ACC 557 Comprehensive Final Exam: Financial Accounting and Reporting

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Comprehensive Final Exam for ACC 557: Financial Accounting and ReportingACC 557/ACC557 Final Exam Part 1 & 2PART 11. Ramos Corporation sold 400 shares of treasury stock for $45 per share. Thecost for the shares was $35. The entry to record thesale will include aAnswercredit to Gain on Sale of Treasury Stock for $14,000.credit to Paid-in Capital from Treasury Stock for $4,000.debit to Paid-in Capital in Excess of Par for $4,000.credit to Treasury Stock for $18,000.2. Each of the following decreases retained earnings exceptAnswercash dividend.liquidating dividend.stock dividend.All of these decrease retained earnings.3. Paid-In Capital in Excess of Stated ValueAnsweris credited when no-par stock does not have a stated value.is reported as part of paid-in capital on the balance sheet.represents the amount of legal capital.normally has a debit balance.

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4. A computer company has $2,800,000 in research and development costs.Before accounting for these costs, the net income of the company is $2,000,000.What is the amount of net income or loss after these R & D costs are accountedfor?Answer$800,000 loss$2,000,000 net income$0Cannot be determined from the information provided.5. A plant asset was purchased on January 1 for $100,000 with an estimatedsalvage value of $20,000 at the end of its useful life. The current year'sDepreciation Expense is $10,000 calculated on the straight-line basis and thebalance of the Accumulated Depreciation account at the end of the year is$50,000. The remaining useful life of the plant asset isAnswer10 years.8 years.5 years.3 years.

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6. Goodwill can be recordedAnswerwhen customers keep returning because they are satisfied with the company'sproducts.when the company acquires a goodlocation for its business.when the company has exceptional management.only when there is an exchange transaction involving the purchase ofan entire business.7. Which of the following statements concerning IFRS and U.S. GAAP is true?AnswerIFRSpermits revaluation of all intangible assets, whereas U.S. GAAPprohibits revaluation of intangible assets.Gains on exchange of assets when the exchange has commercial substance arerecognized under both IFRS and U.S. GAAP.Changes in depreciation method under IFRS are reported in current and futureperiods, under U.S. GAAP such changes are treated as prior period adjustments.All of the choices are true regarding IFRS and U.S. GAAP.

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8. A company has the following assets: Buildings and Equipment, lessaccumulated depreciation of $2,000,000 $9,600,000 Copyrights 960,000 Patents4,000,000 Timberlands, less accumulated depletion of $2,800,000 4,800,000 Thetotal amount reported under Property, Plant, and Equipment would beAnswer$19,360,000.$14,400,000.$18,400,000.$15,360,000.9. Powell’s Courier Service recorded a loss of $9,000 when it sold a van thatoriginally cost $84,000 for $15,000. Accumulated depreciation on the van musthave beenAnswer$78,000.$24,000.$75,000.$60,000.

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10.On October 1, 2015, Holt Company places a new asset into service. The cost ofthe asset is $120,000 with an estimated 5-year life and $30,000 salvage value atthe end of its useful life. What is the book value of the plant asset on theDecember 31, 2015, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation?Answer$78,000$90,000$108,000$114,00011. The balance in the Accumulated Depreciation account represents theAnswercash fund to be used to replace plant assets.amount to be deducted from the cost of the plant asset to arrive at its fair marketvalue.amount charged to expense in the current period.amount charged to expense since the acquisition of the plant asset.12. The times interest earned is computed by dividingAnswernet income by interest expense.income before income taxes by interest expense.income before interest expense by interest expense.income before income taxes and interest expense by interest expense.

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