acct 301a final
Oriole Corporation acquired a patent on May 1, 2020. Oriole paid cash of $26000 to the seller. Legal fees of $1750 were paid related to the acquisition. What amount should be debited to the patent account?
$27750
Concord Corporation purchased a truck at the beginning of 2020 for $108500. The truck is estimated to have a salvage value of $4900 and a useful life of 122000 miles. It was driven 19000 miles in 2020 and 27000 miles in 2021. What is the depreciation expense for 2021?
(108500-4900)/122000 =.849 .849*27000 22923
Swifty Corporation acquires a coal mine at a cost of $1750000. Intangible development costs total $362000. After extraction has occurred, Swifty must restore the property (estimated fair value of the obligation is $189000), after which it can be sold for $216000. Swifty estimates that 5000 tons of coal can be extracted. What is the amount of depletion per ton?
(1750000 + 362000 + 189000) -216000 Divided by 5000 417
On January 1, 2020, the Accumulated Depreciation—Machinery account of a particular company showed a balance of $1490000. At the end of 2020, after the adjusting entries were posted, it showed a balance of $1600000. During 2020, one of the machines which cost $495000 was sold for $243000 cash. This resulted in a loss of $15100. Assuming that no other assets were disposed of during the year, how much was depreciation expense for 2020?
(495000-243000-15100 ) = 236,900 1600000 - (1490000-236900)= 346900
Blossom Company purchased bonds with a face amount of $675000 between interest payment dates. Blossom purchased the bonds at 101, paid brokerage costs of $13700, and paid accrued interest for three months of $23700. The amount to record as the cost of this long-term investment in bonds is
(675000 * 1.01) +13700 695450
Swifty Corporation acquired a tract of land containing an extractable natural resource. Swifty is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2420000 tons, and that the land will have a value of $960000 after restoration. Relevant cost information follows: Land $7580000 Estimated restoration costs 1500000 If Swifty maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
(Cost of land + estimated restoration - salvage after restoration)/Recoverable reserves (7580000+1500000-960000)/2420000 =3.36
activity based depreciation formula
(cost-salvage)/est miles * actual miles in years
Swifty Corporation accepted a customer's $100100 zero-interest-bearing six-month note in a sales transaCction. The product sold normally sells for $94300. If the sale was made on June 30, how much interest revenue from this transaction would be recorded for the year ending December 31?
100100-94300 5800
On January 1, 2020, the merchandise inventory of Ivanhoe, Inc. was $1100000. During 2020 Ivanhoe purchased $2210000 of merchandise and recorded sales of $3000000. The gross profit rate on these sales was 25%. What is the merchandise inventory of Ivanhoe at December 31, 2020? $790000. $2250000. $1060000. $750000.
1100000 +2210000= 3310000 Less: cogs x 1-25%= 2250000 3310000-2250000=1060000
What amount of gain or loss would Carla Vista Corporation report in its income statement for the year ended December 31, 2022 related to its investment, if the fair value method of accounting was used? cost-956000 fair value 2021-1263000 fair value 2022- 1210000 $53000 gain. $254000 gain. $307000 gain. $53000 loss.
1263000 - 1210000 = 53000 loss -
Purchase price of new boiler $140000 Carrying amount of old boiler 10600 Fair value of old boiler 3400 Installation cost of new boiler 18800 The old boiler was sold for $3400. What amount should Marigold capitalize as the cost of the new boiler?
140000+18800= 158800
Carla Vista Corp. incurred $790000 of research and development costs to develop a product for which a patent was granted on January 2, 2018. Legal fees and other costs associated with registration of the patent totaled $155000. On March 31, 2021, Carla Vista paid $325000 for legal fees in a successful defense of the patent. The total amount capitalized for the patent through March 31, 2021 should be
155000+325000=480000
Correct answer iconYour answer is correct. On January 2, 2020, Sunland Co. bought a trademark from Carla Vista, Inc. for $1940000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Carla Vista's books was $1440000. In Sunland's 2020 income statement, what amount should be reported as amortization expense?
1940000/10=$194000.
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 10 periods and 10% from the present value of 1 table. 20 periods and 4% from the present value of 1 table. 10 periods and 8% from the present value of 1 table. 20 periods and 5% from the present value of 1 table.
20 periods and 4% from the present value of 1 table.
