Far - Catch All Flashcards
Costs of joint activities like mailings and telethons are required to be reported as fundraising activities unless certain criteria are satisfied. Which of the following is NOT one of those criteria?
All answer choices are conditions under which joint activities are not required to be reported as fundraising activities.
(2132.22)
Miri Co. began business on January 2, 20x0. Miri used an accelerated method of depreciation for financial statement purposes for its building, and the straight line method for income taxes. On January 20x2, Miri elected to switch to the straight line method for both financial statement and tax purposes. The building cost $240,000 in 20x0, which has an estimated useful life of 15 years and no salvage value. Data related to the building is as follows:
YEAR: 2020 - Accelerated Depreciation = $30,000 - Straight Line Depreciation = $16,000
YEAR: 2021 - AD = 20,000 - SLD = 16,000
- Miris tax rate is 40%
Which is correct?
Miri’s deferred tax asset should be reduced by $554 in 20x2
2123. 31
(2286. 06)
(2286. 07)
(2286. 08)
(2286. 09)
On July 1, one of Rudd Co.’s delivery vans was destroyed in an accident. On that date, the van’s carrying amount was $2,500. On July 15, Rudd received and recorded a $700 invoice for a new engine installed in the van in May, and another $500 invoice for various repairs. In August, Rudd received $3,500 under its insurance policy on the van, which is plans to use to replace the van. What amount should Rudd report as gain (loss) on disposal of the van in its year end income statement?
$300
2221.23-29
Derby Co. incurred costs to modify its building and to rearrange its production line. As a result, an overall reduction in production costs is expected. However, the modifications did not increase the buildings market value, and the rearrangement did not extend the production line’s life. Should the building modification costs and the production line rearrangement costs be capitalized?
The building modification costs and the production line rearrangement costs should both be capitalized.
(2221.14)
Which of the following costs should a nongovernmental not for profit organization report as a supporting service expense?
Cost for the annual fundraising dinner
2132.17
Fireworks, Inc., had an explosion in its plant that destroyed most of its inventory. Its records show that beginning inventory was $40,000. Fireworks made purchases of $480,000 and sales of $620,000 during the year. Its normal gross profit percentage is 25%. It can sell some of its damaged inventory for $5,000. The insurance company will reimburse Fireworks for 70% of its loss. What amount should Fireworks report as loss from explosion?
$15,000
2216.15-17
On June 1 of the current year, a company entered into a real estate lease agreement for a new building. The lease is an operating lease and is fully executed on that day. According to the terms of the lease, payments of $28,900 per month are scheduled to begin on October 1 of the current year and to continue each month thereafter for 56 months. The lease term spans five years. The company has a calendar year end. What amount is the company’s lease expense for the current calendar year?
$188,813
2341. 23
(2341. 24)
(2341. 25)
(2341. 27)
A governments police department reports appropriations of $10,000, encumbrances of $2,000, and expenditures of $5,000. What is the amount of available appropriations for the police department?
$3,000
2414.03
Maxwell Company is the lessee in an operating lease. Maxwell must prepare its financial statements in accordance with:
U.S. GAAP
2392.07
Must an entity identify immaterial performance obligations and allocate a portion of the transaction price to them?
No. An entity only needs to identity material performance obligations in a contract and allocate transaction price to those.
(2271.38)
On January 1, year 3, a company changed its inventory costing method from LIFO to FIFO. The company’s year 3 financial statements contain comparative information for year 2. How should the company present the year 1 effect of the change in accounting principle in its year 3 comparative financial statements?
As an adjustment to the beginning year 2 inventory balance with an offsetting adjustment to beginning year 2 retained earnings.
(2305.02 and 2306.01)
The basic accounting principle that states that income or loss is determined by a process of associating realized revenues with expenses necessary to generate them is the principle of:
Matching Principle.
2113.09
A not for profit voluntary health and welfare entity should report a contribution for the construction of a new building as cash flows from which of the following in the statement of cash flows?
Financing activities
2133.01
Which of the following is the most correct statement regarding the capitalization of constructive period interest requirement on capital assets used in business like activities?
Interest should be capitalized on qualifying assets.
2414.25
On December 31 of the previous and current year, Taft Corporation had 100,000 shares of common stock and 50,000 shares of noncumulative and nonconvertible preferred stock issued and outstanding. Additional information for the current year follows:
- Stockholders equity at 12/32 = $4,500,000
- Net income year ended 12/31 = 1,200,000
- Dividend on preferred stock year ended 12/31 = 300,000
- Market price per share of common stock on 12/31 = 72
The price earnings ratio on common stock at December 31 was:
8 to 1.
2170.02 and 2170.03
