Question 1

Which of the following items should be disclosed with interim data?​

Accepted Answer

A) ​basic and diluted earnings per share 
B) ​contingent items 
C) ​changes in accounting estimates 
D) ​all of the above 
A) ​basic and diluted earnings per share 
B) ​contingent items 
C) ​changes in accounting estimates 
D) ​all of the above D

Question 2

Saunders Corp., which accounts for inventory using the LIFO method, had 2,000 units in beginning inventory at a cost of $40 and had purchased 500 more for $43.During the quarter, 1,300 units were sold.It is expected that the ending inventory at year end will be 1,800 units as Saunders anticipates purchasing additional units for $45.The debit to cost of goods sold for the quarter would be:

Accepted Answer

A) ​$53,500 
B) ​$56,500 
C) ​$55,000 
D) ​$58,500 
A) ​$53,500 
B) ​$56,500 
C) ​$55,000 
D) ​$58,500 A

Question 3

Scott Inc.expects to have financial income of $375,000 for 2016 and estimates annual tax credits of $22,500.Included in Scott's income is interest income on municipal securities, which is not taxable, totaling $45,000 and meals and entertainment expenses of $62,500 of which 50% are not deductible under current tax code.Assume that the graduated tax rate schedule is as follows:
?
?
 $$\begin{array} { l l } 
\$ 1 - \$ 100,000 & 15 \% \
\$ 100,001 - 200,000 & 22 \% \
\$ 200,001 - 460,000 & 28 \% \
\$ 460,001 \text { and above } & 30 \%
\end{array}$$ Required:
?
Determine the tax expense for the first quarter, assuming that taxable income is $85,000.

Accepted Answer

$\begin{array}{lr}
\text { Income subject to tax:}\
\text { Projected income } & \$ 375,000 \
\text { Permanent difference: tax-exempt municipal securities income } & (45,000) \
\text { Permanent difference: non-deductible meals and entertainment } & 31,250 \
\quad \text { Income Subject to Tax } & \$ 361,250\
\
\text { Estimated annual tax: }\
\$ 100,000.15 & \$ 15,000 \
100,000.22 & 22,000 \
161,250.28 & \underline{45,150}\
&\$82,150\
\text { Tax credit } &(22,500)\
\text { Net tax } &\$ 59,650 
\end{array}$

Effective rate: $\$ 59,650 \div \$ 375,000 = 15.9 \%$
First-quarter tax expense $\$ 85,00015.9 \% \$ 13,515$

Question 4

A list of selected information from Aanstad Inc.follows.Regarding its first-quarter performance for 2016,
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a.Sales were $750,000.?
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b.Cost of goods sold was $502,500.?
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c.Total depreciation expense was $75,000 (part of selling and administrative expenses).As of the beginning of the first quarter, Aanstad began using straight-line depreciation.Had they used the old accelerated method, the current depreciation would have been $80,000.?
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d.Other selling and administrative expenses were $30,000 excluding advertising expense.Two quarters of advertising were prepaid at $18,000 at the start of the first quarter.?
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e.The cost of goods sold includes a favorable volume variance of $100,000.The volume variance is expected to be offset by the slow activity anticipated in the fourth quarter.?
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f.Aanstad's estimated effective tax rate is 25%.g.Aanstad's retained earnings at the end of the fourth quarter, 20X0 were $234,000.

Accepted Answer

\(\begin{array}{c}
\text { Aanstad Inc.

Question 5

Millstone Company's first-quarter 2018, pretax income is $25,000.The company anticipates an annual tax credit of $5,500.Millstone is projecting income for the remaining three quarters of $95,000.For the second quarter of 2019, Millstone reports $55,000 of pretax income with a projected pre-tax income for the remainder of the year of $65,000.Millstone does not have any permanent differences between taxable income and financial income.
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In the second quarter, Millstone decided to change their depreciation method used for financial reporting purposes.The change in depreciation methods has the following effect on the calculation and projection of income for Millstone:
?
?
 $$\begin{array} { r r r } 
& \text { Actual Income } & \text { Frojected Remainder } \
\text { Qtr1 }  & 20,000 & 85,000 \
\text { Qtr2 }& 55,000 & 65,000
\end{array}$$
 The effect of the change on prior years is a decrease to retained earnings of $30,000.
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The current tax schedule is:
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 $$\begin{array} { l l } 
\$ 1 - \$ 100,000 & 15 \% \
\$ 100,001 - 200,000 & 22 \% \
\$ 200,001 - 460,000 & 28 \% \
\$ 460,001 \text { and above } & 30 \%
\end{array}$$ Required:
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Calculate the first and second quarter interim tax expenses on continuing income.

