Day 23 / Re-Review

Question 1

Rule: long term debt that matures within one year should be classified as:

Answer 1

Current liability

Unless retirement is to be accomplished with other than current assets

MCQ-00361

Question 2

When are costs associated with computer software capitalized?

Answer 2

Costs associated with software that is developed to be sold, leased, or licensed may be capitalized once technological feasibility has been established.

The costs will continue to be capitalized until the date the software is released for sale

All costs prior to technological feasibility are expensed

MCQ-08579

Question 3

Items included in Other Comprehensive Income

PUFI

Answer 3

Pension Adjustments
Unrealized Gains/Losses (AFS Debt Securities & Hedges)
Foreign Currency Items
Instrument-Specific Credit Risk

MCQ-15674

Question 4

Capitalized Software should be Amortized by which method:

Answer 4

Is the Greater of:

1. Percentage of Revenue = Total Capitalized Amount x (Current Gross Revenue / Total Projected Gross Revenue)

OR

2. Straight Line = Total Capitalized Amount x (1 / Estimated Economic life)

MCQ-12656

Question 5

Items NOT Considered Research & Development Expenses:

Answer 5

1. Routine periodic efforts to improve a product
2. Troubleshooting
3. Quality Control
4. Marketing Research
5. Reformulation of chemicals

MCQ-11135

Question 6

Equation: Sum-Of-The-Years’ Digits depreciation

Answer 6

= N × (N + 1) / 2

N = Estimated Useful Life

Estimated Useful Life = 4 = 1 + 2 + 3 + 4 = 10

MCQ-00142

Question 7

On January 2 of the current year, Lem Corp. bought machinery under a contract that required a down payment of $10,000, plus 24 monthly payments of $5,000 each, for total cash payments of $130,000. The cash equivalent price of the machinery was $110,000. The machinery has an estimated useful life of ten years and estimated salvage value of $5,000. Lem uses straight-line depreciation. In its year-end income statement, what amount should Lem report as depreciation for this machinery?

Answer 7

$10,500

The machinery would be recorded at its FMV of $110,000

MCQ-00146

Question 8

Under US GAAP, what inventory costing method most accurately approximates the current cost for COGS and Ending Inventory?

Answer 8

COGS = LIFO

Ending Inventory = FIFO

MCQ-00294

Question 9

Rule: LT debt that matures within one year should be classified as a Current Liability, UNLESS retirement is to be accomplished with other than Current Assets

Answer 9

MCQ-00361

Question 10

When does an exchange lack commercial substance?

Answer 10

If the projected cash flow after the exchange are NOT expected to change then the exchange lacks commercial substance

MCQ-04479

Question 11

Exchanges Lacking Commercial Substance - When are gains and losses recognized?

Answer 11

• No Boot = No Gain
• Small Boot Paid (Less than 25%) = No Gain
• Small Boot Received (Less than 25%) = Proportional Gain
• Large Boot (More than 25%) = Monetary Exchange

MCQ-04479

Question 12

Equation: Comprehensive Income

Answer 12

Net Income (includes Continuing and Discontinued Operations)
+ OCI (includes Unrealized gain/loss from AFS and Foreign Currency)
= Comprehensive Income

MCQ-00101
MCQ-15233

Question 13

When are supplemental disclosures to the Stmt of Cash Flows required for the Reconciliation of Net Income to Net Cash provided by operating activities?

Answer 13

Only when using the DIRECT Method

MCQ-09417