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A company owns a financial asset that is actively traded on two different exchanges (market A and market B). There is no principal market for the financial asset. The information on the two exchanges is as follows Quoted price of asset Transaction costs Market A $1,000 $ 75 Market B 1,050 150 What is the fair value of the financial asset?

$1,000

During the second quarter, Buzz Company sold a piece of equipment at a $12,000 gain. What portion of the gain should Buzz report in its income statement for the second quarter?

$12,000

A company has an equity investment with a historical cost of $500,000 that is traded in an active market. At December 31, Year 1, the quoted price for an identical investment was $400,000 and the quoted price for a similar investment was $430,000. Using the company's internal present value of cash flows model, the company arrived at a value of $410,000. What amount is the value of the investment on December 31, Year 1?

$400,000

A company holds a financial asset that is actively traded in two different markets. The company transacts in both markets equally. The price of the asset in Market A is $50. If the company sells the asset in market A, it incurs a transaction cost of $4. The price of the asset in market B is $48. If the company sells the asset in market B, it incurs a transaction cost $1. What is the fair value of the financial asset?

$48

Taft Corp. discloses supplemental industry segment information. The following information is available for the current year: SalesTraceableoperatingexpenses Segment A$ 20,000$ 12,000 Segment B16,00010,000 Segment C12,0007,000 Total$ 48,000$ 29,000 Additional expenses, not included above, are as follows: Indirect operating expenses $ 7,200 General corporate expenses 4,800 Segment C's current year operating profit was:

$5,000

Grum Corp., a publicly owned corporation, is subject to the requirements for segment reporting. In its income statement for the year ended December 31, year 1, Grum reported revenues of $50,000,000, operating expenses of $47,000,000, and net income of $3,000,000. Operating expenses include payroll costs of $15,000,000. Grum's combined identifiable assets of all industry segments at December 31, year 1, were $40,000,000. Reported revenues include $30,000,000 of sales to external customers. In its year 1 financial statements, Grum should disclose major customer data if sales to any single customer amount to at least

$5,000,000

There are multiple active markets for a financial asset with different observable market prices: Market. Quoted Price. Transaction Costs A $76 $5 B. $74. $2 There is no principal market for the financial asset. What is the fair value of the asset?

$74

The definition of smaller reporting company with respect to market value, as established by the US Securities and Exchange Commission, includes companies with LESS than exactly what amount in public equity float?

$75 million

Which of the following is a required disclosures under IFRS but not under US GAAP? I. Statement of compliance with applicable accounting principles II. Disclosure of all significant accounting policies III. Disclosure of judgements made in the preparation of the financial statements

I and III

Which of the following should be disclosed in the footnotes to the financial statements?

Information about changes in stockholders' equity

Terra Co.'s total revenues from its three operating segments were as follows: Which operating segment(s) is (are) deemed to be reportable segments?

Lion, Monk, and Nevi

Under US GAAP, what method of accounting must be used in the preparation of financial statements for an entity that is not considered a going concern?

Liquidation basis

A US publicly traded company's second fiscal quarter ends on March 31. If the company is an accelerated filer, what is the latest date that the 10-Q should be filed with the US SEC?

May 10

Farmer Joe sells corn at four exchanges, as follows:Bushels of Corn Sold at This ExchangePrice Paid perBushel of CornTransaction CostsExchange by Farmer Joe by All Suppliers per Bushel of CornIllinois 4,000 1,000,000 $3.78 $0.06Iowa 3,500 1,750,000 $3.75 $0.05Michigan 2,800 2,000,000 $3.73 $0.02Nebraska 3,200 1,400,000 $3.76 $0.07For purposes of determining the fair value of Farmer Joe's corn, which exchange is the "principal"market?

Michigan

The following information pertains to revenue earned by Time Co.'s industry segments for the year ended December 31: In conformity with the revenue test, Timm's reportable segments were:

Only Bix and Dil

Which of the following should be disclosed for each reportable operating segment of an enterprise under US GAAP?

Profit or loss-Yes Total assets-Yes

Which of the following items would best enable Driver Co. to determine whether the fair value of its investment in Favre Corp. is properly stated in the balance sheet?

