CPA FAR Practice Exam 5

Vanguard Corp. reported net income of $750,000 for the current year. Relevant balance sheet account changes and supplemental data are as follows:<br/><br/>- Accounts Receivable: Increased by $40,000<br/>- Allowance for Credit Losses: Decreased by $5,000 (Write-offs: $15,000; Bad Debt Expense: $10,000)<br/>- Inventory: Decreased by $25,000<br/>- Accounts Payable: Decreased by $15,000<br/>- Bond Discount: Amortization of $3,000<br/>- Deferred Tax Liability: Increased by $12,000<br/>- Unrealized Gain on AFS Debt Securities (OCI): $8,000<br/><br/>What is the net cash provided by operating activities for the current year?

On January 1, Year 1, Parent Co. acquired 80% of Sub Co. for $800,000. The fair value of the noncontrolling interest was $200,000. Sub Co.'s net assets had a book value of $700,000 and a fair value of $900,000. The difference was attributable to equipment with a 10-year remaining life. <br/><br/>In Year 1, Sub Co. reported net income of $100,000 and paid dividends of $20,000. Parent Co. reported separate net income of $500,000 (excluding investment income). <br/><br/>What is the Consolidated Net Income attributable to Parent Co. for Year 1?

A nongovernmental not-for-profit organization received the following contributions during Year 1:<br/><br/>1. $50,000 cash restricted by the donor for the purchase of equipment. The equipment was purchased in January Year 2.<br/>2. $20,000 cash restricted by the donor for a specific summer camp program. The program was held in July Year 1.<br/>3. A pledge of $10,000 to be received in Year 2, with no other donor restrictions.<br/><br/>What amount should be reported as an increase in net assets without donor restrictions for Year 1?

City of Oakville issued $2,000,000 in general obligation bonds at 101 to finance the construction of a new police station. The premium was transferred to the Debt Service Fund. How should the Capital Projects Fund report these events?

TechSol Inc. has 100,000 shares of common stock outstanding throughout Year 1. Net income was $400,000. The company also had the following instruments outstanding all year:<br/><br/>- 10,000 shares of 6% Cumulative Preferred Stock, $100 par. Dividends were NOT declared.<br/>- 5,000 stock options with an exercise price of $20. The average market price was $25.<br/><br/>What is the Diluted Earnings Per Share (EPS) for Year 1?