INCOME STATEMENTS ITEMS

Question 1

when would we not be required to calc the diluted earnings for per?

Answer 1

when AVG market price is “LESS” than the exercise price that means it’s antidiluted there so no need to calc the diluted

Question 2

Calc the BEPS net income or loss available to common shareholders?

Answer 2

Part 1 - First we need to find the numberator which would be the “Net Income”

In this problem don’t have Net income however, we can use the Income from continuing operations - the discontinuing operation

Income from continuing operation 1,000,000 discontinued operation 1,200,000
Net Income 200,000

Preferred stock 60,000 x .10 = 6000
Total Net Income is 206,000

Part 2 we need to calc the WAAC outstanding
shares outstanding beginning of the period 300,000 + 12,000 shares * 1 /3 = 4000 = 304,000

60,000 common shares x 2 / 3 = 40,000

206,000 / 344,000 = (0.60)

Question 3

calc the basic earnings per share?

Answer 3

Net Income 330,000 - preferred divis 60,000
300,000 shares common stock

= 0.90

Question 4

what will cause an increase in basic earnings per share?

Answer 4

treasury stock reduce the number of outstanding shares and increasing the earnings per share ratio

Question 5

What effect would companies convertible debt securities and potential common stock and diluted in determining earnings per share?

Answer 5

BEPS would have no effect
DEPS would decrease

Question 6

How to calc the DEPS with using the BEPS?

Answer 6

Step 1: With using BEPS we have the following things available Net Income for the numerator and WAAC for the demonator

Net Income 350,000
WAAC 100,000

With calc the DEPS we need to make some adjustments for the numerator and demonator

Step 2. Adjustment the numerator of the calculation to the DEPS standard so here we have a starting Net income of 350,000 - 10,000 preferred stock x 3 = 30,000 so 350,000 - 30,000 = 320,000

Next for Step 2 is to add the convertible preferred stock with the numerator so here we will need to add the preferred dividend 10,000 x 3 = 30,000 and also add the 1,000,000 x 9% x using the tax rate (1 - 30%) = 63,000

So for the Numerator we are using the NI 320,000 + 30,000 preferred Dividend + 63,000 convertible bond

Step 3 now we need to adjust the demonator we we already have WAAC which is 100,000 now we need to the add the 20,000 shares of common stock which added with preferred dividend. Also, add the bonds convertible into 30,000 shares

320,000 + 30,000 + 20,000
100,000 + 20,000 + 30,000

= 2.75

Question 7

How to calc the BEPS?

Answer 7

Net Income - 330,000 - Preferred dividends 60,000
Divide it by the 300,000 shares of common stock

330,000 - 60,000 / 300,000 shares = 0.90 BEPS

Question 8

When there are stock split, reverse split or 2 for 1 do companies need to take BEPS or DEPS into consideration the stock dividend?

Answer 8

yes for both BEPS and DEPS are required to be presented before the balance sheet date

Question 9

Are cumulative preferred dividends

Answer 9

Senario 1 When preferred stock is cumulative the dividends whether it’s earned or not it’s deducted from net income

**Ex- Net income is 100,000 - preferred stock cumulative 10,000 = 90,000 Net Income **

Senario 2 when prefered stock are noncumulative an adjustment are made for dividends.

**Ex - Net income 100,000 - Prefered stock noncumulative 20,000 = 80,000 **

Senario 3 If the dividend is cumulative then only if it’s earned no adjustments are needed

Question 10

When does the If-converted method of computing diluted per share (DEPS) amounts assumes conversion of convertible securities?

Answer 10

at the beginning of the earliest period reported or time of issurance

Question 11

What does Antidiluted mean?

Answer 11

basically that the EPS has increased from the original BEPS

Ex Old EBPS was 6.00
New EBPS is 6.29

Question 12

Calc the BEPS with the preferred stock being cumulative?

Answer 12

When the Preferred Stock is Cumulative that means we need to detucted the preferred stock from the net income

So we have net income 5,300,000

Preferred stock is 50,000 shares x 10% cumulative preferred stock 100 par = 500,000

= 4,800,000 Net Income

Next we need to get the Weighted AVG Cost

1,060,000 x 5 /12 = 441,667
1,120,000 x 7 / 12 = 653,333

= 4,800,000 Net Income / 1,095,000 weighted avg cost = 4.38 BEPS

Question 13

When entity make an agreement and they only receive parts of the payment and not remaining balance is that considered a liability?

Answer 13

Yes, that’s considered a liability bc revenue is not recognized

Question 14

Calc the interest expense and the contract liability for Dec 31st year 2?

