Test 3- Incorrect Questions Flashcards
What must be present to require the disclosure of the estimated effects of a change in an estimate used in the preparation of financial statements
- It is reasonably possible that the estimate will change in the near term
- The effect of a change in estimate would be material
How do you calculate the total prize expense to be recorded in the financial statement
First payment
+ PV of additional payments
= expense in Year 1 income statement
Is market research related to a major product for the company considered to be an R&D expense?
Yes
What are the requirements for a segment to be considered a reportable segment?
The segment must meet one of the 10% size tests:
- revenues
- reported profit/loss
- Assets
What are the 3 tests for reportable segments
- Revenues
- Reported profit/loss
- Assets
How should end of years officers bonuses be reported?
They should be accrued at year-end and included in total accrued salaries.
How should expenses be reported throughout the year?
Actual and estimated expenditures benefiting all interim periods equally should be expensed ratably throughout the year
How would 150,000 for unanticipated repairs to office equipment be reported throughout the year
it would be expensed ratably throughout the year
How are deferred income taxes that are based on temporary differences be classified on the balance sheet?
non-current deferred tax liability
How do you calculate ending Asset Retirement Obligation (ARO)?
Beginning ARO + PV of new ARO + Accretion Expense - ARO settled during the period
Where does allowance for doubtful accounts belong on the balance sheet?
Current assets
it is subtracted/contra account
Where does discount on BP belong on the balance sheet?
Non-current liability
It is subtracted/contra account
How is treasury stock reported on the balance sheet
negative/contra account
when should a loss on inventory be accounted for?
When the loss is probable and estimable and the loss must be recorded in full
What is included in the cost of land
Cost of land includes all costs necessary to put it in the place and condition for construction of the building
Are legal fees and title insurance included in the cost of land
Yes
How do you calculate goodwill
LOOK UP
How do you calculate accounts receivable turnover in days?
365/ Accounts rec turnover
Accounts rec turnover= net credit sales/ average net rec
What costs are included in patent capitalization?
Purchase price + Acquisition costs + Legal fees (if successful)
What if you have two patents and they are challenges and one wins and one losses…what amounts are capitalized
you would capitalize all amounts for the winning patent… The other patent would not be capitalized at all. This means the purchase price would not be included, the acquisition costs and the losing fees
How is a majority voting interest achieved?
Majority voting interest is achieved when
1) control over an investee is established
2) more than 50% of the voting stock of the investee has been acquired.
when an entity reissues financials what is the rule about recognizing events that occur during that period?
When an entity reissues financial statements, the entity should not recognize events (adjust for events) that occured between the date the original financial statements were issued or available to be issued and the date the financial statements were reissued.
what is the journal entry for when taxpayers are billed for property taxes?
D: Property Taxes Receivable
Cr: Revenues
What is the rule for losses related to percentage complete method and the completed-contract method?
for both the percentage of completion and completed contract methods, the entire estimated loss is recorded for a loss contract in progress (not only the loss incurred to date)
