem 6
Tentukan jenis joint arrangement dari transaksi di bawah ini:
a. PT A dan PT B yang bergerak di bidang manufaktur sepatu bersama-sama membentuk entitas
C untuk melakukan pengaturan bersama. Entitas C bertugas untuk menyediakan kebutuhan raw
material PT A dan B. Dalam kontrak pendirian entitas C dijelaskan bahwa setiap keputusan
strategis harus disetujui oleh PT A dan B, serta tidak disebutkan adanya penguasaan asset oleh
PT A dan B. Dalam operasionalnya, entitas C hanya diperbolehkan untuk menjual raw material
kepada PT A dan B.
b. Untuk mengembangkan dan mengoperasikan lapangan gas LNG, PT X dan Y membentuk PT
Z yang diharapkan dapat mengekstrak gas LNG dan menjualnya kepada para pelanggan di luar
negeri. PT Z merupakan entitas terpisah dari PT X dan Y, namun modal PT Z berasal dari kedua
PT tersebut. Pengaturan kontraktual PT Z tidak menyatakan bahwa salah satu pihak
memiliki hak atas aset, maupun liabilitas PT Z. Untuk memperoleh tambahan investasi, PT Z
terlibat dalam pinjaman sindikasi dalam jumlah besar. Pada kontrak pinjaamn sindikasi tersebut
disebutkan bahwa pada saat pengembangan dan pembangunan fasilitas LNG, PT X dan Y harus
menanggung seluruh pinjaman PT Z apabila entitas Z gagal bayar. Namun, apabila PT Z gagal
bayar dalam tahap produksi, maka pihak sindikasi hanya akan menggadaikan fasilitas LNG yang
dimiliki oleh PT Z.