intermediate accounting ifrs, chapter 4, computational

101. Use the following information: Gross profit ₤7,800,000 Loss on sale of investments 20,000 Interest expense 15,000 Gain on sale of discontinued operations 60,000 Income tax rate 20% Compute the amount of income tax applicable to continuing operations. a. ₤1,553,000 b. ₤1,640,000 c. ₤1,569,000 d. ₤1,568,000

a

107. Palomo Corp has a tax rate of 30 percent and income before non-operating items should this be income from operations of $357,000. It also has the following items (gross amounts). Unusual gain $ 23,000 Loss from discontinued operations 183,000 Dividend revenue 6,000 Income increasing prior period adjustment 74,000 What is the amount of income tax expense Palomo would report on its income statement? a. $115,800 b. $ 60,900 c. $ 83,100 d. $108,900

a

108. Lantos Company had a 40 percent tax rate. Given the following pre-tax amounts, what would be the income tax expense reported on the face of the income statement? Sales $ 100,000 Cost of goods sold 60,000 Salary expense 8,000 Depreciation expense 11,000 Dividend revenue 9,000 Utilities expense 1,000 Loss from discontinued operations 10,000 Interest expense 2,000 a. $10,800 b. $ 6,800 c. $ 7,200 d. $ 3,200

a

109. Moorman Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 430,000 Dividends declared 320,000 Net income 1,000,000 Retained earnings, 1/1/11, as reported 2,000,000 Moorman should report retained earnings, January 1, 2011, as adjusted at a. $1,570,000. b. $2,000,000. c. $2,430,000. d. $3,110,000.

a

116. Rodriquez Corporation had retained earnings of $750,000 at January 1, 2011. During the year the company generated a net income of $150,000 and declared share dividends of $50,000. It was discovered during 2011 that $40,000 of closing costs on a 2010 purchase of land was debited to maintenance expense. The income tax rate is 30%. Determine the retained earnings balance at December 31, 2011. a. $878,000 b. $860,000 c. $810,000 d. $838,000

a

119. On January 1, 2011, Zhang Inc. had cash and share capital of ¥5,000,000. At that date, the company had no other asset, liability, or equity balances. On January 5, 2011, it purchased for cash ¥3,000,000 of equity securities that it classified as available-for-sale. It received cash dividends of ¥400,000 during the year on these securities. In addition, it has an unrealized loss on these securities of ¥300,000. The tax rate is 20%. Compute the amount of other comprehensive income/(loss). a. ¥240,000 b. ¥(300,000) c. ¥100,000 d. ¥80,000

a

122. Korte Company reported the following information for 2011: Sales revenue $500,000 Cost of goods sold 350,000 Operating expenses 55,000 Unrealized holding gain on available-for-sale securities 20,000 Cash dividends received on the securities 2,000 For 2011, Korte would report comprehensive income of a. $117,000. b. $115,000. c. $97,000. d. $20,000.

a

125. For the year ended December 31, 2011, Transformers Inc. reported the following: Net income $ 60,000 Preference dividends declared 10,000 Ordinary share dividends declared 2,000 Unrealized holding loss, net of tax 1,000 Retained earnings, beginning balance 80,000 Share capital - Ordinary 40,000 Accumulated Other Comprehensive Income, Beginning Balance 5,000 What would Transformers report as total stockholders' equity? a. $172,000 b. $168,000 c. $128,000 d. $120,000

a

75. Ortiz Co. had the following account balances: Sales $ 120,000 Cost of goods sold 60,000 Salary expense 10,000 Depreciation expense 20,000 Dividend revenue 4,000 Utilities expense 8,000 Rental revenue 20,000 Interest expense 12,000 Sales returns 11,000 Advertising expense 13,000 What amount would Ortiz report as other income and expense in its income statement? a. $24,000 b. $12,000 c. $49,000 d. $10,000

a

81. Use the following information (in thousands): Revenues ¥1,200,000 Income from continuing operations 150,000 Net Income 135,000 Income from operations 330,000 Selling & administrative expenses 750,000 Income before income tax 300,000 Determine the amount of financing costs. a. ¥30,000 b. ¥15,000 c. ¥150,000 d. ¥120,000

a

87. Use the following information (in thousands): Sales revenue ¥150,000 Gain on sale of equipment 45,000 Cost of goods sold 82,000 Interest expense 8,000 Selling & administrative expenses 15,000 Income tax rate 30% Determine the amount of net income. a. ¥63,000 b. ¥10,500 c. ¥21,000 d. ¥31,500

a

89. Manning Company has the following items: write-down of inventories, $120,000, loss on disposal of part of Sports Division, $185,000, and loss on restructurings, $113,000. Ignoring income taxes, what total amount should Manning Company report as other income and expense? a. $418,000 b. $185,000 c. $233,000 d. $298,000

a

90. Garwood Company has the following items: write-down of inventories, $240,000, loss on disposal of part of Sports Division, $370,000, and loss due to an asset impairment, $226,000. Ignoring income taxes, what total amount should Garwood Company report as other income and expense? a. $836,000 b. $370,000 c. $466,000 d. $596,000

a

91. At Ruth Company, events and transactions during 2011 included the following. The tax rate for all items is 30%. (1) Depreciation for 2009 was found to be understated by $30,000. (2) A litigation settlement resulted in a loss of $25,000. (3) The inventory at December 31, 2009 was overstated by $40,000. (4) The company disposed of its recreational division at a loss of $500,000. The effect of these events and transactions on 2011 income from continuing operations net of tax would be a. $17,500. b. $38,500. c. $66,500. d. $416,500.

a

102. Use the following information: Gross profit ₤7,800,000 Loss on sale of investments 20,000 Interest expense 15,000 Gain on sale of discontinued operations 60,000 Income tax rate 20% Compute the amount of discontinued operations to be combined with income from continuing operations on the income statement. a. ₤60,000 b. ₤48,000 c. ₤12,000 d. None of the above.

b

106. Arreaga Corp. has a tax rate of 40 percent and income before non-operating items of $232,000. It also has the following items (gross amounts). Unusual loss $ 37,000 Discontinued operations loss 101,000 Gain on disposal of equipment 8,000 Change in accounting principle increasing prior year's income 53,000 What is the amount of income tax expense Arreaga would report on its income statement? a. $92,800 b. $81,200 c. $99,200 d. $62,000

b

110. Moorman Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 430,000 Dividends declared 320,000 Net income 1,000,000 Retained earnings, 1/1/11, as reported 2,000,000 Moorman should report retained earnings, December 31, 2011, of a. $1,570,000. b. $2,250,000. c. $2,680,000. d. $3,110,000.

b

117. On January 1, 2011, Zhang Inc. had cash and share capital of ¥5,000,000. At that date, the company had no other asset, liability, or equity balances. On January 5, 2011, it purchased for cash ¥3,000,000 of equity securities that it classified as available-for-sale. It received cash dividends of ¥400,000 during the year on these securities. In addition, it has an unrealized loss on these securities of ¥300,000. The tax rate is 20%. Compute the amount of net income/(loss). a. ¥400,000 b. ¥320,000 c. ¥(100,000) d. ¥80,000

b

118. On January 1, 2011, Zhang Inc. had cash and share capital of ¥5,000,000. At that date, the company had no other asset, liability, or equity balances. On January 5, 2011, it purchased for cash ¥3,000,000 of equity securities that it classified as available-for-sale. It received cash dividends of ¥400,000 during the year on these securities. In addition, it has an unrealized loss on these securities of ¥300,000. The tax rate is 20%. Compute the amount of comprehensive income. a. ¥100,000 b. ¥80,000 c. ¥320,000 d. ¥300,000

b

80. Use the following information (in thousands): Revenues ¥1,200,000 Income from continuing operations 150,000 Net Income 135,000 Income from operations 330,000 Selling & administrative expenses 750,000 Income before income tax 300,000 Determine the amount of other income and expense. a. ¥30,000 b. ¥120,000 c. ¥150,000 d. ¥15,000

b

84. Use the following information (in thousands): Sales revenue ¥150,000 Gain on sale of equipment 45,000 Cost of goods sold 82,000 Interest expense 8,000 Selling & administrative expenses 15,000 Income tax rate 30% Determine the amount of income from operations. a. ¥38,000 b. ¥98,000 c. ¥30,000 d. ¥90,000

b

92. At Ruth Company, events and transactions during 2011 included the following. The tax rate for all items is 30%. (1) Depreciation for 2009 was found to be understated by $30,000. (2) A litigation settlement resulted in a loss of $25,000. (3) The inventory at December 31, 2009 was overstated by $40,000. (4) The company disposed of its recreational division at a loss of $500,000. The effect of these events and transactions on 2011 net income net of tax would be a. $17,500. b. $367,500. c. $388,500. d. $416,500.

b

94. In 2011, Esther Corporation reported net income of $1,000,000. It declared and paid preference dividends of $250,000 and ordinary share dividends of $100,000. During 2011, Esther had a weighted average of 200,000 ordinary shares outstanding. Compute Esther's 2011 earnings per share. a. $3.25 b. $3.75 c. $5.00 d. $6.25

b

99. In 2011, Timmons Company reported net income of £2,000,000. It declared and paid preference share dividends of £200,000 and ordinary share dividends of £250,000. During 2011, Timmons had a weighted average of 150,000 ordinary shares outstanding. The 2011 earning per share for Timmons Company is:. a. £13.33 b. £12.00 c. £11.67 d. £10.33

b

103. Use the following information: Gross profit ₤7,800,000 Loss on sale of investments 20,000 Interest expense 15,000 Gain on sale of discontinued operations 60,000 Income tax rate 20% Compute the total amount of income tax expense experienced by the company. a. ₤1,530,000 b. ₤1,600,000 c. ₤1,565,000 d. ₤2,010,000

c

104. Sandstrom Corporation has a discontinued operations loss of $50,000, an unusual gain of $35,000, and a tax rate of 40%. At what amount should Sandstrom report each item? Discontinued loss Unusual gain a. $(50,000) $35,000 b. (50,000) 21,000 c. (30,000) 35,000 d. (30,000) 21,000

c

105. Prophet Corporation has a discontinued operations loss of $200,000, an unusual gain of $140,000, and a tax rate of 40%. At what amount should Prophet report each item? Discontinued loss Unusual gain a. $(200,000) $140,000 b. (200,000) 84,000 c. (120,000) 140,000 d. (120,000) 84,000

c

111. Leonard Corporation reports the following information: Correction of overstatement of depreciation expense in prior years, net of tax $ 215,000 Dividends declared 160,000 Net income 500,000 Retained earnings, 1/1/11, as reported 1,000,000 Leonard should report retained earnings, January 1, 2011, as adjusted at a. $785,000. b. $1,000,000. c. $1,215,000. d. $1,555,000.

c

123. For the year ended December 31, 2011, Transformers Inc. reported the following: Net income $ 60,000 Preference dividends declared 10,000 Ordinary share dividends declared 2,000 Unrealized holding loss, net of tax 1,000 Retained earnings 80,000 Share capital - Ordinary 40,000 Accumulated Other Comprehensive Income, Beginning Balance 5,000 What would Transformers report as its ending balance of Accumulated Other Comprehensive Income? a. $6,000 b. $5,000 c. $4,000 d. $1,000

c

124. For the year ended December 31, 2011, Transformers Inc. reported the following: Net income $ 60,000 Preference dividends declared 10,000 Ordinary share dividends declared 2,000 Unrealized holding loss, net of tax 1,000 Retained earnings, beginning balance 80,000 Share capital - Ordinary 40,000 Accumulated Other Comprehensive Income, Beginning Balance 5,000 What would Transformers report as the ending balance of Retained Earnings? a. $139,000 b. $133,000 c. $128,000 d. $127,000

c

76. Ortiz Co. had the following account balances: Sales $ 120,000 Cost of goods sold 60,000 Salary expense 10,000 Depreciation expense 20,000 Dividend revenue 4,000 Utilities expense 8,000 Rental revenue 20,000 Interest expense 12,000 Sales returns 11,000 Advertising expense 13,000 What amount would Ortiz report as income from operations in its income statement? a. $49,000 b. $30,000 c. $22,000 d. $10,000

c

77. For Mortenson Company, the following information is available: Cost of goods sold $ 60,000 Sales discounts 2,000 Income tax expense 6,000 Operating expenses 23,000 Sales 100,000 In Mortenson's income statement, gross profit a. should not be reported. b. should be reported at $9,000. c. should be reported at $38,000. d. should be reported at $40,000.

c

78. For Rondelli Company, the following information is available: Cost of goods sold $ 90,000 Sales returns and allowances 4,000 Income tax expense 9,000 Operating expenses 35,000 Sales 150,000 In Rondelli's income statement, gross profit a. should not be reported. b. should be reported at $12,000. c. should be reported at $56,000. d. should be reported at $60,000.

c

79. Gross billings for merchandise sold by Lang Company to its customers last year amounted to $15,720,000, sales returns and allowances were $370,000, sales discounts were $175,000, and freight-out was $140,000. Net sales last year for Lang Company were a. $15,720,000. b. $15,350,000. c. $15,175,000. d. $15,035,000.

c

82. Use the following information (in thousands): Revenues ¥1,200,000 Income from continuing operations 150,000 Net Income 135,000 Income from operations 330,000 Selling & administrative expenses 750,000 Income before income tax 300,000 Determine the amount of income tax. a. ¥30,000 b. ¥15,000 c. ¥150,000 d. ¥120,000

c

93. During 2011, Lopez Corporation disposed of Pine Division, a major component of its business. Lopez realized a gain of $1,200,000, net of taxes, on the sale of Pine's assets. Pine's operating losses, net of taxes, were $1,400,000 in 2011. How should these facts be reported in Lopez's income statement for 2011? Total Amount to be Included in Income from Results of Continuing Operations Discontinued Operations a. $1,400,000 loss $1,200,000 gain b. 200,000 loss 0 c. 0 200,000 loss d. 1,200,000 gain 1,400,000 loss

c

97. Benedict Corporation reports the following information: Net income $500,000 Dividends on ordinary shares 140,000 Dividends on preference shares 60,000 Weighted average ordinary shares outstanding 100,000 Benedict should report earnings per share of a. $3.00. b. $3.60. c. $4.40. d. $5.00.

c

98. Norling Corporation reports the following information: Net income $500,000 Dividends on ordinary shares 140,000 Dividends on preference shares 60,000 Weighted average ordinary shares outstanding 200,000 Norling should report earnings per share of a. $1.50. b. $1.80. c. $2.20. d. $2.50.

c

100. Given the following: Net income $600,000 EPS 4.25 Dividend/ordinary shares 2.00 Weighted average ordinary shares outstanding 120,000 Determine the amount of the preference share dividend. a. $360,000 b. $240.000 c. $120,000 d. $90,000

d

112. Leonard Corporation reports the following information: Correction of overstatement of depreciation expense in prior years, net of tax $ 215,000 Dividends declared 160,000 Net income 500,000 Retained earnings, 1/1/11, as reported 1,000,000 Leonard should report retained earnings, December 31, 2011, at a. $785,000. b. $1,125,000. c. $1,340,000. d. $1,555,000.

d

113. The following information was extracted from the accounts of Essex Corporation at December 31, 2011: CR(DR) Total reported income since incorporation $1,700,000 Total cash dividends paid (800,000) Unrealized holding loss (120,000) Total share dividends distributed (200,000) Prior period adjustment, recorded January 1, 2011 75,000 What should be the balance of retained earnings at December 31, 2011? a. $655,000 b. $700,000 c. $580,000 d. $775,000

d

114. Pullman Corporation had retained earnings of $700,000 at January 1, 2011. During the year the company experienced a net loss of $300,000 and declared cash dividends of $80,000. Determine the retained earnings balance at December 31, 2011. a. $920,000 b. $400,000 c. $1,000,000 d. $320,000

d

115. Pullman Corporation had retained earnings of $700,000 at January 1, 2011. During the year the company experienced a net loss of $300,000 and declared cash dividends of $80,000. It was discovered in 2011 that $50,000 of repair expense was debited to the land account in 2010. The income tax rate is 20%. Determine the retained earnings balance at December 31, 2011. a. $270,000 b. $360,000 c. $350,000 d. $280,000

d

120. On January 1, 2011, Zhang Inc. had cash and share capital of ¥5,000,000. At that date, the company had no other asset, liability, or equity balances. On January 5, 2011, it purchased for cash ¥3,000,000 of equity securities that it classified as available-for-sale. It received cash dividends of ¥400,000 during the year on these securities. In addition, it has an unrealized loss on these securities of ¥300,000. The tax rate is 20%. Compute the amount of accumulated other comprehensive income/(loss). a. ¥(300,000) b. ¥100,000 c. ¥80,000 d. ¥240,000

d

121. Madsen Company reported the following information for 2011: Sales revenue $510,000 Cost of goods sold 350,000 Operating expenses 55,000 Unrealized holding gain on available-for-sale securities 40,000 Cash dividends received on the securities 2,000 For 2011, Madsen would report other comprehensive income of a. $137,000. b. $135,000. c. $42,000. d. $40,000.

d

83. Use the following information (in thousands): Revenues ¥1,200,000 Income from continuing operations 150,000 Net Income 135,000 Income from operations 330,000 Selling & administrative expenses 750,000 Income before income tax 300,000 Determine the amount of discontinued operations. a. ¥(30,000) b. ¥120,000 c. ¥150,000 d. ¥(15,000)

d

85. Use the following information (in thousands): Sales revenue ¥150,000 Gain on sale of equipment 45,000 Cost of goods sold 82,000 Interest expense 8,000 Selling & administrative expenses 15,000 Income tax rate 30% Determine the amount of income before taxes. a. ¥38,000 b. ¥98,000 c. ¥30,000 d. ¥90,000

d

86. Use the following information (in thousands): Sales revenue ¥150,000 Gain on sale of equipment 45,000 Cost of goods sold 82,000 Interest expense 8,000 Selling & administrative expenses 15,000 Income tax rate 30% Determine the amount of income taxes. a. ¥4,000 b. ¥9,000 c. ¥13,500 d. ¥27,000

d

88. Majors Corporation had income from continuing operations of $1,600,000 in 2011. During 2011 it disposed of its repair division at a pre-tax gain of $27,000. Prior to disposal, the division operated at a pre-tax loss of $45,000. The tax rate was 30%. What is the question here? a. $1,582,000 b. $1,528,000 c. $1,549,600 d. $1,587,400

d

95. In 2011, Linz Corporation reported a discontinued operations loss of $1,000,000, net of tax. It declared and paid preference dividends of $100,000 and ordinary share dividends of $300,000. During 2011, Linz had a weighted average of 200,000 ordinary shares outstanding. Compute the effect of the discontinued operations loss, net of tax, on earnings per share. a. $3.00 b. $3.50 c. $4.50 d. $5.00

d

96. In 2011, Benfer Corporation reported net income of $350,000. It declared and paid ordinary share dividends of $40,000 and had a weighted average of 70,000 ordinary shares outstanding. Compute the earnings per share to the nearest cent. a. $4.43 b. $3.50 c. $4.50 d. $5.00

d