Final
In 2016, it was discovered that Hines 55 had debited expense for the full cost of an asset purchased on Jan 1, 2013. The cost was $24 million with no expected residual value. It's useful life was 5 years and straight-line depreciation is used by the company. The correcting entry assuming the error was discovered in 2016 before the adjusting and closing entries includes: A. A credit to accumulated depreciation of $14.4 million B. A debit to accumulated depreciation of $9.6 million C. A debit to retained earnings of $9.6 million D. A credit to an asset of $24 million
A. A credit to accumulated depreciation of $14.4 million ($24/5yrs)=$4.8 $4.8x3yrs=14.4 $24= given 5 years= useful life 3 years= depreciation that has occurred already
Selected information from Felsenthal Corp. accounting records and financial statements for 2016 is as follows Cash paid to retire bonds $30 Treasury stock purch for cash $0 Proceeds from issuance of com stock $70 proceeds from issuance of mor bonds $80 cash div paid on com stock $25 cash int paid to bondholders $15 On this statement of cash flows, Felsenthal should report net cash inflows from financing activities of: A. $10 million B. $45 million C. $30 million D. $125 million
B. $45 million $70+80-30-50-25=45 *Don't include interest, because its operating
Determine how much was paid for inventory during the year. COGS $900,000 Inv. Jan 1 $130,000 Dec 31. $165,000 A/P Jan 1 $23,000 Dec 31. $35,000 A. $900,000 B. $923,000 C. $947,000 D. $877,000
B. $923,000 COGS 900 Inv 35 A/P 12 Cash 923 *A/P incr=credit side decr=dect side inv incr=debt side decr=credit side
A change in accounting principle that usually should not be reported by revising the financial statements of prior periods is a change from the: A. The weighted-average method to the FIFO method B. The weighted-average method to the LIFO method C. FIFO method to the weighted-average method D. LIFO method to the weighted-average method
B. The weighted-average method to the LIFO method EXPLINATION: Changes to LIFO are handled prospectively
Determine how much was paid to employees during the year. Salaries exp: $700,000 Salaries pay: Jan 1 $35,000 Dec. 31 $10,000 A. $700,000 B. $735,000 C. $725,000 D. $675,000
C. $725,000 Sal exp 700,000 Sal pay 25,000 cash 725,000
Which of the following statements is true regarding correcting errors in previously issued financial statements prepared in accordance with IFRS A. The error can be reported in the current period if it's not considered practicable to report it prospectively B. The error can be reported prospectively if it's not considered practicable to report it retrospectively C. The error can be reported in the current period if it's not considered practicable to report it retrospectively D. Retrospective application is required with no exception
C. The error can be reported in the current period if it's not considered practicable to report it retrospectively EXPLANATION: IFRS allows the error to be reported in the current period, GAAP requires a retrospective approach
Accounts Rec was $40,000 on Jan. 1 and $52,000 on Dec. 31. If total sales rev for the year was $800,000, then how much cash was received from customers? A. $800,000 B. $760,000 C. $812,000 D. $788,000
D. $788,000 A/R increased $12,000 during the year. Cash 788 A/R 12 Sales Rev 800
Lamont communications has amortized a patent on a straight-line basis since it was acquired in 2015 at a cost of $50 million. During 2018 management decided that the benefits from the patent would be received over a total period of 8 years rather than the 20-year legal life being used to amortize the cost. Lamont's 2018 financial statement should include: A. A patent balance of $50 million B. Patent amortization exp of $2.5 million C. Patient amortization exp of $5 million D. A patent balance of $34 million
D. A patent balance of $34 million [($50-$7.5)/(8-3) years] $50m-16m=$34m $50=given $7.5= (2.5x3yrs) 2.5= 20 yr legal life/8 total years 8= life of the patent 3= # of years passed 16= (2.5x3)
Global products overstated its inventory by $30 million at the end of 2016. The discovery of this error during 2017, before adjusting or closing entries, would require: A. A debit to inventory of $30 mil B. A prospective adjustment in the 2017 income statement C. An incense in retained earnings D. None of the above
D. None of the above EXPLANATION: Retained earnings would be devoted for $30 million, and inventory would be credited for $30 million D. Retained earnings $30 C. Inventory $30
