FIANCE AND MANAGERIAL ACCOUNTING, Financial Management

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SCH-MGMT 633 S.Machuga Fall15 SPIRE#39194
Exams, quizzes and Case Assignments Take Test: Quiz on Unit 3

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Take Test: Quiz on Unit 3
Content
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Test Information
Instructions
Description

This quiz contains 10 questions. Seven of the questions are from Module 5 and three of the questions are from Module 6 (pages 1 - 12).

The details of the quiz are as follows:

1) Use of Percentage of Completion method to recognize revenue.

2) Revenue recognition rules.

3) Rules regarding R&D expenses, restructuring expenses and income tax expenses.

4) Foreign currency translation.

5) Computation of basic EPS.

6) Accounts receivable, estimating uncollectible accounts and adjusting the allowance acccount, and recording bad debts expense.
Instructions
Timed Test This test has a time limit of 2 hours.You will be notified when time expires, and you may continue or submit.
Warnings appear when half the time, 5 minutes, 1 minute, and 30 seconds remain.
Multiple Attempts Not allowed. This test can only be taken once.
Force Completion This test can be saved and resumed later. The timer will continue to run if you leave the test.
Remaining Time: 1 hour, 31 minutes, 48 seconds.

Question 1

In spring 2014, Parmac Engineering Company signed a $160 million contract with the city of Parkersburg, to construct a new city hall. Parmac expects to construct the building within two years and incur expenses of $120 million. The city of Parkersburg paid $40 million when the contract was signed, $80 million within the next six months, and the final $40 million exactly one year from the signing of the contract. Parmac incurred $48 million in costs during 2014 and rest in 2015 to complete the contract on time. Using the percentage-of-completion method how much revenue should Parmac recognize in 2014?
a.

$ 40 million
b.

$ 120 million
c.

$ 64 million
d.

$ 80 million

4 points
Question 2

When should each of the following companies recognize revenue for the following operations?

a. Sam’s Club collects annual membership fees from customers.

b. Wall Street Journal receives advertising revenues in advance from Banco do Brasil, for an ad campaign that will run a full-page spread once a week for six months.

c. J. Jill is an internet clothing retailer. It receives credit card payments when customers place their orders and ships products from warehouses within 5-7 business days.

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6 points
Question 3

Google reported the following in its 2013, Form 10K (in millions). Use the information to determine in which year, Google reported a more significant R&D expenditure.

2013

2012

Total assets

$110,920

$93,798

Revenues

$59,825

$50,175

Research and development expense

$7,952

$6,793

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4 points
Question 4

Nickolas Imports recorded a restructuring charge of $21.6 million during fiscal 2014 related entirely to the closing of its California based operations in San Diego and in Tijuana, Mexico. The company’s financial statement footnotes indicated that expected employee separation payments amounted to $16.8 million and that fixed asset write-downs accounting for the remainder. Nickolas had never before incurred restructuring charges. At the end of the year, the company’s balance sheet included a restructuring accrual of $3,600,000. Calculate the cash flow effect of Nickolas’s restructuring during fiscal 2014.

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4 points
Question 5

December 31, 2012, includes the following information (in thousands):

Current tax provision

Federal

$237,481

State

13,156

Foreign

50,548

301,185

Deferred tax provision

Federal

(174,953)

State

(9,925)

Foreign

(1,182)

(186,060)

Provision for income taxes

$115,125

What income tax expense did Life Technologies Company report in its 2012 income statement?

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2 points
Question 6

The Bean Import Export Corp. has a profitable Portuguese subsidiary that maintains its financial records in Euros. During the current year, the U.S. dollar strengthened vis-à-vis the Euro. What affect did this have on The Bean’s consolidated income statement for the current year?

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2 points
Question 7

Oil Services Corp. reports the following EPS data in its 2014 annual report (in millions except per share data).

Net income

$2,436

Weighted average shares outstanding:

1,172

Compute basic earnings per share.

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2 points
Question 8

The 2013 annual report of Oracle Corporation, included the following information relating to their allowance for doubtful accounts: Balance in allowance at the beginning of the year $323 million, accounts written off during the year $145 million, balance in allowance at the end of the year $296 million. What did Oracle report as bad debt expense for the year?

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4 points
Question 9

Fey Corporation has aged its accounts receivable and estimated uncollectible accounts as follows (in millions):

Age of Receivables

Balance

Estimated % uncollectible

Current

$5,500

1%

30-60 days past due

1,200

3%

61-90 days past due

850

6%

Over 90 days past due

420

10%

Total

$7,970

a. Determine the appropriate allowance for uncollectible accounts.

b. How will Fey Corporation report its accounts receivable on the balance sheet?

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6 points
Question 10

Dick’s Sporting Goods reported Accounts receivable, net of $60,779 thousand in 2013 and an allowance for doubtful accounts of $3,109 thousand. Pretax income in 2013 was $546,107 thousand. If Dick’s Sporting Goods’ managers had purposely underestimated the allowance for doubtful accounts by $750 thousand, how would the 2013 income statement be affected? What about future financial statements?

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6 points

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