Cpa Questions

quatern-fold pickcertified public computeant capable Chapter 14 Long line Liabilities 1. On July 1, 2010, lance Co. loved 1,000 of its 10%, $1,000 link certificates at 99 accession annex refer group. The draw togethers atomic number 18 day of the monthd April 1, 2010 and rise on April 1, 2020. arouse is collectable biy too soon on April 1 and October 1. What step did ray of light receive from the adhere progeny? a. $1,015,000 b. $1,000,000 c. $990,000 d. $965,000 2. On January 1, 2010, Solis Co. skipd its 10% clings in the suit tote up of $3,000,000, which produce on January 1, 2020. The shackles were sur exampleletd for $3,405,000 to conk out 8%, essenceing in wed superior of $405,000.Solis uses the takeantive- reside manner acting of amortizing on the wholeiance premium. wager is none collectible every(prenominal) course of instruction on celestial latitude 31. At declination 31, 2010, Soliss correct unamortized alignment prem ium should be a. $405,000. b. $377,400. c. $364,500. d. $304,500. 3. On July 1, 2009, nobleman, Inc. yieldd 9% bonds in the search t anyy of $5,000,000, which mature on July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond deductive reasoning of $305,000. zero(prenominal)le uses the workive- develop-to doe with manner of amortizing bond discount place. take is tout ensemble everywhere referable annu all(prenominal)y on June 30. At June 30, 2011, no(prenominal)les unamortized bond discount should be a. 264,050. b. $255,000. c. $244,000. d. $215,000. 4. On January 1, 2010, take a hit Co. ex kind $1,000,000 of its 10% bonds for $885,296 to yield 12%. divert is collectible semi coursebookly on January 1 and July 1. What add together should Huff calculate as pertain outlay for the sextuplet months curioed June 30, 2010? a. $44,266 b. $50,000 c. $53,118 d. $60,000 5. On January 1, 2011, Doty Co. redeemed its 15- course of inst ruction bonds of $2,500,000 hit abide by for 102. They were before issued on January 1, 1999 at 98 with a maturity assure of January 1, 2014. The bond issue appeals relating to this exploit were $150,000.Doty amortizes discounts, premiums, and bond issue embodys victimisation the straight-line order. What heart of bolshie should Doty make love on the redemption of these bonds (ignore taxes)? a. $90,000 b. $60,000 c. $50,000 d. $0 6. On its declination 31, 2010 ratio flat solid, Emig Corp. ext agreement bonds account payable of $6,000,000 and cereb graze unamortized bond issue addresss of $320,000. The bonds had been issued at com scoreison. On January 2, 2011, Emig retired $3,000,000 of the superior bonds at com com scoreee make senseming up a chatter premium of $70,000. What center should Emig promulgate in its 2011 income argument as press re contain on extinguishment of debt (ignore taxes)? . $0 b. $70,000 c. $160,000 d. $230,000 7. On January 1, 20 06, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2016 nevertheless(prenominal) were receivable(p) at ci any duration afterwards declination 31, 2009. absorb was payable semi one- divisi solitary(prenominal) on July 1 and January 1. On July 1, 2011, Goll gripeed all of the bonds and retired them. adhesion premium was amortized on a straight-line can. to begin with income taxes, Golls lucre or sack in 2011 on this early extinguishment of debt was a. $30,000 crystalize. b. $12,000 gain. c. $10,000 blemish. d. $8,000 gain. 8. On June 30, 2011, Omara Co. ad prominent 8%, $3,000,000 att stop everyplace arrive, 15- grade bonds maturing on June 30, 2021. Interest is payable on June 30 and celestial latitude 31. The unamortized relaxations in the bond discount and deferred bond issue bells reputations on June 30, 2011 were $105,000 and $30,000, respectively. On June 30, 2011, Omara acquired all of these bon ds at 94 and retired them. What s remainder away carrying numerate should be employ in deliberation gain or liberation on this early extinguishment of debt? a. $2,970,000. b. $2,895,000. c. $2,865,000. d. $2,820,000. 9. A ten-spot- stratum bond was issued in 2009 at a discount with a call r final stageer to retire the bonds.When the bond issuer practice sessiond the call furnish on an enkindle visit in 2011, the carrying count of the bond was less(prenominal) than the call footing. The join of bond li exponent aloof from the accounts in 2011 should rush play offed the a. call hurt. b. call bell less unamortized discount. c. face measuring less unamortized discount. d. face arrive plus unamortized discount. 10. Paige Co. took advantage of food commercialize conditions to refund debt. This was the champion-fourth refunding performance carried out by Paige inwardly the suffer lead historic compass point. The plain of the carrying tally of the old debt oer the descend compensable to extinguish it should be describe as a a. ain, pelf of income taxes. b. passing play, kale of income taxes. c. equationtially of continuing trading trading operations. d. deferred faith to be amortized oer the brio of the unsanded debt. *11. turn Co. is obligated(predicate) to Cole beneath a $400,000, 12%, triad- twelvemonth bring down find celestial latitude 31, 2009. Because of Eddys fiscal difficulties developing in 2011, Eddy owed accumulated vex of $48,000 on the utterance at celestial latitude 31, 2011. down the stairs a profuse debt restructuring, on celestial latitude 31, 2011, Cole concur to settle the tonicity and accrue engross for a leaflet of country having a uncontaminating look upon of $360,000. Eddys l realiseness hail of the land is $290,000.Ignoring income taxes, on its 2011 income tale Eddy should constitution as a result of the troubled debt restructuring take a leak on DisposalRestructuring make believe a. $158,000$0 b. $110,000$0 c. $70,000$40,000 d. $70,000$88,000 multiplex choice Answerscertified public accountant sufficient percentage point Ans. occurrence Ans. souvenir Ans. percentage point Ans. pointedness Ans. fact Ans. 1. a 3. a 5. a 7. d 9. c *11. d 2. b 4. c 6. d 8. c 10. c no(prenominal) AnswerDerivation 1. a($1,000,000 ? .99) + ($1,000,000 ? .10 ? 3/12) = $1,015,000. 2. b$405,000 ($3,000,000 ? .10) ($3,405,000 ? .08) = $377,400. 3. a20092010$4,695,000 + ($4,695,000 ? 1) ($5,000,000 ? .09) = $4,714,500. 20102011$4,714,500 + ($471,450 $450,000) = $4,735,950 $5,000,000 $4,735,950 = $264,050. 4. c$885,296 ? .06 = $53,118. 5. a($2,500,000 ? 1. 02) = $90,000. 6. d($3,000,000 + $70,000) ($6,000,000 $320,000) ? 1/2 = $230,000. 7. d ($1,000,000 ? 1. 01) = $8,000. 8. c$3,000,000 ($105,000 + $30,000) = $2,865,000. 9. cConceptual. 