Question 1

An analyst can estimate the average total life of depreciable assets by

Accepted Answer

A)  dividing average depreciable assets by depreciation expense for the year. 
B)  dividing depreciation expense for the year by average depreciable assets. 
C)  dividing average gross depreciable assets by accumulated depreciation. 
D)  Subtracting depreciation expense from accumulated depreciation. 
A)  dividing average depreciable assets by depreciation expense for the year. 
B)  dividing depreciation expense for the year by average depreciable assets. 
C)  dividing average gross depreciable assets by accumulated depreciation. 
D)  Subtracting depreciation expense from accumulated depreciation.

Question 2

The installment method of revenue recognition can be used when cash collectibility is uncertain. The installment method

Accepted Answer

A)  requires that no income is recognized until all installments are received. 
B)  requires that gross profit is recognized as each installment payment is received. 
C)  requires that entire cost of the sale be recovered prior to any income being recognized. 
D)  allows revenue recognition at the time of the sale. 
A)  requires that no income is recognized until all installments are received. 
B)  requires that gross profit is recognized as each installment payment is received. 
C)  requires that entire cost of the sale be recovered prior to any income being recognized. 
D)  allows revenue recognition at the time of the sale.

Question 3

Firms recognize an ______________________________ when the carrying amount of a fixed asset exceeds its fair value and is deemed not recoverable.

Accepted Answer

The answer of Firms recognize an ______________________________ when the carrying...

Question 4

Assume that Playground Corp. has agreed to construct a new playground for Township County for $2,300,000 dollars. Construction of the new playground will begin on March 17, 2007 and is expected to be completed in August 2008. At the signing of the contract Playground Corp. estimates that the it will cost $1,600,000 dollars to build the playground. At the end of 2007 Playground provided the following information about the project:
  What percentage is playground complete?

Accepted Answer

A)  62.5% 
B)  43.5% 
C)  55.6% 
D)  50.0% 
A)  62.5% 
B)  43.5% 
C)  55.6% 
D)  50.0%

Question 5

Folio Corp. Folio Corp. sold a paper machine to Library Inc. on January 1, 2007. The sale price of the machine was $4,000,000 and the machine cost $3,200,000 for Folio to manufacture. Library will make four payments at the end of each year, beginning with 2007, of $1,261,883 each. The four payments of $1,261,883 when discounted at 10% have a present value of $4,000,000. An amortization table appears below:
  If Folio Corp. is uncertain that it will collect all four payments from Library Inc. and uses the installment method of accounting for revenue recognition what amount of gross profit should Folio recognize in 2007 from the sale?

Accepted Answer

A)  $0 
B)  $861,883 
C)  $172,377 
D)  $800,000 
A)  $0 
B)  $861,883 
C)  $172,377 
D)  $800,000

Question 6

Using the information below calculate the average total depreciable life of the assets:

Accepted Answer

A)  5.8 years 
B)  10 years 
C)  2.9 years 
D)  5.3 years 
A)  5.8 years 
B)  10 years 
C)  2.9 years 
D)  5.3 years

Question 7

Specifically identifiable intangible assets acquired from others may have either a ____________________ useful life or an ____________________ useful life.

Accepted Answer

The answer of Specifically identifiable intangible assets acquired from others...

Question 8

When input prices are increasing, companies that use the LIFO method of accounting for inventory will report

Accepted Answer

A)  Lower cost of goods sold amounts in comparison to the FIFO method 
B)  Higher sales amounts in comparison to the FIFO method 
C)  Higher ending inventory amounts in comparison to the FIFO method 
D)  Lower gross profit margins in comparison to the FIFO method 
A)  Lower cost of goods sold amounts in comparison to the FIFO method 
B)  Higher sales amounts in comparison to the FIFO method 
C)  Higher ending inventory amounts in comparison to the FIFO method 
D)  Lower gross profit margins in comparison to the FIFO method

Question 9

GAAP stipulates that firms should do what with expenditures that increase the service potential of an asset beyond that originally anticipated?

Accepted Answer

A)  Expense the expenditure immediately. 
B)  Capitalize the expenditure and depreciate it over the remaining service life of the asset. 
C)  Capitalize the expenditure, but do not depreciate the asset. 
D)  Charge it off to shareholders' equity. 
A)  Expense the expenditure immediately. 
B)  Capitalize the expenditure and depreciate it over the remaining service life of the asset. 
C)  Capitalize the expenditure, but do not depreciate the asset. 
D)  Charge it off to shareholders' equity.

Question 10

Applejax Company is a large international canning company. Applejax uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax reporting. The company's tax rate is 35%. Selected financial information about Applejax appears below.
   Required:

Accepted Answer

The answer of Applejax Company is a large international canning...

Question 11

GAAP stipulates that firms should ____________________ expenditures that increase the service potential of an asset beyond that originally anticipated

Accepted Answer

The answer of GAAP stipulates that firms should ____________________ expenditures...

Question 12

Companies that engage in long-term contracts can recognize income using either the _____________________________________________ method or the ________________________________________ method.

Accepted Answer

percentage-of-comple

Question 13

Bold Construction Comp. has consistently used the percentage-of-completion method for recognizing revenue on its long-term contracts. During 2005 Bold entered into a fixed-price contract to construct an office building for $8,000,000. Information relating to the contract is as follows:
   Required (Show Calculations):

Accepted Answer

The answer of Bold Construction Comp. has consistently used the...

Question 14

Which of the following is not a difficulty in determining current market values when determining the value of fixed assets?

Accepted Answer

A)  There is an absence of active markets for many fixed assets. 
B)  It is difficult to identify comparable assets currently available in the marketplace to value assets in place 
C)  It is difficult to make assumptions about the effects of technology and other improvements when using the prices of new assets currently available on the market in the valuation process. 
D)  Our current accounting model is not equipped to handle changes in market values. 
A)  There is an absence of active markets for many fixed assets. 
B)  It is difficult to identify comparable assets currently available in the marketplace to value assets in place 
C)  It is difficult to make assumptions about the effects of technology and other improvements when using the prices of new assets currently available on the market in the valuation process. 
D)  Our current accounting model is not equipped to handle changes in market values.

Question 15

A company would need to record an impairment loss for its equipment when

Accepted Answer

A)  the original cost of the equipment exceeds its fair value and is deemed not recoverable. 
B)  management determines that the equipment will no longer be used. 
C)  the carrying amount of the equipment exceeds its fair value and is deemed not recoverable. 
D)  the cash flows from the equipment are less than its fair value. 
A)  the original cost of the equipment exceeds its fair value and is deemed not recoverable. 
B)  management determines that the equipment will no longer be used. 
C)  the carrying amount of the equipment exceeds its fair value and is deemed not recoverable. 
D)  the cash flows from the equipment are less than its fair value.

Question 16

Discuss how firms should account for intangible assets under GAAP. Your answer should include discussion of the following areas:

Accepted Answer

Recommende

Question 17

Folio Corp. Folio Corp. sold a paper machine to Library Inc. on January 1, 2007. The sale price of the machine was $4,000,000 and the machine cost $3,200,000 for Folio to manufacture. Library will make four payments at the end of each year, beginning with 2007, of $1,261,883 each. The four payments of $1,261,883 when discounted at 10% have a present value of $4,000,000. An amortization table appears below:
  If Folio Corp. is certain that it will collect all four payments from Library Inc. what amount of gross profit should Folio recognize in 2007 from the sale?

Accepted Answer

A)  $0 
B)  $861,883 
C)  $172,377 
D)  $800,000 
A)  $0 
B)  $861,883 
C)  $172,377 
D)  $800,000

Question 18

Under current accounting rules an asset is ____________________ when its carrying amount is deemed "not recoverable".