Crane Company uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2020 was $270000. The balance in the same account at the end of 2021 is $410000. Crane's Cost of Goods Sold account has a balance of $2000000 from sales transactions recorded during the year. What amount should Crane report as Cost of Goods Sold in the 2021 income statement?
2000000 +410000 -270000 $2140000. -
Crane Corporation acquired a patent on May 1, 2020. Crane paid cash of $23000 to the seller. Legal fees of $1600 were paid related to the acquisition. What amount should be debited to the patent account?
23000+1600=24600
Vaughn Manufacturing uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2020 was $332000. The balance in the same account at the end of 2021 is $470000. Vaughn's Cost of Goods Sold account has a balance of $2370000 from sales transactions recorded during the year. What amount should Vaughn report as Cost of Goods Sold in the 2021 income statement?
2370000 + 470000 -332000
Wildhorse Company purchases Blossom Company for $2370000 cash on January 1, 2021. The book value of Blossom Company's net assets, as reflected on its December 31, 2020 balance sheet is $1833000. An analysis by Wildhorse on December 31, 2020 indicates that the fair value of Blossom's tangible assets exceeded the book value by $175500, and the fair value of identifiable intangible assets exceeded book value by $132000. How much goodwill should be recognized by Wildhorse Company when recording the purchase of Blossom Company?
2370000 - (1833000+175500+132000) goodwill=229500
oncord Corporation sells one product and uses a perpetual inventory system. The beginning inventory consisted of 79 units that cost $22 per unit. During the current month, the company purchased 483 units at $22 each. Sales during the month totaled 359 units for $43 each. What is the cost of goods sold using the LIFO method? $10626. $7898. $15437. $1738.
359*22 =7898
Cullumber Company purchased $3600000 of 7%, 5-year bonds from Pharoah, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $3724740 at an effective interest rate of 6%. Using the effective-interest method, Cullumber Company decreased the Available-for-Sale Debt Securities account for the Pharoah, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $11820 and $12180, respectively.At December 31, 2021, the fair value of the Pharoah, Inc. bonds was $3780000. What should Cullumber Company report as other comprehensive income and as a separate component of stockholders' equity?
3780000 - (3724740 - 11820 -12180) 79260
Oriole Company purchased equipment for $41600. Sales tax on the purchase was $2496. Other costs incurred were freight charges of $624, repairs of $364 for damage during installation, and installation costs of $696. What is the cost of the equipment?
41600+624+696+2496= 45416 all exept repairs of damage during installation
Wildhorse Corporation acquired End-of-the-World Products on January 1, 2020 for $6250000, and recorded goodwill of $1170000 as a result of that purchase. At December 31, 2021, the End-of-the-World Products Division had a fair value of $4580000. The net identifiable assets of the Division (including goodwill) had a carrying value of $5290000 at that time. What amount of loss on impairment of goodwill should Wildhorse record in 2021?
5290000 - 4580000 = 710,000
Waterway Industries uses the perpetual inventory and the gross method. On March 1, it purchased $57000 of inventory, terms 2/10, n/30. On March 3, Waterway returned goods that cost $5700. On March 9, Waterway paid the supplier. On March 9, Waterway should credit purchase discounts for $1026. inventory for $1026. purchase discounts for $1140. inventory for $1140.
57000-5700 = 51300 51300 *.02 = 1026
Sheridan Company's 12/31/21 balance sheet reports assets of $6930000 and liabilities of $2730000. All of Sheridan's assets' book values approximate their fair value, except for land, which has a fair value that is $413000 greater than its book value. On 12/31/21, Sunland Corporation paid $7063000 to acquire Sheridan. What amount of goodwill should Sunland record as a result of this purchase?
7063000-6930000-413000+2730000=2450000
Bramble Inc. took a physical inventory at the end of the year and determined that $786000 of goods were on hand. In addition, Bramble, Inc. determined that $58000 of goods that were in transit that were shipped f.o.b. shipping point were actually received two days after the inventory count and that the company had $87000 of goods out on consignment. What amount should Bramble report as inventory at the end of the year?
786000 + 58000 + 87000 = 931000
Vaughn Inc. took a physical inventory at the end of the year and determined that $837000 of goods were on hand. In addition, the following items were not included in the physical count. Vaughn, Inc. determined that $98000 of goods purchased were in transit that were shipped f.o.b. destination (goods were actually received by the company three days after the inventory count). The company sold $38500 worth of inventory f.o.b. destination that did not reach the destination yet. What amount should Vaughn report as inventory at the end of the year?
837000 + 385000
Crane Company records purchases at net amounts. On May 5 Crane purchased merchandise on account, $84000, terms 2/10, n/30. Crane returned $5000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid.By how much should the account payable be adjusted on May 31?
84000-5000 divide by 2 1580
During 2020, Crane Company sold equipment that had cost $390000 for $234200. This resulted in a gain of $16600. The balance in Accumulated Depreciation—Equipment was $1300000 on January 1, 2020, and $1230000 on December 31. No other equipment was disposed of during 2020. Depreciation expense for 2020 was
= $235,200 - $17,200 = $218,000 = $392,000 - $218,000 = $174,000 Depreciation expense = $1,240,000 - ($1,300,000 - $174,000) = $114,000
doubt declining balance depreciation
=ddb
straight line depreciation excel
=sln
Sum of the years digits excel
=syd
Which method may be used to record cash discounts a company receives for paying suppliers promptly? Net method. Gross method. Average method. Both the net method and the gross method.
Both the net method and the gross method.
Indicate which of the following costs should be expensed when incurred: a. $13,000 paid to rearrange and reinstall machinery b. $200,000 paid for addition to building c. $200 paid for tune-up and oil change on delivery truck d. $7,000 paid to replace a wooden floor with a concrete floor e. $2,000 paid for a major overhaul on a truck, which extends the useful life
C
Loss method vs COGS method
COGS - buries the loss in the cost of goods sold JE: DR COGS CR inventory (allowance) LOSS preferable bc does not distort the COGS and displays loss separately JE: DR loss CR inventory allowance
composite depreciation rate
Depreciation per year divided by the total cost of the assets.
Bramble Corp. purchased a depreciable asset for $379000. The estimated salvage value is $25000, 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?
EXCEL=DDB(cost,salvage,life,period) ddb(379000,25000,8,2) =71063
purchase discounts (gross method and net method) JE
GROSS METHOD (when purchase incurred) DR purchase/inventory CR AP (when Purchase discounts taken) DR AP CR cash CR purchase discounts NET METHOD (when purchase incurred) DR purchases/inventory CR AP (if purchase discounts are NOT taken) DR purchase discounts loss DR AP
Which of the following is not reported as part of income from continuing operations? Amortization expense. Goodwill. Research and development costs. Impairment losses for intangible assets.
Goodwill.
mark up is 30% Inventory, March 1 $547000 Purchases 427000 Purchase returns 17000 Sales during March 741000 The estimate of the cost of inventory at March 31 would be
Inventory beginning + (427000-17000) - (741000/1.3)
Equity Method Investments
Investments where the company owns 20% to less than 50% of outstanding stock, and thus has "significant influence."
Which of the following statements is incorrect regarding the lower-of-cost-or-market rule? It usually understates assets. It is inconsistent because losses are recognized but not gains. It can increase future income if the expected reductions do not materialize. It incorporates both gains and losses in value that occur during the course of business.
It incorporates both gains and losses in value that occur during the course of business.
Demolition of old building $19400 Architect's fees 36900 Legal fees for title investigation and purchase contract 4700 Construction costs 1376000 (Salvaged materials resulting from demolition were sold for $10000.) purchased for 311000 record cost for land and building
Land - 311000 +19400 +4700 -10000 Building 36900 +1376000
what is an intangible asset?
Long-term assets that have no physical form but do have value such as patents, trademarks, and goodwill, copyright,franchise
Which of the following is correct? Selling costs are product costs. Manufacturing overhead costs are product costs. Interest costs for routine inventories are product costs. All of these answers are correct.
Manufacturing overhead costs are product costs.
Oriole Company owns machinery with a book value of $573000. It is estimated that the machinery will generate future cash flows of $594000. The machinery has a fair value of $420000. Oriole should recognize a loss on impairment of
No loss on impairment bc cash flow > book value
Where should goods in transit that were recently purchased f.o.b. destination be included on the balance sheet? Inventory. Equipment. Not on the balance sheet. Accounts payable.
Not on the balance sheet.
ppe capitalized and expensed
PPE capitalized if cost increase future benefit ( the value of the asset) PPE expensed if cost incurred to maintain a given level of services
On November 1, year 1, a company purchased a new machine that it does not have to pay for until November 1, year 3. The total payment on November 1, year 3, will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine would be the total payment multiplied by what time value of money concept? Future amount of annuity of $1. Present value of annuity of $1. Present value of $1. Future amount of $1.
Present value of $1
When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"?
Replacement cost, Net realizable value, or Net realizable value less a normal profit margin.
For 2020, Swifty Corporation reports beginning of the year total assets of $899000, end of the year total assets of $1010000, net sales of $1010000, and net income of $197000.The rate of return on assets for Swifty in 2020 is
Return of asset = net income/ avg total asset 197000 / [(899000 + 1010000)/2] 20% ASSET TURNOVER 1010000/ [(1010000+899000)/2] = 1 time asset turnover
Of the following costs related to the development of natural resources, which one is not a part of depletion cost? Intangible development costs such as drilling costs, tunnels, and shafts. Tangible equipment costs associated with machinery used to extract the natural resource. Exploration costs. Acquisition cost of the natural resource deposit.
Tangible equipment costs associated with machinery used to extract the natural resource.
Which of the following statements is true regarding capitalization of interest? The minimum amount of interest to be capitalized is determined by multiplying a weighted average interest rate by the amount of average accumulated expenditures on qualifying assets during the period. Interest cost capitalized in connection with the purchase of land to be used as a building site should be debited to the land account and not to the building account. When excess borrowed funds not immediately needed for construction are temporarily invested, any interest earned should be offset against interest cost incurred when determining the amount of interest cost to be capitalized. The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred.
The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred. -
What is a LIFO reserve? The difference between the LIFO inventory and the amount used for internal reporting purposes. The current effect of using LIFO on net income. The tax savings attributed to using the LIFO method. Change in the LIFO inventory during the year.
The difference between the LIFO inventory and the amount used for internal reporting purposes.
Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset? Expenditures for the assets have been made. Activities that are necessary to get the asset ready for its intended use are in progress. The interest rate is equal to or greater than the company's cost of capital. Interest cost is being incurred.
The interest rate is equal to or greater than the company's cost of capital.
How is a significant amount of consignment inventory reported in the balance sheet? The inventory is reported separately on the consignee's balance sheet. The inventory is combined with other inventory on the consignee's balance sheet. The inventory is reported separately on the consignor's balance sheet. The inventory is combined with other inventory on the consignor's balance sheet.
The inventory is reported separately on the consignor's balance sheet. -
Which of the following most accurately reflects the concept of depreciation as used in accounting? A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.
The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.
Which statement is true about the retail inventory method? It may not be used to expedite physical inventory counts. It may not be used by auditors. It may not be used to estimate inventories for interim statements. There are different versions of the retail inventory method.
There are different versions of the retail inventory method. ---
Waterway Inc. reported total assets of $6406000 and net income of $505000 for the current year. Waterway determined that inventory was understated by $140000 at the beginning of the year and $60300 at the end of the year. Ignoring income taxes, what is the corrected amount for TOTAL ASSETS and NET INCOME for the year?
To find total assets 6406000 + 60300 = 6466300 To find net income 505000 - 140000 + 60300
Sunland Corp. acquires a patent from Carla Vista Co. in exchange for 1700 shares of Sunland Corp.'s $5 par value common stock and $84000 cash. When the patent was initially issued to Carla Vista Co., Sunland Corp.'s stock was selling at $6.90 per share. When Sunland Corp. acquired the patent, its stock was selling for $8.40 a share. Sunland Corp. should record the patent at what amount?
USE : when corp acquired the patent, its stock was selling for $8.40 8.40 x 1700= 14280 14280 + 84000 = 98280
if a company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory? No effect on net income. Overstate net income. Not sufficient information to determine effect on net income. Understate net income.
Understate net income. -
Sheffield Corp. is constructing a building. Construction began in 2020 and the building was completed 12/31/20. Sheffield made payments to the construction company of $3042000 on 7/1, $6312000 on 9/1, and $5810000 on 12/31. Weighted-average accumulated expenditures were $15164000. $3099000. $9354000. $3625000.
Weighted average accumulated expenditure were: ($3042000×6÷12) + ($6312000×4÷12) + ($5810000×0÷12)= $3625000.
