ACCT 557 Intermediate Accounting III
(DeVry – Winter 2016)
ACCT 557 Week 1 Quiz
# Of Questions:
5 Question 1.
(TCO A) Platypus Building Inc. won a bid for a new office building contract. Below is info from the project accountant:
Total Construction Fixed Price $8,000,000
Construction Start Date March 3, 2012
Construction Complete Date December 4, 2013
As of Dec 31… 2012 2013
Actual cost incurred $2,500,000 $3,150,000
Estimated remaining costs $3,750,000 $-
Billed to customer $2,400,000 $5,300,000
Received from customer $2,250,000 $5,400,000
Assuming Platypus Building Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013?
(TCO A) Kerry Corp purchased a used bottling machine from Bob's Bottling Inc. on Jan 1, 2012 for $2100000. Bob accounted for the sale correctly under the installment sales method. It had a book value of $1575000. Kerry paid with $300000 cash and a note for $1800000 with an annual interest of 10%. Kerry agreed to make equal annual payments of $600000. Kerry Corp made their first payment on Jan 1, 2013 of $780000 which included interest of $180000 to date of payment.
As of Dec 31, 2013 Bob has deferred gross profit of ?
(TCO A) Blue Suede Construction Corp used the percentage-of-completion method of revenue recognition. They were contracted to build the new amphitheater for $4500000. Additional information was provided:
As of Dec 31…. 2012 2013
Percentage of completion 35% 60%
Estimated total expected costs $3,750,000 $3,900,000
Gross profit recognized (Cumulative) $225,000 $300,000
Contracted costs incurred during 2013 were…
(TCO A) Revenue should NOT be recognized at the time of sale if…
Question :(TCO A) Windsor Construction Company uses the completed contract method of accounting. In 2014, Windsor began work on a two year contract it had received which provided for a contract price of $3,000,000. Other details follow for 2014:Costs incurred during the year $1,400,000Estimated costs to complete as of December 31 2014, $600,000Billings during the year $1,000,000Collections during the year $900,000
What should be the gross profit recognized in 2014?
ACCT 557 Week 2 Quiz
# Of Questions:
(TCO B) As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Co.'s sole depreciable asset, acquired in Year 1, exceeded its tax basis by $250,000 at December 31, Year 1. This difference will reverse in future years. The enacted tax rate is 30% for Year 1, and 40% for future years. Noor has no other temporary differences. In its December 31, Year 1, balance sheet, how should Noor report the deferred tax effect of this difference?
(TCO B) On its December 31, Year 2, balance sheet, Shin Co. had income taxes payable of $13,000 and a current deferred tax asset of $20,000 before determining the need for a valuation account. Shin had reported a current deferred tax asset of $15,000 at December 31, Year 1. No estimated tax payments were made during Year 2. At December 31, Year 2, Shin determined that it was more likely than not that 10% of the deferred tax asset would not be realized. In its Year 2 income statement, what amount should Shin report as total income tax expense?
(TCO B) Justification for the method of determining periodic deferred tax expense is based on the concept of:
(TCO B) In Year 2, Ajax, Inc. reported taxable income of $400,000 and pretax financial statement income of $300,000. The difference resulted from $60,000 of nondeductible premiums on Ajax's officers' life insurance and $40,000 of rental income received in advance. Rental income is taxable when received. Ajax's effective tax rate is 30%. In its Year 2 income statement, what amount should Ajax report as income tax expense-current portion?
(TCO B) When accounting for income taxes, a temporary difference occurs in which of the following scenarios?
ACCT 557 Week 5 Quiz
Date Taken: ……………………./2016
Question Type: # Of Questions:
Multiple Choice 5
Question 1.Question : (TCO E) Which of the following is not a retrospective-type accounting
Question 2.Question : (TCO E) What type of accounting change/correction should always be
accounted for in the current and future accounting periods?
Question 3.Question : (TCO E) On December 31, 2013, Gifts Galore, Inc. appropriately changed
its inventory valuation method from weighted-average cost to FIFO
method for financial statement and income tax purposes. The change will
result in a $1,800,000 increase in the beginning inventory at January 1,
2013. Assume a 40% income tax rate. The cumulative effect of this
accounting change on beginning retained earnings is
Question 4.Question : (TCO E) As of January 1, 2011, Survival Industries, Inc. purchased a boat
at a cost of $490,000.
When purchased, the company was using the double declining
Key info on the asset at time of purchase is the following.
Estimated useful life is 7 years.
Residual Value is $0.
At the beginning of 2014, the CFO decided to change to straight-line
Compute the depreciation expense for 2014
Question 5.Question : (TCO E) Mystical Corporation found the following errors in their year-end
As of Dec. 2012 As of
Ending Inventory $32,000
understated $46,000 overstated
Depreciation Exp. $7,000 understated
On December 31, 2013, a fully depreciated machine was sold for $35,000
but the sale was not recorded until January 15, 2014 when the cash was
received. In 2012, a three-year insurance premium was prepaid for
$45,000 of which the entire amount was expensed in the first year.
There were no other errors or corrections. Ignore any tax considerations.
What is the total net effect of errors on Mystical's 2013 Retained Earnings?
ACCT 557 Week 6 Quiz
Date Taken: …………2016
Question 1.Question : (TCO F) Which of the following would not be disclosed within a statement
of cash flow?
Question 2.Question : (TCO F) Which of the following is not true?
Question 3.Question : (TCO F) Glitter Girl, Inc. recognized net income of $205,000 including
$60,000 in depreciation expense. Additional changes from the balance sheet are as follows.
Accounts Receivable $2,000 decrease
Prepaid Expenses $15,000 decrease
Inventory $36,000 increase
Accrued Liabilities $10,000 decrease
Accounts Payable $40,000 increase
Question 4.Question : (TCO F) Pig Builder's, Inc. shows the following as of December 31,
A -cquired 50% of Wolf Corp's common stock for $160,000 cash,
which was borrowed from Granny's Bank.
Is-sued 5,000 shares of its preferred stock for land having a fair
value of $320,000
Is-sued 500 of its 11% debenture bonds, due 2017, for $392,000
P -aid $120,000 toward bank loan.
P -urchased a patent for $220,000 cash
S -old available for sales securities for $796,000
R -ecognized $88,000 net increase in returnable long term customer
Pig's net cash provided by investing activities for 2012 is
Question 5.Question : (TCO F) Pig Builder's, Inc. shows the following as of December 31, 2012.
A -cquired 50% of Wolf Corp's common stock for $160,000 cash
which was borrowed from Granny's Bank.
Is-sued 5,000 shares of its preferred stock for land having a fair value of $320,000