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ACC 422 Entire Course

For more classes visit www.snaptutorial.com ACC 422 Week 1 DQ 1 ACC 422 Week 1 DQ 2 ACC 422 Week 1 DQ 3 ACC 422 Week 1 Individual Assignment Disclosure Analysis Paper (2 Papers) ACC 422 Week 1 CPA Practice Exam ACC 422 Week 1 Team Assignment Audited Financial Statements (Nordstrom Inc.) ACC 422 Week 1 Individual WileyPlus Assignment (Exercise 7-2, 7-4, 7-8, 7-9, 7-13, 7-16, 8-3, 8-13) 100% Score ACC 422 Week 2 DQ 1 ACC 422 Week 2 DQ 2 ACC 422 Week 2 DQ 3

ACC 422 Week 2 Individual WileyPlus Assignment (Exercise 9-3, 9-12, 9-19, 10-2, 10-23, 10-24) ACC 422 Week 2 Team Assignment Textbook Problems (P7-1, P7-2, P8-4) 100% Score ACC 422 Week 2 CPA Practice Exam


ACC 422 Week 2 Team Assignment Financial Scavenger Hunt #1 ACC 422 Week 3 DQ 1 ACC 422 Week 3 DQ 2 ACC 422 Week 3 DQ 3

ACC 422 Week 3 Individual WileyPlus Assignment Exercise 11-6, 11-9, 11-21, 12-1, 12-6, 12-8, 12-17 ACC 422 Week 3 Team Assignment Textbook Problems (P9-2, P9-4, P10-3, P10-4) 100% Score ACC 422 Week 3 CPA Practice Exam ACC 422 Week 3 Team Assignment Financial Scavenger Hunt #2 ACC 422 Week 4 DQ 1 ACC 422 Week 4 DQ 2 ACC 422 Week 4 DQ 3 ACC 422 Week 4 Team Assignment Textbook Problems (P11-1, P12-1) 100% Score ACC 422 Week 4 Individual Wileyplus Assignment Exercise 13-1, 13-3, 13-5, 13-8, 13-11, 14-4, 14-13 ACC 422 Week 4 Team Assignment Financial Scavenger Hunt #3 (Nordstrom) ACC 422 Week 4 CPA Practice Exam ACC 422 Week 5 DQ 1 ACC 422 Week 5 DQ 2 ACC 422 Week 5 DQ 3 ACC 422 Week 5 DQ 4


ACC 422 Week 5 Individual WileyPlus Assignment Exercise 21-2, 214, 21-8 (Essay), 21-8, 21-13 ACC 422 Week 5 Team Assignment Textbook Problems (P13-10,P14-2, P21-3) 100% Score ACC 422 week 5 Learning Team Problem Presentation ACC 422 Final Exam Guide 1 ACC 422 Final Exam Guide 2 ACC 422 Final Exam Guide 3 **********************************************************

ACC 422 Final Exam Guide (New 2018, With EXCEL FILE, Score 29/30)

For more classes visit www.snaptutorial.com This Tutorial contains excel File which can be used to solve for any change in values


Brief Exercise 7-1 Brief Exercise 7-7 Brief Exercise 7-14 Brief Exercise 7-15 Brief Exercise 8-4 (Part Level Submission) Brief Exercise 8-5 Brief Exercise 8-6 Multiple Choice Question 21 Question 14 Brief Exercise 9-4 Exercise 9-4 Brief Exercise 10-6 Brief Exercise 10-8 Exercise 10-1 Question 9 Brief Exercise 11-8 Brief Exercise 12-2 Brief Exercise 12-8


Exercise 12-3 Brief Exercise 13-2 Brief Exercise 13-5 Brief Exercise 13-10 Brief Exercise 13-13 Brief Exercise 14-3 Brief Exercise 14-12 Brief Exercise 14-14 Brief Exercise 21-11 Exercise 21-1 Multiple Choice Question 99 Multiple Choice Question 70

Brief Exercise 7-1 Your answer is correct. Vaughn Enterprises owns the following assets at December 31, 2017. Cash in Checking 69,000 17,600 bank— account


savings balance account Cash on Postdated 9,030 770 hand checks Cash Certificates of refund due 35,600 deposit (180- 94,570 from IRS day) What amount should be reported as cash? Brief Exercise 7-7 Larkspur Family Importers sold goods to Tung Decorators for $40,800 on November 1, 2017, accepting Tung’s $40,800, 6-month, 6% note. Prepare Larkspur’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest. Brief Exercise 7-14 Recent financial statements of General Mills, Inc. report net sales of $12,442,000,000. Accounts receivable are $912,000,000 at the beginning of the year and $953,000,000 at the end of the year. Brief Exercise 7-15 Indigo Company designated Jill Holland as petty cash custodian and established a petty cash fund of $290. The fund is reimbursed when the cash in the fund is at $26, which it is. Petty cash receipts indicate funds were disbursed for office supplies $92 and miscellaneous expense $169. Prepare journal entries for the establishment of the fund and the reimbursement. Brief Exercise 8-4 (Part Level Submission)


Pharoah Company uses a periodic inventory system. For April, when the company sold 500 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 290 $32 $ 9,280 April 15 purchase 430 38 16,340 April 23 purchase 280 42 11,760 1,000 $37,380 Brief Exercise 8-6 Your answer is correct. Sandhill Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 270 $30 $ 8,100 April 15 purchase 440 36 15,840 April 23 purchase 290 39 11,310 1,000 $35,250 Compute the April 30 inventory and the April cost of goods sold using the LIFO method. Multiple Choice Question 21 Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer? Question 14 A fire destroys all of the merchandise of Shamrock Company on February 10, 2017. Presented below is information compiled up to the date of the fire. Inventory, January 1, 2017 $432,200 Sales revenue to February 10, 2017 1,935,200


Purchases to February 10, 2017 1,104,580 Freight-in to February 10, 2017 59,180 Rate of gross profit on selling price 35% What is the approximate inventory on February 10, 2017? Exercise 9-4 Martinez Company began operations in 2017 and determined its ending inventory at cost and at LCNRV at December 31, 2017, and December 31, 2018. This information is presented below. Net Cost Realizable Value 12/31/17 $322,170 $299,520 12/31/18 409,250 390,440 (a) Prepare the journal entries required at December 31, 2017, and December 31, 2018, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. Brief Exercise 10-6 Waterway Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $327,600. The estimated fair values of the assets are land $62,400, building $228,800, and equipment $83,200. At what amounts should each of the three assets be recorded? Brief Exercise 10-8 Pearl Corporation traded a used truck (cost $29,600, accumulated depreciation $26,640) for a small computer with a fair value of $4,884. Pearl also paid $740 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)


Exercise 10-1 The expenditures and receipts below are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses. Money borrowed to pay building (a) $(285,400) contractor (signed a note) Payment for construction from (b) 285,400 note proceeds (c) Cost of land fill and clearing 11,790 Delinquent real estate taxes on (d) 7,300 property assumed by purchaser Premium on 6-month insurance (e) 8,580 policy during construction Refund of 1-month insurance (f) premium because construction (1,430 ) completed early (g) Architect’s fee on building 26,200 Cost of real estate purchased as a (h) plant site (land $209,100 and 262,000 building $52,900) Commission fee paid to real (i) 8,970 estate agency Installation of fences around (j) 3,770 property Cost of razing and removing (k) 11,710 building Proceeds from salvage of (l) (4,550 ) demolished building Interest paid during construction (m) on money borrowed for 13,150 construction Cost of parking lots and (n) 20,050 driveways Cost of trees and shrubbery (o) 14,440 planted (permanent in nature)


(p) Excavation costs for new building 2,700 Identify each item by letter and list the items in columnar form, using the headings shown below. All receipt amounts should be reported in parentheses. For any amounts entered in the Other Accounts column, also indicate the account title. Question 9 Sage Company purchased machinery for $174,300 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14,700, production of 81,900 units, and working hours of 44,000. During 2017, the company uses the machinery for 11,440 hours, and the machinery produces 9,009 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-theyears’-digits, and double-declining-balance methods. Brief Exercise 11-8 Carla Company owns equipment that cost $1,008,000 and has accumulated depreciation of $425,600. The expected future net cash flows from the use of the asset are expected to be $560,000. The fair value of the equipment is $448,000. Prepare the journal entry, if any, to record the impairment loss. Brief Exercise 12-8 Concord Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $330,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $700,000. The fair value of the division is estimated to be $668,000 and the implied goodwill is $298,000. Prepare Concord journal entry to record impairment of the goodwill. Exercise 12-3


Joni Marin Inc. has the following amounts reported in its general ledger at the end of the current year. Organization costs $24,400 Trademarks 16,900 Discount on bonds payable 37,400 Deposits with advertising agency for ads to promote goodwill of 12,400 company Excess of cost over fair value of net identifiable assets of acquired 77,400 subsidiary Cost of equipment acquired for research and development projects; the equipment has an alternative 87,400 future use Costs of developing a secret formula for a product that is expected to be marketed for at least 20 83,800 years (a) On the basis of this information, compute the total amount to be reported by Marin for intangible assets on its balance sheet at year-end. Brief Exercise 13-2 Ivanhoe Company borrowed $30,000 on November 1, 2017, by signing a $30,000, 8%, 3-month note. Prepare Ivanhoe’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry. Brief Exercise 13-5


Riverbed Corporation made credit sales of $19,800 which are subject to 7% sales tax. The corporation also made cash sales which totaled $28,462 including the 7% sales tax. Prepare the entry to record Riverbed’s credit sales. Brief Exercise 13-10 Windsor Inc. is involved in a lawsuit at December 31, 2017. Prepare the December 31 entry assuming it is probable that Windsor will be liable for $862,200 as a result of this suit. Brief Exercise 13-13 Martinez Factory provides a 2-year warranty with one of its products which was first sold in 2017. Martinez sold $930,400 of products subject to the warranty. Martinez expects $124,050 of warranty costs over the next 2 years. In that year, Martinez spent $70,460 servicing warranty claims. Prepare Martinez’s journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. Brief Exercise 14-3 The Skysong Company issued $260,000 of 10% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 98. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Skysong Company records straight-line amortization semiannually. Brief Exercise 14-12 Vaughn Corporation issued a 4-year, $55,000, 5% note to Greenbush Company on January 1, 2017, and received a computer that normally sells for $44,762. The note requires annual interest payments each December 31. The market rate of interest for a note of similar risk is 11%.