Accepted Answer

?
 @#IMG-DLM& ?
 @#IMG-DLM& **

Question 6

A reconciliation of the revenue, profit and loss and asset amounts presented for reportable segments to the respective consolidated amounts for the entity:

Accepted Answer

A) ​is not required if all segments are considered reportable. 
B) ​is also required for other significant items presented by segments, such as depreciation and amortization. 
C) ​is required only if the entity elects to use the management approach to determine its operating segments. 
D) ​None of the above is correct. 
A) ​is not required if all segments are considered reportable. 
B) ​is also required for other significant items presented by segments, such as depreciation and amortization. 
C) ​is required only if the entity elects to use the management approach to determine its operating segments. 
D) ​None of the above is correct.

Question 7

Two or more operating segments can be combined into a single operating segment, if they share similarities in the following area EXCEPT for:

Accepted Answer

A) ​They have the same type of class of customer for their products and services. 
B) ​The production processes are of the same nature. 
C) ​They share the same accounting periods and are consistent in their accounting methods. 
D) ​They share the same distribution channels of their products and/or services. 
A) ​They have the same type of class of customer for their products and services. 
B) ​The production processes are of the same nature. 
C) ​They share the same accounting periods and are consistent in their accounting methods. 
D) ​They share the same distribution channels of their products and/or services.

Question 8

The management approach to segmental reporting

Accepted Answer

A) ​focuses on how management organizes information for internal decision making. 
B) ​requires that the company's chief executive officer decide what segments will be reported. 
C) ​separates the costs of management from the costs of operations to determine segment profit or loss. 
D) ​is required only in the United States. 
A) ​focuses on how management organizes information for internal decision making. 
B) ​requires that the company's chief executive officer decide what segments will be reported. 
C) ​separates the costs of management from the costs of operations to determine segment profit or loss. 
D) ​is required only in the United States.

Question 9

The following lists account titles found on the books of Icell Corporation:
?
a.Research and Development
b.Inventory
c.Annual Bonuses
d.Unfavorable Materials Usage Variance
?
Required:
?
Discuss how each of these items is accounted for in interim financial statements.?

Accepted Answer

a. Research and Development: This accoun

Question 10

In determining whether a segment should be reported, a profit and loss test can be used.The test selects segments for reporting by:

Accepted Answer

A) ​only including profitable segments. 
B) ​comparing the absolute value of a segment's profit or loss to 10% of all segments cumulative profit or cumulative loss, whichever is higher. 
C) ​comparing the absolute value of a segment's profit or loss to 10% of all segments combined profits and losses. 
D) ​comparing the profit or loss of a segment to 10% of all segment external revenue. 
A) ​only including profitable segments. 
B) ​comparing the absolute value of a segment's profit or loss to 10% of all segments cumulative profit or cumulative loss, whichever is higher. 
C) ​comparing the absolute value of a segment's profit or loss to 10% of all segments combined profits and losses. 
D) ​comparing the profit or loss of a segment to 10% of all segment external revenue.

Question 11

Ansfield, Inc.has several potentially reportable segments.The following financial information has been determined for the current fiscal year: ?

$$\begin{array} { l r } 
\text { Consolidated net income } & \$ 1,000,000 \
\text { Operating income before taxes } & 1,500,000 \
\text { Net operating income of all segments } & 1,350,000 \
\text { Total consolidated revenue } & 8,000,000 \
\text { Total revenue of all segments, } & \
\text { excluding intersegment sales } & 7,000,000 \
\text { Total intersegment sales } & 1,200,000 \
\text { Consolidated total assets } & 50,000,000 \
\text { Total assets of all segments } & 45,000,000
\end{array}$$ The minimum amount of profit or loss a segment must have to qualify as reported is ____.

Accepted Answer

A) $100,000 
B) $135,000 
C) $150,000 
D) The answer cannot be determined from the information given. 
A) $100,000 
B) $135,000 
C) $150,000 
D) The answer cannot be determined from the information given.

Question 12

Egan Company, a publicly-traded company, divides its operations into several operating segments.Determine which of the following segments are reportable and reconcile the reportable segments to the consolidated revenues and profits.
 $\begin{array}{lrrrr}
&\text { External } & \text { Intersegment } & \
&\text { Revenues } & \text { Revenues } & \text { Expenses } & \text { Assets }\
\text { Travel agency } & \$ 621,000 & \$ 700,000 & \$ 1,597,000 & \$ 1,540,000 \
\text { Hotels } & 4,543,000 & 644,000 & 2,315,000 & 7,787,000 \
\text { Amusement parks } & 2,400,000 & 220,000 & 1,570,000 & 1,940,000 \
\text { Theater } & 2,180,000 & 116,000 & 2,640,000 & 1,441,000 \
\text { Pro soccer team } & 700,000 & - & 898,000 & 1,340,000 \
\text { Corporate-level items } & 100,000 & - & 250,000 & 200,000 \
\text { Total } & \$ 10,544,000 & \$ 1,680,000 & \$ 9,270,000 & \$ \underline{14,248,000}
\end{array}$

Accepted Answer

1. Revenue test
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?
   (b) $10,544,000 -

Question 13

Discuss the criteria emphasized in the "management approach" that is used to define operating segments.

