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During 2005 both Raim Co. and Cane Co. suffered losses due to
the flooding of the Mississippi River. Raim is located two miles
from the river and sustains flood losses every two to three years.
Cane, which has been located fifty miles from the river for the
past twenty years, has never before had flood losses. How should
the flood losses be reported in each company's 2005 income
statement?
Question 3
On September 1, 2008, Bain Corp. received an order for
equipment from a foreign customer for 300,000 local currency
units (LCU) when the U.S. dollar equivalent was $96,000. Bain
shipped the equipment on October 15, 2008, and billed the
customer for 300,000 LCU when the U.S. dollar equivalent was
$100,000. Bain received the customer's remittance in full on
November 16, 2008, and sold the 300,000 LCU for $105,000. In its
income statement for the year ended December 31, 2008, Bain
should report a foreign exchange gain of:
Question 4
The following information is relevant to the computation of Chan
Co.'s earnings per share to be disclosed on Chan's income
statement for the year ending December 31: Chan has no
preferred stock outstanding, and no other convertible securities.
What amount should be used as the numerator in the fraction
used to compute Chan's diluted earnings per share assuming that
the bonds are dilutive securities?
Question 5
Fay Corp. had a realized foreign exchange loss of $15,000 for the
year ended December 31, 2005 and must also determine whether
the following items will require year-end adjustment: Fay had an