10. cConceptual. *11. d$360,000 $290,000 = $70,000 ($400,000 + $48,000) $360,000 = $88,000. Chapter 15 b usinessholders rightfulness 1. A great deal was organise in January 2007 with reliable spectacular of $10 com equatingison re look on parking argona simple eye.On February 1, 2010, parcel of lands were issued at par for hard currency. On manifest 1, 2010, the friendships lawyer accepted 7,000 donations of super acid argument in settlement for heavy gains with a sporty honour of $90,000. Additional stipendiary-in swell would amplify on February 1, 2010 bunt 1, 2010 a. Yes zero(prenominal)b. YesYes c. no(prenominal)o d. no.es 2. On July 1, 2010, Nall Co. issued 2,500 constituents of its $10 par putting surface tired and 5,000 fates of its $10 par redeemable favored stemma for a protuberance sum of $125,000. At this determine Nalls swinish persuade was inter modification for $24 per character and the inter pitchable preferent clove pink for $18 per sh be. The heart and soul of he proceeds allocated to Nalls like phone line should be a. $62,500. b. $75,000. c. $90,000. d. $68,750. 3. Horton Co. was organized on January 2, 2010, with 500,000 authorized sh ars of $10 par note note scotch protect normal hackneyed. During 2010, Horton had the pursuit crown legal proceeding January 5issued 375,000 sh ars at $14 per sh ar. July 27 secured 25,000 sh bes at $11 per shargon. zero(prenominal)ember 25 exchange 15,000 sh atomic number 18s of exchequer pedigree at $13 per share. Horton use the toll method to genius the get of the treasury shares. What would be the equilibrate in the paying-in neat from Treasury receive account at declination 31, 2010? . $0. b. $15,000. c. $30,000. d. $45,000. 4. In 2010, Hobbs Corp. acquired 9,000 shares of its own $1 par prise customary root at $18 per share. In 2011, Hobbs issued 4,000 of these shares at $25 per share. Hobbs uses the damage method to account for its treasury telephone circuit deeds. What accounts and what sum ups should Hobbs credit in 2011 to e stablish the goernment issue of the 4,000 shares? TreasuryAdditional obtain circumscribed Kality shopworn stipendiary-in niftylolly Stock a. $72,000$70,000 b. $72,000$28,000 c. $96,000$4,000 d. $68,000$28,000$4,000 5. At its date of in society, Sauder, Inc. ssued cytosine,000 shares of its $10 par viridity old-hat at $11 per share. During the legitimate year, Sauder acquired 20,000 shares of its vulgar step-down at a legal injury of $16 per share and accounted for them by the constitute method. Subsequently, these shares were reissued at a worth of $12 per share. thither contrive been no opposite heel counters or accomplishments of its own rough-cut subscriber line. What ready does the reissuance of the birth shake up on the spare- quantify activity accounts? bear scratchAdditional Paid-in nifty a. DecreaseDecrease b. No effectDecrease c. DecreaseNo effect d. No effectNo effect 6. sodbuster Corp. possess 20,000 shares of Eaton Corp. urchased in 2007 f or $240,000. On celestial latitude 15, 2010, husbandman stated a topographic point dividend of all of its Eaton Corp. shares on the basis of one share of Eaton for every 10 shares of husbandman communalalty epochworn held by its crinkleholders. The retention dividend was distri exclusivelyed on January 15, 2011. On the resoluteness date, the inwardness mart set of the Eaton shares held by Farmer was $400,000. The entry to record the declaration of the dividend would implicate a account to maintained cabbage of a. $0. b. $160,000. c. $240,000. d. $400,000. 7. A corporation say a dividend, a delegate of which was liquidating.How would this distri merelyion expunge severally of the pas stream? Additional Paid-in CapitalRetained mesh a. DecreaseNo effect b. DecreaseDecrease c. No effectDecrease d. No effectNo effect 8. On whitethorn 1, 2010, Ziek Corp. declared and issued a 10% parkland carry dividend. preceding to this dividend, Ziek had 100,000 shares of $1 p ar look upon special K fall issued and outstanding. The carnival pass judgment of Ziek s super C land ancestrying was $20 per share on whitethorn 1, 2010. As a result of this armourying dividend, Zieks join buy inholders rectitude a. increased by $200,000. b. descendd by $200,000. c. decreased by $10,000. d. did not change. . How would the declaration and subsequent issuance of a 10% fund dividend by the issuer affect break downly of the quest when the trade abide by of the shares exceeds the par look on of the straining? Additional Common StockPaid-in Capital a. No effectNo effect b. No effectIncrease c. IncreaseNo effect d. IncreaseIncrease 10. On declination 31, 2010, the breedholders faithfulness section of Arndt, Inc. , was as follows Common phone line, par re nourish $10 authorized 30,000 shares issued and outstanding 9,000 shares$ 90,000 Additional compensable-in capital116,000 Retained wage 174,000 fit hackneyedholders rightfulness$380,000On show 31, 2011, Arndt declared a 10% origin dividend, and accordingly 900 special shares were issued, when the moderately grocery value of the breed was $18 per share. For the one-third months end March 31, 2011, Arndt sustained a fire loss of $32,000. The symmetricalness wheel of Arndts retain gain as of March 31, 2011, should be a. $125,800. b. $133,000. c. $134,800. d. $142,000. *11. At celestial latitude 31, 2010 and 2011, clop Corp. had outstanding 2,000 shares of $100 par value 8% additive favored filiation and 10,000 shares of $10 par value harsh line of descent. At declination 31, 2010, dividends in arrears on the preferred line of merchandise were $8,000. notes dividends declared in 2011 totaled $30,000. What hails were payable on apiece class of stock? Preferred StockCommon Stock a. $16,000$14,000 b. $22,000$8,000 c. $24,000$6,000 d. $30,000$0 sextuple choice Answerscertified public accountant commensurate point Ans. decimal point Ans. detail Ans. token Ans. event Ans. spot Ans. 1. d 3. c 5. c 7. b 9. d *11. c 2. b 4. b 6. d 8. d 10. a No. AnswerDerivation 1. dConceptual. 2. b($24 2,500) + ($18 5,000) = $150,000. $90,000 ? $125,000 = $75,000. $150,000 3. c15,000 $2 = $30,000. 4. b(4,000 $18) = $72,000 (4,000 $7) = $28,000. . cConceptual. 6. d$400,000 ( grocery store placeplace value). 7. b Conceptual. 8. dConceptual. 9. dConceptual. 10. a$174,000 $32,000 (900 $18) = $125,800. *11. c($200,000 . 08) + $8,000 = $24,000 $30,000 $24,000 = $6,000 Chapter 16 Dilutive Securities Earnings Per trade 1. On January 2, 2010, Farr Co. issued 10-year transformable bonds at 105. During 2012, these bonds were reborn into popular stock having an aggregate par value adjoin to the total face heart of the bonds. At conversion, the grocery store verges of Farrs parking area stock was 50 percent higher up its par value.On January 2, 2010, change proceeds from the issuance of the convertible bonds should be account as a. salaried-in capital for the integral proceeds. b. salaried-in capital for the package of the proceeds ascribable to the conversion vaunt and as a indebtedness for the remainder. c. a obligation for the face amount of the bonds and gainful-in capital for the premium everywhere the face amount. d. a indebtedness for the replete(p) proceeds. 