ACC 557 Final Exam Part 1 & 2

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ACC 557 Final Exam Part 1& 2PART 11.Ramos Corporation sold 400 shares of treasury stock for $45 per share. The cost for the shareswas $35. The entry to record the sale 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.4. A computer company has $2,800,000 in research and development costs. Before accountingfor these costs, the net income of the company is $2,000,000. What is the amount of net incomeor loss after these R & D costs are accounted for?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 estimated salvage value of$20,000 at the end of its useful life. The current year's Depreciation Expense is $10,000calculated on the straight-line basis and the balance of the Accumulated Depreciation account atthe end of the year is $50,000. The remaining useful life of the plant asset isAnswer10 years.

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8 years.5 years.3 years.6. Goodwill can be recordedAnswerwhen customers keep returning because they are satisfied with the company's products.when the company acquires a good location for its business.when the company has exceptional management.only when there is an exchange transaction involving the purchase of an entire business.7.Which of the following statements concerning IFRS and U.S. GAAP is true?AnswerIFRS permits revaluation of all intangible assets, whereas U.S. GAAP prohibits revaluation ofintangible assets.Gains on exchange of assets when the exchange has commercial substance are recognized underboth IFRS and U.S. GAAP.Changes in depreciation method under IFRS are reported in current and future periods, underU.S. GAAP such changes are treated as prior period adjustments.All of the choices are true regarding IFRS and U.S. GAAP.8. A company has the following assets: Buildings and Equipment, less accumulated depreciationof $2,000,000 $9,600,000 Copyrights 960,000 Patents 4,000,000 Timberlands, less accumulateddepletion of $2,800,000 4,800,000 The total amount reported under Property, Plant, andEquipment 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 that originally cost$84,000 for $15,000. Accumulated depreciation on the van must have beenAnswer$78,000.$24,000.$75,000.$60,000.10.OnOctober 1, 2015, Holt Company places a new asset into service. The cost of the asset is$120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life.

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What is the book value of the plant asset on the December 31, 2015, balance sheet assuming thatHolt 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 market value.amount charged to expense in the current period.amount charged to expense since the acquisition of the plant asset.11.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.13. A $1,000 face value bond with a quoted price of 98 is selling forAnswer$1,000.$980.$908.$98.14. Hardy Company has current assets of $95,000, current liabilities of $100,000, long-termassets of $180,000 and long-term liabilities of $80,000. Hardy Company's working capital and itscurrent ratio are:Answer$85,000 and .95:1.-$5,000 and1.95:1.$5,000 and .95:1.-$5,000 and .95:1.15. The interest charged on a $50,000, 60-day note payable, at the rate of 6%, would beAnswer$3,000.

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