IFS.Chapter 2

During 2009, Accent Toys Plc., which began business in October of that year, purchased 10,000 units of a toy at a cost of ₤10 per unit in October. The toy sold well in October. In anticipation of heavy December sales, Accent purchased 5,000 additional units in November at a cost of ₤11 per unit. During 2009, Accent sold 12.000 units at a price of ₤15 per unit. ? Under the first in, first out (FIFO) method, what is Accent’s cost of goods sold for 2009?

• 120
• 122
• 124

During 2009, Accent Toys Plc., which began business in October of that year, purchased 10,000 units of a toy at a cost of ₤10 per unit in October. The toy sold well in October. In anticipation of heavy December sales, Accent purchased 5,000 additional units in November at a cost of ₤11 per unit. During 2009, Accent sold 12,000 units at a price of ₤15 per unit. ? Under the weighted average cost method, what is Accent’s cost of goods sold for 2009?

• 120
• 122
• 124

Which inventory method is least likely to be used under IFRS?

• First in, first out (FIFO).
• Last in, first out (LIFO).
• Weighted average.

At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. The machine has an estimated useful life of 10 years and estimated residual value of $50,000. ? Under the straight-line method, how much depreciation would Glass take in 2010 for financial reporting purposes?

• 55
• 60
• 65

At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. The machine has an estimated useful life of 10 years and estimated residual value of $50,000. ? Under the double-declining balance method, how much depreciation would Glass take in 2010 for financial reporting purposes?

• 60
• 110
• 120

Which combination of depreciation methods and useful lives is most conservative in the year a depreciable asset is acquired?

• Straight-line depreciation with a short useful life.
• Declining balance depreciation with a long useful life.
• Declining balance depreciation with a short useful life.

Under IFRS, a loss from the destruction of property in a fire would most likely be classified as:

• continuing operation
• discontinuing operation
• other comprehensive income

A company chooses to change an accounting policy. This change requires that, if practical, the company restate its financial statements for:

• all prior periods.
• current and future periods.
• prior periods shown in a report.

Which statement is most accurate? A common size income statement:

• restates each line item of the income statement as a percentage of net income.
• allows an analyst to conduct cross- sectional analysis by removing the effect of company size.
• standardizes each line item of the income statement but fails to help an analyst identify differences in companies’ strategies.

Selected year-end financial statement data for Workhard are shown below.

• is $18 million.
• is increased by the derivatives accounted for as hedges.
• includes $4 million in other comprehensive income.