FAR ⑤

Question 1

S Corp. donated investments to P city and stipulated that the income from the investments be used to acquire art for the city’s museum. which of the following funds should be used to account for the investments?
A. special revenue fund
B. private purpose trust fund
C. permanent fund

Answer 1

[C]
Permanent funds are used to account for the principal that is restricted and may not be expended. earnings may be used for purposes that benefit the public. a museum would serve to benefit the public, do the investments must be accounted for in the permanent fund.

special revenue funds account for specific revenues that have been legally restricted or committed to expenditure for a specific purpose.

private purpose trust funds account for the funds that can be expensed according to the donor’s restrictions and benefit special individuals, private organizations, or other governments.

Question 2

the community M health center, a nongovernmental not-for-profit organization, executed state grant funding contracts for its services subject to a 25% match requirement from local funding sources. qualifying match may include local government funding, in-kind revenues and expenses, and first-party fees. the state contracts are the primary source of operational funding for the center. services associated with the grants are fully consistent with the ongoing mission of the organization and revenues are fully consumed by the costs of services provided each year. the organization has a policy of consistently classifying revenues that carry donor restrictions as revenue without donor restriction when restrictions are met within the same period. the terms and conditions of the grant likely result in:
A. unrestricted revenues in the amount of the contract
B. unrestricted revenues from the state recognized as matching conditions are met.
C. restricted revenues from the state released from the restrictions as match requirements are met.
D. conditional revenues from the state.

Answer 2

[B]
revenues are unconditional after match requirements are met and appropriately classified as without donor restrictions consistent with company policy.

Question 3

what amount should report as net cash provided by financing activities?
-gain on sale of equipment (6,000)
-proceeds from the sale of equipment 10,0000
-purchase f A.S., Inc. bonds(par value $200,000) (180,000)
-amortization of bond discount 2,000
-dividends declared (45,000)
-dividends paid (38,000)
-proceeds from sale of treasury stock(carrying amount 65,000) 75,000

Answer 3

75,000-38,000=37,000

Question 4

the city of M self-insures for potential liability risks arising from normal governmental operations. Liability insurance for the city’s bus systems is handled through an unrelated company. what type of fund would be appropriate for the amounts collected by the city for insurance premiums?
A. internal service fund
B. private purpose trust fund

Answer 4

[A]
an internal service fund is the appropriate fund for a city that establishes a self-insurance program because city departments and funds are the exclusive users of the fund benefits.

Question 5

which of the following should be disclosed in the footnotes to the financial statements?
A. management’s estimate of sales for the upcoming year.
B. a projection of future market conditions.
C. information about changes in stockholder’s equity.
D. an analysis of the company’s major competitions.

Answer 5

[C]
D should be included in the management discussion and analysis.

Question 6

• a stock dividend of 400 shares from P. market value was $20. days owns less than 1% of P’s common stock.
• a cash dividend of $15,000 from L in which D owns 25% interest. a majority of L’s directors are also directors of D.

what amount of dividend revenues should D report in the Y1 statement?

Answer 6

[0]
stock dividend is not reported as revenue, only a memo entry is made.

Question 7

the C league was organized as a nongovernmental not-for-profit organization. the league received a pledge of $10,000 to be used to build an addition to the kennel. the donation will not be received for three years. how should this pledge be recorded?
A. as support with donor restrictions of $10,000
B. as support with donor restrictions of the present value of $10,000

Answer 7

[B]
a pledge restriction of a kennel addition that is receivable in three years would be recognized as support with donor restrictions as its present value. multiyear pledge are recorded at the net present value at the date the pledge is made.

Question 8

consolidate balance sheet the amount of S’s payable to P for intercompany sales?

Answer 8

account receivable

Question 9

• capital expenditures 1,000
• capital lease payments $125
• income taxes paid 325
• dividends paid 200
• net interest payments 220

what amount should report as supplemental disclosures in its statements of cash flows prepared using the indirect method?

Answer 9

when the indirect method is used a supplemental disclosure of cash paid for interest and income taxes is required. T will report the total cash paid for interest and income taxes of $545=325+220

Question 10

aggregate cost as 12/31/Y2 170
market value as of 12/31/Y2 148
at 12/31/Y1, reported an unrealized loss of $1.5 to reduce investments to market value. this was the first such adjustment made by S on these types of securities. there is no expected credit loss on this investment. in its Y2 statement of comprehensive income, what amount of unrealized loss should S report?

Answer 10

[20,500]
unrealized loss should add Y1 and Y2.

Question 11

what information should a public company present about revenue from its reporting segment?
A. disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales.
B. disclose separately the amount of sales to unaffiliated customers but not the amount of intracompany sales between geographic areas.

Answer 11

[A]
unaffiliated customers and intracompany sales must be disclosed separately.

Question 12

which of the following statements is true regarding the calculation of comprehensive income?
A. it will include cash dividends paid and exclude stock dividends paid to shareholders.
B. it will include loss on discontinued operations
C. it will exclude cash dividends paid and include stock dividends paid to shareholders.
D. it will exclude losses on discontinued operation

Answer 12

[B]
net income will include gains and losses on discontinued operations, which means that comprehensive income will include this item as well.