Accepted Answer

The management approach focuses on how m

Question 14

Which of the following is not considered when determining whether an operating segment qualifies as a reportable segment?

Accepted Answer

A) ​revenue of the segment 
B) ​the assets of the segment 
C) ​the shareholders' equity of the segment 
D) ​the absolute amount of its profit or loss 
A) ​revenue of the segment 
B) ​the assets of the segment 
C) ​the shareholders' equity of the segment 
D) ​the absolute amount of its profit or loss

Question 15

Abitz Corporation has the following pretax operating income in its first three quarters of 2016.The effective tax rate for each quarter is provided.Determine the third quarter income tax or benefit. ?

$$\begin{array} { l r r } 
& \text { Current } & \text { Effective } \
\text { Quarter } & \text { Period } & \text { Tax Rate } \
 \text { First } & \$ 40,000 & 25 \% \
 \text { Second }& ( 25,000 ) & 25 \% \
\text { Third }& 50,000 & 30 \%
\end{array}$$

Accepted Answer

A) $3,750 
B) $15,000 
C) $15,750 
D) $20,000 
A) $3,750 
B) $15,000 
C) $15,750 
D) $20,000

Question 16

Adam Enterprise includes seven industry segments.Operating profits (losses) relating to those segments are:
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?
 $$\begin{array} { c c } 
& \text { Operating } \
\text { Segment } & \text { Frofit (Loss) } \
1 & \$ 100,000 \
2 & 500,000 \
3 & 400,000 \
4 & ( 295,000 ) \
5 & ( 600,000 ) \
6 & ( 100,000 ) \
7& ( 105,000 )
\end{array}$$ Required:
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Based only on the above operating profit (loss) information, which of Adam's segments would be reported separately?

Accepted Answer

The answer of Adam Enterprise includes seven industry segments.Operating profits...

Question 17

For purposes of interim reporting, US-GAAP permits certain modifications to year-end inventory rules.
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Required:
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Comment on the acceptability of the following independent situations concerning inventory valuation for an interim period:
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a.Management believes that since its firm does not have a perpetual inventory system, it would be too costly to take a physical inventory.Consequently, management has suggested to the accounting department that they estimate ending inventory.?
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b.Since the LIFO inventory base was liquidated in the first quarter, management has recommended that the accounting department switch to FIFO valuation of inventory.?
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c.Since the first quarter is a slow period for a manufacturing firm, management has suggested that the unfavorable volume variances from the firm's standard cost system be deferred until year end.

Accepted Answer

a. Gross profit and other sound methods

Question 18

Non-ordinary items resulting in income or loss

Accepted Answer

A) ​include unusual but not infrequent gains. 
B) ​are treated the same as ordinary items when calculating the effective tax rate. 
C) ​are always treated as a total group when calculating the effective rate for the quarter. 
D) ​are always excluded from interim reporting. 
A) ​include unusual but not infrequent gains. 
B) ​are treated the same as ordinary items when calculating the effective tax rate. 
C) ​are always treated as a total group when calculating the effective rate for the quarter. 
D) ​are always excluded from interim reporting.

Question 19

Which of the following statements about interim reporting is false?

Accepted Answer

A) ​If a company reports year-to-date financial information for the current year, it also must report the last twelve month-to-date information. 
B) ​Under some circumstances, a company can restate the financial information of an earlier current-year quarter. 
C) ​The gross profit method may be used for interim periods when taking a physical inventory would be too costly. 
D) ​A company should allocate a portion of its estimated year-end inventory adjustment to each interim period. 
A) ​If a company reports year-to-date financial information for the current year, it also must report the last twelve month-to-date information. 
B) ​Under some circumstances, a company can restate the financial information of an earlier current-year quarter. 
C) ​The gross profit method may be used for interim periods when taking a physical inventory would be too costly. 
D) ​A company should allocate a portion of its estimated year-end inventory adjustment to each interim period.

Question 20

The incremental income tax effect utilized to determine the tax effect of an extraordinary item is calculated by:

Accepted Answer

A) ​applying the estimated effective tax rate against the amount of the extraordinary item 
B) ​the difference between the gross tax calculated on continuing operations and the gross tax on income from all sources 
C) ​the difference between the estimated net tax calculated on the projected annual income from continuing operations and the estimated net tax calculated on projected annual income, including the non-ordinary items 
D) ​none of the above. 
A) ​applying the estimated effective tax rate against the amount of the extraordinary item 
B) ​the difference between the gross tax calculated on continuing operations and the gross tax on income from all sources 
C) ​the difference between the estimated net tax calculated on the projected annual income from continuing operations and the estimated net tax calculated on projected annual income, including the non-ordinary items 
D) ​none of the above.

