Question 1

Where in the financial statements are changes in the fair value of cash flow hedges reported

Accepted Answer

A)  On the Balance Sheet as part of retained earnings 
B)  On the Income Statement as other gains.losses 
C)  As other comprehensive income and accumulated in other comprehensive income on the Balance Sheet. 
D)  On the Statement of Stockholder's Equity 
A)  On the Balance Sheet as part of retained earnings 
B)  On the Income Statement as other gains.losses 
C)  As other comprehensive income and accumulated in other comprehensive income on the Balance Sheet. 
D)  On the Statement of Stockholder's Equity

Question 2

Which of the following is not one of the three criteria for recognition of a liability?

Accepted Answer

A)  The obligation involves a probable future sacrifice of resources at a specified or determinable date. 
B)  The firm is required to make a cash payment for the goods or services. 
C)  The firm has little or no discretion to avoid the transfer. 
D)  The transaction or event giving rise to the liability has already occurred. 
A)  The obligation involves a probable future sacrifice of resources at a specified or determinable date. 
B)  The firm is required to make a cash payment for the goods or services. 
C)  The firm has little or no discretion to avoid the transfer. 
D)  The transaction or event giving rise to the liability has already occurred.

Question 3

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Santa's incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Santa and a portion of the company's operating lease footnote.

-Using the information provided by Santa Corporation calculate the company's 2012 fixed asset ratio.

Accepted Answer

A)  3.0 
B)  3.65 
C)  3.23 
D)  5.21 
A)  3.0 
B)  3.65 
C)  3.23 
D)  5.21

Question 4

Discuss the method of accounting for employee stock options.In your answer discuss the how the accounting has changed during recent years.

Accepted Answer

The FASB requires the fair value method

Question 5

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

Accepted Answer

The answer of Under an operating lease agreement the lessee...

Question 6

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

Accepted Answer

A)  The transaction or event that gave rise to the obligation has already occurred. 
B)  The firm has a present obligation and little or no discretion to avoid the transfer. 
C)  The firm must know the precise amount of the obligation before recording it. 
D)  The obligation involves a probable future sacrifice of economic benefits-a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares-at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation. 
A)  The transaction or event that gave rise to the obligation has already occurred. 
B)  The firm has a present obligation and little or no discretion to avoid the transfer. 
C)  The firm must know the precise amount of the obligation before recording it. 
D)  The obligation involves a probable future sacrifice of economic benefits-a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares-at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.

Question 7

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Santa's incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Santa and a portion of the company's operating lease footnote.

-Using the information provided by Santa Corporation estimate the average life of the operating leases.

Accepted Answer

A)  8.66 years 
B)  13.66 years 
C)  10 years 
D)  Not able to determine 
A)  8.66 years 
B)  13.66 years 
C)  10 years 
D)  Not able to determine

Question 8

Regarding accounting for troubled debt,which of the following statements is true?

Accepted Answer

A)  The treatment for troubled debt is the same under both U.S. GAAP and IFRS. 
B)  The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt. 
C)  U.S. GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation. 
D)  Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS. 
A)  The treatment for troubled debt is the same under both U.S. GAAP and IFRS. 
B)  The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt. 
C)  U.S. GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation. 
D)  Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS.

Question 9

Which of the following is the date on which the dividend distribution occurs?

Accepted Answer

A)  date of record 
B)  commitment date 
C)  date of declaration 
D)  date of payment 
A)  date of record 
B)  commitment date 
C)  date of declaration 
D)  date of payment

Question 10

Under IFRS,cash payments for purchase of treasury stock

Accepted Answer

A)  operating cash outflow 
B)  investing cash outflow 
C)  financing cash outflow 
D)  Both A and C are correct. 
A)  operating cash outflow 
B)  investing cash outflow 
C)  financing cash outflow 
D)  Both A and C are correct.

Question 11

A(n)____________________ lease arrangement is one in which the lessee enjoys the use of the property for a set period of time.

Accepted Answer

The answer of A(n)____________________ lease arrangement is one in which...

Question 12

In the chart below,assign the directional effect (I = increase,D = decrease,or NE = no effect)of each of the following four transactions on the components of the book value of common shareholders' equity.
a.Recognition of compensation expense related to restricted stock.
b.Granting of stock appreciation rights to be settled with cash.
c.Recognition of compensation expense on stock appreciation rights.
d.Reacquisition and retirement of common stock at an amount greater than original issue price.
 $$\begin{array} { | c | c | c | c | l | l | l | } 
\hline \text { Item } & \begin{array} { c } 
\text { Common } \
\text { Stock }
\end{array} & \begin{array} { c } 
\text { Additional } \
\text { Paid-In } \
\text { Capital }
\end{array} & \begin{array} { c } 
\text { Deferred } \
\text { Compensation }
\end{array} & \begin{array} { c } 
\text { Retained } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { Treasury } \
\text { Stock at } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Total Common } \
\text { Shareholders? } \
\text { Equity }
\end{array} \
\hline \text { a. } & & & & & & \
\hline \text { b. } & & & & & & \
\hline \text { c. } & & & & & & \
\hline \text { d. } & & & & & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array}{l}
\begin{array} { | c |

Question 13

For the year ended December 31,2012,Porter should record depreciation expense for the leased equipment equal to