Quoted market prices on a stock exchange for an identical asset

U.S. Securities and Exchange Commission (SEC) regulations for the financial statement presentation and disclosure requirements of SEC filings can be found in:

Regulation S-X

Which of the following must be included in a company's summary of significant accounting policies in the notes to the financial statements?

Revenue recognition policies

Opto Co. is a publicly traded, consolidated enterprise reporting segment information. Which of the following items is a required enterprise-wide disclosure regarding external customers?

The fact that transactions with a particular external customer constitute more than 10% of the total enterprise revenues

What is the purpose of information presented in notes to financial statements?

To provide disclosures required by generally accepted accounting principles

Which of the following phrases best describes a level 1 input for measuring the fair value of an asset or liability?

Unadjusted quoted prices for identical assets or liabilities in active markets

Which of the following is a Level 3 input to valuation techniques used to measure the fair value of an asset?

Unobservable inputs for the asset

In preparing its interim financial statements, assuring that no changes in accounting principle were implemented, Pro Team Corporation would apply generally accepted accounting principles:

Used in the most recent annual report

Under US GAAP, substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events indicate that it is:

probable that the entity will not be able to meet its obligations as they come due within one year from the date the financial statements are issued.

A change from the cost approach to the market approach of measuring fair value is considered to be what type of accounting change?

Change in accounting estimate

In financial reporting of segment data, which of the following must be considered in determining if an industry segment is a reportable segment?

Sales to unaffiliated customers-Yes Intersegment sales-Yes

YIV, Inc. is a multidivisional corporation, which has both inter segment sales and sales to unaffiliated customers. YIV should report segment financial information for each division meeting which of the following criteria?

Segment revenue is 10% or more of combined revenue of all the company segments

The fair value of which of the following was determined using a Level 3 input?

Shares of a privately held company whose value is based on projected cash flows

Farmer Joe is trying to determine the fair value of his corn inventory. Which of the following would be considered a Level 3 input in this process?

The discount rate Farmer Joe uses in determining the discounted cash flow value of his corn inventory

Management has plans to mitigate conditions causing substantial doubt about the entity's ability to continue as a going concern. Management believes that those plans will be effectively implemented and successful in mitigating the adverse conditions. Which of the following is true?

The financial statements should be prepared under the going concern basis of accounting with footnote disclosure explaining the conditions that originally raised doubt about the entity's status as a going concern.

On March 15, year 2, a calendar-year company issued its Year 1 financial statements. On March 1, Year 2, a fire destroyed the company's only manufacturing plant. Which of the following statements is correct regarding the treatment of the loss in the December 31, Year 1, financial statements?

The loss should be disclosed and NOT recognized in the Year 1 financial statements

An investment company's portfolio of private placement securities is recorded at fair value and valued using a matrix pricing model. The matrix pricing model uses current pricing spreads on similar securities to determine the fair value of the private placement securities. Which of the following valuation techniques is being used?

The market approach

The fair value for an asset or liability is measured as:

The price that would be received when selling an asset or paid when transferring a liability in an orderly transaction between market participants

Each of the following events is required to be reported to the United States Securities and Exchange Commission on Form 8-K, EXCEPT:

The quarterly results of operations and financial condition of a registrant.

Swift Co. has identified three operating segments that may require separate disclosure in Swift's general purpose financial statements for the year ended December 31, year 2. Information for year 2 follows:-------------------------------Segment (in thousands)--------------------------------- A ----- B ------ C ---- TotalReported revenue -----------$ 42 -- $ 121 --- $ 14 --- $ 177Reported profit(loss)-------- $ 12 --- $ 65 --- $ (3) -- $ 74Assets ----------------------- $ 470 --$ 800 - $ 80 --- $ 1,350Which of Swift's segments are required to be separately disclosed in its December 31, year 2, financial statements?

A and B only

Which of the following subsequent events could have a negative impact on a company's debt-to-equityratio computed using the information reported on the company's balance sheet for the year endedDecember 31, Year 1?Assume that the company files its financial statements with the Securities and Exchange Commission and that its financial statements were issued February 4, Year 2.

A lawsuit that was filed against the company on October 12, Year 1, and settled on January 2, Year 2.

An enterprise must separately report information about an operating segment when the segment's revenue meets what minimum percentage of the combined revenue of all reported operating segments?

10%

A company that is large accelerated filer must file its Form 10-Q with the United States Securities and Exchange Commission within how many days after the end of the period?

40 days

A company is an accelerated filer that is required to file Form 10-K with the United States Securities and Exchange Commission (SEC). What is the maximum number of days after the company's fiscal year end that the company has to file Form 10-K with the SEC?

75 days

Management is required to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern for

A reasonable period of time not to exceed one year beyond the date the financial statements are issued.

Alex Inc. files financial statements with the Securities and Exchange Commission; Betty Corp. does not.Both corporations have a fiscal year-end of December 31, Year 1; both corporations had received allapprovals necessary for issuance of their GAAP-compliant December 31, Year 1, financial statements byJanuary 24, Year 2, and both corporations had actually distributed such financial statements to allfinancial statement users by January 29, Year 2.Which of the following is true with respect to how long Alex Inc. and Betty Corp. must evaluatesubsequent events for purposes of potentially having to make adjustments and/or footnote disclosures tothe December 31, Year 1, financial statements?

Alex Inc. must evaluate subsequent events through January 29, Year 2, and Betty Corp. must evaluatesubsequent events through January 24, Year 2.

Under Regulation S-X, an entity's annual financial statements filed with the SEC should include, at a minimum, two:

Balance Sheets

Which of the following should be disclosed in a summary of significant accounting policies?

Basis of consolidation

Which of the following should be disclosed in a summary of significant accounting policies?

Basis of profit recognition on long-term construction contracts

What information should a public company present about revenues from its reporting segments?

Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales

Which of the following is correct concerning financial statement disclosures of accounting policies?

Disclosure of accounting policies is an integral part of the financial statements

Hyde Corp. has three manufacturing divisions, each of which has been determined to be a reportable operating segment. In Year 4, Clay division had sales of $3 million, which was 25% of Hyde's total sales, and had traceable operating costs of $1.9 million. In Year 4, Hyde incurred operating costs of $500,000 that were not directly traceable to any of the divisions. In addition, Hyde incurred interest expense of $300,000 in Year 4. The calculation of the measure of segment profit or loss reviewed by Hyde's chief operating decision maker does not include an allocation of interest expense incurred by Hyde. However, it does include traceable costs. It also includes nontraceable operating costs allocated based on the ratio of divisional sales to aggregate sales. In reporting segment information, what amount should be shown as Clay's operating profit for Year 1?

$1,100,000

ABC Company owns stock in XYZ Company. The stock is traded on the New York Stock Exchange andthe London Stock Exchange. Stock price information from the two stock exchanges on December 31 isas follows: Exchange Quoted Stock Price Transaction Costs Net New York $103 $1 $102 London $106 $5 $101 What is the fair value of the XYZ stock on December 31 if there is no principal market for the stock?

$103

A company owns a financial asset that has no principal market. The financial asset is actively traded in four markets and the company has the ability to transact in all four of these markets. The following are the quoted prices for the financial asset in each of the four markets: market. quoted price A $20,000 B 25,000 C 30,000 D 35,000 What is the fair value of the financial asset?

$35,000

A company owns land and a building that houses its manufacturing operations. When the company purchased the manufacturing facility 10 years ago, the purchase price allocated to the land account was $120,000. The manufacturing facility is located in an area that was once the site of many factories. The owners of many of the neighboring factories have recently sold their facilities to residential real estate developers. The company's land is also suitable for residential development. The estimated current value of the land as part of the manufacturing facility is $150,000. The estimated current value of the land as an undeveloped investment is $130,000, and the current value of the land as part of a residential development would be $180,000. What is the fair value of the land?