Answer 14

Step 1 We need to cal the interest expense for year 1

So the entity received payment of 20,000 x 1.06 = 1,200 interest expense

Now we need to add the interest expense and the payment received so here how it would look

20,000 + 1,200 = 21,200 x 1.06 = 1,272 interest expense for Year 2

Contract liability which is 21,200 + 1,272 = 22,472

Question 15

When would the revenue recognition contracts have a contract modification?

Answer 15

when both parties agree and approve change of the price of contact.

The contract modification is also accounted for separate contract

Also, if the contact result in additional promised goods or services that are distinct

Question 16

What are examples of performance obligations?

Answer 16

1 - Software license
2 - installation service
3 - technical support service

Question 17

When should transaction prices be able to adjusted for the effect of the time value of money?

Answer 17

the selling price of the product considerate are different significantly

Question 18

How to calc the total transaction price?

Answer 18

First we start off with the rooms and how much it was per night

Here it was 10 nights, 10 rooms which was 200 per night

so here we calc this by 10 x 10 x 200 = 20,000 next we need to subtract the credit for the 50 nights of (3,000)

20,000
(3,000)

17,000 total transaction price

Notes - things like coupons, credits, and vouchers reduce the transaction price

Question 19

Calc the revenue and interest income from the contract recognized?

Answer 19

Year 1 Revenue and interest income are the following

Cash selling price 250,000 x 10% = 25,000 interest income for year 1 simple calc and 250,000 would the revenue since we sold the machine for that price

Year 2 the calc is a little different because we made the initalment payments for year 1 at year end so that would need to be calc for year 2

So for year 2 we need to first calc the selling price of the machine which was 250,000 and we subtract the annual payments of 144,049 = 105,951. Next we need to add the inteest expense and we get a total of 105,951 + 25,000 = 130,951 next we use the implicit rate to calc the interest income for year 2 which was 13,095

Question 20

When is revenue recognized in revenue recognition?

Answer 20

when the goods or service is delieved to the customer and the customer has control which would be when the product is delieved

Question 21

How to calc the gross profit from a contract?

Answer 21

Here we have 150 machines and we ducted 20 machines because will be returned so 130 machines available

and now $75 and the machine cost is 45 = 30

130 machine available
x 30 price
= 3,900 gross profit

Question 22

Calc the gross profit of a construction contract for the 3 years?

Answer 22

For year 1 first we need to calc the expected gross profit and the actual costs

2,500,000 payment for project
2,000,000 expected total cost
= 500,000 gross profits

For year 1 we need to also find the actual cost for the projects completed projects were the following 500,000, 900,000

500,000 / 2,000,000 = 0.25

Gross profit 500,000 * 0.25 = 125,000

For year 2 payment for project 2,000,000 expected total cost

500,000 + 900,000 = 1,400,000 / 2,000,000 = 0.70

Gross profit 500,000 * 0.70 = 350,000

For year 3 payment for the projects 2,000,000

500,000 + 900,000 + 600,000 = 2,000,000 / 2,000,000 = 1.00

Gross profit 500,000 x 1 = 500,000 -350,000 from year 1 = 150,000 gross profits

Question 23

according to the guidance for revenue recognition from contracts which amoritized initial capitalization?

Answer 23

incremental costs of obtaining a contract and cost incurred to fulfil a contract are both considered

Question 24

The effects of transaction that is infrequent in occurrence and unusual in nature should be presented separately as a components of income continuing operations?

Answer 24

both gains and losses

Question 25

Calc, the gross profit that should be reported for the project?

Answer 25

Step 1 cal the gross profit of the contract to start off with the contract price 4,200,000 cost incurred in year 1,750,000 estimated costs to 1,750,000 add the cost and estimated 3,500,000 contract price 4,200,000 tot esti cost 3,500,000 = estimated gross profit 700,000 Step 2 - we need to calc the one half of the estimated costs of this construction projects add the cost incurred and estimated costs which will give you a estimate cost 3,500,000 1,7500,000 + 1,750,000 estimated total cost 3,500,000 / estimated cost 1,750,000 = 2 = 700,000 / 2 = 350,000

Question 26

calc the contract completed of project?

Answer 26

Step 1 calc the percentage for each project In order to calc the percentage we need to first calc the cost incurred and the estimated costs to complete which gives us the completed estimated cost so cost incurred for P1 is 240,000 + estimated costs completed 120,000 = tot estimated cost completed 360,000 next we need to cost incured / tot estimated cost 240,000 / 360,000 = **0.67777% for project 1 ** Project 2 calc the percentage we need to first calc the cost incurred and the estimated costs to complete which gives us the completed estimated cost so cost incurred for P1 is 280,000 + estimated costs completed 40,000 = tot estimated cost completed 320,000 next we need to cost incured / tot estimated cost 280,000 / 360,000 = **0.875% for project 2 ** Step 2 calc the gross profit for project 1 and 2 Contract price - total estimated cost Project 1 contract price 420,000 and the incurred cost 240,000 + estimated cost 120,000 = 360,000 420,000 - 360,000 = 60,000 x 0.677 = 40,000 Project 2 contract price 280,000 and the incurred cost 280,000 + estimated cost 40,000 = 360,000 300,000 - 320,000 = -20,000 40,000 + (20,000) = 20,000

Question 27

How to calc the gross profit contract recognized in the income statement?

Answer 27

Important to note that in this contract revenue is recognized over the time and based on the progress towards completion Also important to note that the input method based on costs is used to calc this problem First step we need to start off with calc the gross profit for year 3 Start off with the contract 2,500,000 700,000 + 500,000 + 800,000 = 2,000,0000 incured cost and estimated costs contract 2,500,000 - 2,000,000 = 500,000 gross profit year 2 Start off with the contract 2,500,000 700,000 + 500,000 + 675,000 = 1,875,0000 incurred cost and estimated costs contract 2,500,000 - 1,875,000 = 500,000 gross profit = 675,000 Final step we need to divide the numbers 700,000 + 500,000 cost incurred = 1,200,000 700,000 + 500,000 + 675,000 = 1,875,000 1,200,000 / 1,875,000 = 0.64

Question 28

How to calc the revenue on the contract recognized on the income statement?

Answer 28

Important to note that in this contract revenue is recognized over the time and based on the progress towards completion Also important to note that the input method based on costs is used to calc this problem basically we need to subtract the completion from year 2 - 3 Year 3 the completion would be 100% 2,500,000 as the contract is completed next we would need to calc the completion for year 2 Year 2 Start off with the contract 2,500,000 700,000 + 500,000 + 675,000 = 1,875,0000 incurred cost and estimated costs contract 2,500,000 - 1,875,000 = 500,000 gross profit = 675,000 Final step we need to divide the numbers 700,000 + 500,000 cost incurred = 1,200,000 700,000 + 500,000 + 675,000 = 1,875,000 1,200,000 / 1,875,000 = 0.64 100% - 64% = 0.36% 2,500,000 x 0.36% = 900,000

Question 29

can you recognize revenue when the cost incurred is expected to recover?

Answer 29

yes, as long as the cost is recoverable and the performance obgligation is satisfied

Question 30

are adjusted market assessment and minimum amount in the range of possible amounts acceptable for estimating the amounts of variable consideration in contracts with customers?

Answer 30

NO they're not

Question 31

Are estimated of the price in the sellers market and residual approach are good alternative for estimating standalone selling price?

Answer 31

yes both

Question 32

How to calc the DEPS incremental effects?

Answer 32

So here we need to first start off with Net income 170,000 and the WAAC 100,000 plus the preferred shares and the convertible 20,000 of common shares so the denominator looks like this 100,000 + 20,000 + 30,000 Net income 170,000 - 30,000 + 63,000 1,000,000 x 9% x (1-30%) = 63,000 So first we need to calc the BEPS Net income 170,000 - 30,000 Common Stock 100,000 = 1.40 BEPS 30,000 / 20,000 = 1.50 DEPS 63,000 / 30,000 = 2.10 DEPS So here the lowest incremental effects is the BEPS which can be used 1.40

Question 33

calc the revenue recognized by the entity on the sale of product X?

Answer 33

Start off the problem by adding the standalone selling price of 40,000, and 120,000, and standalone selling price of product Z of 160,000 = 320,000 the sum of the all the standalone products Step 2, is to divide the product X by 40,000 / 320,000 = 0.13 x 250,000 = 31,250

Question 34

calc the refund liabiltiy to be reported on the balance sheet?

Answer 34

to calc the refund liability we need to subtract machine 20 total machine - 10 machines = 10 machines x 75 is the price that was purchased in the beginning of the problem

Question 35

calc the revenue from the machine contract?

Answer 35

we start off with the 150 machines - 20 machines returned = 130 machine next we next multiply the price per $75 which equals = 9.750

Question 36

Calc, the gross profit recognized?

Answer 36

Here, we are using the input method Part 1 we need to calc the gross profit for the business Contract 1,000 actual. 300 Gross profit. 700 Part 2 for year 1 gross profit Contract 1,000 actual (300) construction cost (100) estimated total profit 600 600 * 100 / 400 = 150 recognized Gross Profit 700 - 150 profit recognized = 550 for gross profit

Question 37

What happens to foreign exchange when the exchange rate increases between the date a receivable is recorded and the date the cash receipt?

Answer 37

Gain between both date received and date recorded

Question 38

Calc, foreign currency transaction loss?

Answer 38

Step 1 see the loss per transaction that has occurred Jan 20 year 4 90,000 March 20 year 4 96,000 -6,000 july 1 year 4 500,000 dec 31 year 4 520,000 -20,000 Step 2 we need to calc the interest accured 500,000 x 10% = 50,000 * 6/12 = 25,000.00 26,000 - 25,000 = 1,000 Final Step is to 6000 + 20,000 + 1000 = 27,000 transaction loss

Question 39

Calc the commission expense?

Answer 39

Sales 15,000,000 x 3% = 450,000

Question 40

calc the gross profit recognized by big in year 2 income statement?

Answer 40

Step 1 calc the year 2 gross profit Contract price 2,500,000 700,000 incured 500,000 expected 675,000 1,875,000 2,500,000 - 1,875,000 = 625,000 gross profit for year 2 Step 3 calc the completion for year 2 700,000 500,000 1,200,000 700,000 500,000 675,000 1,875,000 1,200,000 / 1,875,000 0.640 completed process Step 3 calc the year 1 Contract price 2,500,000 inccured 700,000 expected 1,300,000 2,000,000 gross profit year 1 2,500,000 - 2,000,000 = 500,000 Step 3 calc the completion for year 1 700,000 2,000,000 0.35% step 4 final Year 2 gross profit was 625,000 * 0.64 = 400,000 Year 1 gross profit was 500,000 * 0.35 = 175,000 400,000 - 175,000 = 225,000

Question 41

How to calc the costs of goods sold?

Answer 41

cogm 520,000 begin in 120,000 end in. (110,000) = 530,000 COGS

Question 42

Calc, expense that should be included in the quarterly statement for 3 months ended June 30 year 4?

Answer 42

Property taxes 180,000 / 4 = 45,000 unanticipated repairs 300,000 / 3 quarters = 100,000

Question 43

How are gains and losses reported for Interim financial reporting?

Answer 43

in full when the gain or loss has occurred

Question 44

What are the examples that are in prior interim period adjustments

Answer 44

Lawsuits Income tax Renegotiation proceedings

Question 45

What is the primary objective of interm financial reporting?

Answer 45

Timeliness

Question 46

A transaction that is unusual in nature or infrequent in occurrence

Answer 46

component of income from continuing operations but not net of application income taxes must be reported in separate component of income from continuing operation

Question 47

What are the adjustments made when the application is retrospective?

Answer 47

you need to go back to the prior period and make the changes towards those periods as well

Question 48

How is a change in accounting estimates accounted?

Answer 48

by prospectively applying the changes to current and future periods

Question 49

if it's reporting entity remember what?

Answer 49

retrospective

Question 50

when there is a change in accounting principal which method is used?

Answer 50

retrospective

Question 51

When should a company report a prior period adjustment?

Answer 51

restatement of the prior period statements presented errors include the following: -mathematical mistakes, -mistakes in applying accounting principals -and oversight 9

Question 52

How to calc the interest expense for the loan?

Answer 52

Year 4 10,000 x 12% x 10 / 12 = 1,000 30,000 x 12% x 6 / 12 = 1,800 16,000 x 12% x 8 / 12 = 1,280 = 4080 - 3000 = 1080

Question 53

best evidence of standalone price of a promised good or service to a customer is?

Answer 53

observable price

Question 54

How to calc the discontinued operations should report gain or loss?

Answer 54

For year 4 we subract the gains and losses So here first we will start with the gain on disposal 400,000 - losses before income tax 225,000 = 175,000 x (1 - 0.30) = 122,500 gain for year 4 For year 3 we already have a losses on the income taxes of 125,000 x (1- 0.30) = - 87,500 losses for year 4

Question 55

according to GAAP issued by FASB an entity that presents a full set of financial statements?

Answer 55

must report Comprehensive income if it has items of other comprehensive income (OCI)

Question 56

if there are foreign currency transaction gains where should they reported?

Answer 56

component of income from continuing operations

Question 57

True or False Whenever it's impossible to determine whether a change in accounting estimates or change in accounting principle has occured the change should be considered in estimate?

Answer 57

True

Question 58

calc the BEPS Weighted Average numbers? Shares outstanding at 1/1 100,000 Stock Dividends at 3/31 24,000 Stock issurance at 6/30 5000

Answer 58

So when stock dividends is issused it's included with shares outstanding 100,000 + 24,000 = 124,000 x 6 /12 = 62,000 124,000 + 5000 = 129,000 x 6 / 12 = 64,500

Question 59

Calc the accumulated depreciation machine balance?

Answer 59

Step 1 is where purchase price for machine 528,000 / 8 years = 66,000 this is for the first three years and the next four years it's different Step 2 is where we need to calc the accumulated depreciation so 66,000 x 3 years = 198,000 accumulated depreciation Step 3 is where we need to calc the the remaining of the depreciation. So first we need to Cost of the machine 528,000 - accum depreciation 198,000 = 330,000 carrying amount Step 4 we need to use the carrying value of 330,000 - 48,000 salvage value = 282,000 / 3 ears remaing = 94,000 Final step we need to first add the accumulated depreciation 198,000 + 98,000 = 292,000

Question 60

When there is a change in principle inseparable from a change in estimates is it accounted prospective or retrospective?

Answer 60

prospectively

Question 61

A change in new information what kind of change is that? prospective or retrospective?

Answer 61

prospective

Question 62

Calc the Retained Earnings issues single period statements only?

Answer 62

usually a $0

Question 63

How to calc the cumulative effect accounting change on prior periods should be reported in the year end?

Answer 63

Since the change is from LIFO to FIFO inventory measurement is change in accounting principal it the changes must be done retrospectively to the financial statements 500,000 x (1 - 30% tax rate)

Question 64

Calc the prior period adjustment using the tax rate?

Answer 64

**Part 1 calc the after tax understandment of NI ** 210,000 machine purchased 0.700 (1-30%) tax rate 147,000 aftertax under understandment of net income **Part 2 calc the straight line method ** 210,000 Machine purchased salvage value 10,000 200,000 10 year useful life 20,000 annual depreciation **Part 3 calc the after tax calc the after tax 20,000 salvage value 1-3 resulted in an after tax 3 years 60000 0.7 anual tax rate (1-30%) 42000 aftertax under understandment of net income 147,000 after tax overstatement 42,000 prior period adjustment 105,000

Question 65

When there are reporting treatment for change in accounting estimates?

Answer 65

by the period of change in the future periods bc changes in estimates are changes that are made prospectively

Question 66

Where are material transaction that are unusal in nature or infrequent in occurance reported?

Answer 66

component of income from continuing operations

Question 67

How are changes in accounting estimated occurred?

Answer 67

New information or a reassessment of the future benefits and obligations

Question 68

How are the changes in accounting estimates accounted?

Answer 68

future periods and or a period that affects that situation Ex - would be estimated useful life of a depreciable asset

Question 69

calc the AFS debt securities and how much would it increase?

Answer 69

For AFS debt securities securties we need to measure it at FV in the financial statement Dec 31st year 4 160,000 Dec 31st Year 3 130,000 = 30,000 unrealized holding gains

Question 70

if there is a loss in the quarterly financial statement when would the loss be recorded?

Answer 70

the quarterly the loss has occurred

Question 71

When there is a change in the reporting entity how should the change be reported?

Answer 71

retrospectively including note disclosures and application to all prior period financial statements presented

Question 72

What are the two types of subsequent events?

Answer 72

Event or where the transactions provides evidence about condition at (the date of balance sheet), including the estimates inherents in the statements preparation Events or transaction Event or where the transactions provides evidence about condition at

Question 73

When there is a fire or other casualty and it occurs a few days after the balance sheet date. Should this be reported in the financial statements?

Answer 73

it should be disclosed not reported on the financial statements bc it prevents the financial statements from being misleading

Question 74

T or F are there disclosure made to the financial statement when a change of budgeting and other managarial decisions are made?

Answer 74

False no disclosure are made when board or managerial makes decisions

Question 75

When should an entity report an adjustment on the financial statements for year end?

Answer 75

When there is additional evidence about the condition that existed on the balance sheet date

Question 76

Calc, the total income tax exp in it's interim income statement for the second quarter?

Answer 76

To calc the interest exp for the interim income statement Q1 before income tax exp 10,000 Q2 before income tax exp 20,000 = 30,000 total year to date income x 25% = 7500 total income tax - income tax exp Q1 = 6,000 income tax exp for Q2

Question 77

How to calc the BEPS?

Answer 77

To calc the BEPS Net Income - 5,300,000 - (50,000 shares x 100 par x 10%) preferred dividends 5,300,000 - 500,000 = New NI 4,800,000 Step 2 - calc the correct common shares Jan 1 - May 31 1,060,000 x 5/12 = 441,667 Jun 1 - Dec 31 1,060,000 + 60,000 = 1,120,000 x 7 /12 = 653,333 441,6667 + 653,333 = 1,095,000 Common stock shares

Question 78

calc the revenue for the contract recognized on the income statement?

Answer 78

So when we calc the revenue for a contract remember we are recognizing the revenue over time based on completion So first step is to calc the completion of the contract then we can calc the contract revenue incured cost year 2 500,000 incured cost year 1 700,000 1,200,000 incured cost year 2 500,000 incured cost year 1 700,000 costs expected 675,000 1,875,000 = 1,200,000 / 1,875,000 = 0.64 (100% - 64%) = 36% 2,500,000 contract price 36% = 900,000 revenue recognized

Question 79

Are any of the estimating the mounts of variable consideration in contracts with customers?

Answer 79

No neither, adjustment market assesment or min amount in the range of possible amounts

Question 80

What are the items that are needed to be fulfiled to be recognized as a contract?

Answer 80

1 - both parties need to agreed and approved 2 - the contract has commercial substance 3 - payment term must be indentfied 4 - each parties rights regarding goods or services to be transferred 5 - probable that the entity will collect the consideration entitled according to the contract

Question 81

The if converted method computing diluted earning per share (DEPS) amounts assumes conversion of convertible securities

Answer 81

beginning of the earliest period reported or at time of issuance if later

Question 82

How do you calc adjusted beginning Retained Earnings?

Answer 82

To start off we start with RE which is 400,000 Next the premium insurance which was expensed over the 3 years. So we need to 60,000 / 3 = 20,000 60,000 - 20,000 = 40,000 Next step is we need to multiple the 40,000 x the tax rate (1-30%) 0.7 = 40,000 x 0.70 = 28,000 400,000 retained earnings 28,000 428,000

Question 83

When there is depreciation expense issue

Answer 83

any prior period adjustment are not recovered to be adjusted so the adjustment is 0

Question 84

When there is a contract modification what would be the condition for the contract to be present in order for the contract modification to be accounted for a separate contract?

Answer 84

1 - scope of the contract increases because of the additional of promised goods or service 2 - price of the contract increases by an amount of consideration that reflects an entity standalone selling prices of the additional promised Goods & Services

Question 85

Calc the profit recognized for year 2?

Answer 85

To calc the profits for year 2 we need to first calc the profits for year 1 Calc the profits for year 1 Contract 1000 incurred. 100 estimated 300 400 600 Next calc the percentage of completion Incurred 100 estimated 400. 100 / 400 = 0.25 600 x 0.25 = 150 Year 2 Contract 1000 300 700 Profits recognized 700 - 150 = 550 profits recognized for year 2

Question 86

When reporting translation accounts balances from another currency US dollars for year end financial statements should use the currency exchange for the balance sheet for which account?

Answer 86

Accounts Receivable bc foreign subsidiaries are required to be reported in the consolidated financial statement. This method is used to convert foreign currency to assets and liabilities so that's why it's reported on current assets

Question 87

Calc the expense relating to the total amount of expense relating to the two items that should be reported?

Answer 87

total depreciation exp 60,000 bonus to employee 120,000 = 180,000 / 12 months x 6 months = 90,000

Question 88

item that isn't subject to application of intraperiod tax allocation?

Answer 88

Operating income

Question 89

A transaction that is unusual in nature or infrequent operations in occurrence should be reported

Answer 89

Component of income from continuing operations is separate net of application income taxes

Question 90

When there is a change in the estimates useful life of a depreciable asset should be reported

Answer 90

prospectively

Question 91

Item not subject to intraperiod income tax allocation?

Answer 91

Operating income

Question 92

How to calc the contract costs incurred during year 2?

Answer 92

To calc the contract cost you need to remember that estimated total costs at completion and cumulative costs So Year 1 we multiply the % completion 20% x 7,500,000 = 1,500,000 So Year 2 we multiply the % completion 60% x 8,000,000 = 4,800,000 = 4,800,000 - 1,500,000 = 3,300,000 costs incurred during year 2

Question 93

what on the annual report for 10-K on the MD&A?

Answer 93

Covers three financial aspects of a firms business, liquidity, and capital resources and results of operations

Question 94

Foreign exchange rate decreases between

Answer 94

So remember that the foreign transaction gain or loss commonly known as foreign exchange gain or loss are reported in earnings When the functional currency exchangeable this cause exchange rate to increase and it's recorded date of cash receipt

Question 95

How to calc the revenue on a contract recognized in the income statement?

Answer 95

To calc the revenue on a contract we need to first calc the completion So first we add the "Cost incurred each year" + "Costs expected in the following years" 700,000 + 1,300,000 = 2,000,000 700,000 / 200,000 = 35% 2,500,000 x 35% = 875,000 Revenue contract is recognized

Question 96

Calc the gross profit using the the input method?

Answer 96

Remember for the input method we use the following things - costs incurred during year 1 - estimated costs to complete Step 1 calc the percentage of the projects 240,000 (240,000 + 120,000) = 66% Step 2 calc the profits 240,000 + 120,000 = 360,000 Contract price 420,000 - 360,000 = 60,000 x 66% = 40,000 60,000 profits - 40,000 = 20,000 gross profits

Question 97

When there are prior period adjustments for depreciation do we make any adjustment for the current period?

Answer 97

No the current period doesn't need adjustments

Question 98

Calc the prior period adjustment reported?

Answer 98

Part 1 calc the YR1 adjustment machine price 210,000 * (1-30%) = 63,000 210,000 - 63,000 - 147,000 expense for one year Part 2 calc the annual depreciation exp 210,000 - Salvage value 10,000 = 200,000 / 10 years = 20,000 Part 3 20,000 X 3 YEARS = 60,000 * (1-30%) = 42,000 Part 4 147,000 - 42,000 105,000 prior period adjustment

Question 99

On the multiple step income statement calc the COGSM?

Answer 99

COGS - 60,000 Begin - 100,000 Ending - 90,000 = 60,000 - 100,000 + 90,000 = 50,000

Question 100

When there is a change based on new information is that considered to be change in estimate or retroperspective?

Answer 100

it's change in estimate

Question 101

The financial statement disclosure of accounting policies

Answer 101

Disclosure of accounting policies is an integral part of financial statement

Question 102

The contract price is 1000 cal the profit recognized?

Answer 102

contract 1000 incurred 100 complete 300 400 1000 - 400 = 600 100 / 400 = 0.25 600 x 0.25 = 150 1000 contract price 300 completed 700 700 - 150 = 550

Question 103

Are temportary losses recognized on interim financial statements?

Answer 103

Losses are NOT recognized which means it the same for gains as well

Question 104

Are adjusted market assessment and min amount in the range of possible amounts are variable consideration in contract with customers?

Answer 104

NO for adjusted market assessment and min amount in the range of possible amounts

Question 105

When there is a error on prior period adjustments for statements. How to adjust them?

Answer 105

when there is a error that needs to be restated you need to remember that any errors related to prior period must be reported as an error correction by restating financial statement

Question 106

A material loss is NOT a component of current period income from continuing operations when it is

Answer 106

a cumulative effect change in accounting principals

Question 107

When there is foreign exchange gain or loss where is it recorded and how

Answer 107

recorded in earnings when there is transaction fixed increases and a transaction gain or loss is recognized on a receivable or payable

Question 108

calc, how to calc the contract that needs to be recognized in year 1?

Answer 108

Contract is 2,500,000 Incurred 700,000 cost expected in years 1,300,000 700,000 / (700,000 / 1,300,000) = 35% 2,500,000 x 35% = 875,000

Question 109

When there is an event where the market price for a common stock subsequently declined by 50% would accountants need to report that on the financial statements?

Answer 109

No because it's not a financial event that really effects the financial statements Also wanted to add stocks prices are changing on daily basis

Question 110

The purpose of FMV of an asset or liability a transaction is assumed to occur in the

Answer 110

principal market since it has the greatest volume or level of activity

Question 111

Company that has revenue between 800 milion how would they report the form?

Answer 111

Form 10K for 60 days after the end of the reporting period

Question 112

Interim financial reporting should be viewed primarily in which of the following ways?

Answer 112

As reported for an integral part of an annual period

Question 113

What fair value hierarchy level 1 used for?

Answer 113

Most reliable and also the unadjusted quoted prices with active assets and liability

Question 114

When quoted prices for similar assets as the basis for determining FV of it's investments, what level hierarchy is that?

Answer 114

Level 2 remember the quoted prices for similar assets

Question 115

The transaction price generally should be adjusted for the effect of the time value of money when

Answer 115

1- selling price of the product 2 - consideration promised contract indicate that the financing component is significant

Question 116

Are revenue recognition from contracts with customers standards provides model that

Answer 116

From single principal based and it eliminates the most current industry specific guidance

Question 117

Calc the net profit or loss from the transaction by viewing the related to the sales of cosignment inventory?

Answer 117

Cost of merchandise 72,000 Freight out. 7,500 Total 79,000*2/3 = 53,000 Step 2 - is to subtract the consignee and the total of 53,000 80,000 53,000 =27000 4500 + 8000 = 12,500 27,000 - 12000 = 14,500

Question 118

In determining earnings per share interest expense net of application income taxes on Diluted convertible debt should be

Answer 118

added back to net income for diluted earnings per share

Question 118

Calc, the basis earnings per share?

Answer 118

1/1 - 3/31 700,000*3/12 175,000 3/31 - 6/30 700,000 20,000 680,000 x 3/12 170,000 6/30 - 12/1 680,000 40,000 720,000 x 5/12 300,000 12/1 720,000 36,000 684,000 x 1 /12 57,000 702,000

Question 119

Calc, the net income for the company?