Accepted Answer

The answer of Under current accounting rules an asset is...

Question 19

Tiger Company has consistently used the percentage-of-completion method of recognizing income. In 2005, Tiger started on an $18,000,000 construction contract that was completed in 2007. The following information was taken from Tiger's 2005 accounting records:   What amount of revenue should Tiger recognize on the contract in 2005?

Accepted Answer

A)  $6,000,000 
B)  $5,400,000 
C)  $9,000,000 
D)  $0 
A)  $6,000,000 
B)  $5,400,000 
C)  $9,000,000 
D)  $0

Question 20

___________________________________ is primarily a question of timing.

Accepted Answer

The answer of ___________________________________ is primarily a question of timing....

An analyst can estimate the average total life of depreciable assets by

The installment method of revenue recognition can be used when cash collectibility is uncertain. The installment method

Firms recognize an ______________________________ when the carrying amount of a fixed asset exceeds its fair value and is deemed not recoverable.

Using the information below calculate the average total depreciable life of the assets:

Specifically identifiable intangible assets acquired from others may have either a useful life or an useful life.

When input prices are increasing, companies that use the LIFO method of accounting for inventory will report

GAAP stipulates that firms should do what with expenditures that increase the service potential of an asset beyond that originally anticipated?

Applejax Company is a large international canning company. Applejax uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax reporting. The company's tax rate is 35%. Selected financial information about Applejax appears below. Required:

GAAP stipulates that firms should ____________________ expenditures that increase the service potential of an asset beyond that originally anticipated

Companies that engage in long-term contracts can recognize income using either the _____ method or the method.

Which of the following is not a difficulty in determining current market values when determining the value of fixed assets?

A company would need to record an impairment loss for its equipment when

Discuss how firms should account for intangible assets under GAAP. Your answer should include discussion of the following areas:

Under current accounting rules an asset is ____________________ when its carrying amount is deemed "not recoverable".

___________________________________ is primarily a question of timing.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Key Relationships in the Dynamics of a Business

Profitability Analysis

Risk Analysis

Quality of Accounting Information and Adjustments to Reported Financial Statement Data

Liability Recognition and Related Expenses

Intercorporate Entities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 7: Revenue Recognition and Related Expenses

An analyst can estimate the average total life of depreciable assets by

The installment method of revenue recognition can be used when cash collectibility is uncertain. The installment method

Firms recognize an ______________________________ when the carrying amount of a fixed asset exceeds its fair value and is deemed not recoverable.

Using the information below calculate the average total depreciable life of the assets:

Specifically identifiable intangible assets acquired from others may have either a ____________________ useful life or an ____________________ useful life.

When input prices are increasing, companies that use the LIFO method of accounting for inventory will report

GAAP stipulates that firms should do what with expenditures that increase the service potential of an asset beyond that originally anticipated?

Applejax Company is a large international canning company. Applejax uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax reporting. The company's tax rate is 35%. Selected financial information about Applejax appears below. Required:

GAAP stipulates that firms should ____________________ expenditures that increase the service potential of an asset beyond that originally anticipated

Companies that engage in long-term contracts can recognize income using either the _____________________________________________ method or the ________________________________________ method.

Which of the following is not a difficulty in determining current market values when determining the value of fixed assets?

A company would need to record an impairment loss for its equipment when

Discuss how firms should account for intangible assets under GAAP. Your answer should include discussion of the following areas:

Under current accounting rules an asset is ____________________ when its carrying amount is deemed "not recoverable".

___________________________________ is primarily a question of timing.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Key Relationships in the Dynamics of a Business

Profitability Analysis

Risk Analysis

Quality of Accounting Information and Adjustments to Reported Financial Statement Data

Liability Recognition and Related Expenses

Intercorporate Entities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Specifically identifiable intangible assets acquired from others may have either a useful life or an useful life.

Companies that engage in long-term contracts can recognize income using either the _____ method or the method.