Intermediate Accounting II Quizs

a

Adam corp owns 1,000 shares of com stock of Rosen, Inc. a large public traded company listed on a major stock exchange. If Rosen issues a 20percent stock dividend when the par value is $10 per share and the market value is $70 per share, how much and what type of income should Adam Report? a. $0 b. $2000 ordinary income c. $14,000 ordinary income d. $2,000 ordinary income and $12,000 extraordinary income

a

Generally accepted accounting principles require that certain lease agreements be accounted for as purchases. the theoretical basis for this treatment is that a lease of this type a. effectively conveys all of the benefits ad risks incident to the ownership of property b. is an example of form over substance c. provides the use of the leased asset to the lessee for a limited period of time d. must be recorded in accordance with the concept of cause and effect

c

IF the lessee and the lessor use different interest rates to account for a capital lease, then a. the lease will never be accounted for as a capital lease by the lessee b. total expenses (or revenue) will be equal for both lessee and lessor c. total expenses (or revenue) will be different for the lessee and lessor d. GAAP has been violated since the lessor and the lessee are not allowed to use different interest rates in accounting for capital leases

c

If an investment in stock is reclassified from avalible for sale securities to trading securities, the stock should be recorded on the date it is reclassified at the a. market value at the date of acquisition b. book value at the date of reclassification c. market value at the date of reclassification d. lower of cost or market value at the date of reclassification

c

If the residual value of a leased asset is greater than the amount guaranteed by the lessee, the lessee a. pays the lessor for the difference b. recognizes a gain at the end of the lease term c. has no obligation related to residual value d. pays the lessor for the difference

A

Ignoring income taxes, Choose the correct response below regarding total stockholders' equity resulting from classifying all investments for a firm either as trading securities or securities available for sale a. stockholders equity is the same regardless of the classification b. stockholders equity is greater if the investments are classified as afs c. stockholders' equity is greater if the investments are classified as trading securities. d. if there have been unrealized gains, classifications as trading securities results in higher stockholders equity

b

On september 20, 2014, Shunt corporation declared the distribution of the following dividend to its stockholders of record as of September 30, 2014. Investment in 100,000 shares of Ramen Corporation stock, carrying value $600,000: fair market value on September 20, $1,450,000; fair market value on September 30, $1,575,000 The entry to record the declaration of the property dividend would include a debit to Retained Earnings of a. 1,575,000 b. 1,450,000 c. 850,000 d. 20,000

D

The par value of common stock represents the A. liquidation value of the stock B. Book value of the stock C. Amount received by the corporation when the stock was originally issued D. legal nominal value assigned to the stock

c

Waltham corporation was organized on January 2 with 100,000 authorized shares of $10 par value common stock. During the year, Waltham had the following transactions Jan 5-- issued 75,000 shares at $14 per share Dec 27-- purchased 5000 shares at $11 per share Waltham used the par value method to record the purchase of treasury shares What would be the balance in the paid-in capital from the treasury stock account on Dec 31? a. 0 b. 5,000 c. 15,000 d. 20,000 hint: difference in per share

c

When an investor purchases sufficient common stock to gain significant influence over the investee, what is the proper accounting treatment of any excess of cost over book value acquired. a. the excess remains in the asset account until the investment is sold b. the excess is immediately charged to expense in the period in which the investment is made. c. the excess is amortized over the period of time that is reasonable in light of the underlying cause of the excess d. the excess is charged to retained earnings at the time the investor resells the common stock

A

Which of the following is NOT a component of comprehensive income? A. asset revaluation B. net income C. foreign currency translation adjustment D. minimum pension liability adjustment

c

Which of the following is true? a. trading securities can be classified as current or noncurrent depending on management's intent. b. held-to-maturity securities should not be classified as current under any circumstance c. avalible for sale securities can be classified as current or noncurrent depending on management's intent d. trading securities should not be classified as current under any circumstance

c

farnon company has no declared or paid divendends on its cumulative preferred stock in the last three years. these dividends should be reported A. as a current liability b. as a reduction in stockholders' equity c. in a note to the financial statements d. as a noncurrent liability

b

from the standpoint of the lessee, the minimum lease payment includes all of the following except... a. the guaranteed residual value b. the lessee's obligation to pay executory costs c. the bargain purchase option d. any payment that the lessee must make upon failure to extend or renew the lease

no effect

how would a stock split affect each of the follwoing? Assets, total stockholders equity, and additional paid in capital. No effect, increase, decrease

b

on october 1, Ryan Company purchased $200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees classified them as held-to-maturity securities. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this trasaction were $700. at waht amount should the acquisition of bonds be recorded? a. 196000 b. 196700 c. 202,000 d. 202,700

c

select the statement that is incorrect concerning the appropriations of retained earnings a. appropriations of retained earnings reflect funds set aside for a designated purpose such as plant expansion. b. appropriations of retained earnings do not change the total amount of stockholders' equity c. appropriations of retained earnings can be made as a result of contractual requirements appropriations of retained earnings can be made at the discretion of the board of directors

b

the mailer corporation had the follwoing classes of stock outstanding as of December 31, 2014 Com stock, $20 par value, 20,000 shares outstanding Preferred stock, 6 percent, $100 par value, cumulative, 2,000 shares outstanding no dividends were paid on preferred stock for 2012 and 2013, on december 31, 2014, a total cash dividend of $200,000 was declared. What are the amounts of dividends payable on both the common and preferred stock, respectively? a. 0 and 200,000 b. 164,000 and 36,000 c. 176,000 and 24,000 d. 188,000 and 12,000

b

which of the following is an appropriate presentation of treasury stock? A. as a marketable security b. as a deduction at cost from total stockholders' equity c. in a note to the financial statements d. as a noncurrent liability

b

which of the following is true regarding the lease term? a. the lease term does not include all periods covered by bargain renewal options. b. the lease term includes all periods for which failure to renew imposes a penalty sufficiently high that the lessee probably will renew c. the lease term may extend beyond the date a bargain purchase option becomes exercisable d. the lease term does not include all periods representing renewals or extensions of the lease at the lessor's option.