Exam 2: Intermediate Accounting Volume 2

Note issued for non-cash consideration On July 1, 2014, Modesto Holdings Ltd.issued a $50,000 face value note due June 30, 2017 with a stated interest rate of 4% to Modern Consultants in return for consulting services provided in 2014.The value of the consulting services is not readily determinable and the note is not readily marketable.On the basis of a credit analysis, a reasonable imputed interest rate would be 12%. Instructions Prepare the journal entry to record the issuance of the note by Modesto.Use your calculator and round values to the nearest dollar.

Stock dividends Describe the accounting treatment for the declaration of a common stock dividend.

Which of the following is a current liability?

Jesse Corp.owns 4,000,000 shares of James Corp.On December 31, 2014, Jesse distributed these shares as a dividend to its shareholders.This is an example of a

When a note payable is issued for property, goods, or services, the present value of the note should preferably be measured by

A contract representing the covenants and other terms of the agreement between the issuer of bonds and the lender is known as a

Continental Company's 2014 financial statements contain the following selected data: Continental's times interest earned for 2014 is

Preferred shares are often issued instead of debt

The December 31, 2014, statement of financial position of Cotton Corporation includes the following: 9% bonds payable due December 31, 2023 $718,900 The bonds have a face value of $700,000, and were issued on December 31, 2013, at 103, with interest payable on July 1 and December 31 of each year.Cotton uses straight-line amortization to amortize bond premium or discount.On March 1, 2015, Cotton retired $280,000 of these bonds at 98 plus accrued interest.Ignoring income taxes, what should Cotton record as a gain on retirement of these bonds?

Hamilton Ltd.has both common shares and non-participating, non-cumulative preferred shares outstanding.The book value per common share is NOT affected by

What effect does the issuance of a 2-for-1 stock split have on each of the following?

Suede Corp.called an outstanding bond obligation four years before maturity.At that time there was an unamortized discount of $150,000.To extinguish this debt, Suede had to pay a call premium of $75,000.Ignoring income tax considerations, how should these amounts be treated for accounting purposes?

Which of the following commitments would NOT require disclosure in the financial statement notes?

If a long-term note is issued with zero interest or for non-monetary consideration,

On January 2, 2014, Muslin Ltd.sold five year, 8% bonds with a face value of $900,000. Long-Term Financial Liabilities 14- 15 Interest will be paid semi-annually on June 30 and December 31.The bonds were sold for $830,400 to yield 10%.Using the effective interest method of amortization of bond discount or premium, interest expense for 2014 is

Income taxes at interim dates Discuss how income taxes are handled at interim dates.

Taxable loss carryforward with valuation allowance (ASPE) In 2014, its first year of operations, Jersey Inc.reported a $200,000 loss for tax purposes. However, in 2015, Jersey reported $250,000 taxable income.The tax rate is 20%, and is likely to remain at this rate for the foreseeable future.Jersey is a private corporation reporting under ASPE. Assume Jersey's management thinks, at the end of 2014, that it is likely that the loss carryforward will not be realized in the near future.Jersey chooses to use the valuation allowance method for loss carryforwards. Instructions a.What entries (if any)would be prepared in 2014 to record the loss carryforward? b.What entries (if any)would be prepared in 2015 to record the current and future income taxes and to recognize the loss carryforward?

Use the following information for questions. The following data are provided for Croatia Corp.'s last two fiscal years: Shareholders' Equity 15- 27 Additional information: On May 1, 2015, 6,000 common shares were issued.Although dividends had been declared regularly up to December 31, 2014, preferred dividends were NOT declared during 2015.The market price of the common shares was $100 at December 31, 2015. -The December 31, 2014 condensed balance sheet of Bee Services, a proprietorship, follows: On January 1, 2015, Bee Services was incorporated as Bee-Line Ltd., with 10,000 no par value common shares issued.How much should be credited to Common Shares?

Regarding Provincial Sales Tax (PST) Non-Financial and Current Liabilities 13- 11

Which of the following statements is INCORRECT regarding the recording of the related increase or accretion in the carrying amount of an asset retirement obligation (ARO)?