Prepare Vaughn’s journal entries for (a) the January 1 issuance and (b) the December 31 interest. Multiple Choice Question 99 On June 30, 2018, Sheridan Co. sold equipment to an unaffiliated company for $2250000. The equipment had a book value of $1205000 and a remaining useful life of 10 years. That same day, Sheridan leased back the equipment at $12500 per month for 5 years with no option to renew the lease or repurchase the equipment. Sheridan’s rent expense for this equipment for the year ended December 31, 2018, should be **********************************************************

ACC 422 Final Exam Guide 1

For more classes visit www.snaptutorial.com 1. Kraft Enterprises owns the following assets at December 31, 2012. Cash in bank–savings account 67,516


Checking account balance 26,445 Cash on hand 9,478 Postdated checks 753 Cash refund due from IRS 40,324 Certificates of deposit (180-day) 94,754 What amount should be reported as cash? Question 2 Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical Cost 273.79 152.75 76.37 Selling Price 312.70 208.95 106.27 Cost to distribute 27.38 11.53 3.60 Current replacement cost 292.52 151.31 73.49 Normal profit margin 46.11 41.79 30.62 Determine the following: Question 3 Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost $40 each. During June, the


company purchased 202 units at $40 each, returned 8 units for credit, and sold 168 units at $67 each. Journalize the June transactions. Question 4 Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average cost method. Question 5 Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Question 6 (FIFO, LIFO, Average Cost Inventory) Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade’s inventory records for Product BAP. Purchases Units Unit Cost January 1, 2012(beginning inventory) 762 8.00 January 5, 2012 1,524 9.00 January 25, 2012 1,651 10.00 February 16, 2012 1,061 11.00 March 26, 2012 762 12.00 A physical inventory on March 31, 2012, shows 2,032 units on hand. Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method. Question 7 Floyd Corporation has the following four items in its ending inventory. Determine the final lower of cost or market inventory value for each item.


Question 8 Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $320,786 at both cost and market value. At December 31, 2013, the inventory was $428,714 at cost and $403,231 at market value. Prepare the necessary December 31 entry under: Question 9 Boyne Inc. had beginning inventory of $15,000 at cost and $25,000 at retail. Net purchases were $150,000 at cost and $212,500 at retail. Net markups were $12,500; net markdowns were $8,750; and sales were $196,250. Compute ending inventory at cost using the conventional retail method. Question 10 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Question 11 Previn Brothers Inc. purchased land at a price of $30,400. Closing costs were $1,820. An old building was removed at a cost of $14,850. What amount should be recorded as the cost of the land? Question 12 Garcia Corporation purchased a truck by issuing an $108,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck. Question 13 Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $352,800. The estimated fair values


of the assets are land $67,200, building $246,400, and equipment $89,600. At what amounts should each of the three assets be recorded? Question 14 Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stock. The land was recently appraised at $103,700. The common stock is actively traded at $50 per share. Prepare the journal entry to record the acquisition of the land. Question 15 Navajo Corporation traded a used truck (cost $23,600, accumulated depreciation $21,240) for a small computer worth $4,366. Navajo also paid $1,180 in the transaction. Prepare the journal entry to record the exchange. Question 16 Mehta Company traded a used welding machine (cost $10,080, accumulated depreciation $3,360) for office equipment with an estimated fair value of $5,600. Mehta also paid $3,360 cash in the transaction. Prepare the journal entry to record the exchange. Question 17 Depreciation is normally computed on the basis of the nearest A). full month and to the nearest dollar. B). day and to the nearest cent. C). day and to the nearest dollar. D). full month and to the nearest cent. Question 18 Fernandez Corporation purchased a truck at the beginning of 2012 for $54,180. The truck is estimated to have a salvage value of $2,580 and a useful life of 206,400 miles. It was driven 29,670 miles in 2012 and 39,990 miles in 2013. Compute depreciation expense for 2012 and 2013. Question 19


Lockhard Company purchased machinery on January 1, 2012, for $79,200. The machinery is estimated to have a salvage value of $7,920 after a useful life of 8 years. (a) Compute 2012 depreciation expense using the double-declining balance method. (b) Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012. Question 20 Jurassic Company owns machinery that cost $1,145,700 and has accumulated depreciation of $458,280. The expected future net cash flows from the use of the asset are expected to be $636,500. The fair value of the equipment is $509,200. Prepare the journal entry, if any, to record the impairment loss. Question 21 Everly Corporation acquires a coal mine at a cost of $501,600. Intangible development costs total $125,400. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $100,320), after which it can be sold for $200,640. Everly estimates that 5,016 tons of coal can be extracted. If 878 tons are extracted the first year, prepare the journal entry to record depletion. Question 22 Francis Corporation purchased an asset at a cost of $58,200 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $5,820. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012–2017. Question 23 Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $50,820. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare


Celine Dion’s journal entries to record the purchase of the patent and 2012 amortization. Question 24 Karen Austin Corporation has capitalized software costs of $768,500, and sales of this product the first year totaled $390,630. Karen Austin anticipates earning $911,470 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year. (a) Compute the amount of software cost amortization for the first year using the percent of revenue approach. (b) Compute the amount of software cost amortization for the first year using the straight-line approach. Question 25 Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad’s offer. The Railroad’s 2012 financial statements should include the following related to the incident: A). recognition of a loss only. B). creation of a liability only. C). disclosure in note form only. D). recognition of a loss and creation of a liability for the value of the land. Question 26 Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $66,000 of inventory, terms 2/10, n/30, FOB shipping point.


Roley paid freight costs of $1,210. On July 3, Roley returned damaged goods and received credit of $6,600. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley. Question 27 Takemoto Corporation borrowed $93,000 on November 1, 2012, by signing a $95,093, 3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry. (For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.) Question 28 Whiteside Corporation issues $629,000 of 9% bonds, due in 14 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds.(Use the present value tables in the text. Question 29 Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $37,560 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $20,870 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $191,722. Prepare Lost Ark’s January 1, 2012, journal entries. Question 30 On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $26,050 and immediately leased it back. The truck was carried on Irwin’s books at $20,800. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $7,048 at the end of each year. The appropriate rate of


interest is 11%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin’s 2012 journal entries. **********************************************************

ACC 422 Final Exam Guide 2

For more classes visit www.snaptutorial.com SET 2 1) Which of the following is considered cash? 2) Bank overdrafts, if material, should be 3) Which of the following is NOT considered cash for financial reporting purposes? 4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as 5) Which of the following methods of determining annual bad debt expense best achieves the matching concept? 6) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach


7) The failure to record a purchase of merÂŹchandise on account even though the goods are properly included in the physical invenÂŹtory results in 8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 9) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations? 12) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold? 13) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true? 14) Designated market value 15) In no case can "market" in the lower-of-cost-or-market rule be more than 16) A major advantage of the retail inventory method is that it 17) The gross profit method of inventory valuation is invalid when 18) The retail inventory method is based on the assumption that the 19) Which of the following is NOT a major characteristic of a plant asset? 20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be


21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on 22) The period of time during which interest must be capitalized ends when 23) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be 24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to 25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will 26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be 27) Which of the following is NOT a condition that must be satisfied before interest capitalization can begin on a qualifying asset? 28) Which of the following most accurately reflects the concept of depreciation as used in accounting? 29) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues? 30) The major difference between the service life of an asset and its physical life is that 31) Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? 32) Bigbie Company purchased a depreciable asset for $600,000. The estimated salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year.


The activity method will be used for depreciation. What is the depreciation expense on this asset? 33) Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset? 34) Costs incurred internally to create intangibles are 35) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 36) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be 37) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008? 38) Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of $3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008? 39) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be


$800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom’s market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet? 40) Goodwill 41) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as 42) The reason goodwill is sometimes referred to as a master valuation account is because 43) Which of the following items is a current liability? 44) Which of the following statements is false? 45) Stock dividends distributable should be classified on the 46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows: Year Hourly Wages Vacation Days Earned by Each Employee Vacation Dayse Used by Each Employee 2006 $28.50 10 0 2007 $27.00 10 8 2008 $28.50 10 10 What is the amount of expense relative to compensated absences that should be reported on Simson’s income statement for 2006? 47) A company buys an oil rig for $1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events?


48) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31? 49) A contingency can be accrued when 50) Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? 51) Mark Ward is a farmer who owns land which borders on the rightof-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident: 52) An example of an item which is NOT a liability is 53) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the 54) Bonds for which the owners' names are NOT registered with the issuing corporation are called 55) Minimum lease payments may include a 56) What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee? 57) Which of the following is a correct statement of one of the capitalization criteria? 58) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as 59) In the earlier years of a lease, from the lessee's perspective, the use of the


60) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income **********************************************************

ACC 422 Final Exam Guide 3

For more classes visit www.snaptutorial.com SET 3 1) Which of the following is NOT considered cash for financial reporting purposes? 2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet? 3) Which of the following items should NOT be included in the Cash caption on the balance sheet? 4) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach 5) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense? 6) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the


future, failure to follow this practice usually does NOT make the balance sheet misleading because 7) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be 8) If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are 9) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear 10) The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its 11) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold? 12) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 13) In no case can "market" in the lower-of-cost-or-market rule be more than 14) When the direct method is used to record inventory at market 15) Designated market value 16) The retail inventory method is based on the assumption that the 17) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported 18) The gross profit method of inventory valuation is invalid when 19) Which of the following is NOT a major characteristic of a plant asset? 20) The cost of land does NOT include


21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on 22) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be 23) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to 24) The period of time during which interest must be capitalized ends when 25) Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is 26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be 27) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the 28) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will 29) The term "depreciable cost," or "depreciable base," as it is used in accounting, refers to 30) Which of the following most accurately reflects the concept of depreciation as used in accounting? 31) Prentice Company purchased a depreciable asset for $200,000. The estimated salvage value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset? 32) Pine Company purchased a depreciable asset for $360,000. The estimated salvage value is $24,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?


33) Bigbie Company purchased a depreciable asset for $600,000. The estimated salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? 34) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 35) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be 36) Which of the following methods of amortization is normally used for intangible assets? 37) General Products Company bought Special Products Division in 2006 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is $2,000,000 and it is carried on General Product’s books for a total of $1,700,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007? 38) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008? 39) Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of $3,400,000. The net identifiable assets of the


Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008? 40) When a patent is amortized, the credit is usually made to 41) The reason goodwill is sometimes referred to as a master valuation account is because 42) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as 43) Stock dividends distributable should be classified on the 44) Which of the following statements is false? 45) Which of the following items is a current liability? 46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows: What is the amount of expense relative to compensated absences that should be reported on Simson’s income statement for 2006? 47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31? 48) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?


49) A contingency can be accrued when 50) Mark Ward is a farmer who owns land which borders on the rightof-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident: 51) Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? 52) If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be 53) An example of an item which is NOT a liability is 54) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the 55) Which of the following is a correct statement of one of the capitalization criteria? 56) Which of the following best describes current practice in accounting for leases? 57) While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that 58) The amount to be recorded as the cost of an asset under capital lease is equal to the 59) In the earlier years of a lease, from the lessee's perspective, the use of the 60) If the residual value of a leased asset is guaranteed by a third party **********************************************************


ACC 422 Final Exam Guide All 3 Sets

For more classes visit www.snaptutorial.com Details of All 180 Questions Given Below SET 1 1. Kraft Enterprises owns the following assets at December 31, 2012. Cash in bank–savings account 67,516 Checking account balance 26,445 Cash on hand 9,478 Postdated checks 753 Cash refund due from IRS 40,324 Certificates of deposit (180-day) 94,754 What amount should be reported as cash? Question 2 Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical Cost 273.79 152.75 76.37 Selling Price 312.70 208.95 106.27


Cost to distribute Current replacement cost 73.49 Normal profit margin 30.62 Determine the following:

27.38 292.52

11.53 151.31

46.11

41.79

3.60

Question 3 Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost $40 each. During June, the company purchased 202 units at $40 each, returned 8 units for credit, and sold 168 units at $67 each. Journalize the June transactions. Question 4 Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average cost method. Question 5 Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Question 6 (FIFO, LIFO, Average Cost Inventory) Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade’s inventory records for Product BAP. Purchases Units Unit Cost January 1, 2012(beginning inventory) 762 8.00 January 5, 2012 1,524 9.00 January 25, 2012 1,651 10.00 February 16, 2012 1,061 11.00


March 26, 2012 762 12.00 A physical inventory on March 31, 2012, shows 2,032 units on hand. Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method. Question 7 Floyd Corporation has the following four items in its ending inventory. Determine the final lower of cost or market inventory value for each item. Question 8 Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $320,786 at both cost and market value. At December 31, 2013, the inventory was $428,714 at cost and $403,231 at market value. Prepare the necessary December 31 entry under: Question 9 Boyne Inc. had beginning inventory of $15,000 at cost and $25,000 at retail. Net purchases were $150,000 at cost and $212,500 at retail. Net markups were $12,500; net markdowns were $8,750; and sales were $196,250. Compute ending inventory at cost using the conventional retail method. Question 10 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Question 11 Previn Brothers Inc. purchased land at a price of $30,400. Closing costs were $1,820. An old building was removed at a cost of $14,850. What amount should be recorded as the cost of the land?


Question 12 Garcia Corporation purchased a truck by issuing an $108,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck. Question 13 Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $352,800. The estimated fair values of the assets are land $67,200, building $246,400, and equipment $89,600. At what amounts should each of the three assets be recorded? Question 14 Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stock. The land was recently appraised at $103,700. The common stock is actively traded at $50 per share. Prepare the journal entry to record the acquisition of the land. Question 15 Navajo Corporation traded a used truck (cost $23,600, accumulated depreciation $21,240) for a small computer worth $4,366. Navajo also paid $1,180 in the transaction. Prepare the journal entry to record the exchange. Question 16 Mehta Company traded a used welding machine (cost $10,080, accumulated depreciation $3,360) for office equipment with an estimated fair value of $5,600. Mehta also paid $3,360 cash in the transaction. Prepare the journal entry to record the exchange. Question 17 Depreciation is normally computed on the basis of the nearest A). full month and to the nearest dollar. B). day and to the nearest cent. C). day and to the nearest dollar.


D). full month and to the nearest cent. Question 18 Fernandez Corporation purchased a truck at the beginning of 2012 for $54,180. The truck is estimated to have a salvage value of $2,580 and a useful life of 206,400 miles. It was driven 29,670 miles in 2012 and 39,990 miles in 2013. Compute depreciation expense for 2012 and 2013. Question 19 Lockhard Company purchased machinery on January 1, 2012, for $79,200. The machinery is estimated to have a salvage value of $7,920 after a useful life of 8 years. (a) Compute 2012 depreciation expense using the double-declining balance method. (b) Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012. Question 20 Jurassic Company owns machinery that cost $1,145,700 and has accumulated depreciation of $458,280. The expected future net cash flows from the use of the asset are expected to be $636,500. The fair value of the equipment is $509,200. Prepare the journal entry, if any, to record the impairment loss. Question 21 Everly Corporation acquires a coal mine at a cost of $501,600. Intangible development costs total $125,400. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $100,320), after which it can be sold for $200,640. Everly estimates that 5,016 tons of coal can be extracted. If 878 tons are extracted the first year, prepare the journal entry to record depletion. Question 22


Francis Corporation purchased an asset at a cost of $58,200 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $5,820. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012–2017. Question 23 Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $50,820. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion’s journal entries to record the purchase of the patent and 2012 amortization. Question 24 Karen Austin Corporation has capitalized software costs of $768,500, and sales of this product the first year totaled $390,630. Karen Austin anticipates earning $911,470 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year. (a) Compute the amount of software cost amortization for the first year using the percent of revenue approach. (b) Compute the amount of software cost amortization for the first year using the straight-line approach. Question 25 Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad’s offer. The Railroad’s 2012 financial statements should include the following related to the incident: A). recognition of a loss only.


B). creation of a liability only. C). disclosure in note form only. D). recognition of a loss and creation of a liability for the value of the land. Question 26 Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $66,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,210. On July 3, Roley returned damaged goods and received credit of $6,600. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley. Question 27 Takemoto Corporation borrowed $93,000 on November 1, 2012, by signing a $95,093, 3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry. (For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.) Question 28 Whiteside Corporation issues $629,000 of 9% bonds, due in 14 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds.(Use the present value tables in the text. Question 29 Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $37,560 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $20,870 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning


costs, and the carrying amount of the machinery is $191,722. Prepare Lost Ark’s January 1, 2012, journal entries. Question 30 On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $26,050 and immediately leased it back. The truck was carried on Irwin’s books at $20,800. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $7,048 at the end of each year. The appropriate rate of interest is 11%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin’s 2012 journal entries. SET 2 1) Which of the following is considered cash? 2) Bank overdrafts, if material, should be 3) Which of the following is NOT considered cash for financial reporting purposes? 4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as 5) Which of the following methods of determining annual bad debt expense best achieves the matching concept? 6) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach 7) The failure to record a purchase of mer¬chandise on account even though the goods are properly included in the physical inven¬tory results in 8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 9) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31


10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations? 12) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold? 13) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true? 14) Designated market value 15) In no case can "market" in the lower-of-cost-or-market rule be more than 16) A major advantage of the retail inventory method is that it 17) The gross profit method of inventory valuation is invalid when 18) The retail inventory method is based on the assumption that the 19) Which of the following is NOT a major characteristic of a plant asset? 20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be 21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on 22) The period of time during which interest must be capitalized ends when 23) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be 24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to 25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT


expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will 26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be 27) Which of the following is NOT a condition that must be satisfied before interest capitalization can begin on a qualifying asset? 28) Which of the following most accurately reflects the concept of depreciation as used in accounting? 29) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues? 30) The major difference between the service life of an asset and its physical life is that 31) Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? 32) Bigbie Company purchased a depreciable asset for $600,000. The estimated salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? 33) Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset? 34) Costs incurred internally to create intangibles are 35) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 36) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1,


2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be 37) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008? 38) Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of $3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008? 39) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom’s market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet? 40) Goodwill 41) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as


42) The reason goodwill is sometimes referred to as a master valuation account is because 43) Which of the following items is a current liability? 44) Which of the following statements is false? 45) Stock dividends distributable should be classified on the 46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows: Year Hourly Wages Vacation Days Earned by Each Employee Vacation Dayse Used by Each Employee 2006 $28.50 10 0 2007 $27.00 10 8 2008 $28.50 10 10 What is the amount of expense relative to compensated absences that should be reported on Simson’s income statement for 2006? 47) A company buys an oil rig for $1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events? 48) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31? 49) A contingency can be accrued when 50) Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? 51) Mark Ward is a farmer who owns land which borders on the rightof-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and


burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident: 52) An example of an item which is NOT a liability is 53) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the 54) Bonds for which the owners' names are NOT registered with the issuing corporation are called 55) Minimum lease payments may include a 56) What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee? 57) Which of the following is a correct statement of one of the capitalization criteria? 58) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as 59) In the earlier years of a lease, from the lessee's perspective, the use of the 60) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income SET 3 1) Which of the following is NOT considered cash for financial reporting purposes? 2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet? 3) Which of the following items should NOT be included in the Cash caption on the balance sheet?


4) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach 5) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense? 6) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because 7) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be 8) If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are 9) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear 10) The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its 11) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold? 12) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 13) In no case can "market" in the lower-of-cost-or-market rule be more than 14) When the direct method is used to record inventory at market 15) Designated market value 16) The retail inventory method is based on the assumption that the 17) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to


$510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported 18) The gross profit method of inventory valuation is invalid when 19) Which of the following is NOT a major characteristic of a plant asset? 20) The cost of land does NOT include 21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on 22) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be 23) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to 24) The period of time during which interest must be capitalized ends when 25) Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is 26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be 27) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the 28) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will 29) The term "depreciable cost," or "depreciable base," as it is used in accounting, refers to 30) Which of the following most accurately reflects the concept of depreciation as used in accounting? 31) Prentice Company purchased a depreciable asset for $200,000. The estimated salvage value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?


32) Pine Company purchased a depreciable asset for $360,000. The estimated salvage value is $24,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? 33) Bigbie Company purchased a depreciable asset for $600,000. The estimated salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? 34) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 35) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be 36) Which of the following methods of amortization is normally used for intangible assets? 37) General Products Company bought Special Products Division in 2006 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is $2,000,000 and it is carried on General Product’s books for a total of $1,700,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007? 38) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of


$1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008? 39) Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of $3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008? 40) When a patent is amortized, the credit is usually made to 41) The reason goodwill is sometimes referred to as a master valuation account is because 42) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as 43) Stock dividends distributable should be classified on the 44) Which of the following statements is false? 45) Which of the following items is a current liability? 46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows: What is the amount of expense relative to compensated absences that should be reported on Simson’s income statement for 2006? 47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?


48) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31? 49) A contingency can be accrued when 50) Mark Ward is a farmer who owns land which borders on the rightof-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident: 51) Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? 52) If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be 53) An example of an item which is NOT a liability is 54) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the 55) Which of the following is a correct statement of one of the capitalization criteria? 56) Which of the following best describes current practice in accounting for leases? 57) While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that 58) The amount to be recorded as the cost of an asset under capital lease is equal to the


59) In the earlier years of a lease, from the lessee's perspective, the use of the 60) If the residual value of a leased asset is guaranteed by a third party **********************************************************

ACC 422 Week 1 CPA Practice Exam

For more classes visit www.snaptutorial.com 1. What amount should Herc report as inventory in its December 31, 2005, balance sheet? 2. What dollar-value LIFO inventory cost would be reported in Cobb's December 31, 2006, balance sheet? 3. Garson Co. recorded goods in transit purchased FOB shipping point at year-end as purchases. The goods were excluded from the ending inventory. What effect does the omission have on Garson's assets and retained earnings at year end? 4. In accordance with ASC Topic 255, the Consumer Price Index for All Urban Consumers is used to compute information on a


5. If current assets exceed current liabilities, payments to creditors made on the last day of the month will 6. At the end of its first year of operations, December 31, year 1, Wonder Company had a net realizable value of accounts receivable of $500,000. During year 1 Wonder recorded charges to bad debt expense of $80,000 and wrote off as uncollectible accounts receivable of $20,000. What should Wonder report on its balance sheet at December 31, year 1, as accounts receivable before the allowance for doubtful accounts? 7. A company is in its first year of operations and has never written off any accounts receivable as uncollectible. When the allowance method of recognizing bad debt expense is used, the entry to recognize that expense 8. When the allowance method of recognizing bad debt expense is used, the allowance for doubtful accounts would decrease when a(n) 9. In accordance with ASC Topic 860, Transfers and Servicing, all of the following would be disclosed except for 10. The premium on a 3-year insurance policy expiring on December 31, year 3, was paid in total on January 2, year 1. If the company has a 6month operating cycle, then on December 31, year 1, the prepaid insurance reported as a current asset would be for 11. Foster Co. adjusted its allowance for uncollectible accounts at yearend. The general ledger balances for the accounts receivable and the related allowance account were $1,000,000 and $40,000, respectively. Foster uses the percentage-of-receivables method to estimate its allowance for uncollectible accounts. Accounts receivable were estimated to be 5% uncollectible. What amount should Foster record as an adjustment to its allowance for uncollectible accounts at year-end?