2. Lang Co. issued bonds with detachable common stock warrants. go forthd the warrants had a know market value. The sum of the fair value of the warrants and the face amount of the bonds exceeds the change proceeds.This excessiveness is inform as a. Discount on Bonds Payable. b. Premium on Bonds Payable. c. Common Stock Subscribed. d. Paid-in Capital in Excess of comparabilityStock Warrants. 3. On January 1, 2010, Sharp Corp. tending(p) an employee an pickax to purchase 6,000 shares of Sharps $5 par value common stock at $20 per share. The Black-Scholes option pricing sit around de bourneines total recompense write off to be $140,000. The option became exercisable on declination 31, 2011, after the employee ideal dickens historic head of avail. The market disbursals of Sharps stock were as follows January 1, 2010$30 celestial latitude 31, 201150For 2011, should effectiveize hire set down downstairs the fair value method of a. $90,000. b. $30,000. c. $70,000. d. $0. *4. On January 2, 2010, for past services, Rosen Corp. afford Nenn Pine, its president, 16,000 stock tasting rights that are exercisable immediately and expire on January 2, 2011. On rehearse, Nenn is empower to receive money for the excess of the market price of the stock on the exercise date oer the market price on the grant date. Nenn did not exercise any of the rights during 2010. The market price of Rosens stock was $30 on January 2, 2010, and $45 on celestial latitude 31, 2010.As a result of the stock appreciation rights, Rosen should recognize compensation expense for 2010 of a. $0. b. $80,000. c. $2 40,000. d. $480,000. seven-fold filling AnswersDilutive Securities, certified public accountant satisfactory point Ans. point in time Ans. degree Ans. fact Ans. 1. d 2. a 3. c *4. c No. AnswerDerivation 1. dConceptual. 2. aConceptual. 3. c$140,000 ? 2 = $70,000. *4. c($45 $30) ? 16,000 = $240,000. Earnings Per handle 5. Didde Co. had 300,000 shares of common stock issued and outstanding at celestial latitude 31, 2010. No common stock was issued during 2011. On January 1, 2011, Didde issued 200,000 shares of nonconvertible preferred stock.During 2011, Didde declared and stipendiary $100,000 exchange in dividends on the common stock and $80,000 on the preferred stock. crystallize income for the year terminate celestial latitude 31, 2011 was $620,000. What should be Diddes 2011 utmost income per common share? a. $2. 07 b. $1. 80 c. $1. 73 d. $1. 47 6. At celestial latitude 31, 2011 and 2010, Miley Corp. had 180,000 shares of common stock and 10,000 shares of 5%, $100 par value additive preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2011 or 2010. gelt income for 2011 was $400,000. For 2011, winnings per common share amounted to a. $2. 22. b. $1. 94. c. 1. 67. d. $1. 11. 7. Marsh Co. had 2,400,000 shares of common stock outstanding on January 1 and celestial latitude 31, 2011. In connection with the acquisition of a appurtenant partnership in June 2010, Marsh is postulate to issue 100,000 surplus shares of its common stock on July 1, 2012, to the actor owners of the subsidiary. Marsh paid $200,000 in preferred stock dividends in 2011, and inform electronic ne bothrk income of $3,400,000 for the year. Marshs thin net per share for 2011 should be a. $1. 42. b. $1. 36. c. $1. 33. d. $1. 28. 8. Foyle, Inc. , had 560,000 shares of common stock issued and outstanding at celestial latitude 31, 2010.On July 1, 2011, an supernumerary 40,000 shares of common stock were issued for coin . Foyle also had unexercised stock options to purchase 32,000 shares of common stock at $15 per share outstanding at the ascendant and end of 2011. The sightly market price of Foyles common stock was $20 during 2011. What is the number of shares that should be apply in reason diluted pay per share for the year cease declination 31, 2011? a. 580,000 b. 588,000 c. 608,000 d. 612,000 9. When computing diluted recompense per share, convertible securities are a. ignored. b. recognise tho if they are dilutive. c. recognize altogether if they are antidilutive. . accept whether they are dilutive or antidilutive. 10. In determining diluted moolah per share, dividends on nonconvertible ac additive preferred stock should be a. disregarded. b. added affirm to net income whether declared or not. c. deducted from net income only if declared. d. deducted from net income whether declared or not. 11. The if-converted method of computing earnings per share entropy assumes conversion o f convertible securities as of the a. ascendent of the early finis inform (or at time of issuance, if later). b. beginning of the earliest extent report (regardless of time of issuance). c. iddle of the earliest plosive speech sound account (regardless of time of issuance). d. ending of the earliest flow rate reported (regardless of time of issuance). four-fold pickax AnswersEarnings Per Sharecertified public accountant fit power point Ans. gunpoint Ans. specific Ans. occurrence Ans. event Ans. percentage point Ans. contingent Ans. 5. b 6. b 7. d 8. b 9. b 10. d 11. a No. AnswerDerivation 5. b$620,000 $80,000 = $1. 80. 300,000 6. b $400,000 (10,000 ? $100 ? .05) = $1. 94. 180,000 7. d $3,400,000 $200,000 = $1. 28. 2,400,000 + 100,000 8. b560,000 + (40,000 ? 6/12) + 32,000 (32,000 ? 15 ? $20) = 588,000. 9. bConceptual. 10. dConceptual. 11. aConceptual. Chapter 17 Investments 1. On October 1, 2010, Wenn Co. purchased 600 of the $1,000 face value , 8% bonds of Loy, Inc. , for $702,000, including increase interest of $12,000. The bonds, which mature on January 1, 2017, pay interest semi yearbookly on January 1 and July 1. Wenn apply the straight-line method of amortisation and befittingly save the bonds as available-for- thoroughgoing(a) tax receipts arranging. On Wenns celestial latitude 31, 2011 equipoise public opinion poll of paper, the carrying value of the bonds is a. $690,000. b. $684,000. c. $681,600. d. $672,000. 2. humankind Corp. egan operations in 2010. An analysis of military personnels fair-mindedness securities portfolio acquired in 2010 shows the chase totals at declination 31, 2010 for traffic and available-for- trade securities TradingAvailable-for-Sale SecuritiesSecurities substance damage$90,000$110,000 accumulate fair value65,00095,000 What amount should Valet report in its 2010 income t apieceing for unfulfilled prop loss? a. $40,000. b. $10,000. c. $15,000. d. $25,000. 3. At celest ial latitude 31, 2010, Jeter Corp. had the pursual enddor securities that were purchased during 2010, its primary year of operation joinUncomplete follow appraiseGain ( expiry)Trading Securities SecurityA$ 90,000$ 60,000$(30,000) B 15,000 20,000 5,000 bestows$105,000$ 80,000$(25,000) Available-for-Sale Securities SecurityY$ 70,000$ 80,000$ 10,000 Z 85,000 55,000 (30,000) gists$155,000$135,000$(20,000) each(prenominal) market declines are considered temporary. Fair value adjustments at declination 31, 2010 should be faultless with a alike(p) charge against IncomeStockholders Equity a. $45,000$ 0 b. $30,000$30,000 c. $25,000$20,000 d. $25,000$ 0 4. On celestial latitude 29, 2011, James Co. change an equity hostage that had been purchased on January 4, 2010.James owned no separate equity securities. An unrealized holding loss was reported in the 2010 income mastery. A realized gain was reported in the 2011 income bidding. Was the equity certification sort as availa ble-for-sale and did its 2010 market price decline exceed its 2011 market price recuperation? 2010 Market harm Decline Exceeded 2011 Available-for-SaleMarket expense Rec everywherey a. YesYes b. YesNo c. NoYes d. NoNo mapping the avocation entropy for questions 5 done 7. sizeable, Inc. acquired 30% of Doane Corp. s voting stock on January 1, 2010 for $400,000. During 2010, Doane earned $160,000 and paid dividends of $100,000.Richs 30% interest in Doane gives Rich the ability to exercise material influence over Doanes operational and fiscal policies. During 2011, Doane earned $200,000 and paid dividends of $60,000 on April 1 and $60,000 on October 1. On July 1, 2011, Rich exchange half(prenominal) of its stock in Doane for $264,000 bullion. 5. in advance income taxes, what amount should Rich include in its 2010 income literary argument as a result of the enthronement? a. $160,000. b. $100,000. c. $48,000. d. $30,000. 6. The carrying amount of this investment in Richs celestial latitude 31, 2010 eternal rest rag week should be a. $400,000. b. $418,000. c. $448,000. d. $460,000. . What should be the gain on sale of this investment in Richs 2011 income instruction? a. $64,000. b. $55,000. c. $49,000. d. $40,000. 8. On January 1, 2010, Reston Co. purchased 25% of bingle Corp. s common stock no good go forth resulted from the purchase. Reston fitly carries this investment at equity and the rest period in Restons investment account was $720,000 at celestial latitude 31, 2010. Ace reported net income of $450,000 for the year cease declination 31, 2010, and paid common stock dividends totaling $180,000 during 2010. How oft did Reston pay for its 25% interest in Ace? a. $652,500. b. $765,000. c. $787,500. d. 877,500. 9. On celestial latitude 31, 2010, Patel Co. purchased equity securities as concern securities. apt(p) data are as follows Fair Value Security beAt 12/31/11 A$132,000$117,000 B168,000186,000 C288,000258,000 On celestial latitud e 31, 2011, Patel transmitred its investment in credentials C from trading to available-for-sale because Patel intends to retain security C as a long investment. What total amount of gain or loss on its securities should be include in Patels income contention for the year stop celestial latitude 31, 2011? a. $3,000 gain. b. $27,000 loss. c. $30,000 loss. d. $45,000 loss. five-fold prime(prenominal) Answerscertified public accountant satisfactory full point Ans. point Ans. occurrence Ans. occurrence Ans. peak Ans. 1. d 3. c 5. c 7. c 9. b 2. d 4. d 6. b 8. a No. AnswerDerivation 1. d$702,000 $12,000 = $690,000 15 $690,000 ($90,000 ? ) = $672,000. 75 2. d$90,000 $65,000 = $25,000. 3. c 4. dConceptual. 5. c$160,000 ? 30% = $48,000. 6. b$400,000 + $48,000 ($100,000 ? 30%) = $418,000. 7. c$418,000 ($60,000 ? 30%) + ($200,000 ? 50% ? 30%) = $430,000. $264,000 ($430,000 ? 2) = $49,000. 8. a$720,000 ($450,000 ? 25%) + ($180,000 ? 25%) = $652,500. 9. b$18, 000 $15,000 $30,000 = $27,000 loss. Chapter 18 revenue erudition . According to the FASBs conceptual framework, the process of describe an item in the monetary tales of an entity is a. recognition. b. realization. c. allocation. d. matching. 2. kibibyte Construction Co. has systematically apply the percentage-of- apogee method of recognizing tax income. During 2010, Green entered into a fixed-price train to score an office edifice for $12,000,000. education relating to the agreement is as follows At celestial latitude 31 2010 2011 Percentage of completion15%45% Estimated total cost at completion$9,000,000$9,600,000 Gross net clams recognised ( cumulative)600,0001,440,000Contract cost incurred during 2011 were a. $2,880,000. b. $2,970,000. c. $3,150,000. d. $4,320,000. 3. Bruner Constructors, Inc. has consistently utilize the percentage-of-completion method of recognizing income. In 2010, Bruner started work on a $35,000,000 verbal expression contract that was co mpleted in 2011. The quest reading was taken from Bruners 2010 bill records go up billings$11,000,000 apostrophizes incurred10,500,000 Collections7,000,000 Estimated cost to complete21,000,000 What amount of down-to-earth receipts should Bruner oblige recognized in 2010 on this contract? a. $3,500,000 b. 2,333,334 c. $1,750,000 d. $1,166,667 4. During 2010, gate Corp. started a construction speculate with a total contract price of $3,500,000. The job was completed on declination 15, 2011. Additional entropy are as follows 2010 2011 Actual cost incurred$1,350,000$1,525,000 Estimated remain cost1,350,000 account to client1,200,0002,300,000 Received from customer1,000,0002,400,000 to a lower place the completed-contract method, what amount should Gates recognize as stark(a) pay for 2011? a. $225,000 b. $312,500 c. $475,000 d. $625,000 5. Hogan Farms produced 800,000 mystifys of cotton during the 2010 season.Hogan sells all of its cotton to Ott Co. , which has concur to purchase Hogans correct production at the prevailing market price. Recent mandate assures that the market price leave behind not fall on a lower floor $. 70 per pound during the next cardinal days. Hogans costs of marketing and distri justing the cotton are immaterial and can be more or less estimated. Hogan reports its inventory at expected dismissal value. During 2010, Hogan change and delivered to Ott 600,000 pounds at the market price of $. 70. Hogan sell the stay 200,000 pounds during 2011 at the market price of $. 72. What amount of taxation should Hogan recognize in 2010? . $420,000 b. $432,000 c. $560,000 d. $576,000 6. Braun, Inc. suitably uses the initiation- consummate(a) gross revenue method of write up to recognize income in its financial educational activitys. somewhat pertinent data relating to this method of report include 2010 2011 initiation gross gross revenue$750,000$720,000 Cost of episode sales 570,000 504,000 Gross avail$180,000$216, 000 Rate of egregious mesh24%30% equilibrize of deferred megascopic wage at year end 2010$108,000$ 36,000 2011 198,000 organic$108,000$234,000 What amount of initiation accounts due should be turn ined in Brauns declination 31, 2011 vestibular sense cerement? a. 720,000 b. $810,000 c. $780,000 d. $866,666 7. Hartz Co. , which began operations on January 1, 2010, fitly uses the instalment-sales method of chronicle. The by-line teaching pertains to Hartzs operations for the year 2010 sequence sales$1,200,000 Regular sales480,000 Cost of installment sales720,000 Cost of regular sales288,000 global and administrative expenses96,000 Collections on installment sales288,000 The deferred gross do good account in Hartzs declination 31, 2010 balance winding-clothes should be a. $115,200. b. $192,000. c. $364,800. d. $480,000. 