ACC 291 Final Exam Study Guide

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ACC 291 Final Exam Study GuideQuestion 207On January 1, a machine with a useful life of five years and a residual value of $40,000was purchased for $120,000. What is the depreciation expense for year 2 under thedouble-declining-balance method of depreciation?$28,800Explanation: Use thestandard double-declining-balance formula to solve.IFRS Multiple Choice Question 01As a recent graduate of State University you're aware that IFRS requires componentdepreciation for plant assets. A friend has asked you to succinctly explain whatcomponent depreciation means. Which of the following correctly describes componentdepreciation?The method that requires that significant parts of a plant asset with different usefullives be depreciated separately.Multiple Choice Question 198Given the following account balances at year end, compute the total intangible assetson the balance sheet of Janssen Enterprises.Cash$1,500,000Accounts Receivable4,000,000Trademarks1,000,000Goodwill2,500,000Research & Development Costs2,000,000$3,500,000.Explanation: Intangible Assets = Goodwill + Trademarks = 3,500,000Multiple Choice Question 146Bonds with a face value of $300,000 and a quoted price of 97¼ have aselling price of$291,750Explanation: Price-300,000 x 0.9725 = 291750

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Multiple Choice Question 188Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January1, 2013. The bonds had a face value of $400,000, pay interest annually on December31st, and have a call price of 102. Sparks uses the straight-line method of amortization.What is the carrying value of the bonds on January 1, 2015?$418,400Explanation: Annual Premium = 23000/10 = 2300Carrying Value = 423000–(2300*2) = 418,400Multiple Choice Question 90S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreementwas reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $15,000by issuing 8,000 shares of its common stock (par $1). The stock trades on a daily basisand the market price of the stock on the day the debt was settled is $1.80 per share.Given this information, the best journal entry for E. Corp. to record for this transaction isLegal Expense14,400Common Stock8,000Paid-in Capital in Excess of Par-Common6,400Explanation: Use the market value of stock for the entry. 1.80 * 8000 = 14,400Multiple Choice Question 110Logan Corporation issues 50,000shares of $50 par value preferred stock for cash at $60per share. The entry to record the transaction will consist of a debit to Cash for$3,000,000 and a credit or credits toPreferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000.

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