ACCT 3021 Moodle Quiz Questions

The conversion of bonds is most commonly recorded by the: A. incremental method B. proportional method C. market value method D. book value method.

Book Value Method

On January 1, 2016, Nobel Corporation acquired machinery at a cost of $1,600,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2019, a decision was made to change to the double-declining balance method of depreciation for this machine. Assuming a 30% tax rate, the cumulative effect of this accounting change on beginning retained earnings, is: Select one: A. $179,200 B. $0 C. $210,560 D. $300,800.

$0

Ernst Company purchased equipment that cost $3,000,000 on January 1, 2017. The entire cost was recorded as an expense. The equipment had a nine-year life and a $120,000 residual value. Ernst uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2019. Ernst is subject to a 40% tax rate. Before the correction was made and before the books were closed on December 31, 2019, retained earnings was understated by: Select one: A. $1,328,000 B. $1,344,000 C. $1,416,000 D. $1,800,000.

$1,416,000

Gomez, Inc. began work in 2018 on contract #3814, which provided for a contract price of $19,200,000. Other details follow: 2018 2019 Costs incurred during the year $3,200,000 $9,800,000 Estimated costs to complete, as of December 31 9,600,000 0 Billings during the year 3,600,000 14,400,000 Collections during the year 2,400,000 15,600,000 Assume that Gomez uses the percentage-of-completion method of accounting. The portion of the total gross profit to be recognized as income in 2018 is: Select one: A. $1,200,000 B. $1,600,000 C. $4,800,000 D. $6,400,000.

$1,600,000

Ernst Company purchased equipment that cost $3,000,000 on January 1, 2017. The entire cost was recorded as an expense. The equipment had a nine-year life and a $120,000 residual value. Ernst uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2019. Ernst is subject to a 40% tax rate. Ernst's net income for the year ended December 31, 2017, was understated by: Select one: A. $1,608,000 B. $1,800,000 C. $2,680,000 D. $3,000,000.

$1,608,000

Bruner Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In 2018, Bruner started work on a $49,000,000 construction contract that was completed in 2019. The following information was taken from Bruner's 2018 accounting records: Progress billings $15,400,000 Costs incurred 14,700,000 Collections 9,600,000 Estimated costs to complete 29,400,000 What amount of gross profit should Bruner have recognized in 2018 on this contract? A. $4,900,000 B. $3,266,667 Incorrect C. $2,450,000 D. $1,633,333

$1,633,333

Ziegler Corporation purchased 25,000 shares of common stock of the Sherman Corporation for $40 per share on January 2, 2017. Sherman Corporation had 100,000 shares of common stock outstanding during 2018, paid cash dividends of $150,000 during 2018, and reported net income of $500,000 for 2018. Ziegler Corporation should report revenue from investment for 2018 in the amount of: Select one: A. $37,500 B. $87,500 C. $125,000 D. $137,500.

$125,000

Lehman Corporation purchased a machine on January 2, 2017, for $4,000,000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes: 2017 $ 800,000 2020 $460,000 2018 1,280,000 2021 460,000 2019 768,000 2022 232,000 Assuming an income tax rate of 30% for all years, the net deferred tax liability that should be reflected on Lehman's balance sheet at December 31, 2018 is: Select one: A. $144,000 B. $134,400 C. $9,600 D. $0.

$144,000

Pye Company leased equipment to the Polan Company on July 1, 2018, for a ten-year period expiring June 30, 2028. Equal annual payments under the lease are $240,000 and are due on July 1 of each year. The first payment was made on July 1, 2018. The rate of interest contemplated by Pye and Polan is 9%. The cash selling price of the equipment is $1,680,000 and the cost of the equipment on Pye's accounting records was $1,488,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Pye, what is the amount of profit on the sale and the interest revenue that Pye would record for the year ended December 31, 2018? Select one: A. $192,000 and $151,200 Incorrect B. $192,000 and $129,600 C. $192,000 and $64,800 D. $0 and $0

$192,000 and $64,800

On January 1, 2018 Reese Company granted Jack Buchanan, an employee, an option to buy 300 shares of Reese Co. stock for $40 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $4,800. Buchanan exercised his option on September 1, 2018, and sold his 300 shares on December 1, 2018. Quoted market prices of Reese Co. stock during 2018 were: A. $0 B. $2,400 C. $4,800 D. $5,600.

$2,400

In 2017, Eklund, Inc., issued for $103 per share, 90,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Eklund's $25 par value common stock at the option of the preferred stockholder. In August 2018, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock? A. $1,530,000 B. $1,170,000 C. $2,250,000 D. $2,520,000.

$2,520,000

During 2018, Gordon Company issued at 104 five hundred, $1,000 bonds due in ten years. One detachable stock warrant entitling the holder to purchase 15 shares of Gordon's common stock was attached to each bond. At the date of issuance, the market value of the bonds, without the stock warrants, was quoted at 96. The market value of each detachable warrant was quoted at $40. What amount, if any, of the proceeds from the issuance should be accounted for as part of Gordon's stockholders' equity? A. $0 B. $20,000 C. $20,800 D. $19,760

$20,800

In preparing Titan Inc.'s statement of cash flows for the year ended December 31, 2015, the following amounts were available: Collect note receivable $410,000 Issue bonds payable 426,000 Purchase treasury stock 200,000 What amount should be reported on Titan, Inc.'s statement of cash flows for financing activities? Select one: A. $16,000 B. $836,000 C. $226,000 D. $210,000

$226,000

Larsen Corporation reported $200,000 in revenues in its 2018 financial statements, of which $66,000 will not be included in the tax return until 2019. The enacted tax rate is 40% for 2018 and 35% for 2019. What amount should Larsen report for deferred income tax liability in its balance sheet at December 31, 2018? Select one: A. $23,100 B. $26,400 C. $29,400 D. $33,600

$23,100

The following data are for the pension plan for the employees of Lockett Company: 1/1/17 12/31/17 12/31/18 Accumulated benefit obligation $5,000,000 $5,200,000 $6,800,000 Projected benefit obligation 5,400,000 5,600,000 7,400,000 Plan assets (at fair value) 4,600,000 6,000,000 6,600,000 AOCI—net loss 0 960,000 1,000,000 Settlement rate (for year) 10% 9% Expected rate of return (for year) 8% 7% Lockett's contribution was $840,000 in 2018 and benefits paid were $750,000. Lockett estimates that the average remaining service life is 15 years. The corridor for 2018 was $600,000. The amount of AOCI-net loss amortized in 2018 was: Select one: A. $66,666 B. $64,000 C. $28,000 D. $24,000.

$24,000.

On January 1, 2016, Nobel Corporation acquired machinery at a cost of $1,600,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2019, a decision was made to change to the double-declining balance method of depreciation for this machine. The amount that Nobel should record as depreciation expense for 2019 is: Select one: A. $160,000 B. $224,000 C. $320,000 D. $280,000.

$320,000

The following information relates to the pension plan for the employees of Turner Co.: 1/1/17 12/31/17 12/31/18 Accumulated benefit obligation $9,240,000 $ 9,660,000 $12,600,000 Projected benefit obligation 9,765,000 10,458,000 14,007,000 Fair value of plan assets 8,925,000 10,920,000 12,054,000 AOCI—net (gain) or loss 0 (1,512,000) (1,680,000) Settlement rate (for year) 11% 11% Expected rate of return (for year) 8% 7% Turner estimates that the average remaining service life is 16 years. Turner's contribution was $1,323,000 in 2018 and benefits paid were $987,000. The unexpected gain or loss on plan assets in 2018 is: Select one: A. $68,880 loss B. $39,480 gain C. $33,600 gain D. $375,480 gain.

$33,600 gain

Dotel Company's 12/31/18 balance sheet reports assets of $12,000,000 and liabilities of $5,000,000. All of Dotel's assets' book values approximate their fair value, except for land, which has a fair value that is $800,000 greater than its book value. On 12/31/18, Egbert Corporation paid $12,200,000 to acquire Dotel. What amount of goodwill should Egbert record as a result of this purchase? Select one: A. $0 B. $200,000 C. $4,400,000 D. $5,200,000

$4,400,000

Lindsay Corporation had net income for 2018 of $3,000,000. Additional information is as follows: Depreciation of plant assets $1,200,000 Amortization of intagibles 240,000 Increase in accounts receivable 420,000 Increase in accounts payable 540,000 Lindsay's net cash provided by operating activities for 2018 was: Select one: A. $4,560,000 B. $4,440,000 C. $4,320,000 D. $2,680,000.

$4,560,000

At December 31, 2018, Hancock Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 100,000 of which were issued on October 1, 2018. Net income for the year ended December 31, 2018, was $1,700,000. What should be Hancock's 2018 earnings per common share, rounded to the nearest penny? A. $36 B. $4.25 C. $4.00 D. $3.78

$4.00

In its 2018 income statement, Cohen Corp. reported depreciation of $3,700,000 and interest revenue on municipal obligations of $700,000. Cohen reported depreciation of $5,500,000 on its 2018 income tax return. The difference in depreciation is the only temporary difference, and it will reverse equally over the next three years. Cohen's enacted income tax rates are 35% for 2018, 30% for 2019, and 25% for 2020 and 2021. What amount should be included in the deferred income tax liability in Hertz's December 31, 2018 balance sheet? Select one: A. $480,000 B. $620,000 C. $750,000 D. $875,000

$480,000

January 2, 2015, Koll, Inc. purchased a patent for a new consumer product for $800,000. At the time of purchase, the patent was valid for 15 years; however, the patent's useful life was estimated to be only 10 years due to the competitive nature of the product. On December 31, 2018, the product was permanently withdrawn from the market under governmental order because of a potential health hazard in the product. What amount should Koll charge against income during 2018, assuming amortization is recorded at the end of each year? Select one: A. $80,000 B. $480,000 C. $560,000 D. $640,000

$560,000

Gomez, Inc. began work in 2018 on contract #3814, which provided for a contract price of $19,200,000. Other details follow: 2018 2019 Costs incurred during the year $3,200,000 $9,800,000 Estimated costs to complete, as of December 31 9,600,000 0 Billings during the year 3,600,000 14,400,000 Collections during the year 2,400,000 15,600,000 Assume that Gomez uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2019 is: Select one: A. $2,400,000 B. $3,600,000 C. $6,200,000 D. $19,200,000.

$6,200,000

Presented below is pension information related to Woods, Inc. for the year 2018: Service cost $410,000 Interest on projected benefit obligation 270,000 Interest on vested benefits 120,000 Amortization of prior service cost due to increase in benefits 60,000 Expected return on plan assets 90,000 The amount of pension expense to be reported for 2018 is: Select one: A. $590,000 B. $770,000 C. $860,000 D. $650,000.

$650,000

Horner Corporation has a deferred tax asset at December 31, 2015 of $160,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 2012-2014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 50% of the related benefits will actually be realized, a valuation account should be established in the amount of: Select one: A. $80,000 B. $32,000 C. $28,000 D. $24,000.

$80,000

Rathke, Inc. has a defined-benefit pension plan covering its 50 employees. Rathke agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2,700,000. Rathke determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 20% are expected to retire or quit each year. Assuming that Rathke uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is: Select one: A. $540,000 B. $900,000 C. $270,000 D. $720,000.

$900,000

Mathis Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 1,200,000 Estimated litigation expense 3,000,000 Installment sales (2,400,000) Taxable income 1,800,000 The estimated litigation expense of $3,000,000 will be deductible in 2019 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1,200,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1,200,000 current and $1,200,000 noncurrent. The income tax rate is 30% for all years. The deferred tax asset to be recognized is: Select one: A. $0 B. $180,000 current C. $900,000 current D. $900,000 noncurrent.

