Question 1

Which of the following may form part of a disposal group?

Accepted Answer

A) Accounts receivable which are expected to be sold to a factoring company. 
B) A discontinued operating segment. 
C) Stand-alone assets and liabilities that form a distinct group within part of an operating segment. 
D) Both B and C are correct. 
A) Accounts receivable which are expected to be sold to a factoring company. 
B) A discontinued operating segment. 
C) Stand-alone assets and liabilities that form a distinct group within part of an operating segment. 
D) Both B and C are correct.

Question 2

Basic and diluted Earnings per share figures must be disclosed under both ASPE and IFRS.

Accepted Answer

The answer of Basic and diluted Earnings per share figures...

Question 3

When a segment of a business has been discontinued during the year,the gain or loss on disposal should:

Accepted Answer

A) Include operating losses of the current period up to the measurement date. 
B) Be net of applicable income taxes. 
C) Be reported as an infrequent item. 
D) Include operating losses during the phase-out period. 
A) Include operating losses of the current period up to the measurement date. 
B) Be net of applicable income taxes. 
C) Be reported as an infrequent item. 
D) Include operating losses during the phase-out period.

Question 4

Gross billings for merchandise sold by Stratford Co.to its customers last year amounted to $19,650,000; sales returns and allowances were $370,000,sales discounts were $175,000,and freight-out was $140,000.Net sales last year for Orio Company were:

Accepted Answer

A) $19,650,000. 
B) $19,280,000. 
C) $19,105,000. 
D) $18,965,000. 
A) $19,650,000. 
B) $19,280,000. 
C) $19,105,000. 
D) $18,965,000.

Question 5

On January 1,1999,a company purchased a machine that cost $12,000.It was depreciated for 1999,2000,and 2001,using the straight-line method,on the basis of a 5 year estimated useful life and no residual value.During early 2002,the estimated total useful life was changed to 7 years with an $800 residual value at the end of year 7.
(a) Give any entry required during 2002 to reflect the change (if none explain why).
(b) Give the adjusting entry required on December 31,2002.

Accepted Answer

(a) None-This is a change in e

Question 6

Pax Inc.earned $90,000 and $110,000 of income from continuing operations after taxes in Years 1 and 2,respectively.The tax rate is 40%.The firm decided to sell one of its business segments on November 1,Year 1.The expected disposal date is February 1,Year 2.The segment's income was a pre-tax loss of $20,000 (not included in income from continuing operations) for Year 1 through November 1,Year 1.
The segment lost an additional $25,000 pre-tax income for the remainder of Year 1 and was expected to lose $10,000 more pre-tax in Year 2 to the disposal date.The selling price of the segment is $100,000 and the book value of net assets is $60,000.During Year 2,the segment actually earned $10,000 pre-tax.For both years,prepare the bottom portion of the income statement including a section for discontinued operations for this firm.

Accepted Answer

Year 1: @#IMG-DLM& Discontinued operations @#IMG-DLM& There

Question 7

The results from operation of a discontinued segment under IFRS and any gain or loss on disposal or adjustment to fair value of the disposed segment should appear:

Accepted Answer

A) In one line on the statement of comprehensive income. 
B) In two lines on the statement of comprehensive income. 
C) in one or two lines on the statement of comprehensive income. 
D) shown as part of other comprehensive income. 
A) In one line on the statement of comprehensive income. 
B) In two lines on the statement of comprehensive income. 
C) in one or two lines on the statement of comprehensive income. 
D) shown as part of other comprehensive income.

Question 8

Finance costs must always be shown on the face of the income statement under IFRS.

Accepted Answer

A) True 
 B)False

Question 9

Total Comprehensive income must be allocated to both the parent and the non-controlling interest (NCI) shareholder groups.

Accepted Answer

A) True 
 B)False

Question 10

Ace Corporation decided to sell its medical supplies business segment for $500,000,on September 1,Year 1.The disposal date is November 1,Year 1.The book value of the segment's net assets is $650,000.The pre-tax income for the segment for the period January 1 - September 1,Year 1,was a loss of $90,000; the pre-tax income for the segment for September and October was a loss of $20,000.Assuming a tax rate of 40%,choose the correct reporting for discontinued operations in the income statement of Ace Corporation,for the year ended December 31,Year 1.

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4 
A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 11

Under ASPE,assets and liabilities forming part of a disposal group must be classified as current assets.

Accepted Answer

A) True 
 B)False

Question 12

Extraordinary items no longer exist under IFRS.The terms infrequent or unusual are sometimes used instead.

Accepted Answer

A) True 
 B)False

Question 13

Correction of prior years' errors and changes in accounting principles are never reported on the statement of income.

Accepted Answer

A) True 
 B)False

Question 14

Losses and provisions for losses with respect to bad debts and inventories should not be reported as unusual or infrequent.

Accepted Answer

A) True 
 B)False

Question 15

Atanak Inc.,decided to dispose of its auto parts segment on March 1,Year 1 for $200,000 (book value of net assets,$150,000).The disposal date is June 1,Year 2.Income of the segment for the first two months of Year 1 was $33,000; but for the remainder of Year 1 was a loss of $107,000.Estimated income for Year 2 to the disposal date is $64,000.
Required: Ignoring taxes,calculate the income or loss from discontinued operations and any gain or loss from the disposal of discontinued operations on the income statement of Atanak,for the year ended December 31,Year 1.

