Cpaexcel 3

Question 1

Palmyra Co. has net income of $11,000, a positive $1,000 net cumulative effect of a change in accounting principle, a $3,000 unrealized loss on available-for-sale securities, a positive $2,000 foreign currency translation adjustment, and a $6,000 increase in its common stock. What amount is Palmyra's comprehensive income?
 A.   $4,000 
 B.   $10,000 
 C.   $11,000 
 D.   $17,000

Answer 1

c
Incorrect…
The components of comprehensive income are: Net Income, Unrealized gain/loss on AFS securities, foreign currency translation adjustment, unrecognized gain/loss on pension benefits, and deferred gain/loss on certain hedging transactions. Therefore, the Comprehensive income of Palmyra Co is $11,000 - 3,000 + 2,000 = $10,000. The cumulative effect of a change in accounting principle and the increase in common stock is not part of comprehensive income.

B
Correct!
The components of comprehensive income are: Net Income, Unrealized gain/loss on AFS securities, foreign currency translation adjustment, unrecognized gain/loss on pension benefits, and deferred gain/loss on certain hedging transactions. Therefore, the Comprehensive income of Palmyra Co is $11,000 - 3,000 + 2,000 = $10,000.

Question 2

Analysis of net property, plant and equipment:
beginning balance + ｘｘｘｘ - ｘｘｘof disposals - depreciation expense
= ending balance

Answer 2

beginning balance + purchases - book value of disposals - depreciation expense
= ending balance