Question 13

at 12/31, Y1 T estimates that its employees have earned vacation pay of 100. the employee will receive their vacation pay in Y2. Should T accrue a liability at 12/31 Y1 if the rights to this compensation accumulated over time or if the rights are vested?
accumulated: yes/no
vested: yes/no

Answer 13

yes-yes

rule: employee’s compensation for future absences should accrue if:
1. services have already been rendered, and
2. the obligation related to vested or accumulated rights, and
3. the amount can be reasonably estimated, and
4. payment is probable

Question 14

a local government recorded revenue as follows: personal income tax, $ 200; sale taxes 100 and property taxes 150. what should the local government report as total derived tax revenue?

Answer 14

[300]

property taxes is not a derived tax revenue, it is an imposed non-exchange revenue. imposed non-exchange revenues represent taxes imposed on non-exchange transactions (fines) or wealth(property taxes).

Question 15

A and C formed a partnership and aggreed to divide initial equally, even through A contributed $100 and C contributed 84 in identifiable asset. under the bonus approach to adjust the capital accounts, A unidentifiable asset should be debit for:

Answer 15

[0]
A+C=184/2=92
A=92,應該是減少了8
看清楚題目，裡面問的是debit，所以要答0

Question 16

on Nov 1, Y2, D Co. discounted with recourse at 10% a one-year, noninterest bearing, $20,500 note receivable maturing on Jan 31, Y3. What amount of contingent liability for this note must D disclose in its financial statements for the year end Dec 31, Y2?

Answer 16

[20,500]
the contingent liability（或有負債） for a discounted note receivable is the maturity value or 20,500. this should be disclosed.

Question 17

balance per bank statement, Mar 31 $23,250
add: deposit in transit $5,150
less: outstanding checks $6,300
balance per books, Mar 31 $22,100

additional information from bank statement for the month of april is as follow:
deposit $29,200
disbursements $24,800

all reconciling items at Mar 31 cleared through the bank in April. outstanding checks at April 30 totaled $3,200. what is the amount of cash disbursements per books in April?

Answer 17

[21,700]
according to the bank, disbursements in April totaled $20,480. however, the question says all outstanding checks from the Mar reconciliation clear the bank in April. this means that $6,300 of the $24,800 disbursement amount was recorded in the company’S books during the month of Mar. as a result, $18,500=24,800-6,300 of the April disbursements per the bank were recorded in the company’S books during April and learned the bank during April. the last component to consider are outstanding checks in April reconciliation. these are checks written and recorded in the books that did nor clear the bank. because they are not included in the adjusted disbursement amount of 18,500, the 3,200 of outstanding checks are added to determine total April disbursement per books of 21,700.

Question 18

which statement is correct regarding a 10-year bond issued at 96 and fully redeemed at 102 three years later:
A. a loss will be reported in income from continuing operations
B. the unamortized discount will be added to the carrying value to determine gain/loss.

Answer 18

[A]
because the bond was originally issued at a discount and it was redeemed at a price above par(102%), the result is a loss, which will be booked in income from continuing operations. the issuer is effusively paying 102 to remove a liability that three years after insurance is value somewhere between 96 and 100.

Question 19

-grant from state government. 400
-proceeds from general obligation bond issue 500
-transfer from general funds 100

revenue:
other financing sources:

Answer 19

revenue:400
other financing sources: 600

Question 20

upon receipt if an invoice for a previously encumbered estimate cost of supplies a special revenue fund:
A. will debit the encumbrance control account.
B. will debit the budgetary control account.

Answer 20

[B]
to reverse an encumbrance upon receipt of the invoice, a debit would be recorded to budgetary control. and credit encumbrances control, in addition to recording to recording the actual expenditure. this proposed answer says debit the encumbrance account in error.

Question 21

a company deleted the fair value measurement option must apply the accounting measurement based on which of the following criteria?
A. type-by-type basis
B. instrument-by-instrument basis

Answer 21

[B]
fair value is matured for a specific asset/liability or a group of assets/liabilities. fair value is a market-based measure, nor an entity-based measure. a company may apply fair value to financial instruments on an instrument-by-instrument basis, but once elected air value measurement will be used until the Asse/liability is disposed.

Question 22

where in its financial statement should a company disclose information about its concentration of credit risks?
A. the notes to the financial statements.
B. supplementary information to the financial statements.

Answer 22

[A]
concentration of credit risk is required disclosure in the notes to the financial statements.

Question 23

N reported deferred tax assets and deferred tax liabilities at the end of Y1 and at the end of Y2. for the year ended Y2, N should report deferred income tax expense or benefit equal to the:
A. amount of the income liability plus the sum of the net changes in deferred tax assets and deferred tax liabilities.
B. sum of the net changes in deferred tax assets and deferred tax liabilities.

Answer 23

[B]

Question 24

in the current year, P city paid 5,000 interest and $20,000 principal on its outstanding general obligation bonds. the payments was made from a debt service fund using cash transferred earlier the same year from the general fund. how should the city report the expenditures?

general fund:
debt service fund:
permanent fund:

Answer 24

general fund:0
debt service fund:25,000
permanent fund:0

dr: expenditure-interest 5,000
dr: expenditures-principal 20,000
cr: cach 25,000

Question 25

Barnaby Corporation has a deferred tax asset that will expire over the next five years.

the deferred tax asset is deemed more likely than not, Not to be realized.

A. Increase financial statement tax expense
B.Decrease valuation allowance

Answer 25

Increase financial statement tax expense
Identification of a deferred tax asset for which all or a part of the asset will not be realized will result in the creation of a valuation account, decreasing the asset and increasing financial statement income tax expense.

Question 26

Barnaby Corporation has a deferred tax asset that will expire over the next five years.

the deferred tax asset will reverse; however the company anticipates no taxable income for the foreseeable future.

A. Increase financial statement tax expense
B.Decrease valuation allowance

Answer 26

Increase financial statement tax expense
A deferred tax asset will only be realized if there will be future taxable income to which to apply a tax benefit. The absence of future earnings will cause the company to create a valuation allowance and thereby increase financial statement tax expense.

Question 27

Barnaby Corporation has a deferred tax asset that will expire over the next five years.

income projections are more positive than previous estimate and the valuation allowance associated with a deferred tax asset is adjusted.

A. Increase financial statement tax expense
B.Decrease valuation allowance

Answer 27

Decrease valuation allowance
The potential that a deferred tax asset, previously allowed for, no longer requires a valuation allowance will cause the company to reverse the valuation allowance, thereby restoring the asset and decreasing financial statement tax expense.

Question 28

for the fall semester year 1, M university assessed its students $3,000 for tuition and fess. the net amount realized was only 2500 because scholarship of $400 were grant to students, and tuition remissions of 100 were allowed to faculty member’S children attending M. what amount should A report for the period as gross from tuition and fees?

Answer 28

[3000]
only REFUNDs are netted against the revenue. revenues from tuition and fees are reported at the gross amount.

dr: cash 2500
dr: expenses-scholarships 400
dr: expenses tuition mission 100
cr: revenues-tuition and fees 3,000

Question 29

when the direct method of preparing a statement of cash flows is used, an enterprise should provide a reconciliation of net income to net cash flows from which activity?
A. investing
B. financing
C. operating
D. no reconciliation should be provided.

Answer 29

[operating]
if the direct method is used to present cash flows from operating activities, the indirect method must also be presented in the footnotes. the indirect method starts with net income and makes adjustments to it generating cash flows from operating activities that would agree to the same amount calculated using the direct method.

Question 30

which of the following statements regarding bond amortization is incorrect for a premium bond?
A interest expense decrease each period over the life of the bond using the effective interest method.
B. an equal amount for premium on bond payable is credit for amortization echo period under the stage-line method.

Answer 30

[B]
although the straight-line method does result in equal amortization every period, the premium on bond payable account is debited(rather than credit)

Question 31

change in net assets available for benefits

I
C
A
B

Answer 31

Investment income

Contributions

Administrative expenses

Benefits paid directly to participants

Question 32

according to the FASB conceptual framework, which of the following is an enhancing qualitative characteristic?
A. materiality
B.neutrality
C. timeliness
D. completeness

Answer 32

[C]
timeliness, understandability, comparability and verifiability are characteristic that enhance the usefulness of information that is relevant and faithfully represented.

relevance{ materiality
faithful representation{ neutrality, completeness

Question 33

K city Council will be establishing a library fund. library fees are expected to cover 55% of the library’s annual resource requirements. K has decided that an annual determination of net income is desirable in order to maintain management control and accountability over the library. what type of duns should K establish in order to meet their measurement objectives?

A. enterprise fund
B. general fund

Answer 33

[A]
this fund is also used for governmental facilities and services intended to be primarily(>50%) self-supported by user charges.

general fund for ordinary operations of a government unit that are financed from taxes and other general revenue.

Question 34

A purchase an equipment four years ago for 325. on Jan 1, Y5, A sells the equipment to B for 208. the equipment has a remaining useful life of 6 year, a carrying value of 195. a fair value of 202/ the financing liability equal to:

Answer 34

de: cash 208
dr: A/D equipment 130
cr: equipment 325
cr: financing liability(sell price-FV) 6
cr: gain on equipment sale 7

如果設備沒有出售，就不會有gain on equipment sale，也不會對帳簿價格和市場價格進行評價。

Question 35

pretax accounting income of $200,000
income from exempt municipal bonds 10,000
depreciation deducted for tax purposes in excess of depreciation dented for financial statement purposes 20,000
estimated federal income tax payments made 40,000
enacted corporate income tax rate 30%
what amount of current income tax liability should be included in G’s Dec 31 balance sheet?

Answer 35

11,000

taxable income = 200,000-10,000-20,000=170,000
taxprovitsion =51,000
less estimated payment made 40,000
current deferral income tax liability 11,000

Question 36

a derivative designated as a fair value hedge must be:
1. specifically identified to the hedge asset, liability, or unrecognized firm commitment
2. expected to be highly effective in offsetting changes in the fair value of the hedged item.

Answer 36

1&2

fair value hedge criteria:
1. there is formal documentation of the hedging relationship between the derivative and the hedged item.
2. the hedge must be expected to be highly effective in offsetting changes in the fair value of the hedged item and the effectiveness is assessed at lease every three months.
3. the hedged item is specifically identified.
4. the hedged item presents exposure to changes in fair value that could affect income.

Question 37

for purposes of determining the period over which subsequent revenues must be evaluated, financial statements are considered to be available to be issued when:
1. the financial statements are in a form and format that comply with GAAP
2. all approvals necessary for the issuance of the financial statements have been received
3. the financial statements have been widely distributed to financial statements users

Answer 37

1&2

問題問的是可以發行的條件，第3項是被認同的條件

Question 38

On Mar 1, Y1 C Corp. issued at 103 plus accrued interest, two hundred of its 9%, 1,000 bond. the bonds are dated Jan 1 Y1 and mature Jan 1 Y11. interest is payable semiannually on Jan 1 and July 1. C paid bond issuance cost of 10,000. inter USGAAP C should realize net cash receipts from the bond issuance of:

Answer 38

dr: cash 199,000=206k+3k-10k
dr: bond issuance costs and premium 4,000
cr: bonds payable 200,000
cr: bonds interest payable 3,000

Question 39

T city reported a $1,500 net increase in fund balance for governmental fund. during the year, T purchased general capital assets of $9,000 and record depreciation expense of $3,000. that amount should T report as the change on net position for governmental activities?

Answer 39

[7,500]
C capital outlay +
P principal payments on debt
A asset disposals
S sources financing
R revenue
I interest expense
DE depreciation expense
S service net income

Question 40

the B country headstart fund, which is properly accounted for as a special revenue fund, overspent its available resources. the deficit in this fund would likely be displayed as:
A.negative fund balance - restricted
B. negative fund balance- unassigned

Answer 40

[B]
if expenditures incurred for specific purpose exceed the amounts restricted, committed or assigned to those purpose, it may be necessary to report a negative unassigned fund balance.

Question 41

leased equipment for its entire nine-year useful life, agree to pay $50,000 at the start of the lease term on Dec 31, Y1, and $50,000 annually on each Dec 31 for the next eight years. O paid $3,000 in initial direct costs at lease inception. the present value on Dec 31, Y1, of the nine lease payments over the lease term, using the rate implicit in the lease which O knows to be 10% was $316,500/
O accounts for the finance lease under GAPP and used straight line depreciation. what amount should O report as ROU asset on its Dec 31, Y2, balance sheet?

Answer 41

[284,000]

dr: ROU asset
cr: lease liability 316,500
cr: cash 3,000

annual depreciation = 319,500/9=35,500

financial lease asset 12/31/Y2=319500-35,500=284,000

Question 42

if dilutive and if other conditions are met, would enter into the determination of the weighted average shares outstanding to be used in the basic earnings per share(basic EPS) calculation?
1. stock options
2. contingent shares

Answer 42

2 only.
contingent shares are included in the calculation of basic earnings per share if all conditions for issuance are met. Stock options do not enter into the calculation of basic EPS.

Question 43

S city’s liability for claims and judgements:
-current liability at Jan 1,Y1 $100
-claims paid during Y1 $800
-current liability at Dec 31, Y1 $140
-Non-current liability at Dec 31, Y1 $200

what amount should S report for Y1 claims and judgements expenditures?

Answer 43

840,000

容易犯錯計算成1040k，題目中S是一個城市，governmental fund裡面是沒有長期債務的

Question 44

receipts from a special tax levy to retire and pay interest on general obligation bonds should be recorded in which fund?
A. debt service
B. general
C. capital projects
D. special revenue

Answer 44

[A]
the debt service fund accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest. a special tax levy exclusively restricted for debt repayment would be most appropriately accounted for in a debt service fund.

Question 45

C reports total income tax expense of 175,000. taxable income for the year is $420,000 and the company’S tax rate is 35%. on C Y1 balance sheet, the company will report a:
A.deferred tax asset of $28,000 due to a temporary difference of $80,000
B. deferred tax liability of $28,000 due to a temporary difference of $80,000

Answer 45

[B]
tax expense of 175,000 and income tax payable of 147,000, which must be deferred tax liability.

Question 46

-5% cumulative preferred stock, par value $100 per share; 2,500 shares issued and outstanding $250,000
-CS, par value $3.5 per share; 100,000 shares issued and outstanding $350,000
APIC in excess of par value of CS. $125,000
-retained earnings $300,000

dividends in arrear on the preferred stock amount to $25,000. if H were to be liquidated, the preferred stockholders would receive par value plus a premium of $50,000. the book value per share of common stock is:

Answer 46

[7.0]
total stockholders equity 1025,000
less PR stock interest (325,000)*
=700,000
total share O/S 100,000
book value per share 7.00

+par value preferred 250,000
+premium on referred 50,000
+div. in arreas 25,000
=total preferred stock interest 325,000

Question 47

On Aug 31, Y10, H Co. decided to change from the FIFO periodic inventory system to the weighted average periodic inventory system. H uses USGAAP is on a calendar year basis, and does not present comparative financial statements. the cumulative effect of the change is determined:
A. during the eight months ending Aug 31, Y10 by a weighted average of the purchase.
B. as of Jan 1, Y10

Answer 47

[B]
the cumulative effect of a change in accounting principal equals the difference between retained earnings at the beginning of period of the change and what retained earnings would have been if the change was applied to all affected prior, assuming comparative financial statements are not presented. beginning retained earnings of the earlier year presented is adjusted for the cumulative effect of the change.

Question 48

a corporation declared a dividend, a portion of which was liquidating. how would this declaration affect each of the following?
APIC: decrease/no effect
retained earnings: decrease/no effect

Answer 48

decrease- decrease
assume 80% distribution of earnings and 20% liquidating with a $100,000 dividend.

dr: RE 80,000
dr: APIC 20,000
cr: cash 100,000

Question 49

in financial reporting of segment data, which of the following items is always used in deferring a segment’s operating income?
A. sales to other segments.
B. general corporate expense.
C. income tax expense
D. gain or loss on discontinue operations.

Answer 49

[A]
equity in net income of another company, general corporate expense, interest, income tax expense, and gains or losses on discontinued operations are all not included in segment profit unless they are include in the determination of segment profit reported to the “Chief Operating Decision Maker”.

Question 50

On July 1, L Co. sold goods in exchange for a $200,000, 8-month, non interest-bearing note receivable. at the time of the sale, the note’s market rate of interest was 12%. what amount did L receive when it discounted the note at 10% on Sep 1?

Answer 50

[190,000]
face amount of note: 200,000
bank discount: 10%×6/12=5%
proceeds from bank 190,000

six months remain on the 8-month note on Sep 1.

Question 51

the city of L has a property tax levy that totaled $3,000. the city anticipates that it will collect $2,500 in taxes before the end of the year and $300 with sixty days of year-end. five percent of the levy is deemed to be uncollectible. how much would the city likely record as deferred outflows associated with this transaction?

Answer 51

[0]
dr: property taxed receivable 3,000
cr: tax revenue 2,800
cr: deferred inflows 50(plug)
cr: allowance 150=3,000×5%

Question 52

a distinguishing feature of a non compensatory stock option or stock purchase plan is which of the following?
A. an entity has total discretion over whether the stock option/purchase plan should be recorded as compensatory or noncompensatory under USGAAP
C. No journal entry is recored by the entry until the stock is purchase by the employee

Answer 52

[B]
A is incorrect because an entity may classify an employee stock option/purchase plan as non compensatory only if it meets certain requirements.

Question 53

use the allowance method for recognizing uncollectible accounts. ignore deferred taxes, the entry to record the written-off of a special uncollectible account:
A. affect neither net income or working capital
B. affects neither net income nor accounts receivable

Answer 53

[A]
dr: allowance for uncollectible AR
cr: accounts receivable

dr: bed debt expense
cr: accounts receivable

Question 54

the M Inc., a not-for-profit organization, is financially interrelated with its beneficial organization, B university. receipts of the M Foundation would be displayed/disclosed in the B university financial statements as:
A. A note disclosure
B. a change in the university’s interest in the foundation on the statement of activities.

Answer 54

[B]
beneficiaries with a financial interest in recipient organizations recognized the change in their interest of the recipient organization on their statement of activities. the interest in the net assets of the recipient is adjusted for the beneficiary’s share of the change with the following entry:
dr: interest in assets
cr: interest in M foundation net assets(statement of activities)

Question 55

a company issued $1,500,000 of par bonds at 98 on Jan 1, Y1 with a maturity date of Dec 31, Y30. bond issuance costs are $90,000, and the stated interest rate of bond is 6%/ interest paid semiannually on Jan1 and July 1. 10 years after the issue date, the entire issue are called at 102 and canceled. the company used the straight Line method of amortization for bond discounts and issuance costs, and the result of this method is not materially different from the effective interest method. the company should classify what amount as the loss on extinguishment of debt at the time the bonds are called?

Answer 55

[110,000]
dr: bond payable 1,500,000
dr: loss 110,000
cr: cash 1,530,000
cr: unamortized discount 20,000
cr: unamortized bond issuance cost 60,000

Question 56

property taxes levied fiscal year 1 to finance the general fund budget of fiscal year 2 should be repot as general fund revenue in fiscal year 2:
A. for the amount collected before the end of fiscal year 2 or shortly thereafter
B. for the amount collected in fiscal year 2 only.

Answer 56

[A]

Question 57

what will be excluded from the reconciliation ?

Answer 57

non operating income items
such as revealing debt financing and gains on the sal of assets

Question 58

what should include in the change in net position on the statement of revenues, expenses, and changes in fund net position?
1.paid to an internal service fund
2. transfer to the general fund

Answer 58

[2]

Question 59

S corporation computed its diluted earnings per share for the cutest year ended Sep 10. the company had 200,000 shares outstanding at the beginning of the year, issued 60,000 shares at April 1, and reacquired 2,000 share to the held in its trasury on July 1. the company also had 2,000 option outstanding exercisable at $40per share. the average market price of S’s shares during the year was $50. how many additional shares would S include in its diluted earnings per share calculation?

Answer 59

[2,000]
the appropriate method to use for calculating the number of new shares resulting from options issued is the if converted method. because the exercise price of $40 is below the average market price of $50, the options are in the money and 2,000 shares will be offed to the denominator of the diluted EPS calculation.

Question 60

a 15-year bond was issued in Y1 at a discount. during Y11, a 10-year bond was issued at face amount with the proceeds used to retire the 15-year bond at its face amount. the net effect of the Y11 bond transactions was to increase long-term liabilities by the excess of the 10-year bond’s face amount over the 15-year bond’s:
A. face amount
B. carrying amount
C. carrying amount less the deferred loss on bond retirement
D. face amount less the deferred loss on bond retirement

Answer 60

[B]
bond liability is shown on balance sheet net of unamortized discount.

Question 61

a cash contribution with out donor restrictions should be reported in a nongovernmental not-for-profit organization’s statement of cash flows as an inflow from:
A. capital and related financing activities
B. investing activities
C. financing activities
D. operating activities

Answer 61

[D]
cash flows from operating activities in a nongovernmental non-for-profit organization include applicable agency transactions, cash contributions without donor restrictions, program income. and interest income or dividend income from investments.

Question 62

A hospital received an unconditional pledge got 1 million, which will be paid in four installments of $250,000 over four years. what amount of installment pledge revenue should be recognized in the second year?

Answer 62

[0]
Multiyear pledges are recorded at their net present value at the date the pledge is made. Pledges to be collected in the future are classified as with donor restrictions and reclassified as with our donor restrictions as terms and conditions o the bequest are satisfies. contribution revenue is recognized in the year the pledge is made. reclassifications are not revenues. the difference between the previously recorded present value and the current amount collected is recognized as contribution revenue. the question pertains only to the installment pledge revenue and not to the accretion of the discount.

Question 63

a local government reported capital outlay expenditures, debt service expenditures, and loan proceeds in its statement of revenues, expenditure and changes in fund balance. in its reconciliation of the governmental fund change in fund balance to the change in net position displayed for governmental activities on the government-wide statement of activities, which transaction would least likely to be displayed as a reconciling item?

A. loan proceeds
B. capital outlay expenditures
C. debt service-principal payments
D. debt service- interest payments

Answer 63

[D]
debt service -interest payments represent period costs in both governmental fund financial statements and government-wide financial statements. because the accounting recognition of interest expenditure is largely identical to interest expense, the presentation of interest payments would be least likely to be displayed as a reconciling item between the change in fund balance and the change in government-wide net position.

Question 64

which of the following is reported as interest expense?
A.amortization of discount of a note.
B. deferred compensation plan interest

Answer 64

[A]
when a discount on a bond or note is amortized, the discount amortization increase interest expense for the period.

D is incorrect . deferred compensation pain interest os reported as a component of deferred compensation plan expense.

Question 65

the joint presentation of government-wide and fund financial statements and appropriate conciliation is called________approach

Answer 65

integrated

Question 66

what is the underlying concept governing the generally accepted accounting principals pertaining to recording gain contingencies?
A. relevance
B. consistency

Answer 66

[B]
contingencies the thigh result in gains usually are not reflected in the accounts since to of so might be to recognize revenue prior to its realization. the accounting concept of conservatism applies: anticipate all losses but not gains.

Question 67

the investment manager for D Co. pays $988,472 to purchase a $1,000,000 face-value bond maturing in five years and paying interest semiannually at an annual rate of 2.75%. the annual market rate for comparable bonds at the time of issuance is 3%. with 2 years remaining, the manager determine that the bond will pay the full $1,000,000 at maturity but will pay $3,000 less interest than planned every six months for the remainder of the bond’s life. the relevant present value factors for $1 and $1 ordinary annuity are 0.9422 and 3.8544.
if the bond’s current fair value with two years remaining is $944,800 and the amortized cost of the bond is 995,182, the current expected credit loss, assuming that the bond is classified as HTM is closest to:

Answer 67

[11,545]

the manager expects interest payments to be $3,000 less than every six months:
1,000,000×2.75％×1/2-3,000=10,750

present value of face value at maturity =1,000,000×0.9422=942,200
present value of interest payments =10,750×3.8544=41,435
present value total: 942,200+41,435=983,635

loss=amortized cost - present value= 995.182-983,635=11,547

Question 68

P acquire 100% interest in S.
S plant asset BV 200, FV 255
P plant asset BV 1700,FV 1800
consolidated financial statements should report plant assets at:

Answer 68

[1955]
FV of S 255+
BV of P 1700
=1955

Question 69

Concept Industry is preparing its income statement for the year ended Dec 31. in preparing the statement. the line item displayed before considering income tax effects is:
A. income(loss) from continuing operations
B. income(loss)from operation.

Answer 69

[B]
income from operations is displayed on a multiple step income statement

Question 70

on Dec 31, Y1 balance sheet, N Corp. reported bonds payable of $8,000,000 face less related unamortized bond issuance cost of $430,000 under USGAPP. the bonds had been issued at par. on Jan 2, Y2, N retired $4000,000 of the outstanding bonds at par plus a call premium of 100,000. the transaction is material to N and is also considered to be an unusual and infrequent event. ignoring income taxes, what amount should N report in its Y2 income statement?

Answer 70

[315,000]

face value 4,000,000
less unamortized bond issuance cost 4,000,000/8,000,000×430,000=215,000

net carrying amount 3785,000

reacquisition price 4100,000

total loss 315,000

Question 71

which should be included in income from continuing operations on the income statement?　多選
1. a large loss from a currency transaction
2. a union strike that shuts down operations for three months
3. a foreign government takes possession of a company’s only plant.
4. damage to a factory due to an earthquake in an area that has not previously experience earthquakes.

Answer 71

all these items should be included

Question 72

cash flow using the indirect method. P’s unamortized bond discount account decreased by $25,000 during the year. how should P report the change in unamortized bond discount in its statement of cash flow?
A. as a financing cash inflow
B. as a subtraction from net income in the operating activities section
C. as an addition to net income in the operating activities section.

Answer 72

[C]
amortization of bond discount is an income-related item; thus it is almost automatically an operating activity, not a financing activities .

