1) Platteville Corporation has the following account balances at 12/31/15:
Amortization expense$ 20,000
Goodwill280,000
Patent, net of $60,000 amortization140,000
What amount should Platteville report for intangible assets on the 12/31/12 balance
sheet?
a.$140,000
b.$200,000
c.$420,000
d.$440,000
2) The following information pertains to Hopson Co.’s pension plan:
Actuarial estimate of projected benefit obligation at 1/1/15$72,000
Assumed discount rate10%
Service costs for 2015$28,000
Pension benefits paid during 2015$15,000
If no change in actuarial estimates occurred during 2015, Hopson’s projected benefit
obligation at December 31, 2015 was
a.$79,200
b.$80,000
c.$102,200
d.$87,200
3) The primary purpose of the statement of cash flows is to provide information
a.about the operating, investing, and financing activities of an entity during a period
b.that is useful in assessing future cash flow prospects
c.about the cash receipts and cash payments of an entity during a period
d.about the entity’s ability to meet its obligations and to pay dividends
4) A statement of stockholders equity includes a column for each of the following
except
a.accumulated other comprehensive income
b.common stock
c.net income
d.retained earnings
5) On August 1, 2014, Fowler Company acquired $300,000 face value 10% bonds of
Kasnic Corporation at 104 plus accrued interest. The bonds were dated May 1, 2014,
and mature on April 30, 2019, with interest payable each October 31 and April 30 . The
bonds will be held to maturity. What entry should Fowler make to record the purchase
of the bonds on August 1, 2014?
a.Debt Investments312,000
Interest Revenue7,500
Cash319,500
b.Debt Investments319,500
Cash319,500
c.Debt Investments319,500
Interest Revenue7,500
Cash312,000
d.Debt Investments300,000
Premium on Bonds19,500
Cash319,500
6) Under Statement of Financial Accounting Concepts No. 2, free from error is an
ingredient of the fundamental quality of
Faithful RepresentationRelevance
a.YesYes
b.NoYes
c.YesNo
d.NoNo
7) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1,
2014 . Interest is paid on June 30 and December 31 . The proceeds from the bonds are
$19,604,144. Using effective-interest amortization, how much interest expense will be
recognized in 2014?
a.$780,000
b.$1,560,000
c.$1,568,498
d.$1,568,332
8) When computing diluted earnings per share, convertible bonds are
a.ignored
b.assumed converted whether they are dilutive or antidilutive
c.assumed converted only if they are antidilutive
d.assumed converted only if they are dilutive
9) The deposit method of revenue recognition is used when
a.the product can be marketed at quoted prices and units are interchangeable
b.cash is received before the sales transaction is complete
c.the contract is short-term or the percentage-of-completion method cant be used
d.there are no significant costs of distribution
10) On January 1, 2014, Sharp Corp. granted an employee an option to purchase 12,000
shares of Sharp’s $5 par value common stock at $20 per share. The Black-Scholes
option pricing model determines total compensation expense to be $280,000. The
option became exercisable on December 31, 2015, after the employee completed two
years of service. The market prices of Sharp’s stock were as follows:
January 1, 2014$30
December 31, 201550
For 2015, should recognize compensation expense under the fair value method of
a.$180,000
b.$60,000
c.$140,000
d.$0
11) In preparing a statement of cash flows, sale of treasury stock at an amount greater
than cost would be classified as a(n)
a.operating activity
b.financing activity
c.extraordinary activity
d.investing activity
12) Confectioners, a chain of candy stores, purchases its candy in bulk from its
suppliers. For a recent shipment, the company paid $1,500 and received 8,500 pieces of
candy that are allocated among three groups. Group 1 consists of 2,500 pieces that are
expected to sell for $0.15 each. Group 2 consists of 5,500 pieces that are expected to
sell for $0.36 each. Group 3 consists of 500 pieces that are expected to sell for $0.72
each. Using the relative sales value method, what is the cost per item in Group 3?
a.$0.40
b.$0.19
c.$0.60
d.$0.45
13) Dunn, Inc. uses the accrual method of accounting for financial reporting purposes
and appropriately uses the installment method of accounting for income tax purposes.
Installment income of $1,800,000 will be collected in the following years when the
enacted tax rates are:
Collection of IncomeEnacted Tax Rates
2014$180,00035%
2015360,00030%
2016540,00030%
2017720,00025%
The installment income is Dunn’s only temporary difference. What amount should be
included in the deferred income tax liability in Dunn’s December 31, 2015 balance
sheet?
a.$450,000
b.$513,000
c.$567,000
d.$630,000