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Correct Answers are marked with yellow (TCO A) Amazon Building, Inc. won a bid for a new warehouse building contract.???????Below is information from the project accountant.??????????????????????????????????????? Total Construction Fixed Price?????????????????????? $15,000,000 ??????? Construction Start Date????????? ??????????? ??????????? June 13, 2012??????? Construction Complete Date????????????? ??????????? December 16, 2013???????????????? ??????????? As of Dec. 31…????????????????????? ????????????????????????2012??????????????? 2013????? Actual cost incurred??????????????? ??????????????????????? $6,500,000 ??? ?$4,360,000?????? Estimated remaining costs????????????????? ??????????? $5,250,000 ??? ?$-???????? Billed to customer?????????????????? ??????????????????????? $5,000,000 ??? ?$7,000,000?????? Received from customer???????????????????? ????????? ?? $4,500,000 ??? ?$6,500,000?Assuming Amazon Building, Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013??(Points : 5)???????$4,140,000???????$2,342,128???????$2,390,000???????$2,290,2132.?(TCO B) At the beginning of 2012, Annie, Inc. has a deferred tax asset of $7,500 and deferred tax liability of $10,500. In 2012, pretax financial income was $826,000 and the tax rate was 35%.????????????????????????Pretax income included:???????????????????????????????? Interest income from municipal bonds?????????????????????? ??????????????????????? $15,000?????? Accrued warranty costs, estimated to be used in 2013???????????????? ? ??? $74,000?????? Prepaid rent expense, will be used in 2013???????????????? ?????????????????????? $31,000?????? Installment sales revenue, to be collected in 2013????? ???????????? ?????????? $56,000?????? Operating loss carryforward?????????????? ?????????????????????????????????????????????? $71,000What is taxable income for 2012??(Points : 5)???????$727,000????????$826,000????????$915,000???????$1,073,000It should be 916000 but as the nearer is 915000 3.?(TCO C) Presented below is pension information related to Amazing Goods, Inc. for the year 2013.?????????? Service cost???? ????????????????????????????????????????????????????????????????????????????? $96,000?????? Interest on projected benefit obligation????????? ??????????????????????????????????? $53,000?????? Interest on vested benefits????? ???????????????????????????????????????????????????????? $25,000?????? Amortization of prior service cost due to increase in benefits ? ?????????? $10,000?????? Expected return on plan assets?????????? ??????????????????????????????????????????? $19,000?????? The amount of pension expense to be reported for 2013 is?(Points : 5)???????$130,000.???????$140,000.???????$165,000.???????$184,000.4.?(TCO C) Apple Dumpling, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2013.?????????????? Service cost???? ??????????????????????????????????????????????????????????? $280,000?????? Contributions to the plan??????? ????????????????????????????? ??? ???? $270,000?????? Actual return on plan assets??? ????????????????????????? ?? ???????? $260,000?????? Projected benefit obligation (beginning of year)??????????????? $2,900,000?????? Fair value of plan assets (beginning of year??? )????????? ? ? ? $2,700,000?????? The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2013 is?(Points : 5)???????$280,000.00.???????$310,000.00.???????$300,000.00.???????$570,000.00.5.?(TCO D) Animal, Inc. leased equipment from Zoo Enterprises under a 4-year lease requiring equal annual payments of $51,000, 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. Animal, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the amount of interest expense recorded by Animal, Inc. in the first year of the asset’s life????????????????????????????? ???????????????? ? ? ????? PV Annuity Due???????? PV Ordinary Annuity????? 8%, 5 periods????????????? ??????????? 4.31213?????????? ??????????? 3.99271????? 10%, 5 periods??????????????????????? 4.16986?????????? ??????????? 3.79079?(Points : 5)???????0???????$13,513???????$16,290???????$17,593?6.?(TCO E) On December 31, 2013, Bob's Trucking, Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in an $800,000 increase in the beginning inventory at January 1, 2013. Assume a 40% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is?(Points : 5)???????$-.???????$800,000.???????$480,000.???????$320,000.?7.?(TCO E) Which of the following is not a change in accounting estimate??(Points : 5)???????Change in amortization period for an intangible asset.???????Change from straight-line to sum-of-the-years'-digits method of depreciation.???????Change because of understatement of inventory.???????Change in residual value of a depreciable plant asset.8.?(TCO F) Amazing Glory, Inc. recognized a net income of $95,000 including $20,500 in depreciation expense.Additional changes from the balance sheet are as follows.????? Accounts Receivable ????????? ?? ? $800 ? ??????????? decrease??????????????? Prepaid Expenses??????? ?????????? $14,000 ????????? decrease??????????????? Inventory??????? ?????????????????? ?? ??? $25,000 ???????? increase???????????????? Accrued Liabilities????? ???????? ?? ? $6,500 ?????????? decrease??????????????? Accounts Payable?????? ??????? ? ?? $12,000 ???????? increase???????????Compute the net cash from operating activities based on the above information.?(Points : 5)???????$79,000???????$50,700???????$110,800???????$132,0009.?(TCO G) Items that affect the realizability of accounts receivable that are revealed after the balance sheet date but before the financial statements are issued should be?(Points : 5)???????disclosed only in the Notes to the Financial Statements.???????discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.???????used to record an adjustment to Bad Debt Expense for the year ending December 31, 2013.???????used to record an adjustment directly to the retained earnings account.10.?(TCO G) Adventure, Inc. is a company that operates in four different divisions. The following information relating to each segment is available for 2013.???????????????????????????????????????????????????????????????? Sales revenue? Operating profit (loss) Identifiable assets?????????????????????????????????????????????????A? $85,000 ???????? ?$31,000 ???????????????????? $56,000 ?????????B? $105,000 ?????? ?$(16,000)??????????????????? $82,000 ?????????C? $250,000 ?????? ?$112,000 ?????????????????? ?$640,000 ???????D? $20,000 ???????? ?$4,000 ?????????? ??????????? $35,000 ????????????????????????????????????????????????????Required:??????????????????????????????????????????????????For which of the segments would information have to be disclosed in accordance with professional pronouncements??(Points : 5)???????Segments A, B, C, and D???????Segments A, B, and C???????Segments A and B???????Segments A and D? ................
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