Question 73

debits to operating expenses totaled $100,000. what amount did the company pay for operating expenses during the current year?
prepaid expenses : beg. 5,000 end. 10,000
accused liabilities: beg. 8,000　end 20,000

Answer 73

100,000-12,000-5,000=83,000

Question 74

gains from remeasuring a foreign subsidiary’s financial statements from the local currency. which is not the fictional currency, into the parent company’S currency should be reported:
A. as a component of other comprehensive income
B. as a part of continuing operations

Answer 74

[B]
is en entity’s books are not maintained in its functional currency, remeasurement into the functional currency is required. any gains or losses are included in determining net income and are classified as part of continuing operations.

Question 75

during Y1, A Co. the 100% owned subsidiary of W, sold merchandise to W at a 25% markup over its cost. inter-company sale to W totaled $800,000 during Y1. on Dec 31, Y1, W held $200,000 of the inventory purchased from A in its ending inventory. In W’s Dec 31, Y1 elimination of the inter-company sales transaction, the intracompany profit that must be eliminated from ending inventory is:

Answer 75

[40,000]

A cost 640,000
160,000=800,000-640,000

40,000=160,000×25%

dr: intercompany revenue 800,000
cr: intercompany COGS 640,000
cr: COGS-W 120,000
cr: inventory-W 40,000

Question 76

M Co. began business on Jan 1 Y1. M used the double-declining balance method of depreciation for financial statement purposes for its building, and the straight-line method for income taxes. this was the only difference between tax and financing statement accounting. on Jan 16 Y3. elected to swatch to straight-line method for both financial statement and tax purposes. the building, which cost $240,000 in Y1, has a useful life of 15 years and no salvage value. Data related to the building is as follows:
double declining balance:
Y1 30,000
Y2 20,000

straight-line depreciation:
Y1 16,000
Y2 16,000

M’s tax rate is 40%.
which of the following statements is correct?
A. M’s deferred tax asset should be increased by $7,200 in Y3.
B. there should be no increase in M’S deferred tax asset.

Answer 76

[B]
M will continue to have a deferred tax asset that will decrease on a straight-line basis over the life of the asset. the change in depreciation method represents a change in accounting estimate inseparable from a change in accounting principle. the change from the double-declining balance method of depreciation for financial statement purposes to the straight-line method consistent with it tax treatment will be treated prospectively. ay the beginning of Y3, M will have a financial statement net book value of $190,000 and a tax basis of $208,000. book depreciation of 14,615 will be consistently less than tax depreciation of 16,000, which will result in an annual decrease of the deferred tax asset.

Question 77

when a consolidated statement of cash flows is presented, which of the following statements is true?
1. in the reconciliation of net income to net cash provided by operations, total net income including any non controlling interest should be used.
2. dividends paid by a subsidiary to both the parent company and non-controlling shareholders are reported as a use of cash.

Answer 77

1 only.
dividend paid by the subsidiary to non-controlling shareholders are reported in the cash flows statement. dividends paid to the parent company are not reported.

Question 78

the current spot rate is 1 euro is equivalent to 1.27 US dollars. using the indirect method from the perspective of a European company, which of the following rate would show an appreciation of the US dollar?
A. 1.15 US dollars = 1 euro
B. 0.87 euro = 1 US dollar
C. 0.74 euro = 1 US dollar
D. 1.35 US dollars = 1 euro

Answer 78

[A]
from the perspective of a European company, an indirect method quote is 1 euro expressed in terms of US dollars. an appreciation of the US dollar would be a reduction in the number of dollars it takes to covert Into 1 euro. in this case, if the current exchange rate is 1.27 US dollars for 1 euro, a rate of 1.15 US dollars per euro will be an appreciation of the US dollar.

Question 79

a debt service fund prepared a budget on Jan 1 Y2, which included estimated revenues of $88,000, appropriations of 469,500, and a fund balance of $18,500. actual activity for the debt service fund during Y2 included bond issue proceeds of $60,000, other revenues of $24,000, and interest expenditures of $53,000. based on the above, what is the entry to close the budget on Dec 31, Y2?
#JE?

Answer 79

dr: budgetary control 18,500
dr: appropriations control 69,500
cr: estimates revenues control 88,000

the question asked for the entry to close the budgetary accounts, not the activity during the year. the budgetary control essentially is the fund balance established at the beginning of the year and serves as the balancing entry to close the estimated revenue and estimated appropriations made the beginning of the year.

Question 80

deferred compensation plans. for other than proprietary fund employees, adopted under IRC Section 457 should be reported in a:
A. pension( and other employee benefits) trust fund.
B. custodial fund

Answer 80

[A]

Question 81

at the beginning of Y2, a government entity has a $500,000 judgement outstanding. the government entity paid $400,000 of the judgement during Y2. the remaining balance of the judgement includes $25,000 payable early in Y3 and $75,000 payable at the end of Y4.
what amount should the government entity report as a liability for the judgement in its Y2 governmental fund financial statements?

Answer 81

[25,000]
the governmental entity would report a $25,000 liability in their governmental fund consistent with the current financial resources measurement focus. expenditures are generally recored when the related fund liability is incurred but are limited to the amounts payable from available expendable resources. No non-current liabilities are reported.

Question 82

which is a false statement regarding the cost method versus legal method when accounting for treasury stock transactions?
A. the gain or loss from treasury transaction is a direct adjustment to stockholder’s equity under the cost method.
B. gain or losses from treasury stock transaction affect retained earnings under the legal method.

Answer 82

[B]
首先是減少APIC，不夠的時候再減少RE。

Question 83

fund received interest earnings off its invested funds. that category would use to classify cash receipts from these earnings on its enterprise fund statement of cash flow?
A. investing activities
B. noncapital financing activities

Answer 83

investing activities

Question 84

G Co. leases computer equipment to customer under USGAAP direct financing leases. the equipment has no residual value at the end of the lease and the leases do not contain written purchase options. G wishes to earn 8% interest on a five-year lease of equipment with a fair value of $323,400. the present value of an annuity due of $1 at 8% for five years is 4.312. what is the total amount of interest revenue that G will earn over the life of the lease?

Answer 84

51,600

PV= annual rents × annuity due PV factor
annual rents =75,000

total cash flow =375,000

51,600=375,000-323,400

Question 85

on Aug 15, B sold goods for which it received a note bearing the market rate of interest on that date. the four-month note was dated July 15. Note principal, together with all interest, is due Nov 15. when the note was recorded on Aug 15, which of the following accounts increased?
A. unearned discount
B. interest receivable

Answer 85

[B]

dr: note receivable 1000
dr: interest receivable 10
cr: revenue 1,010

Question 86

the city of S has 535,000 in capital assets in the governmental activities column of its government-wide financial statement at the end of y1 and associated accumulated depreciation of 160,000. the city recorded 10,000 in depreciation expense in Y1 and its governmental fund financial statements displayed 35,000 in capital outlay expenditures associated with a lease representing a contract that transfers ownership. to record the opening balance for general government capital assets in deriving its government-wide financial statements for Y1, what should the city record as an entry to the net position?

Answer 86

[350,000]

capital asset =535,000-35,000
accumulated depreciation = 160,000-10,0000

dr: capital assets 500,000
cr: accumulated depreciation 150,000
cr: net position 350,000

Question 87

readers of the financial statements should be expected to find the following financial reports related to the city’s performance in relation to the budget:
A. presentation of budget versus actual amounts for the general fund and each major special revenue fund within a legally adopted budget presented in either the required supplementary information or within the basic financial statements.
B. a presentation of a government-wide budget in comparison to government-wide financial statements.

Answer 87

[A]
B is incorrect. budgetary comparisons are made relative to fund financial statements, not government-wide financial statements.

Question 88

on Jan 1, Y3, S Co. began a construction project qualifying for capitalization of interest. the total amount spent on this project during Y3 was 250,000, spent uniformly during the year. to help pay for construction, $200,000 was borrowed at 10% on Jan 1, Y3, and funds not needed for construction were temporarily invested in short-term securities, yielding 3,000 in interest revenue. other than the construction funds borrowed, the only other debt outstanding during the year was a 150,000, 10-year, 7% note payable dated Jan 1, Y1. how much interest should be capitalized by S during Y3?

Answer 88

[12,500]
total expenditures of 250,000÷2
＝125,000 average accumulated expenditures ×0.1 interest rate on specific borrowing
=12,500

compare avoidable interest to the actual total interest cost incurred and capitalize the lower amount.
actual interest 200,000× 0.1=20,000
150,000×0.7=10,500

30,500>12,500

capitalize the lower amount. interest earned on money invested is interest revenue, it does not affect the amount of interest expensed or capitalized.

Question 89

on a nongovernmental, not-for-profit entity’S statements of activities, which of the following amounts should not be netted together under any circumstances?
A. revenue and expenditures from an annual fundraising event representing a major source of revenue.
B. revenues and expenditures from the sale of used equipment.
C. gains and losses from exchange rates or other foreign currency translations.
D. investment income, custodial fees, and other advisory expenditures.

Answer 89

[A]
special events that represent ongoing and major activities of the not-for-profit organization, such as an annual fundraising campaign, should fully display gross fundraising revenues and fundraisng expenses, while peripheral or incidental events may be presented on a net basis major fundraising compaigns will present revenues and expenses separately. annual fundraising events such as a gala, dinner, or auction that represent a major source of support for the not-for-profit organization are displayed showing gross revenues and expenses for the event. normal ongoing appeals soliciting funding would recognize contribution revenue net of the cost of any related premiums.

Question 90

G township issued 450,000 of bond anticipation notes at face amount in Y1 and placed the proceeds into its capital projects fund, all legal steps were taken to refinance the notes, but G was unable to consummate refinancing. in the capital projects fund, what account should be credited to record the $50,000 proceeds?
A. bond anticipation notes payable
B. deferred inflows of resources

Answer 90

[A]
bond anticipation notes are current liabilities if the entity does not have the ability to refinance as a noncurrent obligation. the $50,000 proceeds of the bond anticipation note, when received in the capital projects fund, should be credited to bond anticipation notes payable because the notes could not be refinanced.

Question 91

T city used an internal service fund to account for the operations of its data processing center, which provides services to T’s other governmental units. to record the billing for data processing services provided to T’s other governmental units, the internal service fund should credit:
A. operating revenues.
B. intergovernmental transfers.

Answer 91

[A]
to record the billing for data processing services provided to other governmental units, the internal service fund should credit operating revenues, just like commercial accounting.

Question 92

a transaction was reported as a nonmonetary exchange of assets. under which of the circumstances should the exchange be measured based on the reported amount of the nonmonetary asset surrendered?
A. when the transaction has commercial substance
B. when the transaction lacks commercial substance

Answer 92

[A]
if the transaction has commercial substance, the fair value approach is used.