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Question 19
On September 1, 2005, Cano & Co., a U.S. corporation, sold
merchandise to a foreign firm for 250,000 francs. Terms of the sale
require payment in francs on February 1, 2006. On September 1, 2005,
the spot exchange rate was $.20 per franc. At December 31, 2005,
Cano's year end, the spot rate was $.19, but the rate increased to $.22 by
February 1, 2006, when payment was received. How much should Cano
report as a foreign exchange gain or loss in its 2006 income statement?
Question 20
During 2005, Rex Co. introduced a new product carrying a two-year
warranty against defects. The estimated warranty costs related to dollar
sales are 2% within 12 months following sale and 4% in the second 12
months following sale. Sales and actual warranty expenditures for the
years ended December 31, 2005 and 2006 are as follows: At December
31, 2006, Rex should report an estimated warranty liability of
Question 1
Which of the following should be disclosed for each reportable
operating segment of an enterprise?
Question 2
Advertising costs may be accrued or deferred to provide an appropriate
expense in each period for
Question 3
Ace Co. settled litigation on February 1, 2005 for an event that occurred
during 2004. An estimated liability was determined as of December 31,
2004. This estimate was significantly less than the final settlement. The
transaction is considered to be material. The financial statements for