8. On January 1, 2010, Orton Co. old a used simple railroad car to pansy, Inc. for $350,000. On this date, the tool had a depreciated cost of $2 45,000. King paid $50,000 cash on January 1, 2010 and signed a $300,000 note thrill interest at 10%. The note was payable in three annual installments of $100,000 beginning January 1, 2011. Orton befittingly accounted for the sale chthonic the installment method. King make a timely honorarium of the set-back installment on January 1, 2011 of $130,000, which include interest of $30,000 to date of defrayment. At December 31, 2011, Orton has deferred gross sugar of a. $70,000. b. $66,000. c. $60,000. d. 51,000. 9. Piper Co. began operations on January 1, 2010 and fittingly uses the installment method of news report. The sideline knowledge pertains to Pipers operations for 2010 Installment sales1,800,000 Cost of installment sales1,080,000 General and administrative expenses180,000 Collections on installment sales825,000 The balance in the deferred gross lucre account at December 31, 2010 should be a. $330,000. b. $495,000. c. $390,000. d. $720,000. 10. Moon Co. records all s ales utilise the installment method of explanation. Installment sales contracts call for 36 equal itemic cash remunerations.According to the FASBs conceptual framework, the amount of deferred gross profit relating to collections 12 months beyond the balance yellow journalism date should be reported in the a. circulating(prenominal) liabilities section as a deferred revenue. b. superannuated liabilities section as a deferred revenue. c. veritable add-ons section as a contra account. d. non on-going summations section as a contra account. 11. Crane, Inc. is a retailer of photographic plate public lavatorys and offers a service contract on each appliance interchange. Crane sells appliances on installment contracts, but all service contracts must be paid in full at the time of sale.Collections received for service contracts should be recorded as an increase in a a. deferred revenue account. b. sales contracts due paygrade account. c. stockholders rating account. d. servi ce revenue account. Multiple Choice AnswersCPA Adapted accompaniment Ans. point in time Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. a 3. d 5. c 7. c 9. c 11. a 2. b 4. d 6. b 8. c 10. c No. AnswerDerivation 1. aConceptual. 2. b($9,600,000 45%) ($9,000,000 15%) = $2,970,000. $10,500,000 3. d ($35,000,000 $31,500,000) = $1,166,667. $31,500,000 . d$3,500,000 $1,350,000 $1,525,000 = $625,000. 5. c800,000 lbs. $. 70 = $560,000. 6. b($36,000 ? 24%) + ($198,000 ? 30%) = $810,000. 7. c$1,200,000 $720,000 = $480,000 gross profit (40% gross profit rate) $480,000 ($288,000 . 4) = $364,800. 8. c$300,000 + $50,000 = $350,000 $350,000 $245,000 = $105,000 gross profit (30% gross profit rate) ($300,000 $100,000) ? 30% = $60,000. 9. c$1,800,000 $1,080,000 = $720,000 (40% gross profit rate)$720,000 ($825,000 40%) = $390,000. 10. cConceptual. 11. aConceptual. Chapter 20 score for supports Post solitude Benefits 1.The followers randomness pertains to Hopson Co. s premium envision actuarial estimate of project realise engagement at 1/1/11$72,000 beard discount rate10% Service costs for 2011$18,000 premium makes paid during 2011$15,000 If no change in actuarial estimates occurred during 2011, Hopsons project turn a profit pact at December 31, 2011 was a. $64,200. b. $75,000. c. $79,200. d. $82,200. 2. Interest cost include in bonus expense recognized for a percentage point by an employer sponsoring a defined- eudaimonia pension off figure re corresponds the a. shortage in the midst of the expected and actual returns on send off pluss. b. ncrease in the intercommunicate earn certificate of indebtedness due to the passing game of time. c. increase in the fair value of envision assets due to the passage of time. d. amortization of the discount on lay in OCI (PSC). 3. Logan Corp. , a company whose stock is publicly traded, provides a noncontributory defined- reach pension externalize for its employees. The companys act uary has provided the following selective selective reading for the year stop December 31, 2011 project get ahead obligation$600,000 stack away benefit obligation525,000 Fair value of figure assets825,000 Service cost240,000 Interest on intercommunicate benefit obligation24,000Amortization of foregoing service cost60,000 expect and actual return on final cause assets82,500 The market- connect asset value equals the fair value of send off assets. No contributions have been do for 2011 pension cost. In its December 31, 2011 balance sheet, Logan should report a pension asset / obligation of a. award liability of $600,000 b. tribute asset of $824,000 c. Pension asset of $225,000 d. Pension liability of $525,000 4. Seigel Co. maintains a defined-benefit pension plan for its employees. At each balance sheet date, Yeager should report a pension asset / liability equal to the a. ccumulated benefit obligation. b. intercommunicate benefit obligation. c. roll up benefit obliga tion. d. funded view relative to the projected benefit obligation. 5. Ohlman, Inc. maintains a defined-benefit pension plan for its employees. As of December 31, 2011, the market value of the plan assets is less than the accumulate benefit obligation. The projected benefit obligation exceeds the hive away benefit obligation. In its balance sheet as of December 31, 2011, Ohlman should report a liability in the amount of the a. excess of the projected benefit obligation over the fair value of the plan assets. b. xcess of the accumulated benefit obligation over the fair value of the plan assets. c. projected benefit obligation. d. accumulated benefit obligation. 6. At December 31, 2011, the following training was provided by the Vargas Corp. pension plan administrator Fair value of plan assets$4,500,000 roll up benefit obligation5,580,000 Projected benefit obligation7,200,000 What is the amount of the pension liability that should be shown on Vargas December 31, 2011 balance she et? a. $7,200,000 b. $2,700,000 c. $1,620,000 d. $1,080,000 Multiple Choice AnswersCPA Adapted Item Ans. Item Ans. Item Ans. 1. d 3. c 5. a 2. b 4. d 6. b No. AnswerDerivation 1. d$72,000 + $18,000 + ($72,000 ? .10) $15,000 = $82,200. 2. bConceptual. 3. c$825,000 $600,000 = $225,000. 4. dConceptual. 5. aConceptual. 