ACC 305 ACC305 Week 5 MidTerm

ACC 305 ACC305 Week 5 MidTerm


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ACC 305 Week 5 MidTerm

Multiple Choice Question 35

In computing the service cost component of pension expense, the FASB concluded that

Multiple Choice Question 98

Harrison Company owns 20,000 of the 50,000 outstanding shares of Taylor, Inc. common stock. During 2015, Taylor earns $1,000,000 and pays cash dividends of $800,000.

Harrison should report investment revenue for 2015 of

Multiple Choice Question 78

Kiner, Inc. began work in 2014 on a contract for $16,800,000. Other data are as follows:






Costs incurred to date





Estimated costs to complete





Billings to date





Collections to date





If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2014 is

Multiple Choice Question 91

Fryman Furniture uses the installment-sales method. No further collections could be made on an account with a balance of $24,000. It was estimated that the repossessed furniture could be sold as is for $7,200, or for $8,400 if $400 were spent reconditioning it. The gross profit rate on the original sale was 40%. The loss on repossession was

Multiple Choice Question 24

In a defined-contribution plan, a formula is used that

Multiple Choice Question 64

Dexter purchases equipment from Ray Company for a price of $5,000,000 and chooses Ray to do the installation. Ray doesn't charge for the installation of equipment. The price of the installation service is estimated to have a fair value of $60,000. Assuming the transaction to be multiple-deliverable arrangement, compute the amount to be allocated to installation.

Multiple Choice Question 25

In a defined-benefit plan, a formula is used that

Multiple Choice Question 33

In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be

Multiple Choice Question 78

On January 1, 2015, Newlin Co. has the following balances:

Projected benefit obligation




Fair value of plan assets




The settlement rate is 10%. Other data related to the pension plan for 2015 are:

Service cost




Amortization of prior service costs due to increase in benefits








Benefits paid




Actual return on plan assets




Amortization of net gain




The fair value of plan assets at December 31, 2015 is

Multiple Choice Question 35

In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year to the

Multiple Choice Question 70

The following information for Cooper Enterprises is given below:




December 31, 2015


Assets and obligations






Plan assets (at fair value)






Accumulated benefit obligation






Projected benefit obligation





Other Items






Pension asset / liability, January 1, 2015












Accumulated other comprehensive loss





There were no actuarial gains or losses at January 1, 2015. The average remaining service life of employees is 10 years.

The amortization of Other Comprehensive Loss for 2016 is:

Multiple Choice Question 53

A seller is using the cost-recovery method for a sale. Interest will be earned on the future payments. Which of the following statements is not correct?

Multiple Choice Question 47

Gains and losses that relate to the computation of pension expense should be

Multiple Choice Question 49

The method most commonly used to report defaults and repossessions is

Multiple Choice Question 39

APB Opinion No. 21 specifies that, regarding the amortization of a premium or discount on a debt security, the

IFRS Multiple Choice Question 07

Rushia Company has an available-for-sale investment in the 10%, 10-year bonds of Pear Company The investment’s carrying value is $3,200,000 at December 31, 2014. On January 9, 2015, Rushia learns that Pear Company has lost its primary manufacturing facility in an uninsured fire. As a result, Rushia determines that the investment is impaired and now has a fair value of $2,300,000. In June, 2016, Pear Company has succeeded in rebuilding its manufacturing facility, and its prospects have improved as a result.

If Rushia Company determines that the fair value of the investment is now $3,900,000 and is using U.S. GAAP for its external financial reporting, which of the following is true?

Multiple Choice Question 29

Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as other comprehensive income and as a separate component of stockholders' equity are

Multiple Choice Question 38

An available-for-sale debt security is purchased at a discount. The entry to record the amortization of the discount includes a

Multiple Choice Question 72

Patton Company purchased $900,000 of 10% bonds of Scott Company on January 1, 2015, paying $846,225. The bonds mature January 1, 2025; interest is payable each July 1 and January 1. The discount of $53,775 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.

On July 1, 2015, Patton Company should increase its Debt Investments account for the Scott Company bonds by

Multiple Choice Question 51

All of the following are procedures for the computation of deferred income taxes except to

Multiple Choice Question 50

A deferred tax liability is classified on the balance sheet as either a current or a noncurrent liability. The current amount of a deferred tax liability should generally be

Multiple Choice Question 46

Accounting for income taxes can result in the reporting of deferred taxes as any of the following except

Multiple Choice Question 78

At the beginning of 2015; Elephant, Inc. had a deferred tax asset of $10,000 and a deferred tax liability of $15,000. Pre-tax accounting income for 2015 was $750,000 and the enacted tax rate is 40%. The following items are included in Elephant’s pre-tax income:

Interest income from municipal bonds

$ 60,000

Accrued warranty costs, estimated to be paid in 2016


Operating loss carryforward

$ 95,000

Installment sales revenue, will be collected in 2016

$ 65,000

Prepaid rent expense, will be used in 2016

$ 30,000

The ending balance in Elephant, Inc’s deferred tax liability at December 31, 2015 is

Multiple Choice Question 83

Larsen Corporation reported $100,000 in revenues in its 2014 financial statements, of which $33,000 will not be included in the tax return until 2015. The enacted tax rate is 40% for 2014 and 35% for 2015. What amount should Larsen report for deferred income tax liability in its balance sheet at December 31, 2014?

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