Reference no: EM13960296
G's 2013 and 2014 balance sheets and 2014 income statement follow:
12-31-13 12-31-14
Cash $100,000 $150,000
Receivables from customers, net 400,000 440,000
Prepaid operating expenses 200,000 260,000
Plant assets 900,000 990,000
Accumulated depreciation (250,000) (320,000)
Intangible assets 150,000 190,000
$1,500,000 $1,710,000
Accrued liabilities for operating expenses 415,645 51,257
Unearned revenue 100,000 20,000
Dividends payable 0 100,000
Bonds payable 500,000 500,000
Discount on bonds payable (25,645) (21,880)
Asset retirement obligation 0 125,623
Common stock ($1 par value) 25,000 35,000
Additional paid-in-capital, common stock 235,000 500,000
Retained earnings 250,000 400,000
$1,500,000 $1,710,000
Sales $1,600,000
Cost of services provided 440,235
Operating expenses 360,000
Loss on plant asset sale 15,000
Impairment loss on plant assets 20,000
Interest expense 23,765
Income before taxes 741,000
Income tax expense 191,000
Net income $ 550,000
Additional information for G follows:
- On 01-01-10, G issued $500,000 of its 4%, 10-year term bonds dated 01-01-10. The bonds pay interest every June 30 and December31. At the time the bonds were issued, similar bonds paid 5%. G did not incur any bond issuance costs.
- On 01-01-14, G acquired a fixed asset that will require G to spend an estimated $150,000 to dismantle the asset when G retires the asset on 12-31-20. As of 01-01-14 the interest rate on US Treasury securities was 0.5% and G's credit standing still required a 2.5% risk premium.
- During 2014, G issued 10,000 shares of its common stock.
- During 2014, G sold a plant asset that had an original cost of $200,000. At the time of sale, the asset's accumulated depreciation was $175,000.
- As of 12-31-13, G owned several limited-life intangible assets. During 2014, G purchased an unlimited-life intangible asset for $60,000.
- G's 2014 operating expenses includes depreciation, amortization, and accretion expenses.
- During 2014, G declared 4 quarterly dividends, however, G only paid 3 of the quarterly dividends.
- G uses the indirect method.
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