Basics

Question 1

Reportable segments, what is the 10% and 75% rule?

Answer 1

10% of total revenues need to be reported. After the 10% tests are completed, a 75% test must be performed. must be enough segments reported so that at least 75% of unaffiliated revenues is shown by reportable segments (75% test).

Question 2

On January 1, year 1, Robert Harrison signed an agreement to operate as a franchisee of Perfect Pizza, Inc. for an initial franchise fee of $40,000. Of this amount, $15,000 was paid when the agreement was signed and the balance is payable in five annual payments of $5,000 each beginning January 1, year 2

Answer 2

The acquisition cost is equal to the $15,000 down payment plus the present value of the $25,000 loan.

Question 3

CPI calculation

Answer 3

historical cost X New CPI/Old CPI (Original)

Question 4

Which of the following qualifies as an operating segment

Answer 4

This answer should pass 10% rules and its management reports to the chief operating officer

Question 5

What total amount should be charged to repairs and maintenance

Answer 5

a cost should be capitalized if it improves the efficiency of the asset or extends its useful life, and expensed if it merely maintains the asset at its current level.

Question 6

the enterprise shall disclose the following about each reportable segment if the specified amounts are reviewed by the chief operating decision maker:

Answer 6

1. Revenues from external customers
2. Intersegment revenues
3. Interest revenue and expense (reported separately unless majority of segment’s revenues are from interest and management relies primarily on net interest revenue to assess performance)
4. Depreciation, depletion, and amortization expense
5. Unusual items, extraordinary items
6. Equity in the net income of investees accounted for by the equity method
7. Income tax expense or benefit
8. Significant noncash item
   Cost of goods sold is not specifically included as a required disclosure.

Question 7

The information provided by financial reporting pertains to

Answer 7

SFAC 8 states that information provided by financial reporting pertains to individual business enterprises rather than to industries or an economy as a whole or to members of society as consumers

Question 8

Examples of nonmonetary assets and liabilities

Answer 8

included inventory, property, plant, equipment, and obligations under warranties. Accumulated depreciation is a nonmonetary item because it relates to equipment.

Question 9

factor of accounts receivable

Answer 9

Cash proceeds will be reduced by fees, interest, and holdback.