Question 1

FASB has specified a "75% percent consolidated revenue test".
Required:
a)What is the 75% test?
b)How is the 75% test impacted by the "10% Significance Rule"?

Accepted Answer

a)The total revenue from external source

Question 2

All of the following situations require a retrospective application of a change in a reporting entity except for:

Accepted Answer

A) Presenting consolidated financials rather than individual statements for separate entities. 
B) Changing the specific subsidiaries that make up a consolidated entity. 
C) Presenting foreign subsidiaries in addition to domestic subsidiaries. 
D) Changing entities that are included in combined financial statements. 
A) Presenting consolidated financials rather than individual statements for separate entities. 
B) Changing the specific subsidiaries that make up a consolidated entity. 
C) Presenting foreign subsidiaries in addition to domestic subsidiaries. 
D) Changing entities that are included in combined financial statements.

Question 3

Follett Company incurred a first quarter operating loss before income tax effect of $2,000,000.This is a normal occurrence for Follett because of seasonal fluctuations.Experience has demonstrated the income earned during the remaining quarters far exceeds the first quarter losses each year.Follett estimates its annual income tax rate will be 35 percent.What net loss should Follett report for the first quarter?

Accepted Answer

A) $0 
B) $700,000 
C) $1,300,000 
D) $2,000,000 
A) $0 
B) $700,000 
C) $1,300,000 
D) $2,000,000

Question 4

On June 30,20X8,String Corporation incurred a $220,000 net loss from disposal of a business component.Also,on June 30,20X8,String paid $60,000 for property taxes assessed for the calendar year 20X8.What amount of the preceding items should be included in the determination of String's net income or loss for the six-month interim period ended June 30,20X8?

Accepted Answer

A) $250,000 
B) $220,000 
C) $140,000 
D) $280,000 
A) $250,000 
B) $220,000 
C) $140,000 
D) $280,000

Question 5

Which of the following are established by ASC 280 as "enterprisewide disclosure" standards to provide more information about the risks to a company?
I.Information about dominant industry segments.
II.Information about major customers.
III.Information about geographic areas.

Accepted Answer

A) Both I and III 
B) Both I and II 
C) Both II and III 
D) I,II,and III 
A) Both I and III 
B) Both I and II 
C) Both II and III 
D) I,II,and III

Question 6

Tuttle Company discloses supplementary operating segment information for its three reportable segments.Data for 20X3 are available as follows:
 
Allocable costs for the year were $54,000.Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs.The 20X3 operating profit for Segment A was:

Accepted Answer

A) $196,000 
B) $223,000 
C) $225,000 
D) $250,000 
A) $196,000 
B) $223,000 
C) $225,000 
D) $250,000

Question 7

The income tax expense applicable to the second quarter's income statement is determined by:

Accepted Answer

A) dividing the estimated annual income tax expense by four and allocating the amount to the second quarter. 
B) multiplying the effective income tax rate times the income before tax for the second quarter. 
C) subtracting the income tax expense applicable to the first quarter from the income tax expense applicable to the first two quarters. 
D) subtracting the income tax liability applicable to the first quarter from the income tax liability applicable to the first two quarters. 
A) dividing the estimated annual income tax expense by four and allocating the amount to the second quarter. 
B) multiplying the effective income tax rate times the income before tax for the second quarter. 
C) subtracting the income tax expense applicable to the first quarter from the income tax expense applicable to the first two quarters. 
D) subtracting the income tax liability applicable to the first quarter from the income tax liability applicable to the first two quarters.

Question 8

Daniel Corporation,which has a fiscal year ending December 31,had the following pretax accounting income and estimated effective annual income tax rates for the first three quarters of the year ended December 31,20X6:
 
Daniel's income tax expense in its interim income statement for the third quarter is:

Accepted Answer

A) $29,500 
B) $35,200 
C) $66,500 
D) $96,000 
A) $29,500 
B) $35,200 
C) $66,500 
D) $96,000

Question 9

Samuel Corporation foresees a downturn in its business in the medium term.It expects to sustain an operating loss of $160,000 for the full year ending December 31,20X8.Samuel's tax rate is 35 percent.Anticipated tax credits for 20X8 total $8,000.No permanent differences are expected.Realization of the full tax benefit of the expected operating loss and realization of anticipated tax credits are assured beyond any reasonable doubt because they will be carried back.For the first quarter ended March 31,20X8,Samuel reported an operating loss of $30,000.How much of a tax benefit should Samuel report for the interim period ended March 31,20X8?