Crane Company purchased a depreciable asset for $1240000. The estimated salvage value is $62000, and the estimated useful life is 10000 hours. Crane used the asset for 1100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?
[(1240000-62000)X 1100]/10000 129580
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 a debit to Debt Investments at $300,000. a credit to Premium on Debt Investments of $15,000. a debit to Debt Investments at $315,000. none of these choices are correct.
a debit to Debt Investments at $315,000.
Delta River Company sold manufacturing equipment with a cost of $44,000 and accumulated depreciation of $32,000 for $9,000. The journal entry to record this transaction will include: a credit to a gain account for $8,000. a credit to Accumulated Depreciation - Equipment for $32,000. a credit to the Equipment account for $12,000. a debit to a loss account for $3,000.
a debit to a loss account for $3,000. The journal entry to record the sale would include debits to Cash ($9,000), Accumulated Depreciation - Equipment ($32,000) and a loss account ($3,000). Equipment would be credited for $44,000. The loss would be computed as follows: Cost, $44,000 - Accumulated Depreciation, $32,000 = Book value, $12,000 - Cost, $9,000 = Loss, $3,000.
Koehn Corporation accounts for its investment in the common stock of Sells Company under the equity method. Koehn Corporation should ordinarily record a cash dividend received from Sells as a reduction of the carrying value of the investment. additional paid-in capital. dividend income. an addition to the carrying value of the investment.
a reduction of the carrying value of the investment.
What is Property plant and equipment
acquired for use in operations and not for resale long term and depreciated except for land tangible land, machine, buildings land improvements
When using a perpetual inventory system, no Purchases account is used. a Cost of Goods Sold account is used. two entries are required to record a sale. All of these answer choices are correct.
all
Held-to-maturity securities are reported at amortized cost. acquisition cost. acquisition cost plus interest. fair value.
amortized cost. -
In accounting for investments in debt securities, a discount is reported separately. a premium is reported separately. any discount or premium is amortized. none of these answers are correct.
any discount or premium is amortized. -
LCM (lower of cost or market) JE?
applied directly to each item, to total of inventory or total of components of each major category JE DR loss due to decline of inventoty to market CR allowance to reduce inventory to market
Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses that are included as other comprehensive income and as a separate component of stockholders' equity are trading debt securities. never-sell debt securities. held-to-maturity debt securities. available-for-sale debt securities.
available-for-sale debt securities. -
Cotton Hotel Corporation recently purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. The cost of the Emporia Hotel should be capitalized as part of the cost of the new hotel. capitalized as part of the cost of the land. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down. written off as a loss in the year the hotel is torn down.
capitalized as part of the cost of the land.
If the parent company owns 90% of the subsidiary company's outstanding common stock, the company should generally account for the income of the subsidiary under the cost method. consolidation. fair value method. divesture method.
consolidation
John Thomas has recently entered into an agreement with Longman Inc. Under this agreement, John will sell its products using the trade name of Longman in a specified geographical location. What type of intangible asset is this agreement between John Thomas and Longman Inc.? marketing-related intangible assets contract-related intangible assets customer-related intangible assets artistic-related intangible assets
contract-related intangible assets
An inventory method which is designed to approximate inventory valuation at the lower of cost or market is last-in, first-out. conventional retail method. first-in, first-out. specific identification.
conventional retail method.
Investments in debt securities are generally recorded at cost including accrued interest. maturity value. maturity value with a separate discount or premium account. cost including brokerage and other fees.
cost including brokerage and other fees. -
The inventory turnover ratio is computed by dividing: cost of goods sold by average inventory. sales by ending inventory. cost of goods sold by ending inventory. sales by average inventory.
cost of goods sold by average inventory.
je went debt is payed in full at maturity date
debit cash credit debt investment
JE debt security during amortization period
debit cash credit interest revenue debit/credit debt investment
JE purchase of debt security
debit debt investment credit cash (payable)
On August 1, 2021, Ivanhoe Company acquired 1220, $1000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2018, and mature on April 30, 2027, with interest paid each October 31 and April 30. The bonds will be added to Ivanhoe's available-for-sale portfolio. The preferred entry to record the purchase of the bonds on August 1, 2021
debit debt investment and interest REVENUE credit CASH
Je when fmv> ncv
debit fmv credit unrealized gain/loss
je when fmv< ncv
debit unrealized gain/loss credit fmv
Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the investee declares a dividend. earnings are reported by the investee in its financial statements. investor sells the investment. investee pays a dividend
earnings are reported by the investee in its financial statements. -
On January 1, 2014, Marigold Corp. purchased equipment at a cost of $395000. The equipment was estimated to have a salvage value of $8000 and it is being depreciated over eight years under the sum-of-the-years'-digits method. What should be the charge for depreciation of this equipment for the year ended December 31, 2021?
excel =syd(395000,8000,8,8) period is 8 because end of year
Costs incurred internally to create intangibles are capitalized if they have an indefinite life. capitalized. expensed only if they have a limited life. expensed as incurred.
expensed as incurred
An investor has a long-term investment in stocks. Regular cash dividends received by the investor are recorded as
fair value method - income equity method - a reduction of the investment
In a period of rising prices, the inventory method which tends to give the highest reported net income is
fifo
goods and costs included in inventory
goods in transit consigned goods special sales costs- product and period costs purchase discounts
A correct valuation for debt securities is available-for-sale at amortized cost. held-to-maturity at amortized cost. held-to-maturity at fair value. none of these answers are correct.
held-to-maturity at amortized cost.
Debt securities that are accounted for at amortized cost, not fair value, are available-for-sale debt securities. never-sell debt securities. trading debt securities. held-to-maturity debt securities.
held-to-maturity debt securities. -
Cost $3890000 Carrying amount 2370000 Expected future net cash flows 2041000 Fair value 1525000 record loss on impairment
impairment = carrying amount - fair value 2370000 - 1525000 = 845000
Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should include a credit to the equipment accumulated depreciation account. not be made if the equipment is still being used. include a credit to the equipment account. recognize an extraordinary loss for the period.
include a credit to the equipment accumulated depreciation account.
To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should include markdowns but not markups. ignore both markups and markdowns. include markups and markdowns. include markups but not markdowns.
include markups but not markdowns. -
Goods in transit which are shipped f.o.b. shipping point should be included in the inventory of the seller. included in the inventory of the buyer. included in the inventory of the shipping company. None of these answer choices are correct.
included in the inventory of the buyer.
Lower-of-cost-or-market must be applied to major categories for taxes. is most conservative if applied to individual items of inventory. is most conservative if applied to major categories of inventory. is most conservative if applied to the total inventory.
is most conservative if applied to individual items of inventory. --
Which of the following is not a debt security? Convertible bonds Commercial paper Loans receivable All of these are debt securities
loans receivable
Securities which could be classified as held-to-maturity are redeemable preferred stock. municipal bonds. warrants. treasury stock.
municipal bonds.
If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is net realizable value less a normal profit margin. market value. original cost. net realizable value.
net realizable value.
examples of intangible assets
patents, trademarks, copyrights, franchises, and goodwill
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 Multiplied by an appropriate interest rate to determine the amount of interest to be capitalized. used to reduce the cost of assets being constructed. offset against interest cost incurred during construction. recognized as revenue of the period.
recognized as revenue of the period.
The fair value option allows a company to -report most financial instruments at fair value at each reporting date. -record the unrealized gains and losses related to changes in the fair value of available-for-sale debt securities in net income. -account for held-to-maturity securities at amortized cost. -all of these choices are true of the fair value option.
report most financial instruments at fair value at each reporting date.-
Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses are securities where a company has holdings of more than 50%. securities where a company has holdings of between 20% and 50%. securities where a company has holdings of more than 20%. securities where a company has holdings of less than 20%. -
securities where a company has holdings of less than 20%. -
Net realizable value is
selling price less costs to complete, sell, and transport.
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to that portion of weighted-average accumulated expenditures on which no interest cost was incurred. the total interest cost actually incurred. that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made. a cost of capital charge for stockholders' equity
that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made.
The period of time during which interest must be capitalized ends when the asset is substantially complete and ready for its intended use. the asset is fully depreciated. no further interest cost is being incurred. the activities that are necessary to get the asset ready for its intended use have begun
the asset is substantially complete and ready for its intended use.
Unrealized holding gains or losses which are recognized in income are from debt securities classified as held-to-maturity. available-for-sale. trading. none of these answers are correct.
trading. -
impairment test
undiscounted future net cash flow < ncv - not impaired
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 vary with sales revenue. vary with production. be constant. vary with unit sales.
vary with production