Question 1

Gain contingencies that are remote and can be reasonably estimated

Accepted Answer

A)  must be disclosed in a note to the financial statements. 
B)  may be disclosed in a note to the financial statements. 
C)  must be reported in the body of the financial statements. 
D)  should not be reported or disclosed. 
A)  must be disclosed in a note to the financial statements. 
B)  may be disclosed in a note to the financial statements. 
C)  must be reported in the body of the financial statements. 
D)  should not be reported or disclosed.

Question 2

A company identified four industry segments as reportable out of a total of eight subunits of the company based on the identifiable asset criterion.Total company sales excluding intersegment sales are $3,000,000 for the year,and the sum of sales for the four identified segments is $2,300,000. Given these facts,the company

Accepted Answer

A)  need not report on a segment basis this period. 
B)  must disclose only the four subunits as segments. 
C)  must identify one or more additional segments for segmental disclosure purposes. 
D)  treat all subunits of the firm as reportable. 
A)  need not report on a segment basis this period. 
B)  must disclose only the four subunits as segments. 
C)  must identify one or more additional segments for segmental disclosure purposes. 
D)  treat all subunits of the firm as reportable.

Question 3

Which of the following contingencies should be accrued in the accounts and reported in the financial statements?

Accepted Answer

A)  The company is forcefully contesting a personal injury lawsuit and a loss is possible and reasonable estimable. 
B)  An accommodation endorsement involving a remote loss 
C)  It is probable that a company will receive $50,000 in settlement of a lawsuit. 
D)  The estimated expenses of a one-year product warranty. 
A)  The company is forcefully contesting a personal injury lawsuit and a loss is possible and reasonable estimable. 
B)  An accommodation endorsement involving a remote loss 
C)  It is probable that a company will receive $50,000 in settlement of a lawsuit. 
D)  The estimated expenses of a one-year product warranty.

Question 4

The following segments have been identified for an enterprise,along with each segments sales.No segment qualifies on any other criterion for determining reportable segments except possibly for sales.Sales for each segment,and the total for the enterprise follow:   What is the minimum number of reportable segments for this firm?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 5

An obligation that is contingent on the occurrence of a future event should be reported in the balance sheet as a liability if the

Accepted Answer

A)  future event is likely to occur. 
B)  amount of the obligation can be reasonably estimated. 
C)  occurrence of the future event is at least reasonably possible and the amount is known. 
D)  occurrence of the future event is probable and the amount can be reasonably estimated. 
A)  future event is likely to occur. 
B)  amount of the obligation can be reasonably estimated. 
C)  occurrence of the future event is at least reasonably possible and the amount is known. 
D)  occurrence of the future event is probable and the amount can be reasonably estimated.

Question 6

Stellar Corporation sells five different types of products.The company is divided for internal reporting purposes into five different divisions based on these five different product lines.The company should prepare the note disclosure for disaggregated information based upon the

Accepted Answer

A)  five types of products. 
B)  five different divisions. 
C)  materiality of each product line based on the revenue or operating profits generated by each product line or the assets utilized by each product line. 
D)  geographic areas in which the 5 products are sold. 
A)  five types of products. 
B)  five different divisions. 
C)  materiality of each product line based on the revenue or operating profits generated by each product line or the assets utilized by each product line. 
D)  geographic areas in which the 5 products are sold.

Question 7

Reporting in the body of the financial statements is required for

Accepted Answer

A)  loss contingencies that are probable and can be reasonably estimated. 
B)  gain contingencies that are probable and can be reasonably estimated. 
C)  loss contingencies that are possible and can be reasonably estimated. 
D)  all loss contingencies. 
A)  loss contingencies that are probable and can be reasonably estimated. 
B)  gain contingencies that are probable and can be reasonably estimated. 
C)  loss contingencies that are possible and can be reasonably estimated. 
D)  all loss contingencies.

Question 8

A truck owned and operated by Mingus Company was involved in an accident with an auto driven by S.Nara on January 12,2014.Mingus received notice on April 24,2014,of a lawsuit for $800,000 damages for a personal injury suffered by S.Nara.Mingus's counsel believes it is probable that S.Nara will be successful against the company for an estimated amount in the range between $100,000 and $400,000.No amount within this range is a better estimate of potential damages than any other amount.It is expected that the lawsuit will be adjudicated in the latter part of 2015.What amount of loss should Mingus accrue at December 31,2014?

Accepted Answer

A)  $400,000 
B)  $250,000 
C)  $100,000 
D)  $800,000 
A)  $400,000 
B)  $250,000 
C)  $100,000 
D)  $800,000

Question 9

The reported identifiable assets of a reportable segment exclude which of the following?