Accepted Answer

Discontinued operati

Question 16

A corporation reported 19X1 net income of $156,000.On January 1,19X1,60,000 shares of common stock were outstanding.An additional 10,000 shares were sold and issued on April 1 and,5,000 shares were purchased and retired on October 1.Earnings per share (rounded to the nearest cent) are:

Accepted Answer

A) $2.32 
B) $2.35 
C) $2.40 
D) $2.60 
A) $2.32 
B) $2.35 
C) $2.40 
D) $2.60

Question 17

How should an unusual item not meeting the criteria for an extraordinary item be disclosed in the financial statements?

Accepted Answer

A) Shown as a separate item in operating revenues or expenses if material and supplemented by a note if deemed appropriate. 
B) Shown in operating revenues or expenses if material but not shown as a separate item. 
C) Shown net of income tax after ordinary net earnings but before extraordinary items. 
D) Shown net of income tax after extraordinary items but before net earnings. 
A) Shown as a separate item in operating revenues or expenses if material and supplemented by a note if deemed appropriate. 
B) Shown in operating revenues or expenses if material but not shown as a separate item. 
C) Shown net of income tax after ordinary net earnings but before extraordinary items. 
D) Shown net of income tax after extraordinary items but before net earnings.

Question 18

Other comprehensive income generally includes unrealized gains or losses which bypass the income statement.

Accepted Answer

A) True 
 B)False

Question 19

Fax Inc.earned $90,000 and $110,000 of income from continuing operations after taxes in Years 1 and 2,respectively.The tax rate is 40%.The firm decided to sell one of its business segments on November 1,Year 1.The expected disposal date is February 1,Year 2.The segment's income was a pre-tax loss of $20,000 (not included in income from continuing operations) for Year 1 through November 1,Year 1.
However,the segment earned $30,000 pre-tax income for the remainder of Year 1 and was expected to earn $25,000 pre-tax in Year 2 to the disposal date.The selling price of the segment is $100,000 and the book value of net assets is $80,000.During Year 2,the segment actually earned $35,000 pre-tax.
For both years,prepare the bottom portion of the income statement including a section for discontinued operations for this firm.

Accepted Answer

@#IMG-DLM& * Only the phase out earnings

Question 20

Historical cost is more useful for measuring economic income than fair values.

Accepted Answer

A) True 
 B)False

Which of the following may form part of a disposal group?

Basic and diluted Earnings per share figures must be disclosed under both ASPE and IFRS.

When a segment of a business has been discontinued during the year,the gain or loss on disposal should:

Gross billings for merchandise sold by Stratford Co.to its customers last year amounted to $19,650,000; sales returns and allowances were $370,000,sales discounts were $175,000,and freight-out was $140,000.Net sales last year for Orio Company were:

The results from operation of a discontinued segment under IFRS and any gain or loss on disposal or adjustment to fair value of the disposed segment should appear:

Finance costs must always be shown on the face of the income statement under IFRS.

Total Comprehensive income must be allocated to both the parent and the non-controlling interest (NCI) shareholder groups.

Under ASPE,assets and liabilities forming part of a disposal group must be classified as current assets.

Extraordinary items no longer exist under IFRS.The terms infrequent or unusual are sometimes used instead.

Correction of prior years' errors and changes in accounting principles are never reported on the statement of income.

Losses and provisions for losses with respect to bad debts and inventories should not be reported as unusual or infrequent.

A corporation reported 19X1 net income of $156,000.On January 1,19X1,60,000 shares of common stock were outstanding.An additional 10,000 shares were sold and issued on April 1 and,5,000 shares were purchased and retired on October 1.Earnings per share (rounded to the nearest cent) are:

How should an unusual item not meeting the criteria for an extraordinary item be disclosed in the financial statements?

Other comprehensive income generally includes unrealized gains or losses which bypass the income statement.

Historical cost is more useful for measuring economic income than fair values.

The Framework for Financial Reporting

Accounting Judgements

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters

Exam 3: Statements of Income and Comprehensive Income

Which of the following may form part of a disposal group?

Basic and diluted Earnings per share figures must be disclosed under both ASPE and IFRS.

When a segment of a business has been discontinued during the year,the gain or loss on disposal should:

Gross billings for merchandise sold by Stratford Co.to its customers last year amounted to $19,650,000; sales returns and allowances were $370,000,sales discounts were $175,000,and freight-out was $140,000.Net sales last year for Orio Company were:

The results from operation of a discontinued segment under IFRS and any gain or loss on disposal or adjustment to fair value of the disposed segment should appear:

Finance costs must always be shown on the face of the income statement under IFRS.

Total Comprehensive income must be allocated to both the parent and the non-controlling interest (NCI) shareholder groups.

Under ASPE,assets and liabilities forming part of a disposal group must be classified as current assets.

Extraordinary items no longer exist under IFRS.The terms infrequent or unusual are sometimes used instead.

Correction of prior years' errors and changes in accounting principles are never reported on the statement of income.

Losses and provisions for losses with respect to bad debts and inventories should not be reported as unusual or infrequent.

A corporation reported 19X1 net income of $156,000.On January 1,19X1,60,000 shares of common stock were outstanding.An additional 10,000 shares were sold and issued on April 1 and,5,000 shares were purchased and retired on October 1.Earnings per share (rounded to the nearest cent) are:

How should an unusual item not meeting the criteria for an extraordinary item be disclosed in the financial statements?

Other comprehensive income generally includes unrealized gains or losses which bypass the income statement.

Historical cost is more useful for measuring economic income than fair values.

The Framework for Financial Reporting

Accounting Judgements

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters