Chapter 14

In considering interim financial reporting, how did the Accounting Principles Board conclude that each reporting should be viewed? As a "special" type of reporting that need not follow generally accepted accounting principles. As useful only if activity is evenly spread throughout the year so that estimates are unnecessary. As reporting for a basic accounting period. As reporting for an integral part of an annual period.

As reporting for an integral part of an annual period.

Which of the following is NOT a segment asset of an operating segment? Assets used jointly by more than one segment. Assets directly associated with a segment. Assets maintained for general corporate purposes. Assets used exclusively by a segment.

Assets maintained for general corporate purposes.

Which of the following is NOT required to be disclosed by SFAS No. 131? Information concerning the enterprise's products. Information related to an enterprise's foreign operations. Information related to an enterprise's major suppliers. All of theses are required disclosures.

Information related to an enterprise's major suppliers.

For external reporting purposes, it is appropriate to use estimated gross profit rates to determine the ending inventory value for: Interim Reporting, No; Annual Reporting, No Interim Reporting, No; Annual Reporting, Yes Interim Reporting, Yes; Annual Reporting, No Interim Reporting, Yes; Annual Reporting, Yes

Interim Reporting, Yes; Annual Reporting, No

Which of the following statements most accurately describes interim period tax expense? The best estimate of the annual tax rate times the ordinary income (loss) for the quarter. The best estimate of the annual tax rate times income (loss) for the year to date less tax expense (benefit) recognized in previous interim periods. Average tax rate for each quarter, including the current quarter, times the current income (loss). The previous year's actual effective tax rate times the current quarter's income.

The best estimate of the annual tax rate times income (loss) for the year to date less tax expense (benefit) recognized in previous interim periods.

Selected data for a segment of a business enterprise are to be separately reported in accordance with SFAS No. 131 when the revenues of the segment is 10% or more of the combined: net income of all segments reporting profits. external and internal revenue of all reportable segments. external revenue of all reportable segments. revenues of all segments reporting profits.

external and internal revenue of all reportable segments.

Gains and losses that arise in an interim period should be: recognized in the interim period in which they arise. recognized in the last quarter of the year in which they arise. allocated equally among the remaining interim periods. deferred and included only in the annual income statement.

recognized in the interim period in which they arise.

A segment is considered to be significant if its: reported profit is at least 10% of the combined profit of all operating segments. reported profit (loss) is at least 10% of the combined reported profit of all operating segments not reporting a loss. reported profit (loss) is at least 10% of the combined reported loss of all operating segments that reported a loss. reported profit (loss) is at least 10% of the combined reported profit of all operating segments not reporting a loss; and reported profit (loss) is at least 10% of the combined reported loss of all operating segments that reported a loss.

reported profit (loss) is at least 10% of the combined reported profit of all operating segments not reporting a loss; and reported profit (loss) is at least 10% of the combined reported loss of all operating segments that reported a loss.

Inventory losses from market declines that are expected to be temporary: should be recognized in the interim period in which the decline occurs. should be recognized in the last (fourth) quarter of the year in which the decline occurs. should not be recognized. none of these.

should not be recognized.

The computation of a company's third quarter provision for income taxes should be based upon earnings: for the quarter at an expected annual effective income tax rate. for the quarter at the statutory rate. to date at an expected annual effective income tax rate less prior quarters' provisions. to date at the statutory rate less prior quarters' provisions.

to date at an expected annual effective income tax rate less prior quarters' provisions.

Companies using the LIFO method may encounter a liquidation of base period inventories at an interim date that is expected to be replaced by the end of the year. In these cases, cost of goods sold should be charged with the: cost of the most recent purchases. average cost of the liquidated LIFO base. expected replacement cost of the liquidated LIFO base. none of these.

expected replacement cost of the liquidated LIFO base.

During the second quarter of 2017, Clearwater Company sold a piece of equipment at a gain of $90,000. What portion of the gain should Clearwater report in its income statement for the second quarter of 2017? $90,000 $45,000 $30,000 $ -0-

$90,000

Long Corporation's revenues for the year ended December 31, 2017, were as follows: Long has a reportable segment if that segment's revenues exceed $80,000. $90,500. $94,000. $14,000.

$94,000.

To determine whether a substantial portion of a firm's operations are explained by its segment information, the combined revenue from sales to unaffiliated customers of all reportable segments must constitute at least: 10% of the combined revenue of all operating segments. 75% of the combined revenue of all operating segments. 10% of the combined revenue from sales to unaffiliated customers of all operating segments. 75% of the combined revenue from sales to unaffiliated customers of all operating segments.

75% of the combined revenue from sales to unaffiliated customers of all operating segments.

Which of the following does NOT have to be disclosed in interim reports? Seasonal costs or expenses. Significant changes in estimates. Disposal of a segment of a business. All of these must be disclosed.

All of these must be disclosed.

Which of the following disclosures is NOT required to be presented for a firm's reportable segments? Information about segment assets Information about the bases for measurement Reconciliation of segment amounts and consolidated amounts for revenue, profit or loss, assets, and other significant items. All of these must be presented.

All of these must be presented.

If annual major repairs made in the first quarter and paid for in the second quarter clearly benefit the entire year, when should they be expensed? An allocated portion in each of the last three quarters An allocated portion in each quarter of the year In full in the first quarter In full in the second quarter

An allocated portion in each quarter of the year

An enterprise determines that it must report segment data in annual reports for the year ended December 31, 2017. Which of the following would NOT be an acceptable way of reporting segment information? Within the body of the financial statements, with appropriate explanatory disclosures in the footnotes Entirely in the footnotes to the financial statements. As a special report issued separately from the financial statements. In a separate schedule that is included as an integral part of the financial statements.

As a special report issued separately from the financial statements.

An entity is permitted to aggregate operating segments if the segments are similar regarding the: nature of the production processes. types or class of customers. methods used to distribute products or provide services. all of these.

all of these.

An inventory loss from a market price decline occurred in the first quarter. The loss was not expected to be restored in the fiscal year. However, in the third quarter the inventory had a market price recovery that exceeded the market decline that occurred in the first quarter. For interim reporting, the dollar amount of net inventory should: decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the market price recovery. decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter. not be affected in the first quarter and increase in the third quarter by the amount of the market price recovery that exceeded the amount of the market price decline. not be affected in either the first quarter or the third quarter.

decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter.

SFAS No. 131 requires the disclosure of information on an enterprise's operations in different industries for: ach annual period presented. each interim period presented. the current period only. each annual period presented and each interim period presented.

each annual period presented and each interim period presented.

For interim financial reporting, a company's income tax provision for the second quarter of 2017 should be determined using the: statutory tax rate for 2017. effective tax rate expected to be applicable for the full year of 2017 as estimated at the end of the first quarter of 2017. effective tax rate expected to be applicable for the full year of 2017 as estimated at the end of the second quarter of 2017. effective tax rate expected to be applicable for the second quarter of 2017.

effective tax rate expected to be applicable for the full year of 2017 as estimated at the end of the second quarter of 2017.