Accepted Answer

A) $8,000 
B) $12,000 
C) $13,500 
D) $15,500 
A) $8,000 
B) $12,000 
C) $13,500 
D) $15,500

Question 10

Chicago Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X2:
 
Chicago's income tax expense in its interim income statement for the third quarter should be:

Accepted Answer

A) $36,000 
B) $41,000 
C) $42,400 
D) $84,000 
A) $36,000 
B) $41,000 
C) $42,400 
D) $84,000

Question 11

Main Manufacturing Corporation reported consolidated revenues of $50,000,000 on its income statement for 20X8.The management of the corporation identified 3 industry segments,M,N,and O.These segments had the following intersegment sales and transfers during 20X8:
 
For Main Manufacturing Corporation,the revenue test would be satisfied if any of its industry segments had revenue equal to or greater than which of the following?

Accepted Answer

A) $7,400,000 
B) $5,740,000 
C) $5,000,000 
D) $4,260,000 
A) $7,400,000 
B) $5,740,000 
C) $5,000,000 
D) $4,260,000

Question 12

Derby Company pays its executives a bonus of 6 percent of income before deducting the bonus and income taxes.For the quarter ended March 31,20X8,Derby had income before the bonus and income tax of $12,000,000.For the year ended December 31,20X8,Derby estimates that its income before bonus and income taxes will be $70,000,000.For the quarter ended March 31,20X8,what is the amount of the bonus that Derby should deduct on its income statement?

Accepted Answer

A) $4,200,000 
B) $720,000 
C) $1,050,000 
D) $180,000 
A) $4,200,000 
B) $720,000 
C) $1,050,000 
D) $180,000

Question 13

Estimated gross profit rates may be used to estimate a company's cost of goods sold and its ending inventory for:

Accepted Answer

A) quarterly but not for annual financial statements. 
B) both quarterly and annual financial statements. 
C) neither quarterly nor annual financial statements. 
D) annual but not for quarterly financial statements. 
A) quarterly but not for annual financial statements. 
B) both quarterly and annual financial statements. 
C) neither quarterly nor annual financial statements. 
D) annual but not for quarterly financial statements.

Question 14

Assume that the replacement did not happen in November.In December,the company decided not to replace any of the 1,500 units.The entry required on December 31 to eliminate valuation accounts related to the inventory that will not be replaced will include:

Accepted Answer

A) a debit to Excess of Replacement Cost over LIFO Cost of Inventory Liquidation for $22,500. 
B) a credit to Cost of Goods Sold for $15,000. 
C) a debit to Inventory for $70,000. 
D) a debit to Inventory for $15,000. 
A) a debit to Excess of Replacement Cost over LIFO Cost of Inventory Liquidation for $22,500. 
B) a credit to Cost of Goods Sold for $15,000. 
C) a debit to Inventory for $70,000. 
D) a debit to Inventory for $15,000.

Question 15

Operand Corporation reported consolidated revenues of $30,000,000 on its income statement for 20X4.The management of the corporation identified three industry segments,X,Y,and Z.These segments had the following intersegment sales and transfers during 20X4:
 
For Operand Corporation,the revenue test would be satisfied if any of its industry segments had revenue equal to or greater than which of the following?

Accepted Answer

A) $2,450,000 
B) $3,000,000 
C) $3,550,000 
D) $5,500,000 
A) $2,450,000 
B) $3,000,000 
C) $3,550,000 
D) $5,500,000

Question 16

During the third quarter of 20X4,Ripley Company sold a piece of equipment at a $10,000 gain.What portion of the gain should Ripley report in its income statement for the third quarter of 20X4?

Accepted Answer

A) $10,000 
B) $7,500 
C) $2,500 
D) $0 
A) $10,000 
B) $7,500 
C) $2,500 
D) $0

Question 17

Forge Company,a calendar-year entity,had 6,000 units in its beginning inventory for 20X8.On December 31,20X7,applying the lower-of-cost-or-market (NRV)principle,the units had been adjusted down to $470 per unit from an actual cost of $510 per unit.It was the lower of cost or market (NRV).No additional units were purchased during 20X8.The following additional information is provided for 20X8:
   Forge does not have sufficient experience with the seasonal market for its inventory units and assumes that any reductions in market value during the year will be permanent.
-Based on the preceding information,the cost of goods sold for the year 20X8,is:

Accepted Answer

A) $2,080,000 
B) $1,880,000 
C) $1,835,000 
D) $1,910,000 
A) $2,080,000 
B) $1,880,000 
C) $1,835,000 
D) $1,910,000

Question 18

Denver Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X8:
 
Denver's income tax expense in its interim income statement for the third quarter should be:

Accepted Answer

A) $126,000. 
B) $68,400. 
C) $62,400. 
D) $54,000. 
A) $126,000. 
B) $68,400. 
C) $62,400. 
D) $54,000.