$180,000

The following information pertains to Aria Corp. and its operating segments for the year ended December 31, year 1: Sales to unaffiliated customers 2,000,000 Intersegment sales of products similar to those sold to unaffiliated customers 600,000 Interest earned on loans to other industry segments 40,000 Aria and all of its divisions are engaged solely in manufacturing operations and evaluates divisional performance based on controllable contribution. Aria has a reportable segment if that segment's revenue exceeds

$260,000

Crossroads Co. chooses to report a financial asset at its fair value. The asset trades in two different markets; however, neither market is the principal market for the financial asset. In the first market, sales proceeds are $76, which is net of transaction costs of $6. In the second market, sales proceeds are $80, which is net of transaction costs of $1. What amount should Crossroads report as the fair value of the asset?

$81

Farmer Joe owns farmland along a busy highway. Farmer Joe originally paid $500,000 for this land. The land sat on top of a reservoir of oil, which when pumped out resulted in total depletion expenses to Farmer Joe of $125,000. The farmland currently has a value of $600,000 if it is used as farmland; however, a developer who wants to build a shopping plaza on the farmland has offered Farmer Joe $850,000 for the farmland. What is the fair value of the farmland?

$850,000

Farmer Joe sells corn at four exchanges, as follows:Bushels of Corn Sold at This ExchangePrice Paid perBushel of CornTransaction CostsExchange by Farmer Joe by All Suppliers per Bushel of CornIllinois 4,000 1,000,000 $3.78 $0.06Iowa 3,500 1,750,000 $3.75 $0.05Michigan 2,800 2,000,000 $3.73 $0.02Nebraska 3,200 1,400,000 $3.76 $0.07For purposes of determining the fair value of Farmer Joe's corn, which exchange is the "most advantageous" market?

Illinois

On January 17 Yr 2, an explosion occurred at a Sims Co. plant causing extensive property damage to area buildings. Although no claims had yet been asserted against Sims by March 10,yr 2. Sims management and counsel concluded that it is likely that claims will be asserted and that it is reasonably possible Sims will be responsible for damages.How should this item be reported?

As a footnote disclosure indicating the possible loss of $250,000

The Ajax Corp. reported the following operating results and net income (net Loss) from its components for the year ended December 31: Component. Net eliminations. Consolidated Astor $215,000 (120,000) 95,000 Bejax 30,000. 0. 30,000 Carter (180,000). 50,000. (130,000) Davis.80,000. (50,000). 30,000 Elbow (20,000) 20,000. 0 Based purely on operating results, which of the components would be deemed reportable segments?

Astor, Carter, and Davis

Andro Co. has a $10 million note payable that is due three months after year-end. The note payable was refinanced when long-term bonds were issued one month after year-end for $11 million. The December 31 financial statements were issued two months after year-end. How should Andromeda's classify and disclose the note?

Classification of liability--Non-current Note disclosure required--Yes

The summary of significant accounting policies should disclose the:

Criteria for determining which investments are treated as cash equivalents

Which of the following information should be disclosed in the summary of significant accounting policies?

Criteria for determining which investments are treated as cash equivalents

Drexler Corp. has a June 30 fiscal year-end and plans to issue its annual (Year 3) financial statements bySeptember 30, Year 3. On August 15, a warehouse fire destroys an estimated $250,000 of inventory. Asa result of the fire, in its Year 3 financial statements Drexler should:

Disclose the nature of the event along with the estimated financial impact.

Which of the following is not a disclosure requirement related to risks and uncertainties under US GAAP?

Disclosure of significant estimates when it is probable that the estimate will change in the near term, even if the effect of the change will be immaterial

Grum Corp., a publicly owned corporation, is subject to the requirements for segment reporting. In its income statement for the year ended December 31, year 1, Grum reported revenues of $50,000,000, operating expenses of $47,000,000, and net income of $3,000,000. Operating expenses include payroll costs of $15,000,000. Grum's combined identifiable assets of all industry segments at December 31, year 1, were $40,000,000. Grum Co.'s four business segments have revenues and identifiable assets expressed as percentages of Grum's total revenues and total assets as follows: Segment Revs. Assets Ebon. 64% 66% Fair. 14% 18% Gel 14% 4% Hak 8% 12% Total. 100% 100% Which of these business segments are deemed to be reportable segments?

Ebon, Fair, Gel, and Hak

Which of the following would NOT be disclosed in the footnotes to the financial statements?

Excerpts from the minutes of a board of directors' meeting in which a proposed acquisition was discussed but rejected

Which of the following statements is correct regarding fair value measurement?