Accepted Answer

A)  $55,000 
B)  $39,927 
C)  $47,912 
D)  $0 
A)  $55,000 
B)  $39,927 
C)  $47,912 
D)  $0

Question 14

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Accepted Answer

reasonable

Question 15

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

Accepted Answer

A)  The assets transferred have been isolated from the selling firm. 
B)  The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor. 
C)  The selling firm does not maintain effective control over the assets transferred through (a) an agreement that both entitles and obligates it to repurchase the assets or (b) the
Ability to unilaterally cause the transferee to return specific assets. 
D)  A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy. 
A)  The assets transferred have been isolated from the selling firm. 
B)  The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor. 
C)  The selling firm does not maintain effective control over the assets transferred through (a) an agreement that both entitles and obligates it to repurchase the assets or (b) the
Ability to unilaterally cause the transferee to return specific assets. 
D)  A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy.

Question 16

All of the following are typically recognized as accounting liabilities except:

Accepted Answer

A)  Bonds Payable 
B)  Rental Fees Received in Advance 
C)  Loan Guarantees 
D)  Taxes Payable 
A)  Bonds Payable 
B)  Rental Fees Received in Advance 
C)  Loan Guarantees 
D)  Taxes Payable

Question 17

Under which of the following conditions does the equipment lease qualify for capital lease accounting?

Accepted Answer

A)  The lease contains a bargain purchase option. 
B)  The lease term is equal to or greater than 75% of the asset's economic life. 
C)  A, and B are correct answers. 
D)  The lease transfers ownership to the lessee at the end of the lease term. 
A)  The lease contains a bargain purchase option. 
B)  The lease term is equal to or greater than 75% of the asset's economic life. 
C)  A, and B are correct answers. 
D)  The lease transfers ownership to the lessee at the end of the lease term.

Question 18

The acceptable method of accounting for stock options is the _________________________ method.

Accepted Answer

The answer of The acceptable method of accounting for stock...

Question 19

Assume that a start-up manufacturing company raises capital through a series of equity issues.
Required:
a.Using the financial statement template below,summarize the financial statement effects of the following transactions.
(1)Issues 85,000 shares of $1 par value common stock for $15.00 per share.
(2)Receives land in exchange for 8,500 shares of $1 par common stock when the common stock is trading in the market at $25 per share.The land has no readily determinable market value.
(3)(a)Receives subscriptions for the issue of 28,000 shares of $1 par value common.The share issue price is $15 of which 30 percent is received as a down payment.
(3)(b)Subsequently,the remaining 70 percent is received from the transaction in 3(a).   b.In each case,how does the company measure the transaction? What measurement
attribute is used?
Journal entry (optional):b.In each transaction,the company uses the attribute "fair value" as the measurement basis for the transaction.The net increase in shareholders' equity always equals the fair value of the asset received.Cash (the best measure of fair value in an arm's-length exchange)received in Transactions 1 and 3 determines the net increase in shareholders' equity.In Transaction 2,the fair value of the asset received (land)is approximated by the fair value of the common stock issued because the market price of the common stock is known and the fair value of the land is not readily determinable.

Accepted Answer

@#IMG-DLM& 
b.Journal Entry
 @#IMG-DLM& 
In Transaction #3
(

Question 20

Why can exercising stock options can create cash flow problems for managers at the exercise date? What is an alternative to this problem?

Accepted Answer

Because the manager must pay the exercis

Where in the financial statements are changes in the fair value of cash flow hedges reported

Which of the following is not one of the three criteria for recognition of a liability?

Discuss the method of accounting for employee stock options.In your answer discuss the how the accounting has changed during recent years.

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

Regarding accounting for troubled debt,which of the following statements is true?

Which of the following is the date on which the dividend distribution occurs?

Under IFRS,cash payments for purchase of treasury stock

A(n)____________________ lease arrangement is one in which the lessee enjoys the use of the property for a set period of time.

For the year ended December 31,2012,Porter should record depreciation expense for the leased equipment equal to

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

All of the following are typically recognized as accounting liabilities except:

Under which of the following conditions does the equipment lease qualify for capital lease accounting?

The acceptable method of accounting for stock options is the _________________________ method.

Why can exercising stock options can create cash flow problems for managers at the exercise date? What is an alternative to this problem?

Overview of Financial Reporting, financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Accounting Quality

Investing Activities

Operating Activities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 7: Financing Activities

Where in the financial statements are changes in the fair value of cash flow hedges reported

Which of the following is not one of the three criteria for recognition of a liability?

Discuss the method of accounting for employee stock options.In your answer discuss the how the accounting has changed during recent years.

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

Regarding accounting for troubled debt,which of the following statements is true?

Which of the following is the date on which the dividend distribution occurs?

Under IFRS,cash payments for purchase of treasury stock

A(n)____________________ lease arrangement is one in which the lessee enjoys the use of the property for a set period of time.

For the year ended December 31,2012,Porter should record depreciation expense for the leased equipment equal to

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

All of the following are typically recognized as accounting liabilities except:

Under which of the following conditions does the equipment lease qualify for capital lease accounting?

The acceptable method of accounting for stock options is the _________________________ method.

Why can exercising stock options can create cash flow problems for managers at the exercise date? What is an alternative to this problem?

Overview of Financial Reporting, financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Accounting Quality

Investing Activities

Operating Activities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters