Reference no: EM132967726

Questions -

Q1. On December 18, Year 1, Company A plans to purchase a printing press for €300,000 when it is completed on February 18, Year 2. The company entered into a forward exchange contract to avoid paying more for the printing press if the exchange rate increases. Relevant exchange rates are as follows:

Spot rate. Forward rate

December 18, Year 1. $1.32. $1.25

December 31, Year 1 1.35 1.31

February 18, Year 2 1.37

Company A accounts for the forward contract as a cash flow hedge. What amount, if any, of foreign currency gain/loss from the forward contract should Company A report in its income statement for the year ended December 31, Year 1?

A. $0

B. $18,000 gain

C. $18,000 loss

D. $6,000 loss

Q2. Adam and Seth formed a partnership on July 1, 20X8. Adam contributed cash of $50,000. Seth contributed property with a $36,000 carrying amount, a $40,000 original cost, and a fair value of $80,000. The partnership assumed the $35,000 mortgage attached to the property. What should Seth's capital account be on July 1, 20X8?

A. $36,000

B. $40,000

C. $45,000

D. $80,000

Q3. Pete and Paul are partners with capital account balances of $60,000 and $90,000, respectively. They agree to admit Zoey as a partner with a one-third interest in capital and profits, for an investment of $100,000, after revaluing the assets of Pete and Paul Goodwill to the original partners should be

A. $0

B. $33,333

C. $50,000

D. $66,667

Q4. Pep Co. is a publicly-traded, consolidated entity reporting segment information. Which of the following items is a required entity-wide disclosure regarding external customers?

A. The fact that transactions with a particular external customer constitute more than 10% of the total entity revenues.

B. The identity of any external customer providing 10% or more of a particular operating segment's revenue.

C. The identity of any external customer considered to be "major" by management.

D. Information on major customers is not required in segment reporting.