Question 1

Under ASPE, assets and liabilities forming part of a disposal group must be classified as current assets.

Accepted Answer

A) True 
 B)False

Question 2

All elements of OCI must eventually be recycled to the income statement.

Accepted Answer

A) True 
 B)False

Question 3

When a segment of a business has been discontinued during the year, the gain or loss on disposal should:

Accepted Answer

A)  include operating losses of the current period up to the measurement date. 
B)  be net of applicable income taxes. 
C)  be reported as an infrequent item. 
D)  include operating losses during the phase-out period. 
A)  include operating losses of the current period up to the measurement date. 
B)  be net of applicable income taxes. 
C)  be reported as an infrequent item. 
D)  include operating losses during the phase-out period.

Question 4

A company had 20,000 shares of common stock outstanding on January 1, 2001. On October 110,000 shares of non-cumulative preferred stock were issued as a stock dividend. No cash dividends were paid or declared in 2007 and 2007 net income was $450,000. Earnings per share (rounded to nearest cent):

Accepted Answer

A)  $15.00. 
B)  $22.50. 
C)  $20.00. 
D)  $30.00. 
A)  $15.00. 
B)  $22.50. 
C)  $20.00. 
D)  $30.00.

Question 5

Based on the following data, compute the amount of rent revenue that should be reported on the 2002 income statement. Show computations.
Balance of account at:$\begin{array} { | l | l | l | } 
\hline & \text { DeC. 31, 2007 } & \text { DeC. 31, 2008 } \
\hline \text { Rent receivable } & \$ 4,000 & \$ 3,000 \
\hline \text { Rent revenue collected in advance } & 3,600 & 2,000 \
\hline \text { Cash collected during 2002: } & & \$ 160,000 \
\hline
\end{array}$2002 rent revenue is $______________________.

Accepted Answer

$160,600 ($160,000 -

Question 6

Once an asset has been abandoned, amortization stops and it is written down to its recoverable value.

Accepted Answer

A) True 
 B)False

Question 7

A corporation is developing financial statements for the year ended December 31, 2010. The average income tax rate is 30 percent. The following pre-tax data are available: $\begin{array} { | l | l | } 
\hline \text { Revenues } & \$ 420,000 \
\hline \text { Expenses } & 360,000 \
\hline \text { Loss from Discontinued Operations (pre-tax) } & 24,000 \
\hline \text { Correction of prior years' error, (credit) } & 22,000 \
\hline
\end{array}$Unrealized foreign exchange gain on translation of foreign subsidiary (net of tax) $10,000
Required:
Assuming all of the above items are subject to the average tax rate of 30%, prepare a statement of Comprehensive Income for the year ended December 31, 2010.

Accepted Answer

Statement of Comprehensive Income
Income

Question 8

Jacks Corporation decided to sell its playing card business segment for $600,000, on September 1, Year 1. The disposal date is November 1, Year 1. The book value of the segment's net assets is $550,000. The pre-tax income for the segment for the period January 1 - September 1, Year 1, was a loss of $80,000; the pre-tax income for the segment for September and October was $30,000. Assuming a tax rate of 40%, choose the correct reporting for discontinued operations in the income statement of Jacks Corporation, for the year ended December 31, Year 1. $$\begin{array} { | l | l | } 
\hline &\text { Income (loss) from Discontinued operations } & \text { Gain (loss) from disposal of ciscontinued operations } \
\hline 1& ( \$ 50,000 ) & \$ 50,000 \
\hline 2& ( \$ 48,000 ) & \$ 48,000 \
\hline 3& ( \$ 30,000 ) & \$ 30,000 \
\hline 4& \text { There is no disc losure necessary bec ause there is no net gain or loss for Y ear } 1 \text { on discontinued operations. } \
\hline
\end{array}$$

Accepted Answer

A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4 
A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4

Question 9

In reporting for discontinued operations, typically the date on which the disposal of the segment occurs follows the date the decision is made to dispose of the segment. In addition, the disposal may occur in the period (year 2) following the year the decision is made (year 1).
Under these circumstances, there are three situations, which can give rise to a reported overall gain on discontinued operations. The situations depend on earnings during the phase-out period (in both years), and on the difference between the selling price and book value of segment net assets.
Required: For each of the three situations, discuss: (1) the variables defining each situation, (2) the reporting of the gain in year 1, and (3) the rationale for that reporting.

Accepted Answer

Situation 1 occurs when the earnings dur

Question 10

Once an asset has been designated as held for sale it must be re measured to the lower of its carrying value and its fair value less costs to sell.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a generally practiced method of presenting the income statement?

Accepted Answer

A)  Including corrections of errors made in a prior period. 
B)  The single-step income statement. 
C)  The consolidated statement of income. 
D)  Including gains and losses from discontinued operations of a segment of a business in determining net income. 
A)  Including corrections of errors made in a prior period. 
B)  The single-step income statement. 
C)  The consolidated statement of income. 
D)  Including gains and losses from discontinued operations of a segment of a business in determining net income.

Question 12

On December 31, 2007, a company discovered that a tract of land (used as a parking lot), purchased for $20,000 cash on January 1, 2005, was debited in full to the Office Building account. The building was being depreciated over 20 years (straight-line) with no residual value. The income tax rate was 40 percent. The 2007 correction of prior years' error (net of income tax) was a:

Accepted Answer

A)  debit of $1,800. 
B)  credit of $1,800. 
C)  debit of $1,200. 
D)  credit of $1,200. 
A)  debit of $1,800. 
B)  credit of $1,800. 
C)  debit of $1,200. 
D)  credit of $1,200.

Question 13

Under, IFRS, a loss should be presented separately as a component of income from continuing operations when it is unusual in nature and which of the following? $$\begin{array} { | l | l | l | } 
\hline &\text { Material in Amount } & \text { Infrequent in Occurrence } \
\hline 1& \text { Yes } & \text { No } \
\hline 2&\text { YYes } & \text { Yes } \
\hline 3& \text { No } & \text { Yes } \
\hline 4& \text { No } & \text { No } \
\hline
\end{array}$$

Accepted Answer

A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4 
A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4

Under ASPE, assets and liabilities forming part of a disposal group must be classified as current assets.

All elements of OCI must eventually be recycled to the income statement.

When a segment of a business has been discontinued during the year, the gain or loss on disposal should:

A company had 20,000 shares of common stock outstanding on January 1, 2001. On October 110,000 shares of non-cumulative preferred stock were issued as a stock dividend. No cash dividends were paid or declared in 2007 and 2007 net income was $450,000. Earnings per share (rounded to nearest cent):

Once an asset has been abandoned, amortization stops and it is written down to its recoverable value.

Once an asset has been designated as held for sale it must be re measured to the lower of its carrying value and its fair value less costs to sell.

Which of the following is NOT a generally practiced method of presenting the income statement?

Under, IFRS, a loss should be presented separately as a component of income from continuing operations when it is unusual in nature and which of the following? Material in Amount Infrequent in Occurrence 1 Yes No 2 YYes Yes 3 No Yes 4 No No

The Framework for Financial Reporting

Accounting Judgements

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 3: Statements of Income and Comprehensive Income

Under ASPE, assets and liabilities forming part of a disposal group must be classified as current assets.

All elements of OCI must eventually be recycled to the income statement.

When a segment of a business has been discontinued during the year, the gain or loss on disposal should:

A company had 20,000 shares of common stock outstanding on January 1, 2001. On October 110,000 shares of non-cumulative preferred stock were issued as a stock dividend. No cash dividends were paid or declared in 2007 and 2007 net income was $450,000. Earnings per share (rounded to nearest cent):

Once an asset has been abandoned, amortization stops and it is written down to its recoverable value.

Once an asset has been designated as held for sale it must be re measured to the lower of its carrying value and its fair value less costs to sell.

Which of the following is NOT a generally practiced method of presenting the income statement?

Under, IFRS, a loss should be presented separately as a component of income from continuing operations when it is unusual in nature and which of the following? Material in Amount Infrequent in Occurrence 1 Yes No 2 YYes Yes 3 No Yes 4 No No

The Framework for Financial Reporting

Accounting Judgements

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters