FAR #4

Enter in the designated cells below the quantitative thresholds for the tests to identify which operating segments are reportable. Round all amounts to the nearest dollar. TestsQuantitative threshold1. Revenue test2. Asset test3. Profit (loss) test Select from the option list provided whether the operating segments are reportable. Each choice may be used once, more than once, or not at all. Operating segmentReportable/Not reportable segment4. Milk5. Ice cream6. Chocolate7. Cars8. Computers9. Printers

1. $9,000. 2. $25,000. 3. $500. 4. Reportable Segment. 5. Reportable Segment. 6. Reportable Segment. 7. Reportable Segment 8. Not Reportable Segment. 9. Reportable Segment.

Antrim Corporation is preparing interim financial statements for the third quarter of its current fiscal year. Using the information in the exhibits, enter the appropriate amounts to be reported in Antrim's third quarter financial statements in the designated cells below. Enter all amounts as positive values. Round all amounts to the nearest whole number. If no entry is necessary, enter a zero (0). ItemAnswer 1. Property taxes 2. Provision for taxes on operating income 3. Gain unusual in nature 4. Inventory recovery 5. Loss on disposal 6. Unexpected repairs

1. 1500 2. 30000 3. 5000 4. 0 5. 10000 6. 3500

Company ABC is a publicly traded company that reports interim financial statements on a quarterly basis. Using the information in the exhibits, enter the appropriate amounts of revenue (expense) or gain (loss) that will be recognized in each of Company ABC's selected interim income statements in the designated cells below. Indicate negative numbers by using a leading minus (-) sign. Round all amounts to the nearest whole number. Interim Income Statements for the 3 Months Ended June 30, Year 2 (Second Quarter)Interim Income Statements for the 3 Months Ended December 31, Year 2 (Fourth Quarter)1. Property taxes2. Bonuses3. Note purchase4. Disposal of a component5. Flood loss

1. 22500 22500 2. 50000 50000 3. 3000 0 4. 0 88000 5. 0 -100000

Subsequent events for reporting purposes are defined as events that occur subsequent to the Balance sheet date but before the issuance (or availability for issuance) of the financial statements. Date of the auditor's report. Balance sheet date. Date of the auditor's report and concern contingencies that are not reflected in the financial statements.

Balance sheet date but before the issuance (or availability for issuance) of the financial statements.

The summary of significant accounting policies should disclose the Maturity dates of noncurrent debts. Concentration of credit risk of all financial instruments by geographical region. Terms for convertible debt to be exchanged for common stock. Criteria for determining which investments are treated as cash equivalents.

Criteria for determining which investments are treated as cash equivalents.

Which of the following information should be disclosed in the summary of significant accounting policies? Guarantees of indebtedness of others. Criteria for determining which investments are treated as cash equivalents. Refinancing of debt subsequent to the balance sheet date. Adequacy of pension plan assets relative to vested benefits.

Criteria for determining which investments are treated as cash equivalents.

Assuming that disclosure is practicable, it is required by publicly held companies regarding the following items only if 10% or more of total revenues are derived from Sales to a SingleExternal Customer Sales toForeign Countries Sales to a Single External Customer Yes Sales to Foreign Countries No Sales to a Single External Customer Yes Sales to Foreign Countries Yes Sales to a Single External Customer No Sales to Foreign Countries Yes Sales to a Single External Customer No Sales to Foreign Countries No

Sales to a Single External Customer Yes Sales to Foreign Countries No

Martin Corporation has the following data related to its operating segments.UnaffiliatedIntersegmentOperatingIdentifiableSegmentRevenuesRevenuesProfit (Loss)AssetsA$ 90$10$(100)$ 600B 7015 50 600C 40-0- (20)150D 25030 180 1,500E 30020 130800Totals$750$75$ 240$3,650Based on the revenue criterion only, which of Martin's segments is (are) reportable? Segments A, B, D, and E only. Segments A and D only. Segments A, B, C, D, and E. Segment E only.

Segments A, B, D, and E only.

A company that issues quarterly financial statements incurs a material unusual loss in one of the first three quarters. In which of the following ways would the company report this loss? Prorated over the remaining quarters of the current year. Only in the annual report. Disclosed only by a note in the quarter that the loss occurs. Entirely in the quarter that the loss occurs.

Entirely in the quarter that the loss occurs.

Farr Corp. had the following transactions during the quarter ended March 31:Loss on disposal of equipment$ 70,000Payment of fire insurance premium for calendar year100,000What amounts should be included in Farr's income statement for the quarter ended March 31? Loss on disposal Insurance Expense Loss on disposal $70,000 Insurance Expense $25,000 Loss on disposal $0 Insurance Expense $100,000 Loss on disposal $70,000 Insurance Expense $100,000 Loss on disposal $17,500 Insurance Expense $25,000

Loss on disposal $70,000 Insurance Expense $25,000

In financial reporting for operating segments of a public business entity, the revenue of a reportable segment must include Revenue from intersegment transactions. Intersegment billings for the cost of shared facilities. Equity in income from unconsolidated subsidiaries. Other comprehensive income items.

Revenue from intersegment transactions.

1. On December 1, Year 5, Luge was awarded damages of $75,000 in a patent infringement suit it brought against a competitor. The defendant did not appeal the verdict, and payment was received in January Year 6.2. Luge has been sued by a former employee for wrongful dismissal. Luge's lawyers believe the suit to be without merit.3. At December 31, Year 5, Luge had outstanding purchase orders in the ordinary course of business for purchase of a raw material to be used in its manufacturing process. The market price is currently higher than the purchase price and is not anticipated to change within the next year.4. A government contract completed during Year 5 is subject to renegotiation. Although Luge estimates that it is reasonably possible that a refund of approximately $200,000 to $300,000 may be required by the government, it does not wish to publicize this possibility.5. Luge has been notified by a governmental agency that it will be held responsible for the cleanup of toxic materials at a site where it formerly conducted operations. Luge estimates that it is probable that its share of remedial action will be approximately $500,000.6. On January 5, Year 6, Luge redeemed its outstanding bonds and issued new bonds with a lower rate of interest. The reacquisition price was in excess of the carrying amount of the bonds.

1. Accrual only 2. Neither accrual nor disclosure 3. Neither accrual nor disclosure 4. Disclosure only 5. Bot accrual and disclosure 6. Disclosure only

Indicate whether each of the following items should be disclosed or not disclosed as a significant accounting policy by selecting the appropriate circle. Disclose Do not disclose 1. Depreciation method 2. Policies unique to the industry 3. Dividend policy 4. Specific principles and methods of applying them 5. Guarantees of indebtedness 6. Maturities of long-term debt

1. Disclose 2. Disclose 3. Do not Disclose 4. Disclose 5. Do not Disclose 6. Do not Disclose

For each of the operating segments mentioned in the exhibits, determine whether the segment for Bison Fertilizer, Inc., is reportable or not. If the segment is not reportable, check the "Not reportable segment" box. If the segment is reportable, indicate the appropriate test(s) by clicking the corresponding boxes. If an item does not apply, leave the corresponding box blank. You may check more than one box for each item. AnswerPotashPhosphateMagnesiumFertilizersChemicalProducts1. Not reportable segment2. Asset test3. Revenue test4. Profit (loss) test

1. Potash -- Asset test ($79,000 > $13,400), Revenue test ($81,200 > $12,200), Profit (loss) test ($39,000 > $4,300). 2. Phosphate -- Not a reportable segment. Does not meet any of the quantitative thresholds. 3. Magnesium -- Revenue test ($16,500 > $12,200), Profit (loss) test ($29,000 > $4,300). 4. Fertilizers -- Asset test ($16,000 > $13,400). 5. Chemical products -- Asset test ($14,000 > $13,400), Profit (loss) test ($9,000 > $4,300). Business and not-for-profit entities need not disclose significant accounting policies in unaudited interim statements if the reporting entity's policies have not changed since the end of the preceding fiscal year.

