FAR Quiz NJ

Hilder Corporation owns an office building and leases the offices under a variety of rental agreements involving rent paid in advance monthly or annually. Not all tenants make timely payments of their rent. Hilder's balance sheets contained the following data (see below). During Year 4, Hilder received $104,000 cash from tenants. What amount of rental revenue should Hilder record for Year 4? Year 3 Year 4Rentals receivable $11,200 $ 8,700Unearned rentals 28,000 39,000

$11,200-$8700= $2500 decrease. $28,000-$39,000=$11000 increase. $104,000+2500-$11,000 = $95,500.

In Year 1, a company purchased equipment that cost $70,000. The equipment has a useful life of seven years and no salvage value. The company used the straight-line method to depreciate the equipment and reported $10,000 of depreciation expense in Years 1 and 2. At the beginning of Year 3, the company determines that the equipment will last for only three more years (five years total) and changes the depreciable life of the asset accordingly. What amount of depreciation expense should the company report in Year 3?

2 years depreciation already calculated=$20,000. Current carrying value= $70,000-$20,000= $50,000. Then divide by life left $50,000/3= $16,667

For which of the following companies is the trend of a single earnings per share figure reliable?

A company that has both common and preferred stock.

Richards Company enters into a lease that requires lease payment with both a fixed and a variable component. Which of the following variable consideration elements would be included in the present value computation of Richards' lease liability?

A payment based on consumer price index

ABC Co. is working on a construction contract. They have been recognizing costs and revenues from the contract as the performance obligation is being satisfied. The contract was started in Year 5 and was completed in Year 7 for a price of $9,000,000. If ABC measures progress on the contract based on costs incurred, how much profit should the company recognize for the year ended December 31, Year 6? December 31, Year 5 | December 31, Year 6 Cumulative contract costs incurred: $3,900,000 | $6,000,000Estimated total cost at completion: $7,800,000 | $8,000,000

Calculate percentage of completion year 6 > 6 mil/8 mil= 75%. Calculate total revenue recognized by the end of the year 6> 9 mil x 75%= $6,750,000. Calculate revenue recognized in year 5> $3,900,000/$7,800,000= 50%. So recognized revenue $9 mil x 50%= $4,500,000. Then calculate revenue recognized in year 6> $6,750,000-$4,500,000= $2,250,000. Calculate the costs incurred between year 5 and year 6> $6 mil-$3.9 mil= $2.1 mil. Now calculate difference between revenue already recognized in year 5 from costs incurred in year 6. $2,250,000-$2,100,000 = $150,000.

Main Co. began its manufacturing business last year. Main uses the dollar-value LIFO method to determine the value of its inventory. Main's inventory was valued at $100,000 at the end of last year, and, using current costs, $132,000 at the end of the current year. The prices for Main's inventory during the current year were 20% higher than last year's prices. What amount should Main report as inventory on its balance sheet at the end of the current year?

Calculate price index. current year cost/base year cost. 20% higher > $100,000 + 20% ($20,000)= $1.20. Convert ending inventory to at current cost to base cost. > $132,000 / $1.20 = $110,000. Determine the increase in inventory at base year costs.> 110,000-100,000=$10,000. Convert increase in inventory back to current costs. > $10,000 x 1.2 = $12,000. Calculate the ending inventory using dollar value LIFO. > $100,000 + $12,000 = $112,000.

The stockholders' equity section of Nelson Corporation's December 31, 20X2, balance sheet consisted of the following (see below). On January 2, 20X3, Nelson put into effect a stockholder-approved quasi-reorganization by reducing the par value of the stock to $6 and eliminating the deficit against additional paid-in capital. Immediately after the quasi-reorganization, what amount should Nelson report as additional paid-in capital? Common stock, $17 par, 30,000 shares Authorized and outstanding: $510,000Additional paid-in capital: $138,000Retained earnings (deficit): ($439,000)

Calculate the new par value > 30,000 shares x $6/share = $180,000. Determine reduction > $510,000 - 180,000 = $330,000. Eliminate retained earnings deficit by the additional paid in capital. $439,000-$330,000= $109,000. Adjust the paid in capital > $138,000-$109,000 = $29,000 new additional paid in capital.

Pluck Limited reported a retained earnings balance of $546,000 at December 31 of the previous year. In November of the current year, Pluck determined that the amount computed for sales commissions in the prior year was understated because of an error in the software used to track sales. The understatement was $129,000 as of January 1 of the current year. Pluck has a 33% income tax rate. What amount should Pluck report as adjusted beginning retained earnings in its current-year statement of retained earnings?

Calculate understatement amount $129,000 x 67% = $86.430. Adjust beginning retained earnings > $546,000-$86,430 = $459,570.

8 Lind Co.'s salaries expense of $10,000 is paid every other Friday for the 10 workdays then ending. Lind's employees do not work on Saturdays and Sundays. The last payroll was paid on June 18. On Wednesday, June 30, the month-end balance in the salaries expense account before accruals was $14,000. What amount should Lind report as salaries expense in its income statement for the month ended June 30?

Days worked since last payroll. 5 + 3=8. Daily salary expense = 10,000/10= $1000 per workday. Accrued salaries expense = 8 x $1000= $8000. Balance in expense account = $8000 + $14000 = $22,000

Jeremiah Corp. issued bonds on November 30, 20X2. The 8% bonds have a face value of $187,500, and were issued for $164,133, reflecting a yield rate of 10%. The interest payment dates are May 31 and November 30 and the bonds mature in 10 years. Jeremiah uses the effective interest method to amortize discounts and premiums on the bonds it issues. How much will Jeremiah debit for interest expense on November 30, 20X3?

Initial Carrying amount $164,133. Calculate interest expense=carrying amount x yield rate/2. Then calculate cash interest payments=Face value x coupon rate/c. Subtract the difference and add amount to carrying amount. Calculate interest expense for the second period using the updated carrying amount. $8242

Blanding City determined it would be economical to set up a payroll department to serve all other departments in the local government by providing payroll services. Which of the following funds should Blanding City use to report the activities of the payroll department?

Internal Service Fund

In the fair value measurement hierarchy, Level 1 measurements are based on which of the following?

Market place similar assets

A taxpayer owns 100 shares of Arden Corp., a publicly traded company, which was purchased on January 1, Year 2, for $10,000. On January 1, Year 3, Arden declared a 2-for-1 stock split when the fair market value (FMV) of the stock was $120 per share. Immediately following the split, the FMV of Arden stock was $62 per share. On February 1, Year 3, the taxpayer had his broker specifically sell the 100 shares of Arden stock received in the split when the FMV of the stock was $65 per share. What is the basis of the 100 shares of Arden sold?

Original purchase $10,000/100 = $100/share. 2for1 stock split means Arden now owns 200 shares so $10000/200= $50/share. Shares sold after split= 100 shares x $50/share = $5000 basis

A city received a $4,800,000 donation from a donor who directs that the principal should be maintained in perpetuity and the earnings from the principal are to be used to provide assistance for homeless families to reestablish their economic and financial security. In which fund should the donation be recorded?

Permanent Fund

A deferred tax asset may result from which of the following items?

The use of equity method