WorksheetsFAR Select FS Accounts
Total questions: 28
Worksheet time: 2hrs 20mins
1. On Jan 1, y1, Play Co, purchase equipment for $90,000. In additional to the purchase price, Play paid $ 6,000 in sales ta, $1,600 in shipping cost, $3,000 in personnel traianing cost, and $2,400 in installation costs. The equipment has an estimated salvage value of $10,000 and a total estimated useful life of 10 yrs. Play uses the stright line method of depreciation and records depreciatin expenses annually.
On Jan 1, y2, the estimated useful life was revised to a total of five years from the date o purchae and the estimated salvage value was reduce to $5,000. The change in estimated useful life was a result of increased production
The equipment was sold for $55,000 in July 1, Y3. For the situation below, redor the appropiate journal entry
Check the account name and select the appropriate account. An account may be used once or not at all for a journal entry
Enter the corresponding debit or credit amount
What is the journa entry to record the depreciation expenses for Y2
A) Depreciation Expenses D 21,500 / Accumulated Depreciation C - 21,500
B) Accumualted Depreciation D 21,500 / Depreciation Expenses C - 21,500
C) Depreciation Expenses D 9,000 / Accumulated Depreciation C -9,000
D) Accumualted Depreciation D 9,000 / Depreciation Expenses C -9000
2. Carp Co has identified three operating segments that may require separate disclosure in Carp’s general purposes financial statements for the year ended December 31s 2020. Information for 2020 follows by Segments (in Thousands):
See table in image
Which of Carp’s segments are required to be separately disclosed in its December 31, 2020 financial statements?
A) A and B only
B) A and C only
C) B and C only
D) A, B and C
3. Pit Co, prepared cash- basis financial statements for the month ended Jan 31. A summary of Pit’s January activities follows:
Credit Sales of $5,600
Collections of $1,900 relating to Jan credit sales
Accrued Salaries of $1,200
By what amount will Pit’s cash- basis income for the month ended Jan 31 increase as a result of restating these activities to the accrual basis of accounting?
A) $2,500
B) $3,700
C) $4,400
D) $4,900
4. Baru Inc changed the accounting for insurance expenses from the cash basis to the accrual basis in the current year. In Jan of the prior year, Baru recorded insurance expenses of $240,000 for the cash purchase of a four-year insurance policy. How should Baru report the insurance transaction in the current year’s financial statements
A) As a $180, 000 debit to prepaid insurance
B) As a $60, 000 debit to insurance expense
C) As a $60, 000 debit to insurance expense, a $120,000 debit to prepaid assets and $180,000 credit to retain earnings
D) As a $180,000 debit to insurance expense, a $120,000 debit to prepaid assets and $60,000 credit to retain earnings
Rutt Inc’s checkbook balance on Dec 31, was $10,000. On that date Rutt held the following items in tis safe:
$4,000 check payable to Rutt, postated Jan 3 , and not included in the December 31 checkbook balance, in collection of a sale made in December
$1,000 check payable to Rutt, deposit December 15 and included in the December 31 checkbook balance, but returned by the bank on December 30 stamped”NSF” . The check was redeposited on January 2, and cleared on January 9.
What amount should Rutt report as cash in its December 31 balance sheet?
A) $10,000
B) $13,000
C) $9,000
D) A) $14,000
6. Cast Co, converted from the FIFO method for inventory valuation to the LIFO method for financial statements and tax purposes. During a period of inflation, would Mast’s ending inventory and income tax payable using LIFO be higher or lower than FIFO?
See attachment
A
B
C
D
7. Tone Co had the following consignment transactions during Dec year 1
Inventory shipped on consignment to Ome Co $36,000
Freight paid by Stone $1,800
Inventory received on consignment from Gam Co $24,000
Freight paid by Gamma $1,000
No sales of consigned good were made through Dec 31, Y1. What amount of consigned inventory should be included in Tone’s Dec 31 y1, balance Sheet?
A) 24,000
B) 25,000
C) 36,000
D) 37,000
8. Pine Co purchase land for $450,000 as a factory site. An existing building on thesitewas razed before construction began Additional information is as follows:
Cost of razing old building $60,000
Title insurance and legal fees to purchase land $30,000
Architect’s fees $95,000
New building construction cost $1,850,000
What amount should Pine capitalized as the cost of the completed factory building
A) 2,005,000
B) 1,975,000
C) 1,945,000
D) 1,910,000
9. Rue Co, did not record an accrual for an probable loss from a lawsuit in its financial statements, Which of the following explanations for Rue’s not accruing the probable loss is in accordance with the generally accepted accounting principles?
A) No reasonable estimate of the loss can be made
B) An estimated range for the loss can e made but no amount in the range is more accurate than any other amount
C) Recognizing an amount in its financial statements would weaken the company’s defense of the lawsuit
D) Accrual was not required because an estimated amount of the loss was disclosed in the notes to the financial statements
10. which of the following financial instruments may be considered a derivative financial instrument?
A) Bank certificate of deposit
B) Municipal bond
C) Option contract
D) Money Market fund
11. Ventor Co, a US corporation, owned 100% of a Swuiss corporation. The Swiss franc is the functional currency. The remeasurement of Ventor’s financial statements resulted in a $25,000 gain at year end. The translation of the financial statements resulted in a $40,000 gain at year end. What amount should Ventor recognized as foreing currency gain in ts income statement?
A) $0
B) $25,000
C) $40,000
D)$65,000
12. Rill Co made the folowing expenditures relating to Product X:
Labor and material cost incurred in the producing a prototype $100,000
Cost of testing the prototype $40,000
Legal cost to file a patent $5,000
Production of Product X commenced when the patent was granted. What amount of the above costs should be expensed as research and development costs?
A) $40,000
B) $100,000
C) $140,000
D) $145,000
13. Kain Co, incurred the following expenses during the current period:
Routine on going efforts to improve an existing product $50,000
Trouble- Shooting in connection with breakdowns during commercial production $75,000
Routine testing of prodcuts during commerical production forquality-control purposes $100,000
What is the total amount of research and development expense incurred by Kain during the current period?
A) 75,000
B) 0
C)100,000
D) 175,000
14. Charles signed up and paid $720 for a 6 month online course on Jan 1st with Berlin institute. As of March 1st Berlin’s accounting records would indicate:
A) $240 of revenue, $480 of accounts receivable
B) $240 of revenue, $480 of deffered revenue
C)$720 of revenue, $720 of cash
D) $480 of revnue, $240 of accounts receivable
15. Which one of the following would constitute a highly inflationary economy when determining the functional currency of a foreign entity?
A) 20% inflation for each of the past 5 years.
B) 30% inflation for each of the past 3 years.
C) 35% inflation for each of the past 3 years.
D)20%, 35%, and 40% inflation, respectively, for each of the past 3 years.
16. Refer to the following lease amortization schedule. The 10 payments are made annually startin with the beginning of th lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The assets has an expected economic life of 12 years. The lease is noncancelable.
See attachment
What is the effective annual interest rate?
A) 7%
B) 10%
C) 12%
D) 8%
17. Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The assets has an expected economic life of 12 years. The lease is noncancelable.
See table
What is the outstanding balance after payment 9?
A) 5,000
B) 5,587
C) 9,009
D) 13,584
18. Accounts receivable are normally reported at the:
A) Present value of future cash receipts
B) Current Value plus accrued interest
C) Expected amount to be collected
D) Current Value less expected collection cost
19. Indicate wether each of the following is true (T) or false (F) in the space provided
___ 1. The new standard, Revenue from Contracts with Customers, adopts an expense-liabiity approach as the basis for revenue recognition
___ 2. The revenue recognition principle states that revenue is recognized when the performance obligation is satisfied
___3. The first-step on the five-step revenue recognition model is to identify the contract with customers
___4. When a customer gives cash for a shirt at a retail store and takes the shirt from the store after paying, revenue is recognized at that point in the time because the performance obligation by the store has been satisfied.
19. Indicate wether each of the following is true (T) or false (F) in the space provided
___ 1. The new standard, Revenue from Contracts with Customers, adopts an expense-liabiity approach as the basis for revenue recognition
___ 2. The revenue recognition principle states that revenue is recognized when the performance obligation is satisfied
___3. The first-step on the five-step revenue recognition model is to identify the contract with customers
___4. When a customer gives cash for a shirt at a retail store and takes the shirt from the store after paying, revenue is recognized at that point in the time because the performance obligation by the store has been satisfied.
____1. The converge standard on revenue recognition entitled Revenue from Contracts with Customers was developed because:
A. GAAP had only one basic standard on revenue recognition
B.GAAP had numerous standards related to revenue recogtion
C. IFRS had numerous inconsistent standard on revenue recognition
D.. GAAP had more onf a principles-based approach
20.2 The new standard, Revenue from Contracts with Customers, recognizes revenue based on a(n):
A. Revenue- expense approach
B. Liability-Equity approach
C Asset-Liability approach
D. Asset-Equity approach
20.3Which of the following best describes the current revenue recognition principle?
A. Identify separate performance obligations in the contract
B. Recognize revenue in the accounting period when cash is received
C. Recognized revenue in the accounting period when the performance obligation is satisfied
D. Recognize revenue in the accounting period when the performance obligation is satisfied
23. The investment category for which the investor’s “positive intent and ability to hold” is important is:
A) Securities reported under the equity method
B) Trading securities
C) Securities classified as held-to maturity
D) Securities available-for-sales
24. Unrealized holding gains and losses on debt securities classified as available-for sale would have the following effects on accumulated other comprehensive income:
See table
A
B
C
D
25. Pam Corp purchased debt securities during 2020 and classified them as securities available for sale:
See table
All declines are considered to be temporary. How much gain will be reported by Pam Corp in December 31,2020 Income statement relative to the portfolio?
A)$8,900
B) $15,900
C)None of these answer choices are correct
D)$0
26. Kat Corp purchase 1,000 bonds of Pack Corp in 2018 for $800 per bond and classified the investment as securities available- for-sales. The value of these holdings was $400 per bond on Dec 31,2019, and $300 per bond on Dec 31,2020. During 2021 Kat sold all of its Pack bonds at $350 per bond.
If Kat record unrealized holding gains and losses up to the moment of sales, what would be the amount of reclassification adjustment that Kat would record upon sale?
A)A Debit of $500,000
B)A credit of $500,000
C)A Debit of $450,000
D)A credit of $450,000
27. With regards to cash received in advance for gift certificates, the derred revenue account would decrease by which of the following?
1. Lapse of expiration of certificates
2. Redemption of certificates
A) 1 only
B) 2 only
C) Both 1 & 2
D) Neither 1 or 2
28. With regard to profit recognition from long-term construction contracts accounted for on the percentage of completion method:
A) Progress billing impact profit, but cash collection do not
B) Cash collections impacts profit, but progress billing do not
C) Both progress billing and cash collections impacts profit
D) Neither Cash Collections or Progress Billing impact profit