12. A retailer failed to record a purchase of inventory on credit near the end of the current year. The goods did arrive and were included in the inventory count. The purchase will be recorded next year, when the goods are paid for. As a result, 13. What is the current ratio as of December 31? 14. What was Brock's dollar-value LIFO inventory on December 31, 2004? 15. In its 2005 income statement, what amount should Kam report as the cost of goods sold? 16. When the accounts receivable of a company are sold outright to a company which normally buys accounts receivable of other companies without recourse, the accounts receivable have been Pledged.

17. What was the price index used to compute Bach's 2007 dollar-value LIFO inventory layer? 18. Drew Co. uses the average cost inventory method for internal reporting purposes and LIFO for financial statement and income tax reporting. 19. What adjusting entry should Drew record to adjust from average cost to LIFO on December 31, 2005? 20. When the FIFO inventory method is used during periods of rising prices, a perpetual inventory system results in an ending inventory cost that is 21. Nomar Co. shipped inventory on consignment to Seabright Co. that cost $20,000. Seabright paid $500 for advertising that was reimbursable


from Nomar. At the end of the year, 70% of the inventory was sold for $30,000. The agreement states that a commission of 20% will be provided to Seabright for all sales. What amount of net inventory on consignment remains on the balance sheet for the first year for Nomar? 22. When an inventory overstatement in year one counterbalances in year two, this means:

23. If ending inventory for 20x5 is understated because certain items were missed in the count, then: 24. The following bank reconciliation is presented for the Kingston Company for the month of November year 1:

25. Data for the month of December year 1 per bank follows:

26. All items that were outstanding as of November 30, cleared through the bank in December, including the bank credit. In addition, $2,500 in checks were outstanding as of December 31, year 1. What is the balance of cash per books at December 31, year 1?


27. Lind Corp. declared a cash dividend of $50,000 on March 10, year 2, to stockholders of record March 25, year 2, payable on April 5, year 2. As a result of this cash dividend, working capital 28. The controller of Peabody, Inc. has been asked to present an analysis of accounts receivable collections at the upcoming staff meeting. The following information is used: 29. What is the receivables turnover ratio as of December 31, year 2? 30. All but one of the following are required before a transfer of receivables can be recorded as a sale. 31.Alfisol, Inc. offers sales discounts of 2% on all credit sales paid within 15 days. For year 1, gross credit sales totaled $150,000 and 75% of Alfisol’s customers took advantage of the discount. Under the net method 32. The following information is available from Timber Corp’s financial records for year 1:

33. How many times did Timber’s accounts receivable turn over in year **********************************************************


1?

ACC 422 Week 1 DQ 1

For more classes visit www.snaptutorial.com Week 1 – DQ 1 Consider how an organization must manage cash, receivables, and inventory. Which of the three variables is the most important to manage? Is one more susceptible to fraud and errors than the others? Explain your answer. How would a misstatement in each affect the organization? **********************************************************

ACC 422 Week 1 DQ 2

For more classes visit


www.snaptutorial.com Week 1 – DQ 2 What is the perpetual method of tracking inventory? How does it differ from the periodic method of tracking inventory? Why would a company choose one method over the other method? Which is the best method? Why? **********************************************************

ACC 422 Week 1 DQ 3

For more classes visit www.snaptutorial.com Week 1 – DQ 3 What are the different ways to estimate bad debt? How does this affect net income? What does Generally Accepted Accounting Principles (GAAP) require? Why? Should all companies have bad debt? Explain your answer.


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ACC 422 Week 1 Individual Assignment Disclosure Analysis Paper (2 Papers)

For more classes visit www.snaptutorial.com This Tutorial contains 2 Papers Resource: Internet Select a publicly held company to use as the basis for this assignment. Research your selected company and acquire the company’s most recent financial statements using the Internet. Prepare a 700- to 1,050-word paper analyzing the disclosures contained within the notes to the financial statements related to cash and cash equivalents, receivables, and inventories. Include a list identifying the components of the organization’s cash and cash equivalents. Format your paper consistent with APA guidelines..


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ACC 422 Week 1 Individual Assignment Disclosure Analysis Paper

For more classes visit www.snaptutorial.com Resource: Internet

Select a publicly held company to use as the basis for this assignment.

Research your selected company and acquire the company’s most recent financial statements using the Internet.

Prepare a 700- to 1,050-word paper analyzing the disclosures contained within the notes to the financial statements related to cash and cash


equivalents, receivables, and inventories. Include a list identifying the components of the organization’s cash and cash equivalents.

Format your paper consistent with APA guidelines. **********************************************************

ACC 422 Week 1 Individual WileyPlus Assignment (Exercise 7-2, 7-4, 7-8, 7-9, 7-13, 716, 8-3, 8-13) 100% Score

For more classes visit www.snaptutorial.com Complete the following Week 1 Assignment in WileyPLUS: Exercise 7-2 Exercise 7-4 Exercise 7-8 Exercise 7-9 Exercise 7-13 Exercise 7-16


Exercise 8-3 Exercise 8-13 Take a screenshot of your completed work, and Click the Assignment Files tab to submit your screenshot. **********************************************************

ACC 422 Week 1 Summary

For more classes visit www.snaptutorial.com Post a 150 words summary what you have learned this week **********************************************************

ACC 422 Week 1 Team Assignment Audited Financial Statements (Nordstrom Inc.)


For more classes visit www.snaptutorial.com Each team is assigned a publically traded company that they will use to answer the questions in the Financial Scavenger Hunt assigned each week. Team A: Nordstrom Inc. Team B: Macy's Inc. Locate your assigned company's latest audited financial statements and post them on the assignment tab. Review the financial statements, including any notes and supplemental information, and answer the following questions. Indicate where you found the answer to the questions. If calculations are required, show your work. Post your answers to the assignment tab. Who are the auditors and have the auditors changed in the past 2 years? If yes, who were the previous auditors and why was there a change? What kind of opinion did the auditors issue on The company as a whole The internal control system What is the date of the audit opinion? This is the date that fixes the auditor's liability. Have the financials been restated in the past 2 years? Have there been any changes in the following positions in the past 2 years? Chief Executive Officer Chief Financial Officer **********************************************************


ACC 422 Week 2 CPA Practice Exam

For more classes visit www.snaptutorial.com 1. On June 18, 2005, Dell Printing Co. incurred the following costs for one of its printing presses:

2. The overhaul resulted in a significant increase in production. Neither the attachment nor the overhaul increased the estimated useful life of the press. What amount of the above costs should be capitalized?

3. The following two inventory items were purchased as a group in a liquidation sale for $1,000. 4. The firm purchasing the inventory records item A at what amount? 5. Which of the following statements are correct when a company applying the lower of cost or market method reports its inventory at replacement cost?


6. Immediately after a note payable was signed, its present value was $30,000. This note and $20,000 cash were used to acquire a used plant asset at the beginning of the current year. The interest rate implied in the note is 6%. Total interest payments due on the note over its term amount to $4,000. The term exceeds one year. No payments on the note are due during the current year. What amount of interest expense is recognized for the first year (current year) on this note, and what amount is capitalized to the plant asset account? 7. Cole Co. began constructing a building for its own use in January 2004. During 2004, Cole incurred interest of $50,000 on specific construction debt and $20,000 on other borrowings. Interest computed on the weighted-average amount of accumulated expenditures for the building during 2004 was $40,000. What amount of interest cost should Cole capitalize? 8. Many years after constructing a plant asset, management spent a significant sum on the asset. Which of the following types of expenditures should be capitalized in this instance: 9. Which of the following is a not requirement for an asset to be categorized as a plant asset. 10. Zahn Corp.'s comprehensive Balance Sheet at December 31, 2005 and 2004 reported accumulated depreciation balances of $800,000 and $600,000, respectively. Property with a cost of $50,000 and a carrying amount of $40,000 was the only property sold in 2005. Depreciation charged to operations in 2005 was:


11. Talton Co. installed new assembly line production equipment at a cost of $185,000. Talton had to rearrange the assembly line and remove a wall to install the equipment. The rearrangement cost was $12,000 and the wall removal cost was $3,000. The rearrangement did not increase the life of the assembly line but it did make it more efficient. What amount of these costs should be capitalized by Talton?

12. The original cost of an inventory item is above the replacement cost. The inventory item's replacement cost is above the net realizable value. Under the lower of cost or market method, the inventory item should be valued at 13. When marking up a specific line of household items for resale, a retailer computes its markup as 40% of cost. For purposes of estimating ending inventory using the gross margin method, what percentage is applied to sales when estimating cost of goods sold? 14. A flash flood swept through Hat, Inc.'s warehouse on May 1. After the flood, Hat's accounting records showed the following: 15. What amount of inventory was lost in the flood? 16. Information for a firm using the dollar value (DV) LIFO retail method follows. The cost to retail (C/R) is provided along with price level indices. The data reflects the use of the method through year one. 17. For year two, ending inventory at retail (by count) totaled $310. The ending price-level index for the year was 1.15. The cost-to-retail ratio was .42. What is the ending inventory for financial reporting purposes for this firm? 18. A firm began the construction of its new manufacturing facility in January of 20x2. The following expenditures were made on construction in that year: 19. Debt outstanding the entire year:


20. At the beginning of the year, Cann Co. started construction on a new $2 million addition to its plant. Total construction expenditures made during the year were $200,000 on January 2, $600,000 on May 1, and $300,000 on December 1. On January 2, the company borrowed $500,000 for the construction at 12%. The only other outstanding debt the company had was a 10% interest rate, long-term mortgage of $800,000, which had been outstanding the entire year. What amount of interest should Cann capitalize as part of the cost of the plant addition? 21. A corporation entered into a purchase commitment to buy inventory. At the end of the accounting period, the current market value of the inventory was less than the fixed purchase price, by a material amount. Which of the following accounting treatments is most appropriate? 22. Merry Co. purchased a machine costing $125,000 for its manufacturing operations and paid shipping costs of $20,000. Merry spent an additional $10,000 testing and preparing the machine for use. What amount should Merry record as the cost of the machine? 23. How does the retail inventory method establish the lower-of-cost-ormarket valuation for ending inventory? 24. A firm uses the dollar value LIFO retail method and has $2,000 in beginning inventory at retail at the beginning of the current year. The base year equivalent of this amount is $1,600. The base year index is 1.00. The beginning inventory reported in the Balance Sheet is $800. During the current year, the firm purchased $12,000 of inventory at cost and marked that up to $40,000. Sales for the year were $28,000. The relevant ending price index is 1.60. What amount does this firm report as inventory in its Balance Sheet at the end of the current year? **********************************************************


ACC 422 Week 2 DQ 1

For more classes visit www.snaptutorial.com Week 2 – DQ 1 Under what circumstances would a company need to estimate its inventory? What are the differences between using the gross profit method and retail inventory method for estimating inventory? Which method of estimation, gross profit or retail inventory, is best? Explain your answer. **********************************************************

ACC 422 Week 2 DQ 2

For more classes visit


www.snaptutorial.com Week 2 – DQ 2 What are the criteria for capitalization of fixed assets? What items are included in the cost of a fixed asset? Should interest be included in the cost of a fixed asset? Explain why or why not. **********************************************************

ACC 422 Week 2 DQ 3

For more classes visit www.snaptutorial.com Week 2 – DQ 3 How do we account for the disposition of fixed assets? What are the differences in how the exchanges of assets are handled, pending on whether they are similar or dissimilar? What is the rationale for these differences? What is the impact to the companies’ financial statements?


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ACC 422 Week 2 Individual Assignment E7-2, E78,Q13,E8-5 And E8-14

For more classes visit www.snaptutorial.com Resource: Intermediate Accounting Prepare written responses to the following assignments from the text:

¡

Ch. 7: Exercises E7-2 & E7-8

Ch. 8: Question 13 and Exercises E8-5 & E8-14 **********************************************************


ACC 422 Week 2 Individual WileyPlus Assignment (Exercise 9-3, 9-12, 9-19, 10-2, 10-23, 10-24)

For more classes visit www.snaptutorial.com Complete the following Week Two Assignment in WileyPLUS: Exercise 9-3 Exercise 9-12 Exercise 9-19 Exercise 10-2 Exercise 10-23 Exercise 10-24 Take a screenshot of your completed work, and Click the Assignment Files tab to submit your screenshot. **********************************************************

ACC 422 Week 2 Learning Team Assignment From The Text P7-10 And E8-25


For more classes visit www.snaptutorial.com Resource: Intermediate Accounting Prepare written responses to the following assignments from the text:

¡

Ch. 7: Problem P7-10

Ch. 8: Exercise E8-25 **********************************************************

ACC 422 Week 2 Summary

For more classes visit www.snaptutorial.com


Post a 150 words summary what you have learned this week **********************************************************

ACC 422 Week 2 Team Assignment Textbook Problems (P7-1, P7-2, P8-4) 100% Score

For more classes visit www.snaptutorial.com Prepare written responses to the following assignments from Ch. 7 & 8 of Intermediate Accounting: Problem 7-1 Problem 7-2 Problem 8-4 Click the Assignment Files tab to submit your assignment. **********************************************************


ACC 422 Week 3 CPA Practice Exam

For more classes visit www.snaptutorial.com 1. Alta Co. spent $400,000 during the current year developing a new idea for a product that was patented during the year. The legal cost of applying for a patent license was $40,000. Also, $50,000 was spent to successfully defend the rights of the patent against a competitor. The patent has a life of 20 years. Under U.S. GAAP, what amount should Alta capitalize related to the patent?

2. In 2005, Ball Labs incurred the following costs: 3. What was Ball's total research and development expense in 2005? 4. South Co. purchased a machine that was installed and placed in service on January 1, 2004 at a cost of $240,000. Salvage value was estimated at $40,000. The machine is being depreciated over 10 years by the double declining balance method. For the year ended December 31, 2005, what amount should South report as depreciation expense? 5. A manufacturing firm purchased used equipment for $135,000. The original owners estimated that the residual value of the equipment was $10,000. The carrying amount of the equipment was $120,000 when ownership transferred. The new owners estimate that the expected


remaining useful life of the equipment was 10 years, with a salvage value of $15,000. What amount represents the depreciable base used by the new owners? 6. After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct? 7. Northstar Co. acquired a registered trademark for $600,000. The trademark has a remaining legal life of five years, but can be renewed every 10 years for a nominal fee. Northstar expects to renew the trademark indefinitely. What amount of amortization expense should Northstar record for the trademark in the current year? 8. Hull Co. bought a trademark from Roe Corp. on January 1, 2005, for $224,000. 9. A firm began a mineral exploitation venture during the current year by spending (1) $40 million for the mineral rights; (2) $100 million exploring for the minerals, one-fourth of which were successful; and (3) $60 million to develop the site. Management estimated that 20 million tons of ore would ultimately be removed from the property. Wages and other extraction costs for the current year amounted to $10 million. In total, 2 million tons of ore were removed from the deposit in the current year. The entire production for the period was sold. Compute cost of goods sold under the successful efforts method. 10. Spiro Corp. uses the sum-of-the-years' digits method to depreciate equipment purchased in January 2003 for $20,000. The estimated salvage value of the equipment is $2,000, and the estimated useful life is four years. What should Spiro report as the asset's carrying amount as of December 31, 2005?


11. A depreciable asset has an estimated 15% salvage value. Under which of the following methods, properly applied, would the accumulated depreciation equal the original cost at the end of the asset’s estimated useful life? 12. What amount should Ichor report as depreciation expense for 2005? 13. Grayson Co. incurred significant costs in defending its patent rights. Which of the following is the appropriate treatment of the related litigation costs? 14. On April 1, 2004, Kew Co. purchased new machinery for $300,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years'-digits method. The accumulated depreciation on this machinery at March 31, 2006 should be: 15. Stam Co. incurred the following research and development project costs during the current year: 16. The equipment has a five-year useful life and is depreciated using the straight-line method. What amount should Stam recognize as research and development expense at year end? 17. Star Co. leases a building for its product showroom. The 10-year non-renewable lease will expire on December 31, 2007. In January 2002, Star redecorated its showroom and made leasehold improvements of $48,000. The estimated useful life of the improvements is 8 years. Star uses the straight-line method of amortization. What amount of leasehold improvements, net of amortization, should Star report in its June 30, 2002, Balance Sheet? 18. A company recently acquired a copyright that now has a remaining legal life of 30 years. The copyright initially had a 38-year useful life assigned to it. An analysis of market trends and consumer habits indicated that the copyrighted material will generate positive cash flows for approximately 25 years. What is the remaining useful life, if any, over which the company can amortize the copyright for accounting purposes?


19. Cantor Co. purchased a coal mine for $2,000,000. It cost $500,000 to prepare the coal mine for the extraction of the coal. It was estimated that 750,000 tons of coal would be extracted from the mine during its useful life. Cantor planned to sell the property for $100,000 at the end of its useful life. During the current year, 15,000 tons of coal were extracted and sold. What would Cantor's depletion amount be per ton for the current year? 20. On January 1, 2004, Bay Co. acquired a land lease for a 21-year period with no option to renew. 21. During 2005, Kent Co. incurred $204,000 of research and development costs in its laboratory to develop a patent that was granted on July 1, 2005. Legal fees and other costs associated with registration of the patent totaled $41,000. The estimated economic life of the patent is 10 years. What amount should Kent capitalize for the patent on July 1, 2005? 22. During 2005, Orr Co. incurred the following costs: 23. In its 2005 income statement, what should Orr report as research and development expense? 24. Goodwill should be tested for value impairment at which of the following levels? 25. In which of the following situations is the units of production method of depreciation most appropriate? 26. Johan Co. has an intangible asset, which it estimates will have a useful life of 10 years, while Abco Co. has goodwill, which has an indefinite life. Which company should report amortization in its financial statements? 27. A firm began a mineral exploitation venture during the current year by spending (1) $40 million for the mineral rights; (2) $100 million


exploring for the minerals, one-fourth of which were successful; and (3) $60 million to develop the site. Management estimated that 20 million tons of ore would ultimately be removed from the property. Wages and other extraction costs for the current year amounted to $10 million. In total, 2 million tons of ore were removed from the deposit in the current year. The entire production for the period was sold. What amount of depletion is recognized during the current year under the full costing method? 28. On January 2, 2005, Ral Co. leased land and a building from an unrelated lessor for a 10-year term. The lease has a renewal option for an additional 10 years, but Ral has not reached a decision with regard to the renewal option. In early January of 2005, Ral completed the following improvements to the property: 29. Amortization of leasehold improvements for 2006 should be:

30. The machines were put into use immediately. Machine A has a useful life of 5 years and can only be used in one research project. Machine B will be used for 2 years on a research and development project and then used by the production division for an additional 8 years. Wizard uses the straight-line method of depreciation. 31. What amount should Wizard include in 2005 research and development expense? 32. Hull Co. bought a trademark from Roe Corp. on January 1, 2005, for $224,000. Hull retained an independent consultant who estimated the trademark's remaining useful life to be 20 years. The trademark most likely will not be renewed. Its unamortized cost on Roe's accounting records was $112,000. In Hull's December 31, 2005 Balance Sheet, what amount should be reported as accumulated amortization?


33. A company reported $6 million of goodwill in last year's statement of financial position. How should the company account for the reported goodwill in the current year? 34. What factor must be present to use the units of production (activity) method of depreciation? 35. Ajax Corp. has an effective tax rate of 30%. On January 1, 2000, Ajax purchased equipment for $100,000. The equipment has a useful life of 10 years. What amount of current tax benefit will Ajax realize during 2000 by using the 150% declining-balance method of depreciation for tax purposes instead of the straight-line method? 36. During 2005, Kent Co. incurred $204,000 of research and development costs in its laboratory to develop a patent that was granted on July 1, 2005. Legal fees and other costs associated with registration of the patent totaled $41,000. The estimated economic life of the patent is 10 years. What amount should Kent capitalize for the patent on July 1, 2005? 37. Ichor Co. reported equipment with an original cost of $379,000 and $344,000 and accumulated depreciation of $153,000 and $128,000, respectively, in its comparative financial statements for the years ended December 31, 2005 and 2004. During 2005, Ichor purchased equipment costing $50,000 and sold equipment with a carrying value of $9,000. 38. On January 1, 2000, Nobb Corp. signed a 12-year lease for warehouse space. Nobb has an option to renew the lease for an additional 8-year period on or before January 1, 2004. 39. On April 1, 2004, Kew Co. purchased new machinery for $300,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years'-digits method. The


accumulated depreciation on this machinery at March 31, 2006 should be: 40. A manufacturing firm purchased used equipment for $135,000. The original owners estimated that the residual value of the equipment was $10,000. The carrying amount of the equipment was $120,000 when ownership transferred. The new owners estimate that the expected remaining useful life of the equipment was 10 years, with a salvage value of $15,000. What amount represents the depreciable base used by the new owners? 41. What is the total R & D cost that will be expensed when incurred? **********************************************************

ACC 422 Week 3 DQ 1

For more classes visit www.snaptutorial.com Week 3 – DQ 1 What is the purpose of depreciation?


Does the book value of a fixed asset (cost minus accumulated depreciation) communicate to a user what the asset is worth? Explain why or why not. Should the financial statements reflect the value of fixed assets? Explain why or why not. **********************************************************

ACC 422 Week 3 DQ 2

For more classes visit www.snaptutorial.com Week 3 – DQ 2 What are the different methods used to calculate depreciation? How does a company decide which method it should utilize? How does its choice affect the financial statements? Should companies standardize the method of depreciation to enhance comparability? Explain your answer. **********************************************************


ACC 422 Week 3 DQ 3

For more classes visit www.snaptutorial.com Week 3 – DQ 3 What is an intangible asset? Should all intangible assets be subject to amortization? Explain why or why not. Why are some intangible assets not amortized? What is the implication to the financial statements? **********************************************************

ACC 422 Week 3 DQ 4

For more classes visit www.snaptutorial.com


ACC 422 Week 3 DQ 4 **********************************************************

ACC 422 Week 3 Individual Assignment From the Text E9-1,E9-12,E9-19,E10-5 And E10-12

For more classes visit www.snaptutorial.com Resource: Intermediate Accounting Prepare written responses to the following assignments from the text:

¡

Ch. 9: Exorcices E9-1, E9-12, & E9-19

Ch. 10: Exercises E10-5 & E10-12 **********************************************************


ACC 422 Week 3 Individual WileyPlus Assignment Exercise 11-6, 11-9, 11-21, 12-1, 12-6, 12-8, 12-17

For more classes visit www.snaptutorial.com Complete the following Week Three Assignment in WileyPLUS: Exercise 11-6 Exercise 11-9 Exercise 11-21 Exercise 12-1 Exercise 12-6 Exercise 12-8 Exercise 12-17 Take a screenshot of your completed work, and Click the Assignment Files tab to submit your screenshot. **********************************************************


ACC 422 Week 3 Learning Team Assignment From The Text P9-9 And P10-8

For more classes visit www.snaptutorial.com Resource: Intermediate Accounting Prepare written responses to the following assignments from the text:

¡

Ch. 9: Problem P9-9

Ch. 10: Problem P10-8 **********************************************************

ACC 422 Week 3 Summary


For more classes visit www.snaptutorial.com Post a 150 words summary what you have learned this week **********************************************************

ACC 422 Week 3 Team Assignment Textbook Problems (P9-2, P9-4, P10-3, P10-4) 100% Score

For more classes visit www.snaptutorial.com Prepare written responses to the following assignments from Ch. 9 & 10 of Intermediate Accounting: Problem 9-2 Problem 9-4 Problem 10-3 Problem 10-4


Click the Assignment Files tab to submit your assignment. **********************************************************

ACC 422 Week 4 CPA Practice Exam

For more classes visit www.snaptutorial.com 1. On September 30, World Co. borrowed $1,000,000 on a 9% note payable. World paid the first of four quarterly payments of $264,200 when due on December 30. In its December 31, balance sheet, what amount should World report as note payable? 2. Gain contingencies are usually recognized in the income statement when 3. For a bond issue which sells for less than its par value, the market rate of interest is 4. In December year 1, Mill Co. began including one coupon in each package of candy that it sells and offering a toy in exchange for 50 cents and five coupons. The toys cost Mill 80 cents each. Eventually 60% of the coupons will be redeemed. During December, Mill sold 110,000


packages of candy and no coupons were redeemed. In its December 31, year 1 balance sheet, what amount should Mill report as estimated liability for coupons? 5. When the interest payment dates of a bond are May 1 and November 1, and the bond is issued on June 1, year 1, the amount of interest expense for the year ended December 31, year 1, would be for 6. White Airlines sold a used jet aircraft to Brown Company for $800,000, accepting a 5-year 6% note for the entire amount. Brown’s incremental borrowing rate was 14%. The annual payment of principal and interest on the note was to be $189,930. The aircraft could have been sold at an established cash price of $651,460. The present value of an ordinary annuity of $1 at 8% for five periods is 3.99. The aircraft should be capitalized on Brown’s books at 7. Which formula should Foley use in cell E3 to calculate the bonds’ carrying amount at the end of year 2? 8. On September 1, year 1, a company borrowed cash and signed a 2year interest-bearing note on which both the principal and interest are payable on September 1, year 3. The company did not elect the fair value option for reporting this note. At December 31, year 2, the liability for accrued interest should be 9. On January 1, 2000, Fox Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2010 but were callable at 101 any time after December 31, 2003. Interest was payable semi-annually on July 1 and January 1. On July 1, 2005, Fox called all of the bonds and retired them. 10. The bond premium was amortized on a straight-line basis. Before income taxes, Fox's gain or loss in 2005 on this early extinguishment of debt was


11. An investor purchased a bond classified as a long-term investment between interest dates at a premium. At the purchase date, the carrying value of the bond is more than the 12. A company has outstanding accounts payable of $30,000 and a short-term construction loan in the amount of $100,000 at year-end. The loan was refinanced through issuance of long-term bonds after year-end but before issuance of financial statements. How should these liabilities be recorded in the balance sheet? 13. Bonds payable issued with scheduled maturities at various dates are called 14. A loss contingency for which the amount of loss can be reasonably estimated should be accrued when the occurrence of the loss is 15. On October 1, year 1, Fleur Retailers signed a 4-month, 16% note payable to finance the purchase of holiday merchandise. At that date, there was no direct method of pricing the merchandise, and the note’s market rate of interest was 11%. Fleur recorded the purchase at the note’s face amount. All of the merchandise was sold by December 1, year 1. Fleur’s year 1 financial statements reported interest payable and interest expense on the note for 3 months at 16%. All amounts due on the note were paid February 1, year 2. As a result of Fleur’s accounting treatment of the note, interest, and merchandise, which of the following items was reported correctly? 16. Agee Corp. pays its outside salespersons fixed monthly salaries and commissions on net sales. Sales commissions are computed and paid on a monthly basis (in the month following the month of the sale), and the fixed salaries are treated as advances against commissions. However, if the fixed salaries for salespersons exceed their sales commissions earned for a month, such excess is not charged back to them. Pertinent data for the month of April year 2 for the three salespersons in sales region 330 are as follows:


17. For sales region 330, what total amount should Agee accrue for sales commissions payable at April 30, year 2? 18. On January 1, a company issued a $50,000 face value, 8% five-year bond for $46,139 that will yield 10%. Interest is payable on June 30 and December 31. What is the bond carrying amount on December 31 of the current year? 19. Album Co. issued ten-year $200,000 debenture bonds on January 2. The bonds pay interest semiannually. Album uses the effective interest method to amortize bond premiums and discounts. The carrying value of the bonds on January 2 was $185,953. A journal entry was recorded for the first interest payment on June 30, debiting interest expense for $13,016 and crediting cash for $12,000. What is the annual stated interest rate for the debenture bonds? 20. An investor purchased a bond classified as a long-term investment between interest dates at a discount. At the purchase date, the carrying amount of the bond is more than the 21. On January 1, year 1, Korn Co. sold to Kay Corp. $400,000 of its 10% bonds for $354,118 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Korn report as interest expense for the 6 months ended June 30, year 1? 22. Bryce Corp. signed an agreement with Casey, which requires that if Casey does not meet certain contractual obligations, Casey must forfeit land worth $100,000 to Bryce. Bryce’s accountants believe that Casey will not meet its contractual obligations, and it is probable Bryce will receive the land by the end of year 3. Bryce uses IFRS for reporting purposes. How should Bryce report the land in its December 31, year 2 financial statements?


23. On March 1, year 1, Cain Corp. issued at 103 plus accrued interest 200 of its 9%, $1,000 bonds. The bonds are dated January 1, year 1, and mature on January 1, year 11. Interest is payable semiannually on January 1 and July 1. Cain paid bond issue costs of $10,000. Cain should realize net cash receipts from the bond issuance of 24 .On April 1, year 1, Girard Corporation issued at 98 plus accrued interest, 200 of its 10%, $1,000 bonds. The bonds are dated January 1, year 1, and mature on January 1, year 11. Interest is payable semiannually on January 1 and July 1. From the bond issuance Girard would realize net cash receipts of 25. Bell Co. is a defendant in a lawsuit that could result in a large payment to the plaintiff. Bell’s attorney believes that there is a 90% chance that Bell will lose the suit, and estimates that the loss will be anywhere from $5,000,000 to $20,000,000 and possibly as much as $30,000,000. None of the estimates are better than the others. What amount of liability should Bell report on its balance sheet related to the lawsuit? 26. Stark, Inc. has $1,000,000 of notes payable due June 15, year 2. At the financial statement date of December 31, year 1, Stark signed an agreement to borrow up to $1,000,000 to refinance the notes payable on a long-term basis. The financing agreement called for borrowings not to exceed 80% of the value of the collateral Stark was providing. At the date of issue of the December 31, year 1 financial statements, the value of the collateral was $1,200,000 and was not expected to fall below this amount during year 2. On the December 31, year 1 balance sheet, Stark should classify 27. On October 1, year 1, a company borrowed cash and signed a 3-year interest-bearing note on which both the principal and interest are payable on October 1, year 4. The company did not elect to use the fair value option for reporting financial liabilities. At December 31, year 3, accrued interest should


28. On January 1, year 1, Jaffe Corporation issued at 95 five hundred of its 9%, $1,000 bonds. Interest is payable semiannually on July 1 and January 1, and the bonds mature on January 1, year 11. Jaffe paid bond issue costs of $20,000 which are appropriately recorded as a deferred charge. Jaffe uses the straight-line method of amortizing bond discount and bond issue costs. Assume Jaffe does not elect the fair value option for reporting financial liabilities. On Jaffe’s December 31, year 1 balance sheet, the bonds payable should be reported at their carrying value of 29. In year 1, Jeremy Corporation issued 1,000 of its 8% $1,000 bonds for $1,040,000. The bonds were due on December 1, year 11. Jeremy did not elect the fair value option for reporting financial liabilities. On October 1, year 7, as part of its normal financing management strategy, Jeremy Corporation redeemed the bonds at a time when the carrying value of the bonds was $50,000 more than the cash paid to retire the bonds. Jeremy should report the $50,000 gain as 30. On December 31, year 1, Wall Corp. issued $100,000 maturity value, 10% bonds for $100,000 cash. The bonds are dated December 31, year 1, and mature on December 31, year 11. Interest will be paid semiannually on June 30 and December 31. In Wall’s September 30, year 2 balance sheet, the amount of accrued interest expense should be 31. Which of the following statements is true? 32. For a troubled debt restructuring involving only modification of terms, it is appropriate for a debtor to recognize a gain when the carrying amount of the debt 33. Tone Company is the defendant in a lawsuit filed by Witt in year 1 disputing the validity of a copyright held by Tone. At December 31, year 1, Tone determined that Witt would probably be successful against Tone for an estimated amount of $400,000. Appropriately, a $400,000 loss


was accrued by a charge to income for the year ended December 31, year 1. On December 15, year 2, Tone and Witt agreed to a settlement providing for cash payment of $250,000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on Tone’s accounting records was $60,000 at December 15, year 2. What would be the effect of the settlement on Tone’s income before income tax in year 2? 34. Blake Foods Corporation mails coupons to consumers which may be presented by a stated expiration date at retail food stores to obtain discounts on certain Blake products. Retailers are reimbursed for the face value of coupons redeemed, plus 10% of coupon value as compensation for handling costs. Blake honors requests for coupon redemption by retailers received up to 3 months after the consumer expiration date. In Blake’s experience, 60% of the coupons issued ultimately are redeemed. Information with respect to the two separate series of coupons issued by Blake during year 1 is as follows: 35. What amount should Blake report as a liability for unredeemed coupons at December 31, year 1? 37. In determining whether to accrue employees’ compensation for future absences, among the conditions that must be met are that the obligation relates to rights that 38. On September 1, year 1, a company borrowed cash and signed a 1year interest-bearing note on which both the principal and interest are payable on September 1, year 2. How will the note payable and the related interest be classified in the December 31, year 1 balance sheet? 39. Dell Company sells its products in reusable, expensive containers. The customer is charged a deposit for each container delivered and receives a refund for each container returned within two years after the year of delivery. Dell accounts for the containers not returned within the