Question 19

Wakefield Company uses a perpetual inventory system.In August,it sold 2,000 units from its LIFO-base inventory,which had originally cost $35 per unit.The replacement cost is expected to be $45 per unit.The company is planning to reduce its inventory and expects to replace only 1,500 of these units by December 31,the end of its fiscal year.The company replaced 1,500 units in November at an actual cost of $50 per unit.
-Based on the preceding information,in the entry to record the replacement of the 1,500 units in November,Accounts Payable will be credited for:

Accepted Answer

A) $67,500. 
B) $75,000. 
C) $62,500. 
D) $60,000. 
A) $67,500. 
B) $75,000. 
C) $62,500. 
D) $60,000.

Question 20

ASC 280 requires certain disclosures about major customers.All of the following statements about those disclosures are true with the exception of which statement?

Accepted Answer

A) The identity of the segment reporting the revenue from a significant customer must be disclosed a footnote. 
B) The amount of revenue from a significant customer must be disclosed in a footnote. 
C) For applying the disclosure test,there is no specific threshold (percent of total revenues)that is defined as "significant". 
D) A local,state,or foreign government can be considered a major customer. 
A) The identity of the segment reporting the revenue from a significant customer must be disclosed a footnote. 
B) The amount of revenue from a significant customer must be disclosed in a footnote. 
C) For applying the disclosure test,there is no specific threshold (percent of total revenues)that is defined as "significant". 
D) A local,state,or foreign government can be considered a major customer.

FASB has specified a "75% percent consolidated revenue test". Required: a)What is the 75% test? b)How is the 75% test impacted by the "10% Significance Rule"?

All of the following situations require a retrospective application of a change in a reporting entity except for:

Which of the following are established by ASC 280 as "enterprisewide disclosure" standards to provide more information about the risks to a company? I.Information about dominant industry segments. II.Information about major customers. III.Information about geographic areas.

The income tax expense applicable to the second quarter's income statement is determined by:

Chicago Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X2: Chicago's income tax expense in its interim income statement for the third quarter should be:

Estimated gross profit rates may be used to estimate a company's cost of goods sold and its ending inventory for:

Assume that the replacement did not happen in November.In December,the company decided not to replace any of the 1,500 units.The entry required on December 31 to eliminate valuation accounts related to the inventory that will not be replaced will include:

During the third quarter of 20X4,Ripley Company sold a piece of equipment at a $10,000 gain.What portion of the gain should Ripley report in its income statement for the third quarter of 20X4?

Denver Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X8: Denver's income tax expense in its interim income statement for the third quarter should be:

ASC 280 requires certain disclosures about major customers.All of the following statements about those disclosures are true with the exception of which statement?

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and the Consolidation of Less-Than-Wholly- Owned Subsidiaries With No Differential

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly- Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Sec Reporting

Partnerships: Formation,operation,and Changes in Membership

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Governmentwide Financial Statements

Not-For-Profit Entities

Corporations in Financial Difficulty

Intercompany Indebtednessfully Adjusted Equity Method Using Straight-Line Interest Amortization

Filters

Exam 13: Segment and Interim Reporting

FASB has specified a "75% percent consolidated revenue test". Required: a)What is the 75% test? b)How is the 75% test impacted by the "10% Significance Rule"?

All of the following situations require a retrospective application of a change in a reporting entity except for:

Which of the following are established by ASC 280 as "enterprisewide disclosure" standards to provide more information about the risks to a company? I.Information about dominant industry segments. II.Information about major customers. III.Information about geographic areas.

The income tax expense applicable to the second quarter's income statement is determined by:

Chicago Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X2: Chicago's income tax expense in its interim income statement for the third quarter should be:

Estimated gross profit rates may be used to estimate a company's cost of goods sold and its ending inventory for:

Assume that the replacement did not happen in November.In December,the company decided not to replace any of the 1,500 units.The entry required on December 31 to eliminate valuation accounts related to the inventory that will not be replaced will include:

During the third quarter of 20X4,Ripley Company sold a piece of equipment at a $10,000 gain.What portion of the gain should Ripley report in its income statement for the third quarter of 20X4?

Denver Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X8: Denver's income tax expense in its interim income statement for the third quarter should be:

ASC 280 requires certain disclosures about major customers.All of the following statements about those disclosures are true with the exception of which statement?

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and the Consolidation of Less-Than-Wholly- Owned Subsidiaries With No Differential

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly- Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Sec Reporting

Partnerships: Formation,operation,and Changes in Membership

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Governmentwide Financial Statements

Not-For-Profit Entities

Corporations in Financial Difficulty

Intercompany Indebtednessfully Adjusted Equity Method Using Straight-Line Interest Amortization

Filters