ACC 305 ACC/305 ACC305 MidTerm Part II On April 1, 2014, West Company purchased $469,000 of 5.00% bonds for $487,510 plus accrued interest as an available-for-sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2019 2. Pole Co. at the end of 2015, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $455,000 Extra depreciation taken for tax purposes (1,041,000) Estimated expenses deductible for taxes when paid 925,000 Taxable income $339,000 Use of the depreciable assets will result in taxable amounts of $347,000 in each of the next three years. The estimated litigation expenses of $925,000 will be deductible in 2018 when settlement is expected. 3. Selected Information about the pension plan of Roman Co. is as follows: 12/31/14 12/31/15 Accumulated benefit obligation $4,720,000 $4,950,000 Projected benefit obligation 4,970,000 5,170,000 Accumulated OCI (PSC) 1,832,000 1,520,000 Fair value of plan assets 4,760,000 4,960,000 Pension expense 1,020,000 1,720,000 Contribution 1,005,000 1,360,000 Discount rate (for year) 9% 8% 4. Pasta Inn charges an initial fee of $1,680,000 for a franchise, with $336,000 paid when the agreement is signed and the balance in four annual payments. The present value of the annual payments, discounted at 10%, is $1,075,200. The franchisee has the right to purchase $30,000 of kitchen equipment and supplies for $57,200. An additional part of the initial fee is for advertising to be provided by Pasta Inn during the next five years. The value of the advertising is $500 a month. Collectibility of the payments is reasonably assured and Pasta Inn has performed all the initial services required by the contract.