FAR

According to the FASB Conceptual Framework, which of the following statements correctly describes the trade-off between the fundamental qualitative characteristics of relevance and faithful representation?

On October 1, Year 1, Host Co. committed to a plan to dispose of a major component of its business that qualifies as a discontinued operation. The sale is expected to occur on March 1, Year 2. For the year ended December 31, Year 1, the component had an operating loss of $300,000. The estimated fair value of the component is $1,500,000, and its carrying amount is $1,800,000. Estimated costs to sell are $50,000. The corporate tax rate is 25%. What amount should Host report as the loss from discontinued operations in its Year 1 income statement?

A company has a debt covenant requiring a current ratio of at least 2.0. On December 31, Year 1, the company has current assets of $800,000 and current liabilities of $500,000. On January 15, Year 2, before the financial statements are issued, the company refinances $200,000 of its short-term debt into a long-term note due in 5 years. The refinancing agreement is non-cancelable. How should the $200,000 debt be classified on the December 31, Year 1 balance sheet, and is the covenant violated?

Orion Corp. reports under US GAAP. In preparing its statement of cash flows for the year ended December 31, Year 1, the following data is available:<br/>- Net Income: $500,000<br/>- Gain on sale of equipment: $20,000<br/>- Purchase of treasury stock: $50,000<br/>- Amortization of bond discount: $5,000<br/>- Increase in net accounts receivable: $30,000<br/>- Decrease in prepaid expenses: $10,000<br/>- Payment of cash dividends: $40,000<br/><br/>What is the net cash provided by operating activities?

Parent Co. owns 80% of Sub Co. During Year 1, Parent sold inventory to Sub for $500,000. The cost of the inventory to Parent was $350,000. At December 31, Year 1, Sub had sold 60% of this inventory to outside parties. The tax rate is 25%. In the consolidated balance sheet at December 31, Year 1, by what amount should the inventory be reduced to eliminate the intercompany profit?

On January 1, Year 1, Acquirer Inc. purchased 100% of Target Corp. for $1,000,000. Target's equity consisted of $200,000 Capital Stock and $600,000 Retained Earnings. The fair value of Target's identifiable net assets was $900,000. The difference between fair value and book value was due to a patent with a 10-year remaining life. What is the annual amortization expense adjustment required for the consolidation worksheet for Year 1?

Regarding SEC reporting requirements, which of the following statements is correct concerning a 'Large Accelerated Filer'?

Alpha Corp. has the following capital structure during Year 1:<br/>- Net Income: $800,000<br/>- Weighted Average Common Shares Outstanding: 100,000<br/>- 5,000 shares of 6% Cumulative Preferred Stock, $100 par, convertible into 20,000 common shares. No dividends were declared.<br/>- $1,000,000 of 4% Convertible Bonds, convertible into 30,000 common shares.<br/><br/>Tax rate is 25%. What is Diluted Earnings Per Share (EPS)?

A company reports the following for its operating segments:<br/>- Segment A: Revenue $400, Profit $50, Assets $1,000<br/>- Segment B: Revenue $100, Loss ($30), Assets $200<br/>- Segment C: Revenue $50, Profit $5, Assets $100<br/>- Segment D: Revenue $40, Loss ($40), Assets $50<br/><br/>Total Revenue = $590. Total Assets = $1,350.<br/>Which segments are reportable based on the quantitative thresholds?

On January 15, Year 2, before the Year 1 financial statements were issued, a customer of Apex Corp. declared bankruptcy due to a fire that occurred on January 10, Year 2. The customer owed Apex $50,000 at December 31, Year 1. How should this event be treated in the Year 1 financial statements?

Under ASC 820, which of the following inputs would be considered Level 3 in the fair value hierarchy?

Company X is preparing its interim financial statements for the first quarter. The company expects to earn $200,000 pre-tax income each quarter. It has a permanent difference of $20,000 (tax-exempt income) expected for the full year. The statutory tax rate is 30%. No other temporary differences exist. What is the income tax expense for the first quarter?

Under ASC 606, how should a company account for a contract modification that adds distinct goods at a price that does NOT reflect their standalone selling price?

On January 1, Year 1, Lessee Corp enters a 10-year lease for a building. Annual payments are $50,000 due at the beginning of each year. The building's useful life is 15 years. The lease grants Lessee an option to purchase the building for $10,000 at the end of the lease, which is significantly below the expected fair value of $200,000. The implicit rate is 5%. How should Lessee classify this lease and amortize the Right-of-Use (ROU) asset?

Company A has a bank account with Bank X with a balance of $50,000 and an overdraft of $10,000 in a separate account at Bank Y. The accounts are not linked. How should these be reported on the balance sheet?

On July 1, Factor Co. transferred receivables with a face value of $100,000 to Finance Corp. Factor Co. retained a 5% holdback for adjustments. Finance Corp. charged a 3% fee and withheld the holdback. The transfer was without recourse and met the criteria for a sale. What is the loss on sale reported by Factor Co.?

A company adopted Dollar-Value LIFO on Jan 1, Year 1, when the inventory value was $200,000 (Base Year Cost). On Dec 31, Year 1, the ending inventory at current year cost is $231,000. The relevant price index is 1.05. What is the Dollar-Value LIFO inventory balance at Dec 31, Year 1?

Under US GAAP, which inventory method requires the use of 'Lower of Cost or Market' (where Market has a ceiling and floor), rather than 'Lower of Cost or Net Realizable Value'?

Construction of a qualifying asset began on Jan 1. Weighted Average Accumulated Expenditures (WAAE) were $1,000,000. The company had a specific construction loan of $600,000 at 8% and general debt of $2,000,000 at 5%. What amount of interest should be capitalized?

Company A exchanges a truck (Book Value $20,000, Fair Value $25,000) for a machine from Company B (Fair Value $22,000) and receives $3,000 cash. The exchange lacks commercial substance. What gain should Company A recognize?

Tech Co. incurred the following costs for developing software for internal use:<br/>- Preliminary project stage: $50,000<br/>- Application development stage (coding/testing): $200,000<br/>- Training employees: $30,000<br/>- Data conversion costs: $20,000<br/><br/>What amount should be capitalized?

Investor Inc. purchased 30% of Investee Co. for $600,000 on Jan 1. The book value of Investee's net assets was $1,500,000. The difference was attributed to equipment with a 5-year remaining life. Investee reported Net Income of $200,000 and paid dividends of $50,000. What is the carrying value of the investment at Dec 31?

A company holds a debt security classified as Available-for-Sale (AFS). Cost = $100,000. Fair Value at Year 1 end = $90,000. The decline is not due to credit factors (no credit loss). In Year 2, the Fair Value rises to $95,000. What is the accounting impact in Year 2?

On Jan 1, Year 1, a company issued $1,000,000, 5% bonds due in 5 years. The bonds were sold to yield 6%. Interest is paid annually on Dec 31. The PV of the bonds is $957,876. What is the carrying value of the bonds at Dec 31, Year 1?

A lessee enters a 5-year lease with annual payments of $20,000 due at the BEGINNING of each year. The rate is 5%. PV of Annuity Due (5 yrs, 5%) = 4.55. PV of Ordinary Annuity (5 yrs, 5%) = 4.33. What is the initial Lease Liability balance on Day 1 (after the first payment is made)?

Lessor Co. enters a sales-type lease. The equipment cost $60,000 and the fair value is $75,000. The present value of the lease payments is $75,000. What is the immediate effect on the Lessor's income statement?

A construction company enters a contract with a bonus clause. If completed by Dec 31, they get a $100,000 bonus. Based on history, they estimate a 60% chance of finishing on time (getting $100k) and 40% chance of being late ($0). Under ASC 606, what amount of variable consideration should be included in the transaction price?

On Jan 1, Year 1, a company sold a subscription for $120 covering 12 months. On March 31, the customer upgraded, adding features for the remaining 9 months for an extra $45 (total). The new features are NOT distinct from the original service. How is this modification accounted for?

In Year 1, a company has a $100,000 temporary difference (Liability > Tax Basis) that will reverse in Year 3. The enacted tax rates are: Year 1 (21%), Year 2 (25%), Year 3 (28%). What is the Deferred Tax Liability at Dec 31, Year 1?

A company has a Deferred Tax Asset (DTA) of $100,000 arising from NOL carryforwards. Management determines it is 'more likely than not' that only 60% of the DTA will be realized. What is the journal entry to record the Valuation Allowance?

Company repurchased 1,000 shares of its $10 par common stock for $15 per share. It uses the Cost Method. Later, it reissued 500 shares for $12 per share. What is the journal entry for the reissuance?

A company declares a 10% stock dividend when the stock price is $50 and par value is $10. There are 100,000 shares outstanding. What is the effect on Retained Earnings?

In Year 3, a company changes its inventory method from Weighted Average to FIFO. This is considered a Change in Accounting Principle. How should this be reported?

In Year 2, Company X discovered it overstated Year 1 ending inventory by $10,000. The tax rate is 30%. What is the adjustment to the Year 2 beginning Retained Earnings?

In a business combination, the acquirer incurred the following costs:<br/>- Finder's fee: $50,000<br/>- Legal fees for the acquisition: $100,000<br/>- Stock registration fees: $20,000<br/>- Audit fees for SEC registration: $10,000<br/><br/>How should these costs be treated?

Parent Co. buys 80% of Sub Co. for $800,000. The Fair Value of the Non-Controlling Interest (NCI) is $200,000. The Fair Value of Sub's identifiable net assets is $900,000. Under US GAAP, what amount of Goodwill is recognized?

A company enters into a derivative to hedge the exposure to changes in the fair value of a recognized asset (Fair Value Hedge). In Year 1, the derivative gains $10,000 in value, and the hedged asset loses $8,000 in value due to the hedged risk. How is this reported?

A US parent has a subsidiary in Europe. The subsidiary's functional currency is the Euro. The reporting currency is the US Dollar. Which exchange rate should be used to translate the subsidiary's Common Stock account?

US Company sells goods to a French customer for 10,000 Euros on Dec 1. Rate = $1.10. On Dec 31, Rate = $1.15. On Jan 15, payment is received when Rate = $1.12. What is the impact on Year 1 Net Income?

A Not-for-Profit receives a pledge of $100,000 in Year 1, contingent on raising a matching $100,000 from other donors. In Year 1, they raise $40,000. In Year 2, they raise the remaining $60,000. When should the $100,000 pledge be recognized as revenue?

A CPA volunteers to audit the books of a local charity. The work would typically cost $5,000. The charity also had volunteers serve meals, valued at $2,000. What amount of contribution revenue should be recognized?

A NFP receives a cash donation of $50,000 in Year 1 restricted for a specific research project. In Year 2, the NFP spends the $50,000 on the project. How is this reported in Year 2?

Which of the following expenses would be classified as 'Supporting Services' in a NFP Statement of Functional Expenses?

Partners A and B have capital balances of $60,000 and $40,000 and share profits 60:40. Partner C is admitted for a $30,000 investment for a 20% interest in the total capital. Using the Bonus Method, what is Partner A's new capital balance?

Which of the following funds uses the Current Financial Resources Measurement Focus and Modified Accrual Basis of Accounting?

A city levies $1,000,000 in property taxes for Year 1. It collects $800,000 in Year 1, $100,000 in the first 60 days of Year 2, and expects to collect the remaining $100,000 later in Year 2. Estimated uncollectible amount is $0. What amount of Property Tax Revenue should be recognized in the General Fund for Year 1?

A city orders a new police car for $30,000. When the car is delivered, the invoice is for $31,000. What is the journal entry in the General Fund upon delivery?

In the Government-Wide Statement of Net Position, how should capital assets used in general government activities be reported?

The General Fund transfers $50,000 to the Debt Service Fund to pay principal and interest. How is this transaction reported in the General Fund?

When reconciling the Net Change in Fund Balance (Governmental Funds) to the Change in Net Position (Government-Wide), which of the following adjustments is required for capital outlays of $100,000 purchased with cash?

Madison Inc. reported the following for Year 1:<br/>- Net income: $200,000<br/>- Depreciation expense: $80,000<br/>- Amortization of bond premium: $5,000<br/>- Gain on sale of equipment: $15,000<br/>- Increase in accounts receivable: $30,000<br/>- Decrease in inventory: $20,000<br/>- Increase in accounts payable: $25,000<br/>- Decrease in accrued liabilities: $10,000<br/><br/>Using the indirect method, what is Madison Inc.'s cash flow from operating activities for Year 1?

Apex Corp. owns a manufacturing facility with the following data at year-end:<br/>- Net carrying amount (book value): $2,400,000<br/>- Undiscounted future cash flows expected from use and disposal: $2,100,000<br/>- Fair value of the asset: $1,800,000<br/>- Costs to sell: $50,000<br/><br/>What amount of impairment loss, if any, should Apex Corp. recognize under ASC 360?

On January 1, Year 1, Corbin Co. enters a 5-year lease for equipment. Annual lease payments of $100,000 are due at the end of each year. The incremental borrowing rate is 6%. The present value factor for an ordinary annuity of $1, 5 periods at 6% = 4.2124. Corbin concludes this is a finance lease.<br/><br/>What is the initial lease liability that Corbin Co. should record on January 1, Year 1?

Riverview City received a $300,000 grant from the state government restricted exclusively for road repair and maintenance operations. Any unused funds must be returned to the state at the end of the fiscal year. The city also received $2,000,000 for construction of a new fire station.<br/><br/>How should Riverview City classify these two resources under GASB fund accounting?

Summit Corp. has the following book-to-tax differences at December 31, Year 1 (enacted tax rate: 25%):<br/>- Equipment depreciation: Book $200,000, Tax (MACRS) $300,000<br/>- Warranty expense: Book accrual $80,000, Tax deduction $0 (cash basis)<br/>- Installment sale income: Book recognition $120,000, Tax recognition $0 (deferred)<br/><br/>What is Summit Corp.'s net deferred tax balance at December 31, Year 1?

Fenwick Co. uses FIFO inventory costing and reports the following data for three inventory items at year-end:<br/><br/>Item Alpha: Cost $3,000, NRV $2,500, Replacement Cost $2,200<br/>Item Beta: Cost $4,000, NRV $3,200, Replacement Cost $3,800<br/>Item Gamma: Cost $2,500, NRV $2,500, Replacement Cost $2,100<br/><br/>Under ASC 330 (lower of cost and net realizable value), what is the total inventory value Fenwick Co. should report on the balance sheet?

Dalton Corp. reports net income of $1,200,000 for Year 1. It has 400,000 weighted average common shares outstanding. Additionally:<br/>- 50,000 stock options outstanding with exercise price of $20/share<br/>- Average market price per share during Year 1: $25/share<br/>- 10,000 shares of 5% convertible preferred stock ($100 par), each convertible into 4 common shares<br/>- Preferred dividends declared: $50,000<br/><br/>What is Dalton Corp.'s diluted EPS for Year 1?

On January 1, Year 1, Phoenix Corp. purchased a building for $800,000. The building has a useful life of 40 years with no salvage value. On January 1, Year 6, Phoenix determines that the building's total useful life should be 30 years instead of 40 years, with no change in salvage value.<br/><br/>What is the depreciation expense Phoenix should record for Year 6?

Riverside NFP received the following contributions during Year 1:<br/>- $100,000 cash contribution with no donor restrictions<br/>- $75,000 cash contribution restricted for program services in Year 2<br/>- $50,000 pledge receivable (unconditional promise) restricted for capital improvements, due in Year 3<br/>- Volunteer services valued at $25,000 for specialized accounting work that would otherwise be purchased<br/><br/>What total amount should Riverside NFP recognize as contribution revenue in Year 1?

Titan Corp. has the following account balances before year-end adjustments:<br/>- Accounts Receivable: $450,000<br/>- Allowance for Credit Losses: $15,000 (credit balance)<br/>- Credit sales for the year: $2,800,000<br/><br/>Based on an aging analysis, Titan estimates that $35,000 of accounts receivable will be uncollectible. What adjusting entry should Titan record for credit losses?

On January 1, Year 1, Cascade Corp. issued $1,000,000 of 8% bonds at 95, with interest payable semiannually on June 30 and December 31. The bonds mature in 5 years. Cascade uses the effective interest method.<br/><br/>What is the carrying amount of the bonds on December 31, Year 1?

Metro Corp. enters into a contract to sell equipment to a customer for $500,000. The contract includes a 2-year service agreement valued at $80,000 if sold separately. Metro delivers the equipment on January 1, Year 1, and will provide services over the next 2 years.<br/><br/>Under ASC 606, how much revenue should Metro recognize on January 1, Year 1?

Quantum Corp. has the following financial data for Year 1:<br/>- Net income: $240,000<br/>- Total assets (beginning): $1,800,000<br/>- Total assets (ending): $2,200,000<br/>- Total equity (beginning): $900,000<br/>- Total equity (ending): $1,100,000<br/><br/>What is Quantum Corp.'s return on assets (ROA) for Year 1?

Sterling Corp. owns a 30% interest in Alliance Co. and accounts for this investment using the equity method. During Year 1:<br/>- Alliance reported net income of $200,000<br/>- Alliance declared and paid dividends of $80,000<br/>- Sterling's original investment cost was $500,000<br/><br/>What is the carrying amount of Sterling's investment in Alliance at the end of Year 1?

Harbor City's General Fund had the following transactions during the fiscal year:<br/>- Property tax revenue (measurable and available): $2,500,000<br/>- Federal grant received for road maintenance: $400,000<br/>- Bond proceeds from general obligation bonds: $1,200,000<br/>- Transfer to Debt Service Fund: $150,000<br/><br/>What amount should Harbor City report as revenues in its General Fund for the fiscal year?

Pinnacle Corp. discovered in Year 2 that it had failed to record depreciation expense of $45,000 in Year 1. The error was discovered before the Year 2 financial statements were issued. Pinnacle's tax rate is 25%.<br/><br/>How should Pinnacle correct this error in its Year 2 financial statements?

Westfield Corp. has a contingent liability related to a lawsuit. The company's legal counsel believes there is a 60% probability that Westfield will lose the case and pay damages of $800,000. There is a 30% probability of paying $400,000, and a 10% probability of paying nothing.<br/><br/>Under ASC 450, how should Westfield account for this contingency?

Meridian Corp. purchased equipment on January 1, Year 1, for $600,000. The equipment has a 10-year useful life and $60,000 salvage value. Meridian uses straight-line depreciation for books and MACRS for tax purposes. MACRS depreciation for Year 1 is $120,000. The tax rate is 30%.<br/><br/>What is the deferred tax impact of this equipment in Year 1?

Coastal Corp. has the following data for its inventory at year-end:<br/><br/>Product A: 100 units, Cost $50/unit, NRV $45/unit<br/>Product B: 200 units, Cost $30/unit, NRV $35/unit<br/>Product C: 150 units, Cost $20/unit, NRV $18/unit<br/><br/>Using the lower of cost or net realizable value approach, what is the total inventory value?

Phoenix Corp. leases office space under a 4-year lease with annual payments of $80,000 due at the beginning of each year. Phoenix's incremental borrowing rate is 8%. The present value of an annuity due of $1 for 4 periods at 8% is 3.5771.<br/><br/>If Phoenix classifies this as an operating lease, what is the total lease cost Phoenix will recognize in Year 1?

Sunrise Corp. has 200,000 shares of $10 par common stock outstanding. The company declares a 10% stock dividend when the market price is $25 per share. <br/><br/>What journal entry should Sunrise record for the stock dividend?

Atlantic Corp. has a defined benefit pension plan. At the beginning of Year 1:<br/>- Projected benefit obligation (PBO): $2,000,000<br/>- Plan assets (fair value): $1,800,000<br/>- Service cost for Year 1: $150,000<br/>- Interest cost for Year 1: $120,000<br/>- Actual return on plan assets: $90,000<br/>- Employer contributions: $200,000<br/><br/>What is Atlantic's pension expense for Year 1?

Glacier Corp. purchased a trademark for $480,000 on January 1, Year 1. The trademark has a legal life of 10 years and an estimated useful life of 8 years. On January 1, Year 4, Glacier determines that the trademark's total useful life should be 6 years instead of 8 years.<br/><br/>What amortization expense should Glacier record for the trademark in Year 4?

Harmony NFP received the following during Year 1:<br/>- Unconditional pledge of $100,000 due in Year 3, restricted for building improvements<br/>- Conditional pledge of $75,000 that becomes unconditional when Harmony raises matching funds<br/>- Art collection valued at $50,000 donated with no restrictions<br/>- Volunteer services: 500 hours of general fundraising work valued at $15/hour<br/><br/>What amount should Harmony recognize as contribution revenue in Year 1?

Vertex Corp. has the following current assets and liabilities at year-end:<br/>- Cash: $85,000<br/>- Accounts receivable (net): $240,000<br/>- Inventory: $180,000<br/>- Prepaid expenses: $25,000<br/>- Accounts payable: $150,000<br/>- Accrued liabilities: $80,000<br/>- Current portion of long-term debt: $100,000<br/><br/>What is Vertex Corp.'s current ratio?

Beacon Corp. has available-for-sale debt securities with the following data at year-end:<br/>- Amortized cost: $450,000<br/>- Fair value: $420,000<br/>- Previous cumulative unrealized loss in OCI: $15,000<br/><br/>What journal entry should Beacon record at year-end?

Riverside Corp. enters into a contract to construct a building for $3,000,000. The contract is expected to take 3 years to complete. At the end of Year 1:<br/>- Costs incurred to date: $900,000<br/>- Estimated costs to complete: $1,800,000<br/>- Billings to customer: $800,000<br/>- Cash collected: $750,000<br/><br/>Using the percentage-of-completion method, how much revenue should Riverside recognize in Year 1?

Mountain Corp. has the following information for its defined benefit pension plan at December 31, Year 1:<br/>- Fair value of plan assets: $1,500,000<br/>- Projected benefit obligation: $1,800,000<br/>- Unrecognized prior service cost: $120,000<br/>- Unrecognized net loss: $80,000<br/><br/>What amount should Mountain report as the funded status on its balance sheet?

Oakwood Corp. factored $500,000 of accounts receivable to Finance Co. under the following terms:<br/>- Finance Co. advances 85% of receivables factored<br/>- Finance Co. charges a 3% factoring fee<br/>- Finance Co. charges 12% annual interest on advances<br/>- The arrangement is without recourse<br/>- Average collection period is 45 days<br/><br/>What is the total cost of factoring that Oakwood should recognize?

Sunset Corp. has the following information regarding its inventory:<br/>- Beginning inventory (FIFO): $180,000<br/>- Purchases during the year: $850,000<br/>- Ending inventory (FIFO): $220,000<br/>- Sales: $1,400,000<br/><br/>If Sunset had used LIFO instead of FIFO, ending inventory would have been $195,000. What would cost of goods sold have been under LIFO?

Pacific Corp. has a debt covenant that requires maintaining a debt-to-equity ratio of no more than 2.0:1. At year-end, Pacific has:<br/>- Total debt: $1,800,000<br/>- Total stockholders' equity: $950,000<br/><br/>Is Pacific in compliance with its debt covenant?

Horizon Corp. issued convertible bonds with a face value of $1,000,000. The bonds were issued at par and are convertible into 40,000 shares of common stock. At the time of issuance, similar bonds without the conversion feature would have yielded 8%, while the convertible bonds yield 6%.<br/><br/>Under ASC 470-20, how should Horizon account for the issuance of these convertible bonds?

Valley Corp. discovered the following subsequent events after year-end but before the financial statements were issued:<br/><br/>Event 1: A major customer filed for bankruptcy on February 15, Year 2. The customer owed Valley $150,000 at December 31, Year 1.<br/>Event 2: Valley issued $2,000,000 in bonds on January 30, Year 2, to finance expansion.<br/><br/>How should Valley account for these subsequent events in its Year 1 financial statements?

Crystal Corp. has trading securities with the following information at year-end:<br/>- Security A: Cost $80,000, Fair value $75,000<br/>- Security B: Cost $60,000, Fair value $68,000<br/>- Security C: Cost $40,000, Fair value $45,000<br/><br/>What is the net impact on Crystal's net income from these trading securities?

Granite Corp. leases equipment under a 6-year lease with the following terms:<br/>- Annual lease payments: $50,000 (paid at year-end)<br/>- Granite's incremental borrowing rate: 7%<br/>- Lease term: 6 years<br/>- Equipment's estimated useful life: 10 years<br/>- Equipment's fair value: $350,000<br/>- Present value of lease payments: $238,130<br/><br/>How should Granite classify this lease under ASC 842?

Emerald Corp. purchased equipment for $240,000 on January 1, Year 1. The equipment has a 5-year useful life with no salvage value. On January 1, Year 3, Emerald sells the equipment for $130,000.<br/><br/>What gain or loss should Emerald recognize on the sale?

Lakeside City's General Fund reports the following for the fiscal year:<br/>- Property tax revenue: $5,000,000<br/>- Sales tax revenue: $1,200,000<br/>- Federal grant revenue (spent on qualifying expenditures): $800,000<br/>- Bond proceeds: $2,000,000<br/>- Transfer to Capital Projects Fund: $300,000<br/>- General government expenditures: $4,500,000<br/>- Public safety expenditures: $1,800,000<br/><br/>What is the General Fund's change in fund balance for the fiscal year?

Redwood Corp. has the following data for calculating basic and diluted EPS:<br/>- Net income: $600,000<br/>- Weighted average common shares: 150,000<br/>- 8% convertible preferred stock: $500,000 par value, convertible into 25,000 common shares<br/>- Preferred dividends declared: $40,000<br/><br/>What is Redwood's basic EPS?

Silverstone Corp. has a machine with the following information at year-end:<br/>- Original cost: $500,000<br/>- Accumulated depreciation: $300,000<br/>- Estimated undiscounted future cash flows: $180,000<br/>- Fair value: $160,000<br/>- Costs to sell: $10,000<br/><br/>Under ASC 360, what amount should Silverstone report for this machine on its balance sheet?

Northstar Corp. enters into a 3-year service contract with a customer for $450,000, payable as follows:<br/>- Year 1: $200,000 (received)<br/>- Year 2: $150,000<br/>- Year 3: $100,000<br/><br/>The services are performed evenly over the 3-year period. Northstar's incremental borrowing rate is 8%. The present value factors are: Year 2 = 0.926, Year 3 = 0.794.<br/><br/>Under ASC 606, what is the transaction price for this contract?

Cascade Corp. has the following information for its cash and cash equivalents:<br/>- Cash in checking account: $125,000<br/>- Cash in savings account: $75,000<br/>- 3-month certificate of deposit: $50,000<br/>- 6-month certificate of deposit: $100,000<br/>- Money market fund (can be withdrawn anytime): $30,000<br/>- Petty cash: $2,000<br/><br/>What amount should Cascade report as cash and cash equivalents?

Harmony NFP has the following net assets at year-end:<br/>- Net assets without donor restrictions: $800,000<br/>- Net assets with donor restrictions for programs: $300,000<br/>- Net assets with donor restrictions for capital improvements: $150,000<br/>- Net assets with donor restrictions in perpetuity (endowment): $200,000<br/><br/>How should Harmony present these amounts in its statement of financial position?

Pinnacle Corp. has the following information for its defined benefit pension plan:<br/>- Service cost: $180,000<br/>- Interest cost: $150,000<br/>- Expected return on plan assets: $120,000<br/>- Amortization of prior service cost: $25,000<br/>- Amortization of net loss: $15,000<br/>- Employer contributions: $200,000<br/>- Benefits paid to retirees: $100,000<br/><br/>What is Pinnacle's net pension cost for the year?

Riverside Corp. has the following inventory information using the FIFO method:<br/>- Beginning inventory: 1,000 units at $15 each<br/>- Purchase 1: 2,000 units at $16 each<br/>- Purchase 2: 1,500 units at $18 each<br/>- Purchase 3: 500 units at $20 each<br/>- Units sold: 3,200 units<br/><br/>What is the cost of goods sold under FIFO?

Thunder Corp. has the following information for its bank reconciliation at month-end:<br/>- Balance per bank statement: $45,200<br/>- Outstanding checks: $8,300<br/>- Deposits in transit: $3,700<br/>- Bank service charges: $150<br/>- NSF check from customer: $1,200<br/>- Interest earned on account: $75<br/><br/>What is the correct cash balance that should appear on Thunder's balance sheet?

Coastal Corp. enters into a contract to deliver 1,000 widgets over 12 months. The contract price is $50,000. At the end of Month 3, Coastal has delivered 300 widgets and incurred costs of $12,000. The estimated total costs to fulfill the contract are $40,000.<br/><br/>Using the output method, how much revenue should Coastal recognize through Month 3?

Granite Corp. has the following current assets and current liabilities:<br/>- Accounts receivable: $180,000<br/>- Inventory: $220,000<br/>- Prepaid expenses: $40,000<br/>- Accounts payable: $160,000<br/>- Accrued wages: $50,000<br/>- Current portion of long-term debt: $90,000<br/><br/>What is Granite's quick ratio (acid-test ratio)?

Sunset Corp. purchased a patent for $360,000 on January 1, Year 1. The patent has a legal life of 20 years and an estimated useful life of 12 years. On January 1, Year 4, Sunset sells the patent for $285,000.<br/><br/>What gain or loss should Sunset recognize on the sale of the patent?

Valley Corp. has a defined benefit pension plan with the following changes during the year:<br/>- Projected benefit obligation, beginning: $2,200,000<br/>- Service cost: $180,000<br/>- Interest cost: $132,000<br/>- Benefits paid: $95,000<br/>- Actuarial loss: $45,000<br/><br/>What is the projected benefit obligation at year-end?

Horizon Corp. has the following information for calculating its debt-to-equity ratio:<br/>- Current liabilities: $400,000<br/>- Long-term debt: $1,200,000<br/>- Common stock: $800,000<br/>- Retained earnings: $600,000<br/>- Accumulated other comprehensive income: $50,000<br/><br/>What is Horizon's debt-to-equity ratio?

Dunn Corp. is preparing its Year 1 balance sheet. The following issues were identified during the review:<br/>1. A $50,000 check received from a customer on December 30, Year 1, was not recorded until January 2, Year 2.<br/>2. Inventory valued at $35,000, shipped FOB shipping point by a vendor on December 28, Year 1, was received on January 4, Year 2, and was excluded from Year 1 ending inventory.<br/>3. A $20,000 check written to a vendor on December 29, Year 1, was mailed on January 3, Year 2, but was recorded as a cash disbursement in Year 1.<br/><br/>What is the net effect of correcting these errors on Dunn's Year 1 Current Assets?

On October 1, Year 1, Host Co. approved a plan to dispose of a component of its business. The disposal meets the criteria for discontinued operations. The component was sold on January 15, Year 2. <br/>For the year ended December 31, Year 1, the component had:<br/>- Operating loss (pre-tax): $300,000<br/>- Estimated costs to sell: $50,000<br/>- Carrying amount of net assets: $2,000,000<br/>- Fair value of net assets: $1,600,000<br/><br/>The effective tax rate is 25%. What amount should Host report as the Loss from Discontinued Operations in its Year 1 Income Statement?

Selected financial information for Zeno Corp. for the year ended December 31, Year 1:<br/>- Cost of Goods Sold: $800,000<br/>- Inventory balance increase: $50,000<br/>- Accounts Payable balance decrease: $20,000<br/><br/>Using the direct method, what amount of cash was paid to suppliers for inventory in Year 1?

Parch Co. owns 80% of Scribe Inc. During Year 1, Parch sold inventory to Scribe for $500,000. The cost of the inventory to Parch was $350,000. At December 31, Year 1, 40% of this inventory remained in Scribe's warehouse. <br/>Both companies have a 30% tax rate. What amount of unrealized gross profit must be eliminated from the consolidated inventory balance at December 31, Year 1?

A company had the following equity transactions in Year 1:<br/>- Jan 1: 100,000 shares outstanding.<br/>- Apr 1: Issued 20,000 shares.<br/>- July 1: Declared and issued a 10% stock dividend.<br/>- Oct 1: Purchased 12,000 shares as treasury stock.<br/><br/>What is the weighted average number of shares outstanding (WASO) for Year 1?

A nongovernmental not-for-profit organization received a $100,000 cash contribution in Year 1 restricted by the donor for the acquisition of equipment. The equipment was purchased in Year 2. Under ASC 958, how should this contribution be reported in the Statement of Cash Flows for Year 1?

Community Helpers, a nongovernmental NFP, received a pledge of $50,000 in Year 1 to be paid in Year 3. The pledge is unconditional. The appropriate discount rate is 5%. How should this pledge be recognized in Year 1?

A nongovernmental NFP incurred the following expenses:<br/>- Printing of annual report: $10,000<br/>- Unsolicited mailing including an appeal for funds and educational materials (mission-related): $25,000<br/>- Salary of the CEO: $150,000<br/><br/>The mailing does NOT meet the criteria for allocating joint costs (purpose, audience, content). How should these expenses be reported by function?

Valley City's internal service fund reported net income of $50,000 for the year. This fund provides services exclusively to the city's police and fire departments (General Fund). How should this net income be reported in the government-wide Statement of Activities?

Which of the following transactions would be recorded in a Capital Projects Fund?

A city government issues $1,000,000 in general obligation bonds at 101 to finance a capital project. The premium of $10,000 is required by law to be used for debt service. How should the $10,000 premium be recorded in the Capital Projects Fund?

Under the modified accrual basis of accounting, which of the following revenues is recognized when it is both measurable and available?

A public company has 100,000 shares of common stock outstanding. It also has 10,000 shares of 6% cumulative preferred stock, $100 par, convertible into 3 shares of common stock each. Net income for the year is $500,000. No dividends were declared. The tax rate is 30%. What is the Diluted Earnings Per Share (DEPS)?

Which of the following items is required to be disclosed in Part II, Item 8 of Form 10-K filed with the SEC?

A company prepares its financial statements using the cash basis of accounting. During Year 1, it collected $200,000 from customers. <br/>- Beginning Accounts Receivable: $40,000<br/>- Ending Accounts Receivable: $60,000<br/>- Beginning Unearned Revenue: $10,000<br/>- Ending Unearned Revenue: $5,000<br/><br/>What amount of revenue should be reported on the accrual basis?

Which of the following transactions will increase a company's Quick Ratio (Acid-Test Ratio) but decrease its Current Ratio? (Assume both ratios are currently greater than 1.0)

A company has a Debt-to-Equity ratio of 1.5. It purchases a machine by signing a 5-year note payable. How does this transaction affect the Debt-to-Equity ratio and the Return on Assets (ROA) immediately?

In preparing its bank reconciliation for the month of April, Zelma Corp. has the following information:<br/>- Balance per bank statement, 4/30: $30,000<br/>- NSF check returned by bank: $500<br/>- Deposits in transit, 4/30: $2,000<br/>- Outstanding checks, 4/30: $4,000<br/>- Bank service charges: $50<br/><br/>What should be the adjusted cash balance per books at April 30?

At year-end, Credo Corp. has a balance in Accounts Receivable of $500,000. The Allowance for Credit Losses has a debit balance of $2,000 before adjustment. An aging analysis estimates that $25,000 of receivables are uncollectible. What is the Credit Loss Expense (Bad Debt Expense) for the year?

On July 1, Year 1, Spear Co. sold $100,000 of accounts receivable to a factor with recourse. The factor assessed a 5% finance charge and retained 3% of the receivables to cover sales returns. Spear estimates the recourse liability (fair value of recourse obligation) at $2,000. The transaction meets the criteria for a sale. What amount of loss should Spear recognize on the sale?

A company uses the LIFO inventory method. At year-end, the following data is available for Item X:<br/>- Cost: $50<br/>- Replacement Cost: $45<br/>- Selling Price: $60<br/>- Disposal Costs: $5<br/>- Normal Profit Margin: $15<br/><br/>What is the carrying amount of Item X at year-end?

During a period of rising prices, which inventory method will result in the highest Net Income and the highest Inventory balance?

Bolt Corp. exchanges a delivery truck for a new machine. The exchange has commercial substance.<br/>- Truck Cost: $50,000<br/>- Accumulated Depreciation: $30,000<br/>- Fair Value of Truck: $25,000<br/>- Cash Paid by Bolt: $10,000<br/><br/>What is the initial recorded cost of the new machine?

On January 1, Year 1, a company purchased a machine for $100,000. It is depreciated using the straight-line method over 10 years with no salvage value. On January 1, Year 3, the company changed the estimated useful life to a total of 8 years (from acquisition date) and established a salvage value of $4,000. What is the depreciation expense for Year 3?

A company is testing a long-lived asset for impairment. <br/>- Carrying Amount: $500,000<br/>- Undiscounted Future Cash Flows: $480,000<br/>- Fair Value: $450,000<br/><br/>What amount of impairment loss should be recognized?

On January 1, Year 1, Investor Co. purchased 30% of Investee Inc. for $600,000, giving it significant influence. <br/>For Year 1, Investee reported Net Income of $100,000 and paid dividends of $20,000. <br/>At year-end, the fair value of the investment was $650,000. <br/>What is the carrying amount of the investment on Investor's balance sheet at December 31, Year 1?

Blue Corp. holds equity securities with a cost of $10,000 and a fair value of $12,000 at the end of Year 1. In Year 2, the fair value drops to $9,000. Blue does not have significant influence. What is the impact on Net Income in Year 2?

Tech Co. incurred the following costs during the year related to developing a new software product for sale:<br/>- Coding costs before technological feasibility: $50,000<br/>- Coding costs after technological feasibility: $30,000<br/>- Testing costs after technological feasibility: $20,000<br/>- Packaging design costs: $10,000<br/><br/>What amount should be capitalized as software inventory/assets?

On January 1, Year 1, Oil Co. installed a platform. It is legally required to dismantle the platform at the end of its 10-year life. <br/>- Estimated dismantling cost: $100,000<br/>- Present value of dismantling cost at 10%: $38,550<br/><br/>What amount of accretion expense should be reported for Year 1?

A company pays its employees every two weeks. The current pay period ends on Friday, January 3, Year 2. Employees worked 8 days in Year 1 and 2 days in Year 2 for this period. Total payroll for the period is $50,000. What adjusting entry should be made on December 31, Year 1?

On January 1, Year 1, Bond Co. issued 5-year bonds with a face value of $100,000 and a stated rate of 8% payable annually. The bonds were issued to yield 10%. The present value of the bonds is $92,418. <br/>What is the carrying amount of the bonds at December 31, Year 1 (after the first interest payment)?

A company modifies the terms of its debt. The modification is treated as a 'troubled debt restructuring' involving only a modification of terms (no asset transfer). The total future cash payments (undiscounted) under the new terms are LESS than the carrying amount of the debt. <br/>How should the debtor account for this?

On January 1, Year 1, a company had 10,000 shares of $10 par common stock outstanding (originally issued at $15). On March 1, it reacquired 1,000 shares at $20 per share. The company uses the Cost Method for treasury stock. On July 1, it reissued 500 of these shares at $25 per share. <br/>What is the credit to Additional Paid-in Capital (APIC) - Treasury Stock on July 1?

A company declared a property dividend. The property had a carrying amount of $40,000 and a fair value of $55,000 on the declaration date. What is the effect on Retained Earnings and Net Income?

In Year 2, a company discovered that it failed to accrue $10,000 of warranty expense in Year 1. The tax rate is 30%. How should this error be reported in the Year 2 financial statements?

A company changes its inventory method from LIFO to FIFO. How should this change be reported?

Legal counsel informs a company that a loss from a lawsuit is 'reasonably possible' and estimates the loss to be between $100,000 and $200,000. How should this be reported?

A company is being sued. It is 'probable' that the company will lose. The estimated loss is a range between $500,000 and $1,000,000, with no amount within the range being more likely than any other. What amount should be accrued?

On January 1, Year 1, Contractor Co. enters a contract to build a bridge for $10,000,000. The estimated cost is $8,000,000. <br/>Year 1 Actual Costs: $2,000,000. <br/>Year 1 Billings: $1,800,000. <br/>Year 1 Cash Collected: $1,500,000. <br/>Using the percentage-of-completion (input) method, what is the Current Asset (Contract Asset) or Current Liability (Contract Liability) reported at year-end?

Under ASC 606, which of the following is an indicator that revenue should be recognized at a point in time rather than over time?

A retailer sells a product for $100 and offers a $10 mail-in rebate. Based on history, 40% of customers mail in the rebate. What is the transaction price for this sale?

At the end of Year 1, a company has a Deferred Tax Asset (DTA) of $100,000. Management determines that it is 'more likely than not' that only $60,000 of the DTA will be realized. What journal entry is required?

A company reports Pretax Financial Income of $500,000. <br/>- Municipal bond interest income: $20,000<br/>- Depreciation (Tax > Book): $50,000<br/>- Warranty Expense (Book > Tax Paid): $10,000<br/><br/>The enacted tax rate is 25%. What is the Current Income Tax Payable?

Which of the following creates a Deferred Tax Liability?

Under ASC 820, which of the following inputs is considered Level 1 in the fair value hierarchy?

On January 1, Year 1, Lessee Co. enters a 5-year lease for equipment. <br/>- Annual payments: $20,000 (due Dec 31)<br/>- Rate: 5%<br/>- PV of payments: $86,590<br/>- Useful life of asset: 6 years<br/>- No purchase option or transfer of ownership.<br/>- The lease is classified as an Operating Lease.<br/><br/>What is the Lease Expense for Year 1?

A lessee enters a lease with the following terms:<br/>- Present Value of Lease Payments: $100,000<br/>- Lease Incentive Received: $5,000<br/>- Initial Direct Costs incurred by Lessee: $2,000<br/>- Prepaid Lease Payments made at commencement: $10,000<br/><br/>What is the initial Right-of-Use (ROU) Asset balance?

Which of the following criteria would cause a lessee to classify a lease as a Finance Lease?

A company has a December 31 year-end. On January 15, Year 2, before the financial statements were issued, a major customer declared bankruptcy due to a fire that destroyed their plant on January 10, Year 2. The customer owed $50,000 at December 31. How should this be reported in the Year 1 financial statements?

A company has a December 31 year-end. On February 1, Year 2, the company settled a lawsuit for $100,000. The lawsuit had been filed in November, Year 1, and the company had previously accrued $70,000 based on the best estimate at year-end. The financial statements are issued on March 1, Year 2. What amount should be reported as the liability in the December 31, Year 1 Balance Sheet?

Orion Corp. is preparing its Statement of Cash Flows for the year ended December 31, Year 1, using the indirect method. The following information is available:<br/><br/>- Net Income: $450,000<br/>- Depreciation Expense: $60,000<br/>- Amortization of Bond Discount: $4,000<br/>- Gain on Sale of Equipment: $12,000<br/>- Equity in Earnings of Investee (Net of $10,000 dividends received): $25,000<br/>- Decrease in Accounts Receivable: $15,000<br/>- Increase in Inventory: $22,000<br/>- Decrease in Accounts Payable: $8,000<br/><br/>What is the net cash provided by operating activities?

Parent Co. acquired 80% of Sub Co. on January 1, Year 1. During Year 1, Parent sold inventory to Sub for $200,000. The cost of the inventory to Parent was $140,000. At December 31, Year 1, 30% of this inventory remained in Sub's warehouse. Both companies have a 30% tax rate. What amount of unrealized gross profit must be eliminated from the consolidated inventory balance at December 31, Year 1?

A nongovernmental not-for-profit organization received a $500,000 pledge in Year 1 to be used for a specific building project in Year 2. The donor paid the pledge in Year 2, and the building was constructed in Year 2. How should this contribution be reported in the Statement of Activities for Year 1 and Year 2?

A nongovernmental not-for-profit entity reports the following cash flows for the current year:<br/><br/>- Cash received from donors restricted for long-term endowment: $100,000<br/>- Cash received from tuition fees: $400,000<br/>- Cash paid for salaries: $250,000<br/>- Cash received from interest on investments (unrestricted): $15,000<br/>- Cash paid to acquire equipment: $60,000<br/><br/>What is the net cash provided by operating activities?

A city government levies a special property tax dedicated solely to the repayment of general obligation bonds issued to finance the construction of a new city hall. In which fund should the proceeds from this tax be recorded?

Which of the following correctly describes the measurement focus and basis of accounting for the governmental fund financial statements?

Under SEC reporting requirements, which of the following items is required to be included in Part II, Item 7 of Form 10-K?

Dover Inc. had 100,000 shares of common stock outstanding throughout Year 1. Net income was $350,000. <br/>Additional data:<br/>- 10,000 options outstanding to purchase common stock at $20/share. Average market price was $25/share.<br/>- 2,000 shares of 6% $100 par cumulative convertible preferred stock. Each share converts to 5 common shares. Dividends were declared.<br/><br/>What is the Diluted Earnings Per Share (EPS) for Year 1?

A company maintains its books on a cash basis. During Year 1, the company collected $400,000 from customers. The following balances were reported:<br/><br/>- Accounts Receivable, Jan 1: $40,000<br/>- Accounts Receivable, Dec 31: $55,000<br/>- Unearned Revenue, Jan 1: $10,000<br/>- Unearned Revenue, Dec 31: $6,000<br/><br/>What is the accrual basis revenue for Year 1?

Company X has a Current Ratio of 2.0 and a Quick Ratio of 1.5. If the company uses cash to purchase inventory, what is the immediate effect on these ratios?

While reviewing the draft balance sheet, the controller discovers that a check for $10,000 issued to a vendor on December 30, Year 1, was recorded as a reduction of cash and accounts payable on that date. However, the check was not mailed until January 4, Year 2. What adjustment is required at December 31, Year 1?

On October 1, Year 1, Gamma Corp. committed to a plan to sell a component of the entity that represents a strategic shift. The component was sold on January 15, Year 2. For the year ended December 31, Year 1, the component had an operating loss of $100,000. The carrying value of the component was $2,000,000 and its fair value less costs to sell was $1,800,000. The tax rate is 25%. What amount should be reported as Discontinued Operations in the Year 1 Income Statement?

Which of the following items is classified as Other Comprehensive Income (OCI) under US GAAP?

At the beginning of Year 1, Delta Corp. had Retained Earnings of $500,000. During Year 1, Delta reported Net Income of $150,000, declared cash dividends of $40,000, and discovered a material error in Year 0 depreciation that understated Year 0 expense by $20,000 (net of tax). What is the Retained Earnings balance at December 31, Year 1?

Parent Co. owns 80% of Sub Co. Sub Co. reported Net Income of $100,000 and paid dividends of $20,000. There is no preferred stock. What amount of Net Income is attributable to the Noncontrolling Interest (NCI)?

Which of the following adjustments is required to convert the Statement of Revenues, Expenditures, and Changes in Fund Balances of governmental funds to the Government-Wide Statement of Activities?

A nongovernmental not-for-profit entity incurs the following expenses:<br/>- Counseling services provided to indigent patients: $100,000<br/>- Fundraising mail campaign: $20,000<br/>- Management and general administrative staff salaries: $30,000<br/>- Cost of pharmacy drugs sold to patients: $50,000<br/><br/>What amount should be reported as Program Services expenses?

Zeta Corp.'s book balance for cash at October 31 is $25,000. The following data is available for the bank reconciliation:<br/>- Outstanding checks: $4,000<br/>- Deposits in transit: $3,000<br/>- Bank service charges recorded by bank but not company: $100<br/>- NSF check returned by bank, not recorded by company: $500<br/>- Check for $200 paid to vendor recorded by company as $2,000 error.<br/><br/>What is the adjusted cash balance to be reported on the balance sheet?

At year-end, a company has a balance in Accounts Receivable of $500,000. The Allowance for Credit Losses has a debit balance of $2,000 before adjustment. An aging analysis estimates expected credit losses to be $25,000. What is the Credit Loss Expense for the year?

A company uses the FIFO inventory method. At year-end, Product A has a cost of $50, a selling price of $60, costs to sell of $5, and a replacement cost of $48. What is the per-unit carrying amount of Product A in the balance sheet?

During an audit, it was discovered that ending inventory was overstated by $30,000 in Year 1. What is the effect of this error on Year 1 Cost of Goods Sold (COGS) and Year 1 Net Income?

A company purchased a machine for $100,000. They paid $2,000 for shipping, $3,000 for installation, $1,000 for insurance while in transit, and $500 for training employees to use the machine. What is the capitalized cost of the machine?

A company tests a long-lived asset for impairment. <br/>Carrying Amount: $500,000<br/>Undiscounted Future Cash Flows: $480,000<br/>Fair Value: $450,000<br/>Costs to Sell: $20,000<br/><br/>What is the impairment loss to be recognized?

On June 30, Year 1, a company decides to sell a building and classifies it as Held for Sale. <br/>Carrying Value: $800,000<br/>Fair Value: $750,000<br/>Costs to Sell: $30,000<br/><br/>What is the carrying amount of the building on the December 31, Year 1 balance sheet, assuming it is still unsold and fair value hasn't changed?

Investor Co. owns 30% of Investee Co. and has significant influence. <br/>Jan 1 Investment Balance: $200,000<br/>Investee Net Income: $100,000<br/>Investee Dividends Paid: $40,000<br/><br/>What is the December 31 Investment Balance?

Which of the following debt investments would be classified as 'Held-to-Maturity'?

On January 1, Year 1, a company purchased a patent for $100,000. The patent has a legal life of 20 years but the company estimates it will provide economic benefits for only 10 years. What is the amortization expense for Year 1?

A company is developing software for internal use. <br/>- Preliminary project stage costs: $50,000<br/>- Application development stage costs (coding/testing): $200,000<br/>- Training costs: $30,000<br/>- Post-implementation maintenance: $20,000<br/><br/>What amount should be capitalized?

A company pays a bonus to its CEO equal to 5% of income after deducting the bonus and taxes. Income before bonus and taxes is $500,000. The tax rate is 30%. What is the amount of the bonus?

A company constructs a nuclear plant. It is legally required to dismantle it after 20 years. <br/>Estimated remediation cost in 20 years: $10,000,000.<br/>Present value of that cost at construction date: $2,000,000.<br/><br/>What is the journal entry to record the Asset Retirement Obligation (ARO) at the start?

On Jan 1, Year 1, a company issued $1,000,000 of 5% bonds at a price to yield 6%. The bonds were issued at $957,000. Interest is paid annually on Dec 31. What is the carrying value of the bonds at Dec 31, Year 1?

A debtor modifies the terms of its debt. The carrying amount of the debt is $100,000. The total future cash flows (undiscounted) under the new terms are $90,000. How should the debtor account for this modification?

A company uses the Cost Method for treasury stock. <br/>- Original Issue: 10,000 shares at $10 par for $15.<br/>- Repurchase: 1,000 shares at $20.<br/>- Reissue: 500 shares at $25.<br/><br/>What is the journal entry for the reissuance?

A company declares a 10% stock dividend when the market price is $50 and par value is $10. There are 100,000 shares outstanding. What is the effect on Retained Earnings?

In Year 2, a company changes its inventory method from LIFO to FIFO. This is considered a change in accounting principle. How should this change be reported?

In Year 2, a company discovered it failed to accrue $50,000 of warranty expense in Year 1. The tax rate is 30%. What is the adjustment to beginning Retained Earnings in the Year 2 Statement of Changes in Equity?

A company is being sued. Legal counsel believes it is 'probable' the company will lose and estimates the loss will be between $100,000 and $500,000, with no amount within the range more likely than any other. What amount should be accrued?

Under ASC 606, which of the following scenarios results in revenue recognition over time?

A company incurs the following costs to obtain a contract with a customer: <br/>- Sales commission (paid only if contract signed): $5,000<br/>- Legal fees for contract drafting: $2,000<br/>- Travel costs to client meeting: $1,000<br/><br/>What amount should be recognized as an asset (Contract Costs)?

A CPA volunteers to audit the financial statements of a local NFP. The CPA's normal billing rate for this service is $5,000. The NFP would have had to purchase this service if not donated. How should the NFP record this transaction?

At year-end, Company Y has the following temporary differences:<br/>- Tax depreciation exceeds book depreciation by $40,000.<br/>- Warranty expense (book) exceeds warranty deductions (tax) by $10,000.<br/>Tax rate is 25%. What is the net Deferred Tax Liability (DTL) or Asset (DTA)?

A company has a Deferred Tax Asset of $100,000. Management determines it is 'more likely than not' that $40,000 of the DTA will not be realized. What is the journal entry to record the valuation allowance?

Under ASC 820, which of the following inputs is considered Level 1 in the fair value hierarchy?

Lessee Co. enters a 5-year lease. Payments are $10,000 annually at the BEGINNING of each year. The incremental borrowing rate is 5%. The PV of an annuity due of $1 for 5 periods at 5% is 4.55. The PV of an ordinary annuity is 4.33. What is the initial Lease Liability?

A lessee has an operating lease with the following terms: <br/>- 5 year term<br/>- Payments: Year 1: Free; Years 2-5: $15,000 per year.<br/>- Total payments: $60,000.<br/>What is the lease expense for Year 1?

Under ASC 842, a lessee may elect not to recognize a Right-of-Use (ROU) asset and Lease Liability for which type of lease?

A company has a December 31 year-end. On January 15, Year 2, before the financial statements were issued, a major customer declared bankruptcy due to a fire that occurred on January 10, Year 2. The customer owed $50,000 at Dec 31. How should this be treated in the Year 1 financial statements?

On December 1, Year 1, a US company purchased goods from a European supplier for 100,000 Euros, payable on February 1, Year 2. <br/>Exchange rates:<br/>Dec 1: 1 Euro = $1.10<br/>Dec 31: 1 Euro = $1.12<br/>Feb 1: 1 Euro = $1.08<br/><br/>What is the Foreign Currency Transaction Gain/Loss reported in Year 1 Net Income?

A company is the plaintiff in a lawsuit. Legal counsel states it is probable the company will win $1,000,000. How should this be reported?

Which of the following describes the 'Component of the Entity' concept for Discontinued Operations?

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?

A company prepares its financial statements using the cash basis of accounting. During Year 1, it collected $450,000 from customers. The following balances were reported:<br/><br/>- Accounts Receivable: Jan 1: $20,000 | Dec 31: $35,000<br/>- Unearned Revenue: Jan 1: $5,000 | Dec 31: $2,000<br/><br/>What amount of Revenue should be reported on the accrual basis income statement?

Orion Corp. is analyzing its liquidity. Current Assets are $500,000 (including $100,000 inventory and $20,000 prepaid expenses) and Current Liabilities are $250,000. <br/><br/>Orion pays $50,000 cash to retire a short-term note payable. What is the effect on the Current Ratio and the Quick Ratio?

On September 1, Year 1, Prism Inc. committed to a plan to sell a component that represents a strategic shift and qualifies as a discontinued operation. The carrying value of the component was $4,000,000. The fair value less costs to sell was $3,200,000. <br/><br/>The component had an operating loss of $300,000 from Jan 1 to Dec 31, Year 1. The tax rate is 25%. <br/><br/>What amount should Prism report as 'Loss from Discontinued Operations' in its Year 1 Income Statement?

Which of the following items is EXCLUDED from Other Comprehensive Income (OCI)?

At the beginning of Year 1, Delta Co. discovered it had erroneously expensed a $100,000 equipment purchase in Year 0. The equipment should have been depreciated over 5 years (straight-line, no salvage). The tax rate is 30%. <br/><br/>What is the adjustment to the beginning Retained Earnings of Year 1 (net of tax)?

Under GASB standards, which of the following is a required financial statement for a Fiduciary Fund?

On July 1, Year 1, Alpha Co. pays $12,000 for a 2-year insurance policy. Alpha uses the cash basis for tax purposes and accrual basis for financial reporting. Tax rate is 25%. <br/><br/>What is the Deferred Tax Asset or Liability reported on the December 31, Year 1 Balance Sheet regarding this transaction?

Regarding the Statement of Cash Flows for a Proprietary Fund (Governmental Accounting), which of the following statements is TRUE?

A company has a $100,000 bond payable outstanding with unamortized premium of $5,000. It retires the bond by paying $102,000. What is the gain or loss on extinguishment?

On December 31, Year 1, Gem Co. holds the following:<br/>- Checking account balance: $50,000<br/>- Treasury bill (purchased Dec 1, Year 1, maturing Feb 28, Year 2): $20,000<br/>- Treasury bond (purchased Mar 1, Year 1, maturing Feb 28, Year 2): $30,000<br/>- Restricted cash (for bond sinking fund, non-current): $10,000<br/><br/>What amount should be reported as Cash and Cash Equivalents on the Balance Sheet?

At year-end, a company has a bank balance of $25,000. The following information is available:<br/>- Deposits in transit: $2,000<br/>- Outstanding checks: $4,500<br/>- Bank service charge not recorded: $100<br/>- NSF check from customer returned by bank: $400<br/><br/>What is the correct adjusted cash balance?

Blue Corp. factors $100,000 of accounts receivable with recourse. The factor charges a 5% fee and retains 3% of the receivable. The fair value of the recourse obligation is estimated at $2,000. The transfer qualifies as a sale.<br/><br/>What is the net cash received and the loss on sale reported by Blue Corp.?

On January 1, Year 1, Retailer Co. adopted the Dollar-Value LIFO method. The inventory on that date was $200,000 (Base Year Cost). <br/><br/>At December 31, Year 1, the inventory at current year cost was $231,000. The price index for Year 1 is 1.05.<br/><br/>What is the Dollar-Value LIFO inventory balance at December 31, Year 1?

Construction Co. is building a warehouse for its own use. <br/>- Expenditures: Jan 1: $200,000; July 1: $400,000; Nov 1: $300,000.<br/>- Specific construction debt: $300,000 at 10%.<br/>- General debt: $1,000,000 at 5%.<br/><br/>What is the amount of interest to be capitalized for the year ended December 31?

Company A exchanges a delivery truck for a piece of land owned by Company B. The exchange lacks commercial substance. <br/><br/>Company A Truck:<br/>- Book Value: $20,000 (Cost $50k, Acc Dep $30k)<br/>- Fair Value: $25,000<br/><br/>Company A pays $2,000 cash to Company B to equalize the deal.<br/><br/>What is Company A's recorded cost of the land?

Investor Co. owns 30% of Investee Inc. and applies the equity method. In Year 1, Investee reported Net Income of $100,000 and paid dividends of $20,000. <br/><br/>The excess of purchase price over book value was attributed to a patent with a 10-year life. The amortization of this excess is $5,000 per year.<br/><br/>What amount should Investor Co. report as 'Equity in Earnings of Investee' for Year 1?

TechDev Inc. incurred the following costs during the year related to developing a new software product for sale:<br/>- Completion of detailed program design: $50,000<br/>- Coding and testing (before technological feasibility): $80,000<br/>- Coding and testing (after technological feasibility): $60,000<br/>- Production of product masters: $20,000<br/>- Duplication of software and manuals for sale: $15,000<br/><br/>What amount should be capitalized as software inventory?

On January 1, Year 1, Mine Co. purchased a mineral mine for $2,000,000 with an estimated 500,000 tons of ore. Mine Co. is legally required to restore the land at the end of the mine's life. The fair value of this Asset Retirement Obligation (ARO) is estimated at $100,000. <br/><br/>In Year 1, Mine Co. extracted 50,000 tons. <br/><br/>What is the depletion expense for Year 1?

On January 1, Year 1, Lessee Corp enters into a 5-year lease for equipment. Payments are $20,000 annually at the END of each year. The rate is 5%. PV of annuity factor is 4.329. The equipment has a 6-year life. The lease grants an option to purchase the equipment for $1,000 (expected to be exercised). <br/><br/>What is the amortization expense for the Right-of-Use (ROU) Asset for Year 1?

A company issues 10,000 shares of $10 par value common stock and 5,000 shares of $50 par value preferred stock for a lump sum of $450,000. <br/><br/>The common stock has a market value of $20/share. The preferred stock has a market value of $60/share. <br/><br/>What amount should be credited to Additional Paid-In Capital (APIC) - Common Stock?

Under ASC 606, which of the following scenarios represents revenue recognized 'over time'?

On January 1, Year 1, Parent Co. sold land to its subsidiary, Sub Co., for $150,000. The land originally cost Parent $100,000. Sub Co. still holds the land at December 31, Year 2. <br/><br/>What is the required elimination entry regarding this land for the Year 2 consolidated financial statements?

A company has a deferred tax asset of $40,000 at year-end. Management determines that it is more likely than not that only $30,000 of the asset will be realized. <br/><br/>What is the journal entry to record the valuation allowance?

Which of the following events occurring after the reporting date but before the financial statements are issued requires ADJUSTMENT to the financial statements?

A company uses the percentage-of-completion method (cost-to-cost) for a long-term construction contract. <br/>Contract Price: $1,000,000.<br/>Year 1 Data:<br/>- Costs incurred: $200,000<br/>- Estimated costs to complete: $600,000<br/>- Billings: $150,000<br/>- Collections: $100,000<br/><br/>What is the Gross Profit recognized in Year 1?

Government-Wide Financial Statements are prepared using which measurement focus and basis of accounting?

On January 1, Year 1, Bond Co. issued 1,000 bonds with a face value of $1,000 each at 98. The bonds pay 5% interest annually. Bond issuance costs were $10,000. <br/><br/>What is the initial carrying amount of the bond liability?

A company declares a 15% stock dividend when the market price is $30 and par value is $10. There are 10,000 shares outstanding. <br/><br/>What is the debit to Retained Earnings?

Which of the following is considered a Level 1 input in the Fair Value Hierarchy (ASC 820)?

A company purchases a trademark for $50,000. It expects to renew the trademark indefinitely for a nominal fee. How should this asset be amortized?

On January 1, Year 1, Retailer sells a product for $100. The product includes a warranty that covers defects for 1 year (Assurance Type). Retailer also sells an extended warranty for years 2-3 for $20 (Service Type). The customer buys both. <br/><br/>How much revenue is recognized on January 1, Year 1?

Which of the following is a required disclosure for a company reporting under US GAAP?

A company has a probable loss contingency estimated to be between $100,000 and $200,000. No amount within the range is more likely than any other. What amount should be accrued?

In a sale-leaseback transaction, the seller-lessee transfers an asset to a buyer-lessor and leases it back. If the transfer does NOT meet the requirements for a sale under ASC 606 (e.g., repurchase option exists), how should the seller-lessee account for the transaction?

Which of the following costs should be expensed as incurred?

A company changes its inventory method from FIFO to Weighted Average. How should this change be reported?

On January 1, Year 1, Lessee signs a 3-year operating lease. Payments are: Year 1: $0 (Free rent); Year 2: $15,000; Year 3: $21,000. <br/><br/>What is the Lease Expense for Year 1?

Under GASB, which fund would account for the activities of a municipal motor pool that charges other city departments for vehicle services on a cost-reimbursement basis?

A company has a $100,000 temporary difference that will result in taxable amounts in future years (DTL). The enacted tax rate for the current year is 30%. The enacted rate for future years is 25%. <br/><br/>What is the Deferred Tax Liability?

Which of the following is a component of 'Net Position' in the government-wide Statement of Net Position?

A company issues a bond convertible into common stock. Under US GAAP, how are the proceeds allocated at issuance?

Which of the following is a characteristic of a 'Finance Lease' for a lessee?

A Not-for-Profit organization incurs expenses for a fundraising dinner. The dinner cost $10,000. It generated $25,000 in ticket sales. The fair value of the dinner provided to attendees was $8,000. <br/><br/>How should the $10,000 cost be reported?

On December 1, Year 1, US Corp. sells goods to a French customer for 100,000 Euros, due on January 30, Year 2. <br/>Exchange Rates:<br/>- Dec 1: 1 Euro = $1.10<br/>- Dec 31: 1 Euro = $1.08<br/>- Jan 30: 1 Euro = $1.12<br/><br/>What is the Foreign Currency Transaction Gain or Loss reported in US Corp's Year 1 Income Statement?

Which of the following is a disclosure requirement for 'Concentrations' (Risks and Uncertainties)?