WorksheetsAFAR (average)
Total questions: 10
Worksheet time: 11mins
Which of the following statements is true concerning the treatment of salaries in partnership accounting?
Partner salaries may be used to allocate profits and losses; they are not considered expenses of the partnership
Partner salaries are equal to the annual partner draw.
The salary of a partner is treated in the same manner as salaries of corporate employees.
Partner salaries are directly closed to the capital account.
Polk issues common stock to acquire all the assets of the Sam Company on January 1, 20X5. There is a contingent share agreement, which states that if the income of the Sam Division exceeds a certain level during 20X5 and 20X6, additional shares will be issued on January 1, 20X7. The impact of issuing the additional shares is to
increase the price assigned to fixed assets.
have no effect on asset values, but to reassign the amounts assigned to equity accounts.
reduce retained earnings.
record additional goodwill.
Orbit Inc. purchased Planet Co. in 20X3. At that time an existing patent was not recorded as a separately identified intangible asset. At the end of fiscal year 20X5, the patent is valued at $15,000, and goodwill has a book value of $100,000. How should intangible assets be reported at the beginning of fiscal year 20X6?
Goodwill $100,000 Patent $0
Goodwill $115,000 Patent $0
Goodwill $100,000 Patent $15,000
Goodwill $85,000 Patent $15,000
4. FASB favors consolidation of
two entities when
one acquires less than 20% equity
ownership of the other.
one company’s ownership interest in another gives it control on the acquired company, yet the acquiring company does not have a majority ownership in the acquired. Typically, this is in the 20%-50% interest range.
one acquires two thirds equity
ownership in the other.
one gains control over the entity irrespective of the equity percentage owned.
5. Raphael Company paid $2,000,000 for the net assets of Paris Corporation and Paris was then dissolved. Paris had no liabilities. The fair values of Paris’ assets were $2,500,000. Paris’s only non-current assets were land and equipment with fair values of $160,000 and $640,000, respectively. At what value will the equipment be recorded by Raphael?
$640,000
$240,000
$400,000
$0
In recording acquisition costs,which of following procedures is correct?
Registration costs are expensed,and not charged against the fair value of the securities issued.
Indirect costs are charged against the fair value of the securities issued.
Consulting fees are expensed.
None of the above procedures is correct.
7. Under the Uniform Partnership Act, loans made by a partner to the partnership are treated as
advances to the partnership for which interest shall be paid from the date of the advance.
advances to the partnership that are carried in the partners' capital accounts.
Accounts Payable of the partnership for which interest is paid.
advances to the partnership for which interest does not have to be paid.
The XYZ partnership provides a 10% bonus to Partner Y that is based upon partnership income, after deduction of the bonus. If the partnership's income is $121,000, how much is Partner Y's bonus allocation?
$11,000
$11,450
$11,650
$12,100
A partnership dissolution differs from a liquidation in that
payments are made to creditors before partners receive value
periodic payments to partners are made when cash becomes available
a partner withdraws from the business and the enterprise continues to function
full payment is made to all outside creditors before remaining cash is distributed to partners in a final lump sum payment
Partners Acker, Becker & Checker have the following profit and loss agreement:
(1) Acker & Becker receive salaries of $40,000 each
(2) Checker gets a bonus of 10 percent of net income after salaries and bonus (the bonus is zero if salaries exhaust net income)
(3) Remaining profits are shared by Acker, Becker & Checker in the following ratios respectively: 3:4:3. The partnership had a net income of $91,000. How much should be allocated to Checker?
$3,300
$10,300
$1,000
$4,000
