Quiz Mod 9-13A Flashcards Preview

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Flashcards in Quiz Mod 9-13A Deck (20):
0

The annual amortization shall be the greater of the amount computed using...2

1 ratio of current gross revenues for product
Or
2 straight line method of estimated economic life

1

When applying the lower cost or market inventory method, the lowest total inventory amount is obtained when the lower cost of market determination is made on...

2) why?

An item by item basis

2) because lower value for each item is selected

2

Debtors sometimes grant security in assets to secured party lenders, when this happens, the debtor should...

Reclassify the assets and report it separately on the balance sheet

Ex. Reclassify as security pledged to creditors

3

Blake co sold a used machine to Cooper Inc for $900k, resulting in a gain of $270k, what is the gross profit rate?

2) if $400k has been received by Blake, what is Blake's deferred GP?

270/900 = 30%

2) deferred GP= (900-400) x 30% = $150k

4

5 Items available for fair value election

1 financial asset and financial laibility
2 firm commitment involve only financial instruments
3 written loan commitment
4 rights and obligations under insurance contract or warranty
(not financial Instrument)
5 host financial instrument separated from embedded derivative

5

An impairment loss is recognized on an exchange of similar productive assets if...

The carrying amount of the asset exceeds its fair value on
Date of exchange

6

Royalties paid to a major stockholder as consideration for patents purchased from the share holder, where should this be disclosed?

In notes in related party transactions

7

When progress billings exceeds cash collected for a construction company using percentage completion method, what is it classified as...

A current asset

8

Fair values should be used to account for monetary exchanges unless...

The exchange does not have commercial substance

9

If a truck with a book value of $2,500 and fair value of $3,000 is exchanged for stock in Ace with a book value of $1500, what amount should be reported on the balance sheet as investment in Ace?

Fair value of asset transferred, $3,000

10

The SEC was created under which act?

The 1934 Securities Exchange Act

11

Voluntary change in accounting principle should be recognized using...

2) what is not affected?

The retrospective approach, where cumulative effect is reported
As adjustment of beginning of year retained earnings for earliest
Year presented

Net income is not affected

12

Net operating income results in a measure similar to net income called...

Net operating cash flow

13

Net operating cash flow is...

The difference between cash receipts and cash disbursments

14

Equation for accumulated depreciation

Beginning balance + annual expense - retirements = end balance A/D

15

How is a prepayment for 2 years made at the beginning of the year, classified at the end of the first year financial statements?

Year 1 fee is an expense

The year 2 fee is a current asset (prepaid fee)

16

An annuity payment made at the beginning of a period is...

2) How do you calculate payments for 4 periods at 10% for 1,000,000, when the annuity payment is made at the beginning of each period?

An annuity in advance

2) $1,000,000/future amount of annuity in advance of $1, 10%, 4 pds

17

Both group depreciation and composite depreciation apply...

Average straight line depreciation method

18

Payables to Subcontractors, would not be credited until...

The subcontractor has delivered the order

19

Paid gross wages would already include...2

Federal income and FICA taxes withheld