time limit as being retired by sale at the deposit amount. Information for year 3. concerning the containers is as follows: 40. What amount should Dell report as a liability for returnable containers at December 31, year 3? 41. On December 31, year 2, Marsh Company entered into a debt restructuring agreement with Saxe Company, which was experiencing financial difficulties. Marsh restructured a $100,000 note receivable as follows: 42. Marsh does not elect the fair value option for recording this note receivable. In accordance with the agreement, Saxe made payments to Marsh on December 31, year 3 and year 4. How much interest income should Marsh report for the year ended December 31, year 4? 43. If the payment of compensation is probable, the amount can be reasonably estimated, and the obligation relates to rights that vest, employees’ compensation for future absences should be 44. Witt Corp. has outstanding at December 31, year 1, two long-term borrowings with annual sinking fund requirements and maturities as follows: 45. In the notes to its December 31, year 1 balance sheet, how should Witt report the above data? 46. On January 1, year 1, Hansen, Inc. issued for $939,000, 1,000 of its 9%, $1,000 bonds. The bonds were issued to yield 10%. The bonds are dated January 1, year 1, and mature on December 31, year 10. Interest is payable annually on December 31. Hansen uses the interest method of


amortizing bond discount. In its December 31, year 1 balance sheet, Hansen should report unamortized bond discount of 47. During year 1 Cain Corporation incurred the following costs in connection with the issuance of bonds: 48. What amount should be recorded as a deferred charge to be amortized over the term of the bonds? 49. Reserves for contingencies for general or unspecified business risks should 50. What amount should Pak report for professional fees expense for the year ended December 31, year 1? 51. On March 1, year 1, a suit was filed against Dean Company for patent infringement. Dean’s legal counsel believes an unfavorable outcome is probable, and estimates that Dean will have to pay between $500,000 and $900,000 in damages. However, Dean’s legal counsel is of the opinion that $600,000 is a better estimate than any other amount in the range. The situation was unchanged when the December 31, year 1 financial statements were released on February 24, year 2. How much of a liability should Dean report on its balance sheet at December 31, year 1 in connection with this suit? 52. How would the amortization of premium on bonds payable affect each of the following? 53. Ace Corp. entered into a troubled debt restructuring agreement with National Bank. National agreed to accept land with a carrying amount of $75,000 and a fair value of $100,000 in exchange for a note with a carrying amount of $150,000. Disregarding income taxes, what amount should Ace report as a gain on restructuring the debt?


54. Ray Finance, Inc. issued a 10-year, $100,000, 9% note on January 1, year 1. The note was issued to yield 10% for proceeds of $93,770. Ray did not elect the fair value option to report financial liabilities. Interest is payable semiannually. The note is callable after 2 years at a price of $96,000. Due to a decline in the market rate to 8%, Ray retired the note on December 31, year 6. On that date, the carrying amount of the note was $94,582, and the discounted market rate was $105,280. What amount should Ray report as gain (loss) from retirement of the note for the year ended December 31, year 6? 55. Snelling Co. did not record an accrual for a contingent loss, but disclosed the nature of the contingency and the range of the possible loss. How likely is the loss? 56. On June 1 of the current year, Cross Corp. issued $300,000 of 8% bonds payable at par with interest payment dates of April 1 and October 1. In its income statement for the current year ended December 31, what amount of interest expense should Cross report? 57. Hope Corporation prepares its financial statements in accordance with IFRS. Hope intends to refinance a $500,000 note payable due on March 1, year 2. The company expects the note to be refinanced for a period of five years. Under what circumstances can Hope report the note payable as a noncurrent liability on its December 31, year 1 statement of financial position? 58. Arno Corp.’s liability account balances at June 30, year 2, included a 10% note payable in the amount of $1,800,000. The note is dated October 1, year 1, and is payable in three equal annual payments of $600,000 plus interest. Arno does not elect the fair value option for reporting this financial liability. The first interest and principal payment was made on October 1, year 2. In Arno’s June 30, year 3 balance sheet, what amount should be reported as accrued interest payable for this note?


59. Which of the following contingencies should generally be accrued on the balance sheet as a liability when the occurrence of the contingent event is reasonably possible and its amount can be reasonably estimated? 60. Office supplies were ordered by Dwyer Company from Orcutt Company on December 15, year 1. The terms of sale were FOB destination. Orcutt shipped the office supplies on December 28, year 1, and Dwyer received them on January 3, year 2. When should Dwyer record the account payable? 61. A state requires quarterly sales tax returns to be filed with the sales tax bureau by the 20th day following the end of the calendar quarter. However, the state further requires that sales taxes collected be remitted to the sales tax bureau by the 20th day of the month following any month such collections exceed $500. These payments can be taken as credits on the quarterly sales tax return. Taft Corp. operates a retail hardware store. All items are sold subject to a 6% state sales tax, which Taft collects and records as sales revenue. The sales taxes paid by Taft are charged against sales revenue. Taft pays the sales taxes when they are due. Following is a monthly summary appearing in Taft’s first quarter year 2 sales revenue account: 62. In its financial statements for the quarter ended March 31, year 2, Taft’s sales revenue and sales taxes payable would be 63. A company has the following liabilities at year-end: 64. What amount should the company include in the current liability section of the balance sheet?


Wall Co. sells a product under a two-year warranty. The estimated cost of warranty repairs is 2% of net sales. During Wall’s first two years in business, it made the following sales and incurred the following warranty repair costs: 65. What amount should Wall report as warranty expense for year 2? 66. Milton Co. pledged some of its accounts receivable to Good Neighbor Financing Corporation in return for a loan. Which of the following statements is correct? 67. On March 1, year 1, Williams Corporation issued at 103 plus accrued interest, 100 of its 9%, $1,000 bonds. The bonds are dated January 1, year 1, and mature on January 1, year 11. Interest is payable semiannually on January 1 and July 1. Williams paid bond issue costs of $5,000. Based on the information above, Williams would realize net cash receipts from the bond issuance of 68. On May 1, year 2, Winston Corporation received notification of legal action against the firm. Winston’s attorneys determine that it is probable the company will lose the suit, and the loss is estimated at $5,000,000. Winston’s accountants believe this amount is material and should be disclosed. Winston prepares its financial statements in accordance with IFRS. How should the estimated loss be disclosed in Winston’s financial statements at December 31, year 2? 69. Webb Co. has outstanding a 7%, 10-year $100,000 face-value bond. The bond was originally sold to yield 6% annual interest. Webb uses the effective interest rate method to amortize bond premium. On June 30, year 1, the carrying amount of the outstanding bond was $105,000. What amount of unamortized premium on bond should Webb report in its June 30, year 2 balance sheet?


70. What amount should Bloy accrue as its share of payroll taxes in its October 31, year 1 balance sheet? 71. Glen Corporation had the following long-term debt: 72. The total of the serial bonds amounted to 73. Ande Co. estimates uncollectible accounts expense using the ratio of past actual losses from uncollectible accounts to past net credit sales, adjusted for anticipated conditions. The practice follows the accounting concept of 74. An expropriation of assets which is imminent and for which the amount of loss can be reasonably estimated should beBronson Apparel, Inc. operates a retail store and must determine the proper December 31, year 1 year-end accrual for the following expenses: 75. In its December 31, year 1 balance sheet, Bronson should report accrued expenses of 76. How would the amortization of discount on bonds payable affect each of the following? 77. What type of bonds in a particular bond issuance will not all mature on the same date? 78. During year 2, a former employee of Dane Co. began a suit against Dane for wrongful termination in November year 1. After considering all of the facts, Dane’s legal counsel believes that the former employee will prevail and will probably receive damages of between $1,000,000 and $1,500,000, with $1,300,000 being the most likely amount. Dane’s financial statements for the year ended December 31, year 1, will not be


issued until February year 2. In its December 31, year 1 balance sheet, what amount should Dane report as a liability with respect to the suit? 79. Fulton Cereal Company inaugurated a new sales promotional program. For every 10 cereal box tops returned to the company, customers receive an attractive prize. Fulton estimates that only 30% of the cereal box tops reaching the consumer market will be redeemed. Additional information is as follows: 80. At the end of its year, Fulton recognized a liability equal to the estimated cost of potential prizes outstanding. What is the amount of this estimated liability? 81. Baker Co. sells consumer products that are packaged in boxes. Baker offered an unbreakable glass in exchange for two box tops and $1 as a promotion during the current year. The cost of the glass was $2.00. Baker estimated at the end of the year that it would be probable that 50% of the box tops will be redeemed. Baker sold 100,000 boxes of the product during the current year and 40,000 box tops were redeemed during the year for the glasses. What amount should Baker accrue as an estimated liability at the end of the current year, related to the redemption of box tops? 82. An estimated loss from a loss contingency that is probable and for which the amount of the loss can be reasonably estimated should 83. Finch Co. reported a total asset retirement obligation of $257,000 in last year’s financial statements. This year, Finch acquired assets subject to unconditional retirement obligations measured at undiscounted cash flow estimates of $110,000 and discounted cash flow estimates of $68,000. Finch paid $87,000 toward the settlement of previously recorded asset retirement obligations and recorded an accretion expense of $26,000. What amount should Finch report for the asset retirement obligation in this year’s balance sheet?


