Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1) An expenditure made in connection with a machine being used by an enterprise
should be
a.expensed immediately if it merely extends the useful life but does not improve the
quality
b.expensed immediately if it merely improves the quality but does not extend the useful
life
c.capitalized if it maintains the machine in normal operating condition
d.capitalized if it increases the quantity of units produced by the machine
2) During 2014, Bass Corporation constructed assets costing $3,000,000. The
weighted-average accumulated expenditures on these assets during 2014 was
$1,800,000. To help pay for construction, $1,320,000 was borrowed at 10% on January
1, 2014, and funds not needed for construction were temporarily invested in short-term
securities, yielding $27,000 in interest revenue. Other than the construction funds
borrowed, the only other debt outstanding during the year was a $1,500,000, 10-year,
9% note payable dated January 1, 2008 . What is the amount of interest that should be
capitalized by Bass during 2014?
a.$180,000
b.$90,000
c.$175,200
d.$283,200
3) The criteria for recognition of revenue at the completion of production of precious
metals and farm products include
a.an established market with quoted prices
b.low additional costs of completion and selling
c.units are interchangeable
d.All of these answers are correct
4) Which of the following disclosures of postretirement benefits would not be required
by professional pronouncements?
a.Postretirement expense for the period
b.A schedule showing changes in postretirement benefits and plan assets during the year
c.The amount of the EPBO
d.The assumptions and rates used in computing the EPBO and APBO
5) Dodson Company traded in a manual pressing machine for an automated pressing
machine and gave $24,000 cash. The old machine cost $279,000 and had a net book
value of $213,000. The old machine had a fair value of $180,000.
Which of the following is the correct journal entry to record the exchange?
a.Equipment204,000
Loss on Disposal33,000
Accumulated Depreciation66,000
Equipment279,000
Cash24,000
b.Equipment204,000
Equipment120,000
Cash24,000
c.Cash24,000
Equipment180,000
Loss on Disposal33,000
Accumulated Depreciation66,000
Equipment303,000
d.Equipment369,000
Accumulated Depreciation66,000
Equipment279,000
Cash24,000
6) On January 1, 2014, Sauder Corporation signed a five-year noncancelable lease for
equipment. The terms of the lease called for Sauder to make annual payments of
$150,000 at the beginning of each year for five years with the title passing to Sauder at
the end of this period. The equipment has an estimated useful life of 7 years and no
salvage value. Sauder uses the straight-line method of depreciation for all of its fixed
assets. Sauder accordingly accounts for this lease transaction as a capital lease. The
minimum lease payments were determined to have a present value of $625,479 at an
effective interest rate of 10%.
In 2015, Sauder should record interest expense of
a.$32,547
b.$52,303
c.$47,548
d.$52,302
7) Horner Construction Co. uses the percentage-of-completion method. In 2014, Horner
began work on a contract for $16,500,000; it was completed in 2015 . The following
cost data pertain to this contract:
Year Ended December 31
2014 2015
Cost incurred during the year$5,850,000$4,200,000
Estimated costs to complete at the end of year3,900,000
If the completed-contract method of accounting was used, the amount of gross profit to
be recognized for years 2014 and 2015 would be
20142015
a.$6,750,000$0
b.$6,450,000$(300,000)
c.$0$6,450,000
d.$0$6,750,000
8) A troubled debt restructuring will generally result in a
a.loss by the debtor and a gain by the creditor
b.loss by both the debtor and the creditor
c.gain by both the debtor and the creditor
d.gain by the debtor and a loss by the creditor
9) The term used for bonds that are unsecured as to principal is
a.mortgage bonds
b.debenture bonds
c.indebenture bonds
d.callable bonds
10) Jordan Company purchased ten-year, 10% bonds that pay interest semiannually.
The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to
multiply the principal by the table value for
a.10 periods and 10% from the present value of 1 table
b.10 periods and 8% from the present value of 1 table
c.20 periods and 5% from the present value of 1 table
d.20 periods and 4% from the present value of 1 table
11) Equipment which cost $213,000 and had accumulated depreciation of $114,000 was
sold for $111,000. This transaction should be shown on the statement of cash flows
(indirect method) as a(n)
a.addition to net income of $12,000 and a $111,000 cash inflow from financing
activities
b.deduction from net income of $12,000 and a $99,000 cash inflow from investing
activities
c.deduction from net income of $12,000 and a $111,000 cash inflow from investing
activities
d.addition to net income of $12,000 and a $99,000 cash inflow from financing activities
12) A generally accepted method of valuation is
1>trading securities at market value.
2>accounts receivable at net realizable value.
3> inventories at current cost.
a.1
b.2
c.3
d.1 and 2