$900,000 noncurrent

Lynne Corporation acquired a patent on May 1, 2017. Lynne paid cash of $90,000 to the seller. Legal fees of $2,000 were paid related to the acquisition. What amount should be debited to the patent account? Select one: A. $2,000 B. $88,000 C. $90,000 D. $92,000

$92,000

Jordan Company purchased ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the principal by the table value for: Select one: A. 10 periods and 10% from the present value of 1 table B. 10 periods and 8% from the present value of 1 table C. 20 periods and 5% from the present value of 1 table D. 20 periods and 4% from the present value of 1 table.

20 periods and 4% from the present value of 1 table.

On January 2, 2018, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $160,000 each, payable beginning January 2, 2018. Brick Co. agrees to guarantee the $100,000 residual value of the asset at the end of the lease term. Brick's incremental borrowing rate is 10%, however it knows that Gold Star's implicit interest rate is 8%. What journal entry would Gold Star make at January 2, 2018 assuming this is a direct-financing lease? PV Annuity Due PV Ordinary Annuity PV Single Sum 8%, 5 periods 4.31213 3.99271 .68508 10%, 5 periods 4.16986 3.79079 .62092 Select one: A. Cash 160,000 Lease Receivable 740,000 Equipment 900,000 Incorrect B. Cash 160,000 Lease Receivable 529,940 Loss 210,060 Equipment 900,000 C. Cash 160,000 Lease Receivable 569,270 Equipment 729,270 D. Cash 160,000 Lease Receivable 598,449 Equipment 758,449

Cash 160,000 Lease Receivable 598,449 Equipment 758,449

Dublin Company holds a 30% stake in Club Company which was purchased in 2018 at a cost of $3,000,000. After applying the equity method, the Investment in Club Company account has a balance of $3,040,000. At December 31, 2018 the fair value of the investment is $3,120,000. Which of the following values is acceptable for Dublin to use in its balance sheet at December 31, 2018? I. $3,000,000 II. $3,040,000 III. $3,120,000 Select one: A. I, II, or III B. I or II only C. II only D. II or III only

D. II or III only

Foltz Corp.'s 2018 income statement had pretax financial income of $500,000 in its first year of operations. Foltz uses an accelerated cost recovery method on its tax return and straight-line depreciation for financial reporting. The differences between the book and tax deductions for depreciation over the five-year life of the assets acquired in 2018, and the enacted tax rates for 2018 to 2022 are as follows: Book Over (Under) Tax Tax Rates 2018 $(100,000) 35% 2019 (130,000) 30% 2020 (30,000) 30% 2021 120,000 30% 2022 140,000 30% There are no other temporary differences. In Foltz's December 31, 2018 balance sheet, the noncurrent deferred income tax liability and the income taxes currently payable should be: Select one: Noncurrent Deferred Income Tax Liability, $78,000; Income Taxes Currently Payable, $100,000 Noncurrent Deferred Income Tax Liability, $78,000; Income Taxes Currently Payable, $140,000 Noncurrent Deferred Income Tax Liability, $30,000; Income Taxes Currently Payable, $120,000 Noncurrent Deferred Income Tax Liability, $30,000; Income Taxes Currently Payable, $140,000

Noncurrent Deferred Income Tax Liability, $30,000; Income Taxes Currently Payable, $140,000

To address inconsistencies and weakness, a comprehensive revenue recognition model was developed called the: Select one: A. Revenue Recognition Principle B. Principle-based Revenue Accounting C. Rules-based Revenue Accounting D. Revenue from Contracts with Customers.

Revenue from Contracts with Customers.