84. E & S Partnership purchased land for $500,000 on May 1, year 1, paying $100,000 cash and giving a $400,000 note payable to Big State Bank. E & S made three annual payments on the note totaling $179,000, which included interest of $89,000. E & S then defaulted on the note. Title to the land was transferred by E & S to Big State, which cancelled the note, releasing the partnership from further liability. At the time of the default, the fair value of the land approximated the note balance. In E & S’s year 4 income statement, the amount of the loss should be 85. On December 31, year 1, Taylor, Inc. signed a binding agreement with a bank for the refinancing of an existing note payable scheduled to mature in February, year 2. The terms of the refinancing included extending the maturity date of the note by three years. On January 15, year 2, the note was refinanced. How should Taylor report the note payable in its December 31, year 1 balance sheet? 86. In March year 2, an explosion occurred at Nilo Co.’s plant, causing damage to area properties. By May year 2, no claims had yet been asserted against Nilo. However, Nilo’s management and legal counsel concluded that it was reasonably possible that Nilo would be held responsible for negligence, and that $3,000,000 would be a reasonable estimate of the damages. Nilo’s $5,000,000 comprehensive public liability policy contains a $300,000 deductible clause. In Nilo’s December 31, year 2 financial statements, for which the auditor’s fieldwork was completed in April year 3, how should this casualty be reported? 87. Grim Corporation operates a plant in a foreign country. It is probable that the plant will be expropriated. However, the foreign government has indicated that Grim will receive a definite amount of compensation for the plant. The amount of compensation is less than the fair market value but exceeds the carrying amount of the plant. The contingency should be reported


88. In determining whether to accrue employees’ compensation for future absences, one of the conditions that must be met is that the employer has an obligation to make payment even if an employee terminates. This an example of a(n) 89. On October 1, year 1, Fleur Retailers signed a 4-month, 16% note payable to finance the purchase of holiday merchandise. At that date, there was no direct method of pricing the merchandise, and the note’s market rate of interest was 11%. Fleur recorded the purchase at the note’s face amount. All of the merchandise was sold by December 1, year 1. Fleur’s year 1 financial statements reported interest payable and interest expense on the note for 3 months at 16%. All amounts due on the note were paid February 1, year 2. Fleur’s year 1 cost of goods sold for the holiday merchandise was 90. Verona Co. had $500,000 in short-term liabilities at the end of the current year. Verona issued $400,000 of common stock subsequent to the end of the year, but before the financial statements were issued. The proceeds from the stock issue were intended to be used to pay the shortterm debt. What amount should Verona report as a short-term liability on its balance sheet at the end of the current year? 91. Strand, Inc. provides an incentive compensation plan under which its president receives a bonus equal to 10% of the corporation’s income in excess of $200,000 before income tax but after deduction of the bonus. If income before income tax and bonus is $640,000 and the tax rate is 40%, the amount of the bonus would be 92. In year 1, May Corp. acquired land by paying $75,000 down and signing a note with a maturity value of $1,000,000. On the note’s due date, December 31, year 6, May owed $40,000 of accrued interest and $1,000,000 principal on the note. May was in financial difficulty and was unable to make any payments. May and the bank agreed to amend the note as follows:


93. May does not elect the fair value option for reporting its financial liabilities. As a result of the troubled debt restructuring, May should report a gain, before taxes, in its year 6 income statement of 94. Bloy Company pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Bloy accrues salaries expense only at its December 31 year-end. Data relating to salaries earned in December year 1 are as follows: 95. Assuming a 5-day work week, Bloy should record a liability at December 31, year 1, for accrued salaries of 96. On March 1, year 1, Harbour Corporation issued 10% debentures dated January 1, year 1, in the face amount of $1,000,000, with interest payable on January 1 and July 1. The debentures were sold at par and accrued interest. How much should Harbour debit to cash on March 1, year 1? 97. On December 1, year 1, Paxton Co. had a note payable due on August 1, year 2. On January 20, year 2, Paxton signed a financing agreement to borrow the balance of the note payable from a lending institution to refinance the note. The agreement does not expire within one year, and no violation of any provision in the financing agreement exists. On February 1, year 2, Paxton was informed by its financial advisor that the lender is not expected to be financially capable of honoring the agreement. Paxton’s financial statements were issued on March 31, year 2. How should Paxton classify the note on its balance sheet at December 31, year 1? 98. On November 1, year 1, Beni Corp. was awarded a judgment of $1,500,000 in connection with a lawsuit. The decision is being appealed by the defendant, and it is expected that the appeal process will be completed by the end of year 2. Beni’s attorney feels that it is highly probable that an award will be upheld on appeal, but that the judgment may be reduced by an estimated 40%. In addition to footnote disclosure,


what amount should be reported as a receivable in Beni’s balance sheet at December 31, year 1? 99. The following information pertains to a fire insurance policy in effect during calendar year 1, covering Vail Co.’s inventory: 100. Vail’s inventory averages $1,000,000 uniformly throughout the year. Vail’s income tax rate is 40%. How much of a contingent liability should Vail accrue at December 31, year 1, to cover possible future fire losses? 101. Which of the following is generally associated with payables classified as accounts payable? 102. Which of the following is generally associated with payables classified as accounts payable? 103. Which of the following is classified as an accrued liability? 104. Morgan Company determined that: (1) it has a material obligation relating to employees’ rights to receive compensation for future absences attributable to employees’ services already rendered, (2) the obligation relates to rights that vest, and (3) payment of the compensation is probable. The amount of Morgan’s obligation as of December 31, year 1, is reasonably estimated for the following employee benefits: 105. What total amount should Morgan report as its liability for compensated absences in its December 31, year 1 balance sheet?


106. Bold Company estimates its annual warranty expense at 2% of annual net sales. The following data are available: 107. After recording the year 2 estimated warranty expense, the warranty liability account would show a December 31, year 2 balance of 108. A 15-year bond was issued in year 1 at a discount. The fair value option was not elected to value financial liabilities. During year 10 a 10year bond was issued at face amount with the proceeds used to retire the 15-year bond at its face amount. The net effect of the year 10 bond transactions was to increase long-term liabilities by the excess of the 10year bond’s face amount over the 15-year bonds. 109. After three profitable years, Dodd Co. decided to offer a bonus to its branch manager, Cone, of 25% of income over $100,000 earned by his branch. For year 1, income for Cone’s branch was $160,000 before income taxes and Cone’s bonus. Cone’s bonus is computed on income in excess of $100,000 after deducting the bonus, but before deducting taxes. What is Cone’s bonus for the year year 1? 110. Wyatt Co. has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. The loss accrual should be 111. A company issued 10-year term bonds at a discount in year 1. Bond issue costs were incurred at that time. The company uses the effective interest method to amortize bond issue costs. Reporting the bond issue costs as a deferred charge would result in 112. On June 30, year 1, Dean Company had outstanding 8%, $1,000,000 face value, 15-year bonds maturing on June 30, year 11. Interest is payable on June 30 and December 31. The unamortized balances on June 30, year 1, in the bond discount and deferred bond


issue costs accounts were $45,000 and $15,000, respectively. Dean reacquired all of these bonds at 93 on June 30, year 1, and retired them. How much gain should Dean report on this early extinguishment of debt? 113. A retail store sells gift certificates that are redeemable in merchandise. When the gift certificate was sold for cash, a 114. Bake Co.’s trial balance included the following at December 31, year 1: 115. The deferred income tax liability is not related to an asset for financial accounting purposes and is expected to reverse in year 2. What amount should be included in the current liability section of Bake’s December 31, year 2 balance sheet? 116. In open market transactions, Oak Corp. simultaneously sold its long-term investment in Maple Corp. bonds and purchased its own outstanding bonds. The broker remitted the net cash from the two transactions. Oak’s gain on the purchase of its own bonds exceeded its loss on the sale of Maple’s bonds. Oak should report the 117. Gar, Inc.’s trial balance reflected the following liability account balances at December 31, year 1: 118. The deferred income tax liability is based on temporary differences stemming from different depreciation methods for financial reporting and income taxes. In Gar’s December 31, year 1 balance sheet, the current liabilities total was 119. On July 1, year 1, Cody Company obtained a $2,000,000, 180-day bank loan at an annual rate of 12%. The loan agreement requires Cody


to maintain a $400,000 compensating balance in its checking account at the lending bank. Cody would otherwise maintain a balance of only $200,000 in this account. The checking account earns interest at an annual rate of 6%. Based on a 360-day year, the effective interest rate on the borrowing is 120. For the week ended June 30, year 1, Free Co. paid gross wages of $20,000, from which federal income taxes of $2,500 and FICA were withheld. All wages paid were subject to FICA tax rates of 7% each for employer and employee. Free makes all payroll-related disbursements from a special payroll checking account. What amount should Free have deposited in the payroll checking account to cover net payroll and related payroll taxes for the week ended June 30, year 1? 121. A company receives an advance payment for special-order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company’s balance sheet as a 122. On December 31, year 1, Key Co. received two $10,000 noninterest-bearing notes from customers in exchange for services rendered. The note from Alpha Co., which is due in nine months, was made under customary trade terms, but the note from Omega Co., which is due in two years, was not. The market interest rate for both notes at the date of issuance is 8%. The present value of $1 due in nine months at 8% is .944. The present value of $1 due in two years at 8% is .857. At what amounts should these two notes receivable be reported in Key’s December 31, year 1 balance sheet? 123. On January 1, year 2, Battle Corporation sold at 97 plus accrued interest 200 of its 8%, $1,000 bonds. The bonds are dated October 1, year 1, and mature on October 1, year 12. Interest is payable semiannually on April 1 and October 1. Accrued interest for the period October 1, year 1, to January 1, year 2 amounted to $4,000. As a result


on January 1, year 2, Battle would record bonds payable, net of discount, at 124. Jackson Corporation provides an incentive compensation plan under which its president is to receive a bonus equal to 10% of Jackson’s income in excess of $100,000 before deducting income tax but after deducting the bonus. If income before income tax and the bonus is $320,000, the amount of the bonus should be

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ACC 422 Week 4 DQ 1

For more classes visit www.snaptutorial.com Week 4 – DQ 1 What are the criteria for classifying an item as a current liability? What are some examples of current liabilities? Why is it important to classify a portion of long-term debt on a yearly basis as a current liability? What is the implication of misclassifying a liability as current or longterm?


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ACC 422 Week 4 DQ 2

For more classes visit www.snaptutorial.com eek 4 – DQ 2 What is a contingency? Why are contingencies important to users of financial statements? What are the criteria for recording contingencies? Should companies record a liability for threatened litigation? Explain why or why not. **********************************************************

ACC 422 Week 4 DQ 3


For more classes visit www.snaptutorial.com Week 4 – DQ 3 What is a bond? What are some features of a bond? How do you value bonds? What factors can affect that value? **********************************************************

ACC 422 Week 4 Individual Assignment From The Text E11-4,E11-11,E12-6 And E12-16

For more classes visit www.snaptutorial.com Resource: Intermediate Accounting Prepare written responses to the following assignments from the text:


Ch. 11: Exercises E11-4 & E11-11

Ch. 12: Exercises E12-6 & E12-16

Prepare a response to the following questions:

路 What are at least four depreciation methods that are available to a company? 路

What are the similarities and differences?

Why does a company select one method over another? **********************************************************

ACC 422 Week 4 Individual Wileyplus Assignment Exercise 13-1, 13-3, 13-5, 13-8, 13-11, 14-4, 1413

For more classes visit


www.snaptutorial.com Resource: WileyPLUS Complete the following Week Four Assignment in WileyPLUS: Exercise 13-1 Exercise 13-3 Exercise 13-5 Exercise 13-8 Exercise 13-11 Exercise 14-4 Exercise 14-13 Take a screenshot of your completed work, and Click the Assignment Files tab to submit your screenshot.

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Acc 422 Possible Is Everything--snaptutorial.com  

ACC 422 Week 1 DQ 1 ACC 422 Week 1 DQ 2 ACC 422 Week 1 DQ 3 ACC 422 Week 1 Individual Assignment Disclosure Analysis Paper (2 Papers) ACC 42...

Acc 422 Possible Is Everything--snaptutorial.com  

ACC 422 Week 1 DQ 1 ACC 422 Week 1 DQ 2 ACC 422 Week 1 DQ 3 ACC 422 Week 1 Individual Assignment Disclosure Analysis Paper (2 Papers) ACC 42...

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