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Depreciation is computed on the original cost less estimated salvage under which of the following depreciation methods?

Double-Declining-Balance; Productive-Output

Yes No

No Yes

Yes Yes

No No

No Yes

Treasury stock is recorded on the statement of financial position as a(n)

Increase in assets

Decrease in shareholders' equity

Decrease in assets

Increase in shareholders' equity

Decrease in shareholders' equity

Current assets are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business. Current assets most likely include

Intangible assets.

Trading debt securities.

Organizational costs.

Purchased goodwill.

Trading debt securities

On October 31, Year 1, a company with a calendar year end paid $90,000 for services that will be performed evenly over a 6-month period from November 1, Year 1, through April 30, Year 2. The company expensed the $90,000 cash payment in October Year 1 to its services expense general ledger account. The company did not record any additional journal entries in Year 1 related to the payment. What is the adjusting journal entry that the company should record to properly report the prepayment in its Year 1 financial statements?

Debit services expense and credit prepaid services for $60,000.

Debit services expense and credit prepaid services for $30,000.

Debit prepaid services and credit services expense for $60,000.

Debit prepaid services and credit services expense for $30,000.

Debit prepaid services and credit services expense for $60,000

An automobile dealer sells service contracts. The contracts stipulate that the dealer will perform specific repairs on covered vehicles. The contracts vary in length from 12 to 36 months. Do the following increase when service contracts are sold? Deferred Revenue and Service Revenue

No No

Yes Yes

No Yes

Yes No

Yes No

The types of assets that qualify for interest capitalization are

Assets that are being used in the earning activities of the reporting entity.

Inventories that are manufactured in large quantities on a continuing basis.

Assets that are ready for their intended use in the activities of the reporting entity.

Assets that are constructed for the reporting entity's own use.

Assets that are constructed for the reporting entity's own use

Dunne Co. sells equipment service contracts that cover a 2-year period. The sales price of each contract is $600. Dunne's past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Dunne sold 1,000 contracts evenly throughout the year. In its December 31 balance sheet, what amount should Dunne report as deferred service contract revenue?

$360,000

$540,000

$480,000

$300,000

$480,000

Form 10-K must be filed within

I. 60 days of the last day of the fiscal year by large accelerated filers

II. 70 days of the last day of the fiscal year by small accelerated filers

III. 75 days of the last day of the fiscal year by accelerated filers

IV. 90 days of the last day of the fiscal year by nonaccelerated filers

I, II, and III.

I, II, III, and IV.

I, III, and IV.

I, II, and IV

I, III, and IV

Miller Mining, a calendar-year corporation, purchased the rights to a copper mine on July 1, Year 1. Of the total purchase price, $2.8 million was appropriately allocable to the copper. Estimated reserves were 800,000 tons of copper. Miller expects to extract and sell 10,000 tons of copper per month. Production began immediately. The selling price is $25 per ton. Miller uses percentage depletion (15%) for tax purposes. To aid production, Miller also purchased some new equipment on July 1, Year 1. The equipment cost $76,000 and had an estimated useful life of 8 years. After all the copper is removed from this mine, however, the equipment will be of no use to Miller and will be sold for an estimated $4,000. If sales and production conform to expectations, what is Miller's depletion expense on this mine for financial accounting purposes for the Year 1 calendar year?

$420,000

$215,400

$210,000

$105,000

$210,000

Lano Corp.'s forest land was condemned for use as a national park. Compensation exceeded the forest land's carrying amount. Lano purchased similar, but larger, replacement forest land for an amount greater than the condemnation award. As a result of the condemnation and replacement, what is the net effect on the carrying amount of forest land reported in Lano's balance sheet?

The amount is increased by the excess of the replacement forest land's cost over the condemnation award.

The amount is increased by the excess of the condemnation award over the condemned forest land's carrying amount.

The amount is increased by the excess of the replacement forest land's cost over the condemned forest land's carrying amount.

No effect, because the condemned forest land's carrying amount is used as the replacement forest land's carrying amount.

The amount is increased by the excess of the replacement forest land's cost over the condemned forest land's carrying amount.

A company determined the following values for its inventory as of the end of the fiscal year:

Historical cost: $100,000

Current replacement cost: 70,000

Net realizable value: 90,000

Net realizable value minus a normal profit margin: 85,000

Fair value: 95,000

$90,000

$95,000

$70,000

$85,000

$90,000

On June 1, Pitt Corp. sold merchandise with a list price of $5,000 to Burr on account. Pitt allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40, and the sale was made FOB shipping point. Pitt prepaid $200 of delivery costs for Burr as an accommodation. On June 12, Pitt received from Burr a remittance in full payment amounting to

$2,912

$2,944

$2,744

$3,112

$2,944

A building suffered uninsured fire damage. The damaged portion of the building was refurbished with higher-quality materials. The cost and related accumulated depreciation of the damaged portion are identifiable. The owner should

Reduce accumulated depreciation equal to the cost of refurbishing.

Capitalize the cost of refurbishing by adding the cost to the carrying amount of the building.

Capitalize the cost of refurbishing and record a loss in the current period equal to the carrying amount of the damaged part of the building.

Record a loss in the current period equal to the sum of the cost of refurbishing and the carrying amount of the damaged part of the building.

Capitalize the cost of refurbishing and record a loss in the current period equal to the carrying amount of the damaged part of the building.

At the beginning of the current year, Hayworth Co. sold equipment with a 2-year service warranty for a single payment of $20,000. The service warranty can be purchased separately by the customer. The fair value of the equipment was $18,000. Hayworth recorded this transaction with a debit of $20,000 to cash and a credit of $20,000 to sales revenue. Assuming the proper entry was made for cost of goods sold, which of the following statements is correct regarding Hayworth's current-year financial statements?

Net income will be overstated.

The financial statements are correct.

Total liabilities will be overstated.

Total assets will be overstated.

Net income will be overstated.

Ross Co. pays all salaried employees on a Monday for the 5-day workweek ended the previous Friday. The last payroll recorded for the year ended December 31, Year 4, was for the week ended December 25, Year 4. The payroll for the week ended January 1, Year 5, included regular weekly salaries of $80,000 and vacation pay of $25,000 for vacation time earned in Year 4 not taken by December 31, Year 4. Ross had accrued a liability of $20,000 for vacation pay at December 31, Year 3. In its December 31, Year 4, balance sheet, what amount should Ross report as accrued salary and vacation pay?

$68,000

$89,000

$64,000

$69,000

$89,000

A company uses a periodic inventory system and has its cost of ending inventory understated by $4,000. Which of the following describes the effects of this error on the company's current-year's cost of goods sold and net income, respectively? Cost of goods sold and Net income

Understated Overstated

Overstated Understated

Overstated Overstated

Understated Understated

Overstated Understated

According to the FASB's conceptual framework, for financial reporting to be useful, it must

Provide information useful for making business and investment decisions.

Directly measure the value of the entity being reported on.

Be in accordance with generally accepted accounting principles.

Be understandable to those who have a limited knowledge of business activities.

Provide information useful for making business investment decisions

Freer Co. purchased a piece of machinery for $50,000. Freer will use the machinery in the production of its product line for five years, at which time the machinery will have a residual value of $5,000. Freer anticipates that it will produce 90,000 units the first year with total units of 450,000. Which of the following methods will allow Freer to claim the greatest amount of depreciation in the first year?

Straight-line.

Double declining balance.

Sum-of-the-years' digits.

Units of production.

Double declining balance