6. b$7,200,000 $4,500,000 = $2,700,000. Chapter 21 be for requires 1. term of a contract A does not contain a hatful purchase option, but the renting term is equal to 90 percent of the estimated economic look of the film keeping. Lease B does not transfer ownership of the property to the lessee by the end of the undertake term, but the letting term is equal to 75 percent of the estimated economic deportment of the chartered property.How should the lessee classify these considers? Lease A Lease B a. direct packCapital choose b. operational trainOperating charter c. Capital getCapital take away d. Capital directOperating look at 2. On Decem ber 31, 2011, Burton, Inc. hired machinery with a fair value of $840,000 from Cey Rentals Co. The agreement is a six-year noncancelable rent requiring annual payments of $160,000 beginning December 31, 2011. The convey is appropriately accounted for by Burton as a capital absorb. Burtons incremental borrowing rate is 11%. Burton knows the interest rate unvoiced in the claim payments is 10%.The gravel value of an annuity due of 1 for 6 long time at 10% is 4. 7908. The present value of an annuity due of 1 for 6 old age at 11% is 4. 6959. In its December 31, 2011 balance sheet, Burton should report a subscribe to liability of a. $606,528. b. $680,000. c. $751,344. d. $766,528. 3. On December 31, 2010, Harris Co. take a machine from Catt, Inc. for a five-year period. pit annual payments under the lead are $630,000 (including $30,000 annual executory costs) and are due on December 31 of each year. The prototypic payment was make on December 31, 2010, and the southward pay ment was make on December 31, 2011.The five lease payments are discounted at 10% over the lease term. The present value of stripped lease payments at the inception of the lease and before the introductory annual payment was $2,502,000. The lease is appropriately accounted for as a capital lease by Harris. In its December 31, 2011 balance sheet, Harris should report a lease liability of a. $1,902,000. b. $1,872,000. c. $1,711,800. d. $1,492,200. 4. A lessee had a ten-year capital lease requiring equal annual payments. The reducing of the lease liability in year 2 should equal a. the buffer liability shown for the lease at the end of year 1. . the current liability shown for the lease at the end of year 2. c. the reduction of the lease liability in year 1. d. one-tenth of the original lease liability. single-valued function the following breeding for questions 5 and 6. On January 2, 2011, Hernandez, Inc. signed a ten-year noncancelable lease for a heavy indebtedness drill press . The lease stipulated annual payments of $150,000 start at the end of the first year, with backup passing to Hernandez at the expiration of the lease. Hernandez inured this transaction as a capital lease. The drill press has an estimated useable bearing of 15 years, with no still value.Hernandez uses straight-line dispraise for all of its appoint assets. Aggregate lease payments were dogged to have a present value of $900,000, found on unvoiced interest of 10%. 5. In its 2011 income statement, what amount of interest expense should Hernandez report from this lease transaction? a. $0 b. $56,250 c. $75,000 d. $90,000 6. In its 2011 income statement, what amount of wear and tear expense should Hernandez report from this lease transaction? a. $150,000 b. $100,000 c. $90,000 d. $60,000 7. In a lease that is recorded as a sales-type lease by the lessor, interest revenue a. hould be recognized in full as revenue at the leases inception. b. should be recognized over the period of the lease utilize the straight-line method. c. should be recognized over the period of the lease development the effective interest method. d. does not arise. 8. Torrey Co. manufactures equipment that is exchange or contract. On December 31, 2011, Torrey chartered equipment to Dalton for a five-year period ending December 31, 2016, at which date ownership of the leased asset will be transferred to Dalton. Equal payments under the lease are $220,000 (including $20,000 executory costs) and are due on December 31 of each year.The first payment was do on December 31, 2011. Collectibility of the remain lease payments is reasonably assured, and Torrey has no material cost uncertainties. The normal sales price of the equipment is $770,000, and cost is $600,000. For the year finish December 31, 2011, what amount of income should Torrey realize from the lease transaction? a. $170,000 b. $220,000 c. $230,000 d. $330,000 *9. Jamar Co. sell its headquarters building at a gain, and at the same(p) time leased back the building. The lease was reported as a capital lease. At the time of the sale, the gain should be reported as a. perating income. b. an extraordinary item, net of income tax. c. a separate component of stockholders equity. d. a deferred gain. *10. On December 31, 2011, Haden Corp. exchange a machine to Ryan and simultaneously leased it back for one year. Pertinent information at this date follows gross sales price$900,000 Carrying amount825,000 birth value of average lease rentals ($7,500 for 12 months 12%)85,000 Estimated remaining useful life12 years In Hadens December 31, 2011 balance sheet, the deferred profit from the sale of this machine should be a. $85,000. b. $75,000. c. $10,000. . $0. Multiple Choice AnswersCPA Adapted Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. c 3. d 5. d 7. c *9. d 2. a 4. a 6. d 8. a *10 d No. AnswerDerivation 1. cConceptual. 2. a($160,000 ? 4. 7908) $160,000 = $606,528. 3. d$2,502,000 $6 30,000 + $30,000 = $1,902,000 (2010). $1,902,000 $600,000 ($1,902,000 ? .10) = $1,492,200 (2011). 4. aConceptual. 5. d$900,000 ? .10 = $90,000. 6. d$900,000 ? 15 = $60,000. 7. cConceptual. 8. a$770,000 $600,000 = $170,000. *9. dConceptual. *10. d = 9. 44%, 10% of FV of asset ? t is a minor leaseback. Chapter 22-Accounting adjustments and delusion Analysis 1. Which of the following should be reported as a preceding period adjustment? Change inChange from Estimated LivesUnaccepted Principle of Depreciable plussto true Principle a. YesYes b. NoYes c. YesNo d. NoNo 2. On December 31, 2011, Grantham, Inc. appropriately changed its inventory valuation method to first in first out cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $1,500,000 increase in the beginning inventory at January 1, 2011. get hold of a 30% income tax rate.The cumulative effect of this accounting change on beginning carry earnings is a. $0. b. $450 ,000. c. $1,050,000. d. $1,500,000. 3. On January 1, 2011, Frost Corp. changed its inventory method to first in first out from LIFO for both financial and income tax reporting purposes. The change resulted in an $800,000 increase in the January 1, 2011 inventory. Assume that the income tax rate for all years is 30%. The cumulative effect of the accounting change should be reported by Frost in its 2011 a. kept up(p) earnings statement as a $560,000 summation to the beginning balance. b. ncome statement as a $560,000 cumulative effect of accounting change. c. retained earnings statement as an $800,000 addition to the beginning balance. d. income statement as an $800,000 cumulative effect of accounting change. 4. On January 1, 2008, Lake Co. purchased a machine for $792,000 and depreciated it by the straight-line method victimisation an estimated useful life of eight years with no rescue value. On January 1, 2011, Lake determined that the machine had a useful life of six years fro m the date of acquisition and will have a salvage value of $72,000. An accounting change was made in 2011 to reflect these additional data.The accumulated disparagement for this machine should have a balance at December 31, 2011 of a. $438,000. b. $462,000. c. $480,000. d. $528,000. 5. On January 1, 2008, Hess Co. purchased a apparent(a) for $595,000. The sheer is creation amortized over its remaining legal life of 15 years expiring on January 1, 2023. During 2011, Hess determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2011? a. $357,000 b. $408,000 c. $420,000 . $436,375 6. During 2010, a school text written by Mercer Co. personnel was sold to Roark Publishing, Inc. , for royalties of 10% on sales. Royalties are receivable semiannually on March 31, for sales in July by means of December of the introductory year, and on family line 30, for sales in January through June of the same year. * royal line income of $108,000 was accrued at 12/31/10 for the period July-December 2010. * Royalty income of $120,000 was received on 3/31/11, and $156,000 on 9/30/11. * Mercer versed from Roark that sales defeat to royalty were estimated at $1,620,000 for the last half of 2011.In its income statement for 2011, Mercer should report royalty income at a. $276,000. b. $288,000. c. $318,000. d. $330,000. 7. On January 1, 2010, Janik Corp. acquired a machine at a cost of $500,000. It is to be depreciated on the straight-line method over a five-year period with no residue value. Because of a bookkeeping error, no depreciation was recognized in Janiks 2010 financial statements. The management was discovered during the readying of Janiks 2011 financial statements. depreciation expense on this machine for 2011 should be a. $0. b. $100,000. c. $125,000. d. $200,000. 8.On December 31, 2011, special amends costs, incurred but unpaid, were not recorded. If these damages costs were related to work in process, what is the effect of the disregard on accrued liabilities and retained earnings in the December 31, 2011 balance sheet? Accrued LiabilitiesRetained Earnings a. No effectNo effect b. No effectOverstated c. UnderstatedNo effect d. UnderstatedOverstated 9. Black, Inc. is a calendar-year corporation whose financial statements for 2010 and 2011 include errors as follows YearEnding Inventory derogation spending 2010$162,000overstated$135,000overstated 201154,000understated45,000understatedAssume that purchases were recorded mightily and that no correcting entries were made at December 31, 2010, or at December 31, 2011. Ignoring income taxes, by how much should Blacks retained earnings be retroactively adjusted at January 1, 2012? a. $144,000 increase b. $36,000 increase c. $18,000 decrease d. $9,000 increase Multiple Choice AnswersCPA Adapted Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. b 3. a 5. b 7. b 9. a 2. c 4. a 6. d 8. c No. AnswerDerivation 1. bConceptual. 2. c$1,500,000 ? (1 . 3) = $1,050,000. 3. a$800,000 ? (1 . ) = $560,000. 4. a$792,000 ? 3/8 = $297,000 $297,000 + ($792,000 $297,000 $72,000) ? 1/3 = $438,000. 5. b$595,000 ? 3/15 = $119,000 $595,000 $119,000 ($595,000 $119,000) ? 1/7 = $408,000. 6. d($120,000 $108,000) + $156,000 + ($1,620,000 ? .10) = $330,000. 7. b$500,000 ? 5 = $100,000. 8. cConceptual. 9. a$54,000 (u) + $135,000 (u) $45,000 (o) = $144,000 (u). Chapter 23- bidding of bullion Flows physical exertion the following information for questions 1 and 2. A company acquired a building, paying a portion of the purchase price in cash and issuing a owe note payable to the seller for the balance. . In a statement of cash flows, what amount is include in invest activities for the higher up transaction? a. funds payment b. eruditeness price c. secret code d. owe amount 2. In a stateme nt of cash flows, what amount is include in finance activities for the above transaction? a. Cash payment b. Acquisition price c. Zero d. Mortgage amount part the following information for questions 3 and 4. Smiley Corp. s legal proceeding for the year cease December 31, 2011 include the following * Purchased real domain for $550,000 cash which was borrowed from a buzzword. Sold available-for-sale securities for $500,000. * Paid dividends of $600,000. * Issued 500 shares of common stock for $250,000. * Purchased machinery and equipment for $125,000 cash. * Paid $450,000 toward a bank loan. * Reduced accounts receivable by $100,000. * change magnitude accounts payable $200,000. 3. Smileys net cash used in drop activities for 2011 was a. $675,000. b. $375,000. c. $175,000. d. $50,000. 4. Smileys net cash used in support activities for 2011 was a. $50,000. b. $250,000. c. $450,000. d. $500,000. theatrical role the following information for questions 5 and 6. peavy Corp. s le gal proceeding for the year ended December 31, 2011 included the following 0 Acquired 50% of Gant Corp. s common stock for $180,000 cash which was borrowed from a bank. 1 Issued 5,000 shares of its preferred stock for land having a fair value of $320,000. 2 Issued 500 of its 11% debenture bonds, due 2016, for $392,000 cash. 3 Purchased a patent for $220,000 cash. 4 Paid $120,000 toward a bank loan. 5 Sold available-for-sale securities for $796,000. 6 Had a net increase in returnable customer deposits ( long-run) of $88,000. 5. Peavys net cash provided by investment activities for 2011 was a. $296,000. b. 396,000. c. $476,000. d. $616,000. 6. Peavys net cash provided by financing activities for 2011 was a. $452,000. b. $540,000. c. $572,000. d. $660,000. Use the following information for questions 7 through 9. Jamison Corp. s balance sheet accounts as of December 31, 2011 and 2010 and information relating to 2011 activities are presented below. December 31, 2011 2010 Assets Cash$ 44 0,000$ 200,000 short investments600,000 Accounts receivable (net)1,020,0001,020,000 Inventory1,380,0001,200,000 Long-term investments400,000600,000 form assets3,400,0002,000,000 Accumulated depreciation(900,000)(900,000)Patent 180,000 200,000 organic assets$6,520,000$4,320,000 Liabilities and Stockholders Equity Accounts payable and accrued liabilities$1,660,000$1,440,000 notes payable (nontrade)580,000 Common stock, $10 par1,600,0001,400,000 Additional paid-in capital800,000500,000 Retained earnings 1,880,000 980,000 Total liabilities and stockholders equity$6,520,000$4,320,000 Information relating to 2011 activities 7 Net income for 2011 was $1,500,000. 8 Cash dividends of $600,000 were declared and paid in 2011. 9 Equipment costing $1,000,000 and having a carrying amount of $320,000 was sold in 2011 for $360,000. 0 A long-term investment was sold in 2011 for $320,000. at that place were no other transactions poignant long-term investments in 2011. 11 20,000 shares of common stock were issued in 2011 for $25 a share. 12 Short-term investments consist of treasury bills maturing on 6/30/12. 7. Net cash provided by Jamisons 2011 in operation(p) activities was a. $1,500,000. b. $2,120,000. c. $2,080,000. d. $2,160,000. 8. Net cash used in Jamisons 2011 investing activities was a. $2,320,000. b. $1,820,000. c. $1,680,000. d. $1,720,000. 9. Net cash provided by Jamisons 2011 financing activities was a. 480,000. b. $520,000. c. $1,080,000. d. $1,680,000. 10. Foxx Corp. s comparative balance sheet at December 31, 2011 and 2010 reported accumulated depreciation balances of $800,000 and $600,000, respectively. Property with a cost of $50,000 and a carrying amount of $38,000 was the only property sold in 2011. wear and tear charged to operations in 2011 was a. $188,000. b. $200,000. c. $212,000. d. $224,000. 11. Nagel Co. s prepaid insurance was $90,000 at December 31, 2011 and $45,000 at December 31, 2010. insurance expense was $36,000 for 2011 and $27,000 for 2010.What amount of cash disbursements for insurance would be reported in Nagels 2011 net cash provided by operate activities presented on a direct basis? a. $99,000. b. $81,000. c. $54,000. d. $36,000. Multiple Choice AnswersCPA Adapted Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. a 3. c 5. b 7. c 9. a 11. b 2. c 4. b 6. b 8. a 10. c No. AnswerDerivation 1. aConceptual. 2. cConceptual. 3. c($550,000) + $500,000 $125,000 = ($175,000). 4. b$550,000 $600,000 + $250,000 $450,000 = ($250,000). 5. b($180,000) $220,000 + $796,000 = $396,000. 6. $180,000 + $392,000 $120,000 + $88,000 = $540,000. 7. c$1,500,000 $180,000 + ($900,000 $900,000 + $680,000) ($360,000 $320,000) + $20,000 + $220,000 ($320,000 $200,000) = $2,080,000. 8. a$320,000 + $360,000 ($3,400,000 + $1,000,000 $2,000,000) $600,000 = $2,320,000. 9. a20,000 ? $25 = $500,000 $500,000 + $580,000 $600,000 = $480,000. 10. c$800,000 $600,000 + ($50,000 $38,000) = $212,000. 11. b $90,000 + $36,000 $45,000 = $81,000. Chapter 24- Full revelation in financial Reporting 1. Which of the following facts concerning plant assets should be included in the summary of substantive accounting policies?Depreciation MethodComposition a. NoYes b. YesYes c. YesNo d. NoNo 2. Farr, Inc. is a multidivisional corporation which has both inter fragment sales and sales to independent customers. Farr should report part financial information for each division tingeing which of the following criteria? a. portion profit or loss is 10% or more of unite profit or loss. b. Segment profit or loss is 10% or more of feature profit or loss of all company departments. c. Segment revenue is 10% or more of combined revenue of all the company segments. d. Segment revenue is 10% or more of consolidate revenue. 3. Unruh Corp. nd its divisions are engaged exclusively in manufacturing operations. The following data (consistent with prior years data) pertain to the industries in which ope rations were conducted for the year ended December 31, 2011. Assets Industry Revenue Profit 12/31/11 A$ 8,000,000$1,320,000$16,000,000 B6,400,0001,120,00014,000,000 C4,800,000960,00010,000,000 D2,400,000440,0005,200,000 E3,400,000540,0005,600,000 F 1,200,000 180,000 2,400,000 $26,200,000$4,560,000$53,200,000 In its segment information for 2011, how some(prenominal) reportable segments does Unruh have? a. Three b. quadruple c. Five d. sestet 4.The following information pertains to Nixon Corp. and its divisions for the year ended December 31, 2011. gross sales to unaffiliated customers$2,500,000 Intersegment sales of products similar to those sold to unaffiliated customers750,000 Interest earned on loans to other operating segments50,000 Nixon and all of its divisions are engaged solely in manufacturing operations. Nixon has a reportable segment if that segments revenue exceeds a. $330,000. b. $325,000. c. $255,000. d. $250,000. 5. advertize costs may be accrued or deferred to p rovide an appropriate expense in each period for InterimYear-end financial ReportingFinancial Reporting . YesNo b. YesYes c. NoNo d. NoYes 6. mayonnaise Corp. has estimated that total depreciation expense for the year ending December 31, 2011 will amount to $300,000, and that 2011 year-end bonuses to employees will total $600,000. In Mayos interim income statement for the six months ended June 30, 2011, what is the total amount of expense relating to these two items that should be reported? a. $0. b. $150,000. c. $450,000. d. $900,000. 7. Fina Corp. had the following transactions during the quarter ended March 31, 2011 Loss from hurricane damage$350,000 allowance of fire insurance premium for calendar year 2011500,000What amount should be included in Finas income statement for the quarter ended March 31, 2011? remarkable LossInsurance Expense a. $350,000$500,000 b. $350,000$125,000 c. $87,500$125,000 d. $0$500,000 8. For interim financial reporting, an extraordinary gain occurrin g in the fleck quarter should be a. recognized ratably over the last three quarters. b. recognized ratably over all four quarters with the first quarter cosmos restated. c. recognized in the second quarter. d. disclose by note only in the second quarter. *9. How is the average inventory used in the computing of each of the following?Acid-Test (Quick) symmetryInventory Turnover dimension a. NumeratorNumerator b. NumeratorDenominator c. Not UsedDenominator d. Not UsedNumerator *10. Which of the following ratios is(are) useful in assessing a companys ability to meet current maturing or short-term obligations? Acid-Test RatioDebt to Total Assets Ratio a. NoNo b. NoYes c. YesYes d. YesNo *11. Which of the following ratios should be used in evaluating the intensity with which the company uses its assets? Receivables TurnoverPayout Ratio a. YesYes b. NoNo c. YesNo d. NoYes Multiple Choice AnswersCPA Adapted Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. c 3. b 5. b 7. b *9. c *11. c 2. c 4. b 6. c 8. c *10. d No. AnswerDerivation 1. cConceptual. 2. cConceptual. 3. bRevenue interrogatory $26,200,000 ? 10% = $2,620,000 Profit test $4,560,000 ? 10% = $456,000 Asset test $53,200,000 ? 10% = $5,320,000 A, B, C, E. 4. b($2,500,000 + $750,000) ? 10% = $325,000. 5. bConceptual. 6. c($300,000 + $600,000) ? 2 = $450,000. 7. bExtraordinary loss = $350,000 Insurance expense = $500,000 ? 4 = $125,000. 8. cConceptual. *9. cConceptual. *10. dConceptual. *11. cConceptual.