Which of the following items should be disclosed with interim data?

A reconciliation of the revenue, profit and loss and asset amounts presented for reportable segments to the respective consolidated amounts for the entity:

Two or more operating segments can be combined into a single operating segment, if they share similarities in the following area EXCEPT for:

The management approach to segmental reporting

The following lists account titles found on the books of Icell Corporation: ? a.Research and Development b.Inventory c.Annual Bonuses d.Unfavorable Materials Usage Variance ? Required: ? Discuss how each of these items is accounted for in interim financial statements.?

In determining whether a segment should be reported, a profit and loss test can be used.The test selects segments for reporting by:

Discuss the criteria emphasized in the "management approach" that is used to define operating segments.

Which of the following is not considered when determining whether an operating segment qualifies as a reportable segment?

Non-ordinary items resulting in income or loss

Which of the following statements about interim reporting is false?

The incremental income tax effect utilized to determine the tax effect of an extraordinary item is calculated by:

Business Combinations: New Rules for a Long-Standing Business Practice

Consolidated Statements: Date of Acquisition

Consolidated Statements: Subsequent to Acquisition

Intercompany Transactions: Merchandise, Plant Assets, and Notes

Intercompany Transactions: Bonds and Leases

Cash Flow, Eps, and Taxation

Special Issues in Accounting for an Investment in a Subsidiary

Subsidiary Equity Transactions, Indirect Subsidiary Ownership, and Subsidiary Ownership of Parent Shares

The International Accounting Environment

Foreign Currency Transactions

Translation of Foreign Financial Statements

Partnerships: Characteristics, Formation, and Accounting for Activities

Partnerships: Ownership Changes and Liquidations

Government and Not for Profit Accounting

Governmental Accounting: Other Governmental Funds, Proprietary Funds, and Fiduciary Funds

Financial Reporting Issues

Accounting for Private Not-For-Profit Organizations

Accounting for Not-For-Profit Colleges and Universities and Health Care Organizations

Estates and Trusts: Their Nature and the Accountants Role

Debt Restructuring, Corporate Reorganizations, and Liquidations

Derivatives and Related Accounting Issues

Equity Method for Unconsolidated Investments

Variable Interest Entities

Filters

Exam 12: Interim Reporting and Disclosures About Segments of an Enterprise

Which of the following items should be disclosed with interim data?​

A reconciliation of the revenue, profit and loss and asset amounts presented for reportable segments to the respective consolidated amounts for the entity:

Two or more operating segments can be combined into a single operating segment, if they share similarities in the following area EXCEPT for:

The management approach to segmental reporting

The following lists account titles found on the books of Icell Corporation: ? a.Research and Development b.Inventory c.Annual Bonuses d.Unfavorable Materials Usage Variance ? Required: ? Discuss how each of these items is accounted for in interim financial statements.?

In determining whether a segment should be reported, a profit and loss test can be used.The test selects segments for reporting by:

Discuss the criteria emphasized in the "management approach" that is used to define operating segments.

Which of the following is not considered when determining whether an operating segment qualifies as a reportable segment?

Non-ordinary items resulting in income or loss

Which of the following statements about interim reporting is false?

The incremental income tax effect utilized to determine the tax effect of an extraordinary item is calculated by:

Business Combinations: New Rules for a Long-Standing Business Practice

Consolidated Statements: Date of Acquisition

Consolidated Statements: Subsequent to Acquisition

Intercompany Transactions: Merchandise, Plant Assets, and Notes

Intercompany Transactions: Bonds and Leases

Cash Flow, Eps, and Taxation

Special Issues in Accounting for an Investment in a Subsidiary

Subsidiary Equity Transactions, Indirect Subsidiary Ownership, and Subsidiary Ownership of Parent Shares

The International Accounting Environment

Foreign Currency Transactions

Translation of Foreign Financial Statements

Partnerships: Characteristics, Formation, and Accounting for Activities

Partnerships: Ownership Changes and Liquidations

Government and Not for Profit Accounting

Governmental Accounting: Other Governmental Funds, Proprietary Funds, and Fiduciary Funds

Financial Reporting Issues

Accounting for Private Not-For-Profit Organizations

Accounting for Not-For-Profit Colleges and Universities and Health Care Organizations

Estates and Trusts: Their Nature and the Accountants Role

Debt Restructuring, Corporate Reorganizations, and Liquidations

Derivatives and Related Accounting Issues

Equity Method for Unconsolidated Investments

Variable Interest Entities

Filters

Which of the following items should be disclosed with interim data?