When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies? Select one: A. The investor should always use the equity method to account for its investment. B. The investor should use the equity method to account for its investment unless circumstances indicate that it is unable to exercise "significant influence" over the investee. C. The investor must use the fair value method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee. D. The investor should always use the fair value method to account for its investment.

The investor should use the equity method to account for its investment unless circumstances indicate that it is unable to exercise "significant influence" over the investee.

Which of the following does not describe intangible assets? Select one: A. They lack physical existence. B. They are financial instruments. C. They provide long-term benefits. D. They are classified as long-term assets.

They are financial instruments.

When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct? Select one: A. Under both the percentage-of-completion and the completed-contract methods, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. B. Under the percentage-of-completion method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. C. Under the completed-contract method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. D. No current period of adjustment is required.

Under the percentage-of-completion method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods.

Which of the following is not accounted for a change in accounting principle? Select one: A. a change from LIFO to FIFO for inventory valuation B. a change to a different method of depreciation for plant assets C. a change from full-cost to successful efforts in the extractive industry D. a change from the completed-contract to the percentage-of-completion method

a change to a different method of depreciation for plant assets

Seadrill Engineering licensed software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides consulting services and support to ensure smooth operation of the software. The total transaction price is $420,000. Based on standalone values, the company estimates the consulting services and support have a value of $120,000 and the software license has a value of $300,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction includes: Select one: A. a credit to Sales Revenue for $300,000 and a credit to Unearned Service Revenue of $120,000 B. a credit to Service Revenue of $120,000 C. a credit to Unearned Service Revenue of $120,000 D. a credit to Sales Revenue of $420,000.

a credit to Sales Revenue for $300,000 and a credit to Unearned Service Revenue of $120,000

Watt Company purchased $300,000 of bonds for $315,000. If Watt intends to hold the securities to maturity, the entry to record the investment includes: Select one: A. a debit to Held-to-Maturity Securities at $300,000 B. a credit to Premium on Investments of $15,000 C. a debit to Held-to-Maturity Securities at $315,000 D. none of these.

a debit to Held-to-Maturity Securities at $315,000

The primary purpose of the statement of cash flows is to provide information: Select one: A. about the operating, investing, and financing activities of an entity during a period B. that is useful in assessing future cash flow prospects C. about the cash receipts and cash payments of an entity during a period D. about the entity's ability to meet its obligations and to pay dividends.

about the cash receipts and cash payments of an entity during a period

A requirement for a security to be classified as held-to-maturity is: Select one: A. ability to hold the security to maturity B. positive intent C. the security must be a debt security D. all of these.

all of these

The cost of an intangible asset includes all of the following except: Select one: A. purchase price B. legal fees C. other incidental expenses D. all of these are included.

all of these are included

Compensation expense resulting from a compensatory stock option plan is generally: A. recognized in the period of exercise B. recognized in the period of the grant C. allocated to the periods benefited by the employee's required services D. allocated over the periods of the employee's service life to retirement.

allocated to the periods benefited by the employee's required services

Deferred taxes should be presented on the balance sheet: Select one: A. as one net debit or credit amount B. in two amounts: one for the net current amount and one for the net noncurrent amount C. in two amounts: one for the net debit amount and one for the net credit amount D. as reductions of the related asset or liability accounts.

as one net debit or credit amount

A lessee with a finance lease containing a bargain purchase option should amortize the leased asset over the: Select one: A. asset's remaining economic life B. term of the lease C. life of the asset or the term of the lease, whichever is shorter Incorrect D. life of the asset or the term of the lease, whichever is longer.

asset's remaining economic life

When computing diluted earnings per share, convertible bonds are: A. ignored B. assumed converted whether they are dilutive or antidilutive C. assumed converted only if they are antidilutive D. assumed converted only if they are dilutive.

assumed converted only if they are dilutive.

A corporation issues bonds with detachable warrants. The amount to be recorded as paid-in capital is preferably: A. zero B. calculated by the excess of the proceeds over the face amount of the bonds C. equal to the market value of the warrants D. based on the relative market values of the two securities involved.

based on the relative market values of the two securities involved.

