ACC 305 ACC305 Final Exam Part I
ACC 305 Final Exam Part I
Multiple Choice Question 78
Alt Corporation enters into an agreement with Yates Rentals Co. on January 1, 2015 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement:
Multiple Choice Question 71
Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual payments of $172,076, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pisa, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Pisa, Inc. uses the straight-line method to depreciate similar assets. What is the amount of depreciation expense recorded by Pisa, Inc. in the first year of the asset’s life?
Multiple Choice Question 100
Lease A does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases?
Multiple Choice Question 64
On December 31, 2015, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring December 30, 2022. Equal annual payments of $300,000 are due on December 31 of each year, beginning with December 31, 2015. The lease is properly classified as a capital lease on Kuhn’s books. The present value at December 31, 2015 of the eight lease payments over the lease term discounted at 10% is $1,760,528. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2015 balance sheet is
Multiple Choice Question 39
In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as
Multiple Choice Question 22
Which of the following is an advantage of captive leasing companies over the other players in the leasing market?
Multiple Choice Question 69
On December 31, 2015, Grantham, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $2,500,000 increase in the beginning inventory at January 1, 2015. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is
IFRS Multiple Choice Question 09
Ben, Inc. follows IFRS for its external financial reporting. Ben, Inc. owns 25% of the outstanding stock of Black, Inc. and accordingly uses the equity method to account for its investment. Which of the following is true regarding Ben, Inc.'s policies related to Black, Inc.?
Multiple Choice Question 46
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During 2015, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below:
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Multiple Choice Question 49
On December 31, 2015 Dean Company changed its method of accounting for inventory from weighted average cost method to the FIFO method. This change caused the 2015 beginning inventory to increase by $840,000. The cumulative effect of this accounting change to be reported for the year ended 12/31/15, assuming a 40% tax rate, is
Multiple Choice Question 24
Which of the following is accounted for as a change in accounting principle?
Multiple Choice Question 53
Swift Company purchased a machine on January 1, 2012, for $600,000. At the date of acquisition, the machine had an estimated useful life of six years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2015, Swift determined, as a result of additional information, that the machine had an estimated useful life of eight years from the date of acquisition with no salvage. An accounting change was made in 2015 to reflect this additional information.
Assume that the direct effects of this change are limited to the effect on depreciation and the related tax provision, and that the income tax rate was 30% in 2012, 2013, 2014, and 2015. What should be reported in Swift's income statement for the year ended December 31, 2015, as the cumulative effect on prior years of changing the estimated useful life of the machine?
Multiple Choice Question 54
Swift Company purchased a machine on January 1, 2012, for $600,000. At the date of acquisition, the machine had an estimated useful life of six years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2015, Swift determined, as a result of additional information, that the machine had an estimated useful life of eight years from the date of acquisition with no salvage. An accounting change was made in 2015 to reflect this additional information.
What is the amount of depreciation expense on this machine that should be charged in Swift's income statement for the year ended December 31, 2015?
Multiple Choice Question 108
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Jamison Corp.'s balance sheet accounts as of December 31, 2015 and 2014 and information relating to 2015 activities are presented below.
Multiple Choice Question 48 In reporting extraordinary transactions on a statement of cash flows (indirect method), the |
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Multiple Choice Question 62
Equipment that cost $525,000 and had a book value of $234,000 was sold for $270,000. Data from the comparative balance sheets are:
Multiple Choice Question 22
The primary purpose of the statement of cash flows is to provide information
Multiple Choice Question 76
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In preparing Titan Inc.’s statement of cash flows for the year ended December 31, 2015, the following amounts were available:
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Multiple Choice Question 26
A company borrows $10,000 and signs a 90-day nontrade note payable. In preparing a statement of cash flows (indirect method), this event would be reflected as a(n)
Multiple Choice Question 57
In January 2015, Post, Inc. estimated that its year-end bonus to executives would be $840,000 for 2015. The actual amount paid for the year-end bonus for 2014 was $770,000. The estimate for 2015 is subject to year-end adjustment. What amount, if any, of expense should be reflected in Post's quarterly income statement for the three months ended March 31, 2015?
Multiple Choice Question 74
Farr, Inc. is a multidivisional corporation which has both intersegment sales and sales to unaffiliated customers. Farr should report segment financial information for each division meeting which of the following criteria?
Multiple Choice Question 38
In considering interim financial reporting, how does the profession conclude that such reporting should be viewed?
Multiple Choice Question 35
In presenting segment information, which of the following items must be reconciled to the entity's consolidated financial statements?
IFRS Multiple Choice Question 15
High-quality standards in an international environment include which of the following?
Multiple Choice Question 26
If a business entity entered into certain related party transactions, it would be required to disclose all of the following information except the