Fair value is a market-based measurement

When valuing certain financial instruments, a company that has elected the fair value measurement option must apply the accounting measurement based on which of the following criteria?

Instrument-by-instrument basis

Which of the following conditions would LEAST likely raise substantial doubt about an entity's ability to continue as a going concern?

Flood damage to an insured warehouse

Which of the following is the annual report that is filed with the United States Securities and Exchange Commission?

Form 10-K

A US public company with a worldwide public float of $800 million at the end of the second quarter of the fiscal year is required to file its annual report with the US SEC on:

Form 10-K within 60 days after the end of the reporting period

Which of the following reports would a company file to meet the US Securities and Exchange Commission's requirements for unaudited, interim financial statements reviewed by an independent accountant?

Form 10-Q

Which of the following SEC filings would not include a set of financial statements?

Form 3

An XBRL financial statement exhibit is required to be submitted with all of the following SEC filings, except:

Form 3, 4, and 5

Which form is not required to include audited financial statements?

Form 6-K

ABC Co. is a public company that is required to file financial reports with the United States Securities and Exchange Commission (SEC). ABC acquired a significant related business, Bauer Co., through the registration and issuance of additional shares of common stock to the former stockholders of Bauer. Which of the following forms should ABC find with the SEC as a result of the acquisition of Bauer?

Form 8-K

For purposes of deterring the period over which subsequent events must be evaluated, financial statements are considered to be "available to be issued" when: I. The financial statements are in a form and format that comply with GAAP. II. All approvals necessary for the issuance of the financial statements have been received III. The financial statements have been widely distributed to financial statement users.

I and II

Whether to give consideration to an entity's plans to mitigate the conditions or events that raise substantial doubt about its ability to continue as a going concern depends on: I. Whether it is probable that the plans will be effectively implemented. II. Whether the condition(s) that give rise to substantial doubt about the entity's ability to continue as a going concern is expected to continue. III. Whether it is probable that the plans, if implemented, will actually be successful in mitigating the adverse conditions or events.

I and II

For purposes of determining the period which subsequent events must be evaluated, financial statements are considered to be "issued" when: I. the financial statements are in a form and format that comply with GAAP II. Shareholders owning more than 50 percent of the company's stock have acknowledged receiving the financial statements III. The financial statements have been widely distributed to financial statement users.

I and III

Which of the following factors determines whether an identified segment of an enterprise should be reported in the enterprise's financial statements? I. the segment's assets constitute more than 10% of the combined assets of all operating II. the segment's liabilities constitute more than 10% of the combined liabilities of all operating segments

I only

A major different between US GAAP and IFRS guidance for consideration of going concern is:

IFRS does not offer guidance on the liquidation basis of accounting; US GAAP provides guidance on the liquidation basis of accounting

Which of the following should be disclosed in a summary of significant accounting policies? I. Management's intention to maintain or vary the divided payout ratio. II. Criteria for determining which investments are treated as cash equivalents III. Composition of the sales order backlog by segment

II Only

The December 31, Year 1, financial statements of Edwards Co. (a privately held company) were availableto be issued on March 1, Year 2, and were actually issued on March 3, Year 2. As of December 31, Year1, Edwards Co. had 250,000 shares of common stock outstanding. On February 15, Year 2, Edwards Co.issued 500,000 more shares of common stock. As a result of this transaction, Edwards Co. must:I. Adjust the amount of common stock reported on its December 31, Year 1, balance sheet.II.Provide disclosure about the stock issuance in the footnotes included with the December 31, Year 1,financial statements.

II only

Which of the following statements is incorrect regarding the inputs that can be used to measure fair value? I. Level I inputs are the most reliable fair value measurements and Level III inputs are the least reliable II. Level I measurements are quoted prices in active markets for identical or similar assets or liabilities III. A fair value measurement based on management assumptions only (no market data) would not be acceptable per GAAP IV. The level in the fair value hierarchy of a fair value measurement is determined by the level of the highest level significant input.

II, III, and IV

Which of the following statements regarding fair value is/are correct? I. the fair value of an asset or liability is specific to the entity making the fair value measurement II. Fair value is the price to acquire an asset or assume a liability III. fair value includes transportation costs, but no transaction costs IV. the price in the principle market for an asset or liability will be the fair value measurement

III & IV

Each of the following would be considered a level 2 observable input that could be used to determine an asset or liability's fair value, EXCEPT:

Internally generated cash flow projections for a related asset or liability

Under which of the following circumstances does substantial doubt exist about an entity's ability to continue as a going concern?

It is probable that the entity will be unable to meet its obligations coming due within 12 months of financial statement issuance.

Cooper Co. files financial statements with the Securities and Exchange Commission; Davis Corp. doesnot. Both corporations have a fiscal year-end of December 31, Year 1; both corporations received allapprovals necessary for issuance of their GAAP-compliant December 31, Year 1, financial statements byJanuary 27, Year 2, and both corporations distributed such financial statements to all interested partiesby February 5, Year 2.Under U.S. GAAP, which of the following must be disclosed by Davis Corp. with respect to when itssubsequent event evaluation period ended?

It must disclose that its subsequent even evaluation period ended January 27, Year 2

McClave Enterprises used quoted prices for similar assets as the basis for determining the fair value of its investments. McClave's inputs for determining the fair values of the investments would be classified as which level in fair value hierarchy?

Level 2

Which of the following items in not required to be presented in an exhibit prepared using XBRL when a filer submits Form 10-K to the SEC?

Management's discussion and analysis

A public entity sells steel for use in construction. One of its customers accounts for 43 percent of sales, and another customer accounts for 40% of sales. What should the entity disclose in its annual financial statements about these two customers?

The amount of the entity's revenue from each of the two customers

Which of the following is not a criterion in determining whether to disclose information in the footnotes to the financial statements about vulnerability to a concentration?

The concentration pertains to a specific geographic region.

Under IFRS, which of the following is true regarding the method of accounting used in the preparation of financial statements for an entity that is not considered a going concern? I. The liquidation basis of accounting must be used if the entity has plans to mitigate the adverse conditions or events that raise substantial doubt about its ability to continue as a going concern. II. The going concern basis of accounting must be used if the entity does not have plans to mitigate the adverse conditions or events that raise substantial doubt about its ability to continue as a going concern.

Neither I nor II

A company performing its long-lived asset impairment testing is reviewing the fair value of equipment. Each of the following valuation techniques may be appropriate for measuring the fair value of the equipment, EXCEPT the:

Net realizable value approach

Cooper Co. files financial statements with the Securities and Exchange Commission; Davis Corp. doesnot. Both corporations have a fiscal year-end of December 31, Year 1; both corporations received allapprovals necessary for issuance of their GAAP-compliant December 31, Year 1, financial statements byJanuary 27, Year 2, and both corporations distributed such financial statements to all interested partiesby February 5, Year 2.Under U.S. GAAP, which of the following must be disclosed by Cooper Co. with respect to when itssubsequent event evaluation period ended?

No disclosure is necessary

Which of the following information should be included in Melay, Inc.'s summary of significant accounting policies?

Property, plant, and equipment is recorded at cost with depreciation computed principally by the straight-line method

Which of the following types of entities are required to report on business segments?

Publicly-traded enterprises

In financial reporting of segment data, which of the following items is always used in determining a segment's operating income?

Sales to other segments

Under IFRS, which of the following is not disclosed for an entity's reportable segments?

Segment Cash Flow

Under IFRS, which of the following best describes when disclosure regarding substantial doubt about an entity's ability to continue as a going concern should be made in the entity's footnotes to the financial statements?

Such disclosure is required when management is aware of material uncertainties that may give rise to substantial doubt about the entity's ability to continue as a going concern.

In general, an enterprise preparing interim financial statements should:

Use the same accounting principles followed in preparing its latest annual financial statements.

Ace Co. settled litigation on February 1, Year 2, for an event that occurred during Year 1. An estimated liability was determined as of Dec 31, Year 1. This estimate was significantly less than the final settlement. The transaction is considered to be material. The year-end financial statement for Year 1 have not been issued. How should the settlement be reported in Ace's Year 1 financial statements?

d. Both a disclosure and an accrual.


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