Listed below are 5 terms followed by a list of phrases that describe or characterize each
of the terms. Match each phrase with the number for the correct term.
Indicate (by letter) the way each of the items listed below should be reported in a
balance sheet at December 31, 2016.
Notsofast Inc. acquired land for $500,000 on July 1, 2015. It erroneously recorded the
full amount as an expense. Explain what Notsofast must do when it discovers the error
in 2016.
Beavis Construction Company was the low bidder on a construction project to build an
earthen dam for $1,800,000. The project was begun in 2015 and completed in 2016.
Cost and other data are presented below:
Assume that Beavis recognizes revenue upon completion of the project.
Required: Compute the amount of gross profit recognized during 2015 and 2016.
The following table presents a summary of ratio analysis for McDonald’s and averages
for their peer group:
Are differences between McDonald’s and the industry likely driven by differences in
size between McDonald’s and the average company in their industry peer group?
Explain briefly.
On January 1, 2016, Shirley Corporation purchased 10% bonds dated January 1, 2016,
with a face amount of $10 million. The bonds mature in 2025 (10 years). For bonds of
similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June
30 and December 31.
Required:
1> Determine the price of the bonds at January 1, 2016.
2> Prepare the journal entry to record the bond purchase by Shirley on January 1, 2016.
3> Prepare the journal entry to record interest on June 30, 2016, using the effective
interest method.
4> Prepare the journal entry to record interest on December 31, 2016, using the
effective interest method.
In 2016, KP Building Inc. began work on a four-year construction project (called Cincy
One). The contract price is $300 million. KP recognizes revenue on this contract over
time according to percentage of completion. At the end of 2016, the following financial
statement information indicates the results to date for Cincy One:
Required: Compute the following, placing your answer in the spaces provided and
showing supporting computations below.
List and briefly describe the five measurement attributes used commonly in current
GAAP.