Taxable income of a corporation differs from pretax financial income because of: Select one: A. neither permanent differences nor temporary differences B. temporary differences, but not permanent differences C. both permanent differences and temporary differences D. permanent differences, but not temporary differences.

both permanent differences and temporary differences

Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as part of net income are: Select one: A. equity holdings of less than 20%. B. equity holdings of between 20% and 50%. C. equity holdings of more than 50%. D. none of the above.

equity holdings of less than 20%.

Debt securities that are accounted for at amortized cost, not fair value, are: Select one: A. held-to-maturity debt securities B. trading debt securities C. available-for-sale debt securities D. never-sell debt securities.

held-to-maturity debt securities

The second step in the process for revenue recognition is to: Select one: A. allocate transaction price to the separate performance obligations B. determine the transaction price C. identify the contract with customers D. identify the separate performance obligations in the contract.

identify the separate performance obligations in the contract.

A contract: Select one: A. must be in writing to be an enforceable contract B. is an agreement that creates enforceable rights and obligations C. is enforceable if each party can unilaterally terminate the contract D. does not need to have commercial substance.

is an agreement that creates enforceable rights and obligations

In a defined-benefit plan, the process of funding refers to: Select one: A. determining the projected benefit obligation B. determining the accumulated benefit obligation C. making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims D. determining the amount that might be reported for pension expense.

making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims

All of the following are procedures for the computation of deferred income taxes except: Select one: A. identifying the types and amounts of existing temporary differences B. measuring the total deferred tax liability for taxable temporary differences C. measuring the total deferred tax asset for deductible temporary differences and operating loss carrybacks D. all of these are procedures in computing deferred income taxes.

measuring the total deferred tax asset for deductible temporary differences and operating loss carrybacks

A pension asset is reported when: Select one: A. the accumulated benefit obligation exceeds the fair value of pension plan assets B. the accumulated benefit obligation exceeds the fair value of pension plan assets, but a prior service cost exists C. pension plan assets at fair value exceed the accumulated benefit obligation D. pension plan assets at fair value exceed the projected benefit obligation.

pension plan assets at fair value exceed the projected benefit obligation.

The amount to be recorded as the lease liability under a finance lease is equal to the: Select one: A. present value of the minimum lease payments without regarding any residual values (guaranteed or unguaranteed) B. present value of the minimum lease payments including guaranteed residual values exceeding expected residual value C. present value of the minimum lease payments plus the present value of any unguaranteed residual value Incorrect D. carrying value of the asset on the lessor's books.

present value of the minimum lease payments including guaranteed residual values exceeding expected residual value

Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation? Select one: A. vested benefit obligation B. accumulated benefit obligation C. projected benefit obligation D. restructured benefit obligation

projected benefit obligation

A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the: Select one: A. projected benefit obligation exceeds the fair value of the plan assets B. fair value of the plan assets exceeds the projected benefit obligation C. amount of employer contributions exceeds the pension expense D. amount of pension expense exceeds the amount of employer contributions.

projected benefit obligation exceeds the fair value of the plan assets

The interest on the projected benefit obligation component of pension expense: Select one: A. reflects the incremental borrowing rate of the employer B. reflects the rates at which pension benefits could be effectively settled C. is the same as the expected return on plan assets D. may be stated implicitly or explicitly when reported.

reflects the rates at which pension benefits could be effectively settled

In a defined-contribution plan, a formula is used that: Select one: A. defines the benefits that the employee will receive at the time of retirement B. ensures that pension expense and the cash funding amount will be different C. requires an employer to contribute a certain sum each period based on the formula D. ensures that employers are at risk to make sure funds are available at retirement.

requires an employer to contribute a certain sum each period based on the formula

Under the completed-contract method: Select one: A. revenue, cost, and gross profit are recognized during the production cycle B. revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed C. revenue, cost, and gross profit are recognized at the time the contract is completed D. none of these.