Accepted Answer

A)  Segment patents 
B)  Segment receivables 
C)  Portion the segment uses of corporate assets used by all segments 
D)  Allowance for doubtful accounts on segment receivables 
A)  Segment patents 
B)  Segment receivables 
C)  Portion the segment uses of corporate assets used by all segments 
D)  Allowance for doubtful accounts on segment receivables

Question 10

Uncertainty that the party on the other side of an agreement will abide by the terms of the agreement is referred to as

Accepted Answer

A)  credit risk. 
B)  exchange rate risk. 
C)  interest rate risk. 
D)  price risk. 
A)  credit risk. 
B)  exchange rate risk. 
C)  interest rate risk. 
D)  price risk.

Question 11

Information obtained prior to the issuance of the current period's financial statements of a company indicates that it is probable that,at the date of the financial statements,a liability will be incurred for obligations related to product warranties on products sold during the current period.During the past three years,product warranty costs have been approximately 1 1/2 percent of annual sales revenue. An estimated loss contingency should be

Accepted Answer

A)  neither accrued nor disclosed in the financial statements. 
B)  recognized as an appropriation of retained earnings. 
C)  accrued in the accounts and reported in the financial statements. 
D)  disclosed in the financial statements but not accrued. 
A)  neither accrued nor disclosed in the financial statements. 
B)  recognized as an appropriation of retained earnings. 
C)  accrued in the accounts and reported in the financial statements. 
D)  disclosed in the financial statements but not accrued.

Question 12

On January 1,2014,Panther Company received a two-year $600,000 loan.The loan calls for payments to made at the end of each year based on the prevailing market rate at January 1 of each year.The interest rate at January 1,2014,was 10 percent.Aegean company also has a two-year $600,000 loan,but Aegean's loan carries a fixed interest rate of 10 percent.
-Panther Company does not want to bear the risk that interest rates may increase in year two of the loan.Aegean Company believes that rates may decrease and they would prefer to have variable debt.So the two companies enter into an interest rate swap agreement whereby Aegean agrees to make Panther's interest payment in 2015 and Panther likewise agrees to make Aegean's interest payment in 2015.The two companies agree to make settlement payments,for the difference only,on December 31,2015.If the interest rate on January 1,2015 is 8 percent,what will be Panther's settlement payment to/from Aegean?

Accepted Answer

A)  $6,000 payment 
B)  $6,000 receipt 
C)  $12,000 payment 
D)  $12,000 receipt 
A)  $6,000 payment 
B)  $6,000 receipt 
C)  $12,000 payment 
D)  $12,000 receipt

Question 13

Allman,Inc. ,enters into a call option contract with Betts Investment Co.on January 2,2014.This contract gives Allman the option to purchase 1,000 shares of Upmann stock at $100 per share.The option expires on April 30,2014.Upmann shares are trading at $100 per share on January 2,2014,at which time Allman pays $200 for the call option.
-Using the information above,assume that the price of the Upmann shares has risen to $130 per share on March 31,2014,and the Hall is preparing financial statements for the quarter ending March 31.As regards this option,Hall,Inc. ,would report which of the following?

Accepted Answer

A)  A $30,000 realized gain 
B)  A $30,000 unrealized gain 
C)  A deferred gain of $29,800 
D)  Nothing would be reported in the financial statements or the notes thereto. 
A)  A $30,000 realized gain 
B)  A $30,000 unrealized gain 
C)  A deferred gain of $29,800 
D)  Nothing would be reported in the financial statements or the notes thereto.

Question 14

Which of the following statements regarding requirements for segment disclosures is most accurate?

Accepted Answer

A)  Segment disclosures must include most of the items found in financial statements for the entire enterprise. 
B)  Segment reporting is generally applied in a similar fashion in various companies,since the requirement are detailed and inflexible. 
C)  Segment reporting requirements are so flexible that firms can often resist disclosing information they would prefer to keep confidential. 
D)  Segment reporting is not required for any entities;the standards are concerned with determination of segment information if a company wishes to disclose it. 
A)  Segment disclosures must include most of the items found in financial statements for the entire enterprise. 
B)  Segment reporting is generally applied in a similar fashion in various companies,since the requirement are detailed and inflexible. 
C)  Segment reporting requirements are so flexible that firms can often resist disclosing information they would prefer to keep confidential. 
D)  Segment reporting is not required for any entities;the standards are concerned with determination of segment information if a company wishes to disclose it.

Question 15

When a company with reportable segments issues interim condensed financial statements,current GAAP requires that the interim reports provide all of the following for each reportable segment except

Accepted Answer

A)  revenues for external customers. 
B)  intersegment revenues. 
C)  total assets. 
D)  a measure of segment profit or loss. 
A)  revenues for external customers. 
B)  intersegment revenues. 
C)  total assets. 
D)  a measure of segment profit or loss.

Question 16

Ondular Technologies is involved in cancer research.Ondular is involved in a number of lawsuits related to their operations.For each case,indicate the disclosure that should be provided by Ondular Technologies in the annual financial statement.

Accepted Answer

The answer of Ondular Technologies is involved in cancer research.Ondular...

Question 17

Inca Company purchases a call option to hedge an investment of 20,000 shares of Limbaugh Company stock.The option agreement provides that if the prices of a share of Limbaugh Company stock is greater than $30 on October 25,Inca receives the difference (multiplied by 20,000 shares).Alternatively,if the price of the stock is less than $30,the option is worthless and will be allowed to expire.Which of the following statements regarding this call option is correct?

Accepted Answer

A)  The call option effectively hedges the investment in the shares of Limbaugh stock. 
B)  The call option is an option to sell Limbaugh Company stock at a fixed price. 
C)  The call option represents a speculative option rather than a hedge. 
D)  Inca could have purchased a put option or a call option to effectively hedge the investment in the shares of Limbaugh stock. 
A)  The call option effectively hedges the investment in the shares of Limbaugh stock. 
B)  The call option is an option to sell Limbaugh Company stock at a fixed price. 
C)  The call option represents a speculative option rather than a hedge. 
D)  Inca could have purchased a put option or a call option to effectively hedge the investment in the shares of Limbaugh stock.

Question 18

According to FASB ASC Topic 280 (Segment Reporting)how do firms identify reportable segments?

Accepted Answer

A)  By designations used inside the firm 
B)  By product lines 
C)  By industry classification 
D)  By geographic regions 
A)  By designations used inside the firm 
B)  By product lines 
C)  By industry classification 
D)  By geographic regions

Question 19

Uncertainty about the future market value of an asset is referred to as

Accepted Answer

A)  price risk. 
B)  credit risk. 
C)  interest rate risk. 
D)  exchange rate risk. 
A)  price risk. 
B)  credit risk. 
C)  interest rate risk. 
D)  exchange rate risk.

Question 20

Which of the following tests may be used to determine if an industry segment of an enterprise is a reportable segment under FASB ASC Topic 280?

Accepted Answer

A)  Its revenue (both from external customers and internal segments)is equal to or greater than 10 percent of total revenue (external and internal). 
B)  The absolute value of its operating profit is equal to or greater than 10 percent of the total of the operating profit for all segments that reported profits (or the total of the losses for all segments that reported losses). 
C)  The segment contains 10 percent or more of the combined assets of all operating segments. 
D)  All of these. 
A)  Its revenue (both from external customers and internal segments)is equal to or greater than 10 percent of total revenue (external and internal). 
B)  The absolute value of its operating profit is equal to or greater than 10 percent of the total of the operating profit for all segments that reported profits (or the total of the losses for all segments that reported losses). 
C)  The segment contains 10 percent or more of the combined assets of all operating segments. 
D)  All of these.

Gain contingencies that are remote and can be reasonably estimated

Which of the following contingencies should be accrued in the accounts and reported in the financial statements?

An obligation that is contingent on the occurrence of a future event should be reported in the balance sheet as a liability if the

Stellar Corporation sells five different types of products.The company is divided for internal reporting purposes into five different divisions based on these five different product lines.The company should prepare the note disclosure for disaggregated information based upon the

Reporting in the body of the financial statements is required for

The reported identifiable assets of a reportable segment exclude which of the following?

Uncertainty that the party on the other side of an agreement will abide by the terms of the agreement is referred to as

Which of the following statements regarding requirements for segment disclosures is most accurate?

When a company with reportable segments issues interim condensed financial statements,current GAAP requires that the interim reports provide all of the following for each reportable segment except

Ondular Technologies is involved in cancer research.Ondular is involved in a number of lawsuits related to their operations.For each case,indicate the disclosure that should be provided by Ondular Technologies in the annual financial statement.

According to FASB ASC Topic 280 (Segment Reporting)how do firms identify reportable segments?

Uncertainty about the future market value of an asset is referred to as

Which of the following tests may be used to determine if an industry segment of an enterprise is a reportable segment under FASB ASC Topic 280?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 19: Derivatives, contingencies, business Segments, and Interim Reports

Gain contingencies that are remote and can be reasonably estimated

Which of the following contingencies should be accrued in the accounts and reported in the financial statements?

An obligation that is contingent on the occurrence of a future event should be reported in the balance sheet as a liability if the

Stellar Corporation sells five different types of products.The company is divided for internal reporting purposes into five different divisions based on these five different product lines.The company should prepare the note disclosure for disaggregated information based upon the

Reporting in the body of the financial statements is required for

The reported identifiable assets of a reportable segment exclude which of the following?

Uncertainty that the party on the other side of an agreement will abide by the terms of the agreement is referred to as

Which of the following statements regarding requirements for segment disclosures is most accurate?

When a company with reportable segments issues interim condensed financial statements,current GAAP requires that the interim reports provide all of the following for each reportable segment except

Ondular Technologies is involved in cancer research.Ondular is involved in a number of lawsuits related to their operations.For each case,indicate the disclosure that should be provided by Ondular Technologies in the annual financial statement.

According to FASB ASC Topic 280 (Segment Reporting)how do firms identify reportable segments?

Uncertainty about the future market value of an asset is referred to as

Which of the following tests may be used to determine if an industry segment of an enterprise is a reportable segment under FASB ASC Topic 280?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters