MCQS issues Flashcards
Company retired bond after 10 years instead of 30. Bond was issued with discount 98 and sold at Y10 at 102. what $ loss on canceling of debt? Bond Face $1.5 mil.
Bond Face $1.5 mil.
Less: Unamortized discount (20k). Since only 1/3 of discount $30K was amortized.
Less: Unamortized bond issue cost (60k). Since only 1/3 was amortized out of $90k. Net Carrying Value =1.5 mil–$20k -$60=$1.42 mil
Bond sold at 102 = $1.53 mil -$1.42mil =$110k
what is deferred income tax liability (temporary differences)?
Equity in earnings $180k per Books.
Dividends received from investee $30k (per Tax)
Less: 65% dividends deduction (180-117k=63) for equity.
Less deduction for dividends (30k-19,5k)=10,5k (permanent difference).
Temporary dif 63k-10,5k=52.5
Def tax liability =52.5*21%(future tax rate)= 11,025.
Government-wide fin stmt would include all government-wide activities associated with the operational accountability for all except
Fiduciary activitiy should excluded form gov -wide smt measures of operational accountability since fiduciary resources cannot be used to support the governm. programs or other services.
How donation of art work must be accounted for?
Governments should capitalize works of art such as this unless they meet certain criteria (i.e., artwork is held for public exhibit, artwork is protected, policy dictates that the proceeds from any sales of the artwork will be used to acquire other items for collections). In this case, the proceeds were going to be used for a park, which would not meet the criteria.
Where to book a result of the change in exchange rates (euro to dollars)
In foreign exchange transactions, gains and losses that result from changes in interest rates are booked on the income statement.
But foreign currency TRANSLATION will go to OCI.
How to report Custodian fund
reports items such as current assets equaling current liabilities, and NO Fund Balanceno year-end balance as the money is periodically transferred to an authorized recipient (i.e., fund, individual, government) to clear the fund.
FASB ASC 958, Financial Statements of Not-for-Profit Organization focuses on
ASC 958 primarily focuses on basic information for the organization as a whole. The standards establish guidance for general-purpose external financial statements provided by a not-for-profit organization.
Which rate to use (expected rate on the lease 10% or incremental borrowing rate 12%) for discount cash flow
Rule: Lessee should use the rate implicit in the lease (if known by the lessee) to discount cash flows. (10%)
New partner bring 20% ( no goodwill or bonus is to be recorded). What amount should Capp contribute?
Fair Value of Asset = $580k
20% * ($580 + Capp contr) = Capp’s contribution
$116k +0.2 Capp cont= Capp contrib.
$116/0.8 = $145k Capp contrib.
How to calculate RE and Shareholder’s equity
Capital stock: $300,000 (10,000 shares × $30 par per share).
APIC: $200,000 [10,000 shares × ($50 sale price – $30 par)].
Retained earnings: $50,000 [Year 1 net income of $100,000 + Year 2 net income of $200,000 – Year 2 dividends paid of $250,000 (10,000 shares × $25 per share)].
Shareholders’ equity is, therefore, equal to $300,000 (capital stock) + $200,000 (APIC) + $50,000 (retained earnings) = $550,000.
which currency rate should Company use to convert it IS to US dollars at year-end?
Absent any information to the contrary, the functional currency of the British subsidiary must be the British pound. To convert from the British pound to the U.S. dollar (the reporting currency), the translation (current) method is used and all income statement items are translated using the average exchange rate.
What amount should be reported as uncollectible accountant expense on Year 2 stmt.
Beginning Year 2 balance is $30k. Written off $40k. The balance is negative $10k now. The ending balance is 8% of $300k , which is $24k. The plug is $34k.An adjusting entry of $34,000 must be recorded to increase the allowance balance to 24,000 at year-end. Dr. Uncollectible accounts expense 34,000, Cr. Allowance for uncollectible accounts 34,000. See T-account representation below.
Allowance for Doubtful Accounts | $30,000 $40,000 | | 34,000 ← Plug | $24,000
Fiscal year end on Sep 30, and JE made on quarterly basis, what single AJE on Dec 31, if the comp recognized only net sales and the paid operating expenses associated with sales during this quater?
Debit (Dr) Credit (Cr)
Selling/back office expense
50,000
Operating expense
150,000
Accrued SBO expense
50,000
Accrued operating expense
150,000
The $150,000 (20% of $750,000) unpaid operating expenses and the $50,000 (40% x $125,000) indirect selling and back office expenses were not expensed. As a result, the following single adjusting entry should be made to record the unpaid amounts of $150,000 for operating expense and $50,000 in sales and back office expenses on December 31:
How to calculate depletion amount for Income Statement?
The depletion base equals the purchase price ($2,640,000) plus the development costs ($360,000) plus the estimated restoration costs ($180,000) less the expected salvage value ($300,000) or $2,880,000. Depletion is $2.40 per ton ($2,880,000 / 1,200,000 tons). Depletion expense is $144,000 ($2.40 per ton × 60,000 tons sold).
Which item will valued diff depending on fin stmt translated using TRANSLATION or REMEASUREMENT method?
Depreciation Expense.Under the translation method, all income statement items are translated using the weighted average rate. Under the remeasurement method, depreciation is translated at the historical rate.
What is the purpose of the concerning financial stmt disclosure of acct policies?
Disclosure of accounting policies (and all other disclosure also) is an integral part of the financial statements.
Receipts from a special tax lev to retire and pay interest on general obligation bonds should be recorded in which fund?
he 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.
Fin reporting basis of comp plant assets exceeds the tax basis. The company will report as:
Deferred tax liability. If book basis of asset is greater than tax basis (resulting from different depreciation methods), a deferred tax liability should be established for the tax effect of the difference. In future years the taxable income will be higher than book income when the temporary difference reverses.