revenue, cost, and gross profit are recognized at the time the contract is completed

On January 1, 2018, Yancey, Inc. signs a 10-year noncancelable lease agreement to lease a storage building from Holt Warehouse Company. Collectibility of lease payments is reasonably predictable and no important uncertainties surround the amount of costs yet to be incurred by the lessor. The following information pertains to this lease agreement. (a) The agreement requires equal rental payments at the beginning of each year. (b) The fair value of the building on January 1, 2018 is $6,000,000 (c) The building has an estimated economic life of 10 years, with no residual value. Yancey depreciates similar buildings on the straight-line method. (d) At the termination of the lease, the title to the building will be transferred to the lessee. (e) Yancey's incremental borrowing rate is 11% per year. Holt Warehouse Co. set the annual rental to insure a 10% rate of return. The implicit rate of the lessor is known by Yancey, Inc. (f) The yearly rental payment includes $15,000 of executory costs related to taxes on the property. From the lessor's viewpoint, what type of lease is involved? Select one: A. sales-type lease B. sales-leaseback C. direct-financing lease D. operating lease Incorrect

sales-type lease

Assume there are two dilutive convertible securities. The one that should be used first to recalculate earnings per share is the security with the: A. greater earnings adjustment B. greater earnings per share adjustment C. smaller earnings adjustment D. smaller earnings per share adjustment.

smaller earnings per share adjustment

Hager Company sold some of its plant assets during 2018. The original cost of the plant assets was $900,000 and the accumulated depreciation at date of sale was $840,000. The proceeds from the sale of the plant assets were $90,000. The information concerning the sale of the plant assets should be shown on Hager's statement of cash flows (indirect method) for the year ended December 31, 2018, as a(n): Select one: A. subtraction from net income of $30,000 and a $60,000 increase in cash flows from financing activities B. addition to net income of $30,000 and a $90,000 increase in cash flows from investing activities C. subtraction from net income of $30,000 and a $90,000 increase in cash flows from investing activities D. addition of $90,000 to net income.

subtraction from net income of $30,000 and a $90,000 increase in cash flows from investing activities

If a company offers additional considerations to convertible bondholders in order to encourage conversion, it is called a(n): A. forced conversion B. sweetener C. additional conversion D. end conversion.

sweetener

A major distinction between temporary and permanent differences is: Select one: A. permanent differences are not representative of acceptable accounting practice B. temporary differences occur frequently, whereas permanent differences occur only once C. once an item is determined to be a temporary difference, it maintains that status; however, a permanent difference can change in status with the passage of time D. temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse.

temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse.

Xanthe Corporation had the following transactions occur in the current year: (a) Cash sale of merchandise inventory (b) Sale of delivery truck at book value (c) Sale of Xanthe common stock for cash (d) Issuance of a note payable to a bank for cash (e) Sale of a security held as an available-for-sale investment (f) Collection of loan receivable How many of the above items will appear as a cash inflow from investing activities on a statement of cash flows for the current year? Select one: A. five items B. four items C. three items D. two items

three items

Unrealized holding gains and losses which are recognized in income are from securities classified as: A. held-to-maturity B. available-for-sale C. trading D. none of these.

trading

A company has satisfied its performance obligation when it has: Select one: A. received payment for goods and services B. significant risks and rewards of ownership C. legal title to the asset D. transferred physical possession of the asset.

transferred physical possession of the asset.

On its December 31, 2017, balance sheet, Crump Company reported its investment in equity securities, which had cost $600,000, at fair value of $560,000. At December 31, 2018, the fair value of the securities was $585,000. What should Crump report on its 2018 income statement as a result of the increase in fair value of the investments in 2018? Select one: A. $0 B. unrealized loss of $15,000 C. realized gain of $25,000 D. unrealized gain of $25,000

unrealized gain of $25,000