Exam 22: Accounting Corrections and Error Analysis

For an operating lease,the lessee is only required to report rent expense on its income statement.

If the lease contract allows the lessee to exercise the bargain purchase option prior to the lease termination,all accounting computations must be based on the shorter period.

Initial direct costs are recorded as assets and amortized over the term of the lease in ________.

Compare and contrast the major types of leases from the point of view of the lessee under GAAP.

Cash paid to employees is calculated as salary and wage expense minus increases in salaries and wages payable.

Cash equivalents are short-term,highly liquid investments with original maturities of one year or less when acquired.

Refer to SuperByte Corporation. What amount of depreciation will Laguna Madre record in its income statement on December 31 of the current year? A)$1,493,617 B)$1,500,000 C)$2,000,000 D)$2,987,234

Compare and contrast the major types of leases from the point of view of the lessor under GAAP.

One disadvantage of leasing an asset is that the lessee bears the risk of obsolescence.

Cash receipts for dividends are classified as investing activities.

Under U.S.GAAP,a lease is classified as a capital lease if the leased asset is of such a specialized nature that only the lessee can use it.

Explain the conceptual model for the statement of cash flows.

Johnston Controls began operation in 2014 using FIFO inventory methods.In 2015,management decided they should have chose LIFO.The beginning 2015 inventory using FIFO was $100,000.Under the LIFO method the beginning inventory would have been $120,000. Required: Prepare the journal entry to record the change in accounting principle and discuss the required disclosures.

Svengool Inc.financial statements included the following amounts for the current year: Based on this information,what is the amount of net cash flows from financing activities? A)$47,000 net inflow B)$11,000 net inflow C)$15,000 net outflow D)$26,000 net outflow

Betz Corporation entered into a capital lease on January 1 of the current year.The lease is for 8 years and calls for the first payment to be made an the inception.The first annual minimum lease payment will contain which of the following components?

The cost of a leasehold improvement is depreciated over which of the following time periods?

Which of the following factors is most indicative that a lease should be recorded as a a finance lease under IFRS?

Which one of the following is not a required disclosure for a change in reporting entity? A)the nature of the change and the reason for the change B)the effect of the change on income from continuing operations C)the effect of the change on operating expenses D)the effect of the change on other comprehensive income

Which of the following is not treated differently for the direct vs.indirect method of reporting cash flows?

Miller Company leases office equipment from Swanson Company.The fair value of the equipment exceeds Swanson's cost.Collectability of the lease payments is reasonably assured; there are no material uncertainties surrounding the lease.Additionally,there is a bargain purchase option.Swanson will account for the lease as a(n)________.