FAR QUESTIONS

A. $0. Step one, compare the carrying amount to the sum of undiscounted future cash flows. If the carrying amount is less than the sum of the cash flows, no impairment loss is recorded. $5,000 is less than $6,000 so no impairment loss is recorded.

A company has a long-lived asset with a carrying amount of $5,000. The future nondiscounted cash flow from the use of the long-lived asset is estimated to be $6,000. The discounted cash flow from the use of the long-lived asset is estimated to be $2,000. What amount should the company recognize as an impairment loss? A. $0 B. $3,000 C. $1,000 D. $4,000

C. $10,000. The accretion Expense is the increase in the ARO's liability due to the passage of time. The formula is Beginning ARO x Risk-adjusted rate. $100,000 x 10%= $10,000

At the beginning of the year, the carrying value of an asset was $1,000,000 with 20 years of remaining life. The fair value of the liability for the asset retirement obligation was $100,000. At year end, the carrying value of the asset was $950,000. The risk-free interest rate was 5%. The credit-adjusted risk-free interest rate was 10%. What was the amount of accretion expense for the year related to the asset retirement obligation? A. $100,000 B. $95,000 C. $10,000 D. $50,000

D. 25 years. The legal life of the intangible asset is 30 years. But it will only generate cashflow for the next 25 years. Therefore the economic life of the asset is 25 years.

Barco Co acquired a copyright with a remaining life of 30 years. The copyright initially had a 38 year life assigned to it. An analysis of market trends indicated the copyright material will generate positive cash flow for the next 25 years. What is the remaining useful life, if any, over which the company can amortize the copyright for accounting purposes? A. 30 years B. 0 Years C. 38 Years D. 25 Years

$4,000 is correct. The estimated life is 5 years, and the legal life is the life of the author plus 50 years. As such the estimated life will be used and the $20,000 cost will be amoritzed over 5 years for $4,000.

Corbet Co. purchased a copyright near the beginning of the current year from an author for $20,000. The legal life of the copyright is equivalent to the life of the author plus 50 years. Corbet expects to sell the book for five years. What amount should Corbet report as amortization expense related to the copyright at the end of the current year? A. $0 B. $500 C. $400 D. $4,000

D. is correct. If the loss is probable and the range is estimated. GAAP requires that we use the best estimate amount which is $1,300,000.

During Year 2, a former employee of Dane Co. began a suit against Dane for wrongful termination in November year 1. After considering all of the facts, Dane's legal counsel believes that the former employee will prevail and will probably receive damages of between $1,000,000 and $1,500,000, with $1,300,000 being the most likely amount. Dane's financial statements for the year ended December 31, Year 1, will not be issued until February Year 2. In its December 31, Year 1, balance sheet, what amount should Dane report as a liability with respect to the suit? A. $1,500,000 B. $0 C. $1,000,000 D. $1,300,000

75 days

For an accelerated filer for form 10-k, what is the maximum # of days after a fiscal year that a company can file the form 10-k?

The correct answer is A. $700,000. Considering the fact equipment suffered a "permanent impairment" we need to recognize the loss in the depreciation. This is because the book value of the asset is reduced and recorded as a loss. Acum depre 420,000 Stated in the question Loss 180,000 Calculated Loss (900k-420k-300k) Depr Yr 9 100,000 (300k/3 yrs) Total $700,000

Gei Co. determined that, due to obsolescence, equipment with an original cost of $900,000 and accumulated depreciation at January 1, Year 9, of $420,000 had suffered permanent impairment, and as a result should have a carrying value of only $300,000 as of the beginning of the year. In addition, the remaining useful life of the equipment was reduced from 8 years to 3. Assuming straight-line depreciation, what amount should Gei report as accumulated depreciation in its December 31, Year 9, balance sheet? A. 700,000 B. 600,000 C.520,000 D. 100,000

See image: Cost of Goods Sold/ Average inventory

If X Corp has beginning inventory of 100,000, net sales of 2,000,000 net purchases of 700,000, and ending inventory of 300,000 at year end. What is there inventory turnover for year end?

No

If preferred stock dividend are cumulative, when they are declared. Are they relevant in the EPS formula, yes or no?

False, the exercise price is the same as the strike price.

Is the exercise price the same as the market price?

The company is using straight line amortization. Under SLD the interest expense of $470,00 is reported each period. The interest expense is equal to the interest payment of $450,000 ($5,000,000 face x 9% stated rate) plus the discounted amortization of $20,000. Therefore the formula. Income available to shareholders + interest of dilutive securities = $600,000 + [$470,000 x (1- 25%)] = $600,000 +$352,500= $952,500.

MCQ-05943

Perpetual is $5,400. Periodic is: Ending inventory in units= 2,200 (from remaining inventory) x oldest cost = LIFO valuation. Units UnitCost $ 1/1 Beginning bal. 2,000 $1 $2,000 1/8 Purchase 200 3 600 $2,600 $2,600 is correct.

Nest Co. recorded the following inventory information during the month of January: Units UnitCost TotalCost Unitson Hand Balance on 1/1 2,000 $1 $2,000 2,000 Purchased on 1/8 1,200 3 3,600 3,200 Sold on 1/23 1,800 1,400 Purchased on 1/28 800 5 4,000 2,200 Nest uses the LIFO method to cost inventory. What will Perpetual and Periodic inventory be at the end of the month. Remember Perpetual is the normal one.

A. $0 Since Northstar expects to renew the trademark indefinitely. There will be no amortization expense. Amortization is only recorded for intangible assets with a definite life.

Northstar Co. acquired a registered trademark for $600,000. The trademark has a remaining legal life of five years, but can be renewed every 10 years for a nominal fee. Northstar expects to renew the trademark indefinitely. What amount of amortization expense should Northstar record for the trademark in the current year? A. 0 B. 40,000 C. 15,000 D. 120,000

B)

On Jan 1st Yr 3 a company changed inventory costed method from LIFO to FIFO. The company yr 3 financial statements contain comparative information for Yr 2. How should the company present the Yr 1 effect of the change in accounting principle in its Yr 3 comparative financial statements? A) As an extraordinary item in the Yr 2 income statement. B) As an adjustment to the beginning year 2 inventory balance with an offsetting adjustment Yr 2 retained earnings. C) As a note disclosure? D) As pa

B. $0 is correct. since the text says it is reasonably possible. It only needs to be listed on the disclosure including the range.

On November 10, Year 1, a Garry Corp. truck was in an accident with an auto driven by Dacey. On January 10, Year 2, Garry received notice of a lawsuit seeking $800,000 in damages for personal injuries suffered by Dacey. Garry Corp.'s counsel believes it is reasonably possible that Dacey will be awarded an estimated amount in the range between $250,000 and $500,000, and that $400,000 is a better estimate of potential liability than any other amount. Garry's accounting year ends on December 31, and the Year 1 financial statements were issued on March 6, Year 2. What amount of loss should Garry accrue at December 31, Year 1? A. 500,000 B. $0 C. $250,000 D. $400,000

Total accum depre at the end of year 5 is $45,000.0 Year 1 5,000 Year 2-5 10,000 x 4 Total: 45,000 Year 6 5,000

Speed Co purchases a machine for 50,000 dollars w/ a useful life of 5 years. Using the straight-line method with a half year convention and no estimated salvage value. What is the total accumulated depreciation at the end of year 5.

C. 1.08. Add Capital stock to equity account. Use the accounting formula A= L+E or L= A-E. Assets=760,000 Equity=365000 L= 760,000-365000= 395000. Then 395000/365000= 1.08

Stent Co. had total assets of $760,000, capital stock of $150,000, and retained earnings of $215,000. What was Stent's debt-to-equity ratio? A. 2.63 B. 0.52 C. 1.08 D. 0.48

The correct answer is D. $74. When there is no principal market, the most advantageous market is considered the fair value. Since 76-5=71 and 74-2=72 the most advantageous fair value is the asset with the $74 valuation.

There are multiple active markets for a financial asset with different observable market prices: Market QuotedPrice TransactionCosts A $76 $5 B $74 $2 There is no principal market for the financial asset. What is the fair value of the asset? A. $71 B. $76 C. $72 D. $74

No, instead the difference will be recognized in the shareholders equity (as APIC)

Under the cost method: when a company repurchases its own stock (treasury stock), when the shares are later sold, will the difference in the reissue price and the cost be reported as a gain/loss on the income statement?

Considering the fact accumulated depreciation didnt increase by the year 2 depreciation expense. There is a retirement of some sort. Year 1 acum depr is $370,000. Year 2 depre exp is $55,000. Add those two together and get $425,000 acumm depre YR 2. Since acum depr is $400,000 in year 2. Subtract the difference and get $425,000-400,000=$20,000 PPE retirement.

Weir Co. uses straight-line depreciation for its property, plant, and equipment, which, stated at cost, consisted of the following: 12/31/Year 2 12/31/Year 1 Land 25,000 25,000 Buildings 195,000 195,000 Machinery & equipment 695,000 650,000 Total 915,000 870,000 Less accumulated depreciation 400,000 370,000 Total 515,000 500,000 Weir's depreciation expense for Year 2 and Year 1 was $55,000 and $50,000, respectively. What amount was debited to accumulated depreciation during Year 2 because of property, plant, and equipment retirements?

A. $4,000. Purchased intangible assets are recorded at cost therefore it will be valued at $50,000. As West Co. intents to sell the asset for $10,000 in year 10, it will only be amortized down to $10,000 (40,000 total) and not 0. Therefore, $50,000-10,000= $40,000/10= $4,000 amortization expense each year.

West Co. paid $50,000 for an intangible asset other than goodwill. Fair value of the asset is $55,000. West signed a contract to sell the asset for $10,000 in 10 years. What amount of amortization expense should West record each year? A. $4,000 B. $5,000 C. $4,500 D. $5,500

Total Liabilities / Total Assets

What is the total Debt Ratio? Give me the formula.

A. is correct. If the loss is probable and can be estimated then it should be a contingent liability. Now if the amount cannot be estimated, even if it is probable then it should only be listed on the disclosure of notes in the FS.

Which of the following methods should a company use to account for a contingent liability when the loss is probable but not reasonably estimated? A. The liability should only be disclosed in the notes to the financial statements. B. The liability should not be reported. C. The liability should be reported as a short-term liability. D. The liability should be reported as a long-term liability.