Use only pencil or blue or black ink or ribbon. Do not indicate whether you are a graduating senior. Do not write any notes on the examination that do not answer a question. Most importantly, do not attempt to discuss the examination with me until the grades are posted. Assume that all financial statements are based on the calendar year and that year is 1993 unless stated otherwise.
All corporations have only one class of stock outstanding.
All questions apply GAAP unless specified otherwise. Company A and Company B are virtually identical manufacturing concerns. They both buy large amounts of similar machinery and equipment each year. Neither has material intangibles or self-produced inventory. For purposes of determining depreciation on their financial statements, both companies use similar useful lives and salvage values.