Extra for Chp 1, 3 and 4

Question 1

Selling expenses

Answer 1

sales, advertising, salesperson commission, travel, marketing

Question 2

general and admin expenses

Answer 2

rent, utilities, insurance, office supplies, salaries, licensee fees, subscriptions

Question 3

income from other operations items

Answer 3

interest expense
interest revenue
gain/loss on sale of plant asset
unrealized gain/loss investments
dividend rev

Question 4

how to determine sale of plant asset

Answer 4

compare the BV of asset with proceeds recieved from sale

if proceeds (what sold for) exceed the BV (gain)

if proceeds are less than BV (loss)

Question 5

book value

Answer 5

cost of asset (not what sold for) - depreciation

Question 6

example of gain or loss

Answer 6

sells equipment for 16,000

equipment cost 60,000

AD is 49,000

so….

1) what is book value

60,000 - 49,000 = 11,000

2) gain or loss
BV - proceeds

16,000 - 11,000 = 5,000 = gain

Loss would be if proceeds less than BV

Question 7

disposal of plant asset journal entry

Answer 7

D: cash 16,000
D: AD 49,000

C: Equipment 60,000
C: Gain on disposal of plant asset 5,000

if loss would need to debit the loss

Question 8

impairment and FV

Answer 8

impairment loss:

when the BV of asset is GREATER than Fair value less costs to sell

(same as a loss if just looking at proceeds and BV –> but because its FV instead of proceeds this loss is called an impairment)

IF THERE IS NO IMPAIRMENT when looking at BV and fair value - the total loss on discotinued operation is just 180,000 what is was before tax (completly disregard the impairment/asset)