Reference no: EM13337568
1. Amazon Building, Inc. won a bid for a new warehouse building contract. Below is information from the project accountant.
Total Construction Fixed Price $10,000,000
Construction Start Date June 13, 2012
Construction Complete Date December 16, 2013
As of Dec. 31Ac€¦ 2012 2013
Actual cost incurred $4,500,000 $2,360,000
Estimated remaining costs $2,250,000 $-
Billed to customer $6,000,000 $4,000,000
Received from customer $5,000,000 $3,500,000
Assuming Amazon Building, Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013?
$973,333
$1,640,000
$2,093,333
$3,140,000
2. At the beginning of 2012, Annie, Inc. has a deferred tax asset of $7,500 and deferred tax liability of $10,500. In 2012, pretax financial income was $826,000 and the tax rate was 35%.
Pretax income included:
Interest income from municipal bonds $15,000
Accrued warranty costs, estimated to be used in 2013 $74,000
Prepaid rent expense, will be used in 2013 $31,000
Installment sales revenue, to be collected in 2013 $56,000
Operating loss carryforward $71,000
What is taxable income for 2012?
$727,000
$826,000
$915,000
$1,073,000
3. Presented below is pension information related to Amazing Goods, Inc. for the year 2013.
Service cost $96,000
Interest on projected benefit obligation $53,000
Interest on vested benefits $25,000
Amortization of prior service cost due to increase in benefits $10,000
Expected return on plan assets $19,000
The amount of pension expense to be reported for 2013 is
$130,000.
$140,000.
$165,000.
$184,000.
4. Apple Dumpling Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2013.
Service cost $320,000
Contributions to the plan $285,000
Actual return on plan assets $215,000
Projected benefit obligation (beginning of year) $3,100,000
Fair value of plan assets (beginning of year) $3,600,000
The expected return on plan assets and the settlement rate were both 9%. The amount of pension expense reported for 2013 is
$275,000.00
$384,000.00
$320,000.00
$599,000.00
5. Animal, Inc. leased equipment from Zoo Enterprises under a 4-year lease requiring equal annual payments of $48,000, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Animal, Inc.'s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the amount of interest expense recorded by Animal, Inc. in the first year of the asset's life?
PV Annuity Due PV Ordinary Annuity
8%, 5 periods 4.31213 3.99271
10%, 5 periods 4.16986 3.79079
0
$16,559
$12,719
$15,332
6. On December 31, 2013, Bob's Trucking, Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in a $600,000 increase in the beginning inventory at January 1, 2013. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is
$600,000.
$420,000.
$-.
$180,000.
7. Which of the following is not a change in accounting estimate?
Change in amortization period for an intangible asset.
Change from straight-line to sum-of-the-years'-digits method of depreciation.
Change because of understatement of inventory.
Change in residual value of a depreciable plant asset.
8. Amazing Glory, Inc. recognized a net income of $95,000 including $20,500 in depreciation expense.
Additional changes from the balance sheet are as follows.
Accounts Receivable $800 decrease
Prepaid Expenses $14,000 decrease
Inventory $25,000 increase
Accrued Liabilities $6,500 decrease
Accounts Payable $12,000 increase
Compute the net cash from operating activities based on the above information.
$79,000
$50,700
$110,800
$132,000
9. Items that affect the realizability of accounts receivable that are revealed after the balance sheet date but before the financial statements are issued should be
disclosed only in the Notes to the Financial Statements.
discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.
used to record an adjustment to Bad Debt Expense for the year ending December 31, 2013.
used to record an adjustment directly to the retained earnings account.
10. Adventure, Inc. is a company that operates in four different divisions. The following information relating to each segment is available for 2013.
Sales revenue Operating profit (loss) Identifiable assets
A $9,000 $2,000 $60,000
B $32,000 $(14,000) $65,000
C $65,500 $130,000 $525,000
D $21,000 $8,000 $38,000
Required:
For which of the segments would information have to be disclosed in accordance with professional pronouncements?
Segments B, C, and D
Segments A, B, and C
Segments A and B
Segments C and D