Answer 119

Revenues 80,000 Oper Exp. 50,000 Income 10,000 = Net Income 20,000

Question 120

CALC, THE GROSS PROFIT TO BE RECOGNIZED USING THE INPUT METHOD

Answer 120

PART 1 CONTRACT PRICE 3,000,000 ESTIMATED CONTRACT 2,000,000 COST INCURRED 700,000 PART 2 COST TO COST BASIS 700,000 / 2,000,000 0.35 PART 3 CONTRACT PRICE 3,000,000 ESTIMATED CONTRACT 2,000,000 DIFFERENCE 1,000,000 PART 4 DIFFERENCE 1,000,0000 RATE 0.35 GROSS PROFIT RECOGNIZED 350,000

Question 121

The per-share amount must be reported on the face of a public company’s income statement for which of the following items?

Answer 121

Income from continuing operations since all companies must share amounts for income

Question 122

When the effect of a material transaction that is infrequent in occurrence and unsual in nature should be presented separately as a component of income from continuing operations when the transaction results

Answer 122

both yes gain or loss

Question 123

Calc, the interest expense and the contract liability?

Answer 123

To calc the contract liability we need to use the entity receives a payment which is 20,000 x 1.06 = 21,200 contract liability at the beginning of the year 21,200 x 1.06 = 22,472 contract liability at the end Next we need to calc, the interest expense. To calc the we need to use 21,200 x 6% = 1,272 interest expense for Y2

Question 124

When an entity uses the revenue recognition method from long term contract over time and the the performance of the contract cannot be reasonably measure the outcome but the expects the costs incurred revenue should be recognized based on

Answer 124

a zero profit margin since the contract cannot reasonably measure the outcome

Question 125

A promised asset is transferred in full satisfaction of a performance obligation in a contract when the customer

Answer 125

obtains control of the asset

Question 126

Amount should be added as an adjustment to the numerator earnings to common shareholders?

Answer 126

Annual preferred dividend

Question 127

Adjustment of the transaction price to reflect the time value of money results in

Answer 127

interest income or expense that is presented in the income statement separately from revenues

Question 128

Calc, the DEPS for the year ended December 31st?

Answer 128

Shares Outstanding Jan 1 - June 30 300,000 July 1 - Dec 31 350,000 Weighted AVG shares outstanding 300,000 x 6/12 + 350,000 x 6/12 = 325,000 shares Shares attributed to unexpected stock options 40,000 shares x 15 per share = 600,000 proceeds 600,000 / 20 per share = 30,000 Number of incremental shares 40,000 - 30,000 = 10,000 Number of shares used in computing DEPS 325,000 shares + 10,000 = 335,000

Question 129

Calc, the basic earnings per share?

Answer 129

18,000 shares x 3/12 = 4500 18,000 + 3,000 additional shares = 21,000 x 8 /12 = 14,000 21,000 - 1,200 treasury stock sold = 19,800 x 1/12 = 1650 4,500 + 14,000 + 1,650 = 20,150

Question 130

Calc, the BEPS net income or loss available shareholders for Q1?

Answer 130

Step 1 - Calc the net income bc sometimes net income isn't mentioned So we start off with income from continuing operations 1,000,000 Next we have discontinued operation 1,200,000 = 1,000,000 - 1,200,000 = 200,000 Preferred Stock - 60,000 x 0.10 = -206,000 Step 2 - calc the weighted AVG number of shares used in the BEPS 300,000 + 12,000 shares issued on March x 1 / 3 = 344,000 = -206,000 / 344,000 = =0.60 BEPS

Question 131

Calc, the revenue contract recognize income statement?

Answer 131

To calc the revenue for the contract recognized we need to first use the input method Step 1 Add the costs incurred and the costs expected in the following years 700,000 + 1,300,000 = 2,000,000 700,000 / 2,000,000 = 0.35 Step 2 2,500,000 x 35% = 875,000 revenue recognized for year 1

Question 132

Calc, basic earnings per share?

Answer 132

Net income - 500,000 - 10,000 = 490,000 AVG WEIGHTED 200,000 490,000 / 200,000 = 2.45

Question 133

Determine the transaction price of a contract with a significant component with "undiscounted cash flows" & "Variable Consideration"?

Answer 133

For variable consideration it's "YES" because variable consideration also determines the transaction price Undiscounted Cash Flows is consideration "No"

Question 134

A promised asset is transferred in full satisfaction of performance obligation in a contract when the customer

Answer 134

obtains control of the asset

Question 135

In computing the loss per share of common stock, cumulative preferred dividends not earned should be

Answer 135

added to the loss for the year

Question 136

when there is a functional currency to units of the foreign currency is there a gain or loss and what happens to AP or AR?

Answer 136

a gain is occurred and the exchange causes an increase on the date of receivable is recorded on the date of cash receipts