1. On May 1, Year 2, the company incurred an unusual material loss of $30,000 on expropriation of assets. 2. On April 1, Year 2, the company paid $60,000 in property taxes on its plant for the current calendar year. 3. On December 1, Year 2, the company incurred a $110,000 loss from the disposal of a machine. 4. On June 30, Year 2, the company determined the following information about its LIFO inventory:•Historical Cost$100,000•Current replacement cost82,000•Net realizable value (NRV)90,000•Normal profit margin5,000The company expects that at the end of Year 2, the inventory's NRV reduced by a normal profit margin will be at least $100,000. 5. On April 1, the company paid a flood insurance premium of $20,000 for the current calendar year. 6. On December 31, Year 2, the company paid interest of $9,000 on a 12% construction note with a face amount of $100,000. The note was issued on January 1, Year 2, to finance the internal construction of the company's new headquarters. The construction of the headquarters was started during Year 1 and completed during Year 4.

1. in the second quarter only 2. Ratably over all foud quarters of the year 3. In the fourth quarter only 4. Not recognized in income statement 5. Ratably over all four quarters of the year 6. Not recognized in income statement

Crossroads Co. chooses to report a financial asset at its fair value. The asset trades in two different markets; however, neither market is the principal market for the financial asset. In the first market, sales proceeds are $76, which is net of transaction costs of $6. In the second market, the sales proceeds are $80, which is net of transaction costs of $1. What amount should Crossroads report as the fair value of the asset? $82 $76 $80 $81

81

Vilo Corp. has estimated that total depreciation expense for the year ending December 31 will amount to $60,000, and that year-end bonuses to employees will total $120,000. In Vilo's interim income statement for the 6 months ended June 30, what is the total amount of expense relating to these two items that should be reported? $30,000 $90,000 $0 $180,000

90000

Which of the following material events occurring after the December 31, Year 6, end of the reporting period does not ordinarily result in adjustment of the financial statements before they are issued on February 28, Year 7? Write-off of a receivable from a debtor who had suffered from a deteriorating financial condition for the past 6 years. The debtor filed for bankruptcy on January 20, Year 7. A 3-for-5 reverse stock split consummated on January 20, Year 7. A major business combination completed on January 20, Year 7. Negotiations had begun in December of Year 6. Settlement of extended litigation on January 20, Year 7, in excess of the recorded year-end liability.

A major business combination completed on January 20, Year 7. Negotiations had begun in December of Year 6.

Which of the following should be disclosed in a summary of significant accounting policies? A maturity analysis of the operating lease liability for each of the first 5 years. Composition of sales by segment. Basis of profit recognition on long-term construction contracts. Depreciation expense.

Basis of profit recognition on long-term construction contracts.

Hampton, Inc., has identified the following operating segments.TotalOperatingIdentifiableSegmentsRevenueProfitAssetsBingham$ 200,000$ 20,000$ 120,000Charles100,0004,00060,000Harvey1,400,00080,000780,000Norton600,00040,000320,000Randall1,800,00036,000560,000Wicker200,00015,000100,000$4,300,000$195,000$1,940,000Based on the standard quantitative tests, the Hampton segments that should be disclosed in the financial statements are Bingham, Harvey, Norton, and Randall. Harvey, Norton, and Randall. Charles, Norton, and Wicker. Bingham, Charles, Harvey, and Wicker.

Bingham, Harvey, Norton, and Randall.

Neely Co. disclosed in the notes to its financial statements that a significant number of its unsecured trade account receivables are with companies that operate in the same industry. This disclosure is required to inform financial statement users of the existence of Concentration of market risk. Off-balance-sheet risk of accounting loss. Risk of measurement uncertainty. Concentration of credit risk.

Concentration of credit risk.

Which of the following is correct concerning financial statement disclosure of accounting policies? Disclosure of accounting policies is an integral part of the financial statements. The format and location of accounting policy disclosures are fixed by generally accepted accounting principles. Disclosures should be limited to principles and methods peculiar to the industry in which the company operates. Disclosures should duplicate details disclosed elsewhere in the financial statements.

Disclosure of accounting policies is an integral part of the financial statements.

Which section of the FASB's ASC best addresses disclosure of accounting policies when the entity issues only one basic financial statement? Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance.

FASB ASC 235-10-50-1

Which section of the Accounting Standards Codification best lists examples of commonly required disclosures about accounting policies? Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance.

FASB ASC 235-10-50-4

Which section of the Accounting Standards Codification best provides guidelines for voluntary disclosures in the form of a 5-year summary about the effects of change prices? Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance.

FASB ASC 255-10-50-3

Magnus Co. is a publicly traded, consolidated entity reporting segment information. Based on quantitative thresholds, Magnus identified the following three reportable segments: banking services, insurance services, and automobile production. Although the consulting services operating segment does not meet any of the quantitative thresholds, the management believes that the information regarding this segment would be useful to the external users of financial statements. Which section of the Accounting Standard Codification best helps Magnus determine whether the consulting services segment can be considered a reportable and separately disclosed? Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance.

FASB ASC 280-10-50-12

A corporation issues quarterly interim financial statements and uses the lower of cost or market method to measure its LIFO inventory in its annual financial statements. The corporation accounts for its inventory using the LIFO method. Which of the following statements is correct regarding how the corporation should measure its inventory in its interim financial statements? Only the cost method of inventory measurement should be used. Gains from measurements in previous interim periods should be fully recognized. Temporary market declines should be recognized in the interim statements. Inventory losses generally should be recognized in the interim statements.

Inventory losses generally should be recognized in the interim statement

Multinational Entity has 10 divisions, and its operations are overseen by a board and an executive committee. This committee includes the CEO, COO, CFO, and the heads of the marketing, logistics, and research functions. Which of the following most likely qualifies as a separate reportable operating segment? South American segment, whose results of operations are reported directly to the chief operating officer, and has 5% of the entity's assets, 9% of its revenues, and 8% of its profits. North American segment, whose assets are 12% of the entity's assets of all segments, and management reports to the chief operating officer. Eastern Europe segment has 20% of the European division's assets, 12% of its revenues, and 11% of its profits. Its manager reports to the divisional manager. Corporate headquarters, which oversees $1 billion in sales for the entire entity.

North American segment, whose assets are 12% of the entity's assets of all segments, and management reports to the chief operating officer.

Which of the following information is not required to be disclosed in the notes to the financial statements? The company's principal markets are located in Australia, China, Canada, and Japan. The company's financial ratios in comparison with the industry average. The company has only one supplier. The supplier is forced to shut down for 6 months after food safety violations. The company is unable to find another supplier within 6 months. A strong earthquake destroyed the company's main factories, which raised substantial doubt regarding the company's ability to continue as a going concern.

The company's financial ratios in comparison with the industry average.

Nancarrow Corp. released its financial statements for the year ended December 31, Year 7, on March 15, Year 8. On February 1, Year 8, Nancarrow settled a long-standing lawsuit that resulted in a material loss. No liability for this circumstance had been accrued in the financial statements. How should this event be disclosed or recognized? The event should be disclosed, but the financial statements themselves need not be adjusted. No disclosure or recognition is required. The existing liability should be adjusted. The event must be recognized in the financial statements.

The event must be recognized in the financial statements.

Where in its financial statements should a company disclose information about its concentration of credit risks? No disclosure is required. Management's report to shareholders. The notes to the financial statements. Supplementary information to the financial statements.

The notes to the financial statements.

Financial statements must disclose significant risks and uncertainties. The required disclosures include Information about a significant estimate used to value an asset only if it is probable that the financial statement effect of a condition existing at the balance sheet date will change materially in the near term. Quantified comparisons of the relative importance of the different businesses in which the entity operates. Vulnerability due to a concentration if a near-term severe impact is at least reasonably possible. Risk-reduction techniques that have successfully mitigated losses.

Vulnerability due to a concentration if a near-term severe impact is at least reasonably possible.