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ACCT 495 Midterm Exam Advanced Accounting

ACCT 495 Midterm Exam Advanced Accounting

ACCT495

Midterm Exam Advanced Accounting (30 questions x 9 points each=270)

1. Pigskin Co., a U.S. corporation, sold inventory on credit to a British company on April 8, 2011. Pigskin received payment of 35,000 British pounds on May 8, 2011. The exchange rate was £1 = $1.54 on April 8 and £1 = 1.43 on May 8. What amount of foreign exchange gain or loss should be recognized? (round to the nearest dollar
A. $10,500 loss
B. $10,500 gain
C. $1,750 loss
D. $3,850 loss
E. No gain or loss should be recognized.

 

Use the following information for questions 2 and 3

Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows:

2. For what amount should Sales be credited on December 1? 
A. $5,500.
B. $16,949.
C. $18,182.
D. $17,241.
E. $16,667.

3. What amount of foreign exchange gain or loss should be recorded on December 31? 
A. $300 gain.
B. $300 loss.
C. $0.
D. $941 loss.
E. $941 gain.

Use the following information for questions 4-6

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco’s fiscal year-end. The pertinent exchange rates were as follows:

4. For what amount should Brisco’s Accounts Payable be credited on May 8? 
A. $2,500,000.
B. $2,440,000.
C. $1,600,000.
D. $1,639,344.
E. $1,666,667.

5. How much Foreign Exchange Gain or Loss should Brisco record on May 31? 
A. $2,520,000 gain.
B. $20,000 gain.
C. $20,000 loss.
D. $80,000 gain.
E. $80,000 loss.

6. How much US $ will it cost Brisco to finally pay the payable on June 7? 
A. $1,666,667.
B. $2,440,000.
C. $2,520,000.
D. $2,500,000.
E. $2,400,000.

Use this information for #7

Darron Co. was formed on January 1, 2011 as a wholly owned foreign subsidiary of a U.S. corporation. Darron’s functional currency was the stickle (§). The following transactions and events occurred during 2011:

7. What exchange rate should have been used in translating Darron’s revenues and expenses for 2011? 
A. $1 = §.48.
B. $1 = §.44.
C. $1 = §.46.
D. $1 = §.42.
E. $1 = §.45.

Use the following information for #8

Certain balance sheet accounts of a foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows:

 

8. If the subsidiary’s local currency is its functional currency, what total amount should be included in Tulip’s balance sheet in U.S. dollars? 
A. $609,000.
B. $658,000.
C. $602,000.
D. $630,000.
E. $616,000.

A subsidiary of Porter Inc., a U.S. company, was located in a foreign country. The functional currency of this subsidiary was the stickle (§), the local currency where the subsidiary is located. The subsidiary acquired inventory on credit on November 1, 2010, for §120,000 that was sold on January 17, 2011 for §156,000. The subsidiary paid for the inventory on January 31, 2011. Currency exchange rates between the dollar and the stickle were as follows:

9. What amount would have been reported for this inventory in Porter’s consolidated balance sheet at December 31, 2010? 
A. $24,000.
B. $26,400.
C. $22,800.
D. $27,600.
E. $28,800.

10. Under the temporal method, common stock would be remeasured at what rate? 
A. Beginning of the year rate.
B. Average rate.
C. Current rate.
D. Historical rate.
E. Composite amount.

11. Under the current rate method, common stock would be translated at what rate? 
A. Beginning of the year rate.
B. Average rate.
C. Current rate.
D. Historical rate.
E. Composite amount.

12. Which topic was not covered by FASB under the short-term convergence project? 
A. Inventory costs.
B. Asset exchanges.
C. Liability transfers.
D. Accounting changes.
E. Earnings-per-share.

13. The IASB and FASB are working on several joint projects. What is the purpose of the Financial Statement Presentation Project? 
A. to provide guidance on the application of the acquisition method.
B. to enhance the usefulness of information in assessing the financial performance of the reporting enterprise.
C. to develop a common comprehensive standard on revenue recognition.
D. to develop a common conceptual framework that both boards can use as a basis for future standard-setting.
E. to agree upon financial statement titles that will have no differentiation after translation to various languages.

14. The IASB and FASB are working on several joint projects. What is the purpose of the Revenue Recognition Project? 
A. to provide guidance on the application of the acquisition method.
B. to enhance the usefulness of information in assessing the financial performance of the reporting enterprise.
C. to develop a common comprehensive standard on revenue recognition.
D. to develop a common conceptual framework that both boards can use as a basis for future standard-setting.
E. to agree upon financial statement titles that will have no differentiation after translation to various languages.

A company incurs research and development costs of $200,000 in 2011 of which $50,000 of these costs relate to development activities because certain criteria have been met which suggest that an intangible asset has been created.

15. What amount should be recognized as research and development expense in 2011 using U.S. GAAP? 
A. $50,000.
B. $150,000.
C. $200,000.
D. $0.
E. $250,000.

16. What are free assets
A. Assets for which net realizable value is greater than historical cost.
B. Assets for which no market exists.
C. Assets for which replacement cost is greater than historical cost.
D. Assets available to be distributed for liabilities with priority and for other unsecured obligations.
E. Assets available to be distributed to stockholders.

17. On a statement of financial affairs, a specific liability may be classified as 
A. current or long-term.
B. secured or unsecured.
C. monetary or nonmonetary.
D. direct or indirect.
E. past due or not yet due.

18. How are assets and liabilities valued on a Statement of Financial Affairs?A. Entry A.
B. Entry B.
C. Entry C.
D. Entry D.
E. Entry E.

 Use the following information for questions 19 and 20

A company that was to be liquidated had the following liabilities:

19. Total assets, available to pay liabilities with priority and unsecured creditors, are calculated to be what amount? 
A. $ 75,000.
B. $270,000.
C. $275,000.
D. $295,000.
E. $370,000.

20. Total liabilities with priority are calculated to be what amount? 
A. $19,000.
B. $37,950.
C. $42,950.
D. $44,000.
E. $144,000.

Use this information for 21-24

The capital account balances for Donald & Hanes LLP on January 1, 2011, were as follows:

Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The partners agreed to admit May to the partnership with a 35% interest in partnership capital and net income. May invested $100,000 cash, and no goodwill was recognized.

21. What is the balance of May’s capital account after the new partnership is created? 
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000.

22. What is the balance of Donald’s capital account after the new partnership is created? 
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000.

23. What is the balance of Hane’s capital account after the new partnership is created? 
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000.

24. What is the new total balance of the partnership accounts? 
A. $84,000.
B. $140,000.
C. $176,000.
D. $200,000.
E. $400,000.

Use this information for 25-26

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.

25. If C is to contribute an amount equal to his book value share of the new partnership, how much should C contribute? 
A. $22,000
B. $20,000
C. $25,000
D. $18,000
E. $10,000

26. C contributes $38,000 to the partnership and the bonus method is used. What amount will be credited for C’s beginning capital balance? 
A. $20,000
B. $25,000
C. $27,600
D. $32,600
E. $38,000

27. The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
If the noncash assets were sold for $234,000, what amount of the loss would have been allocated to Bartle?
A. $43,200.
B. $46,800.
C. $40,000.
D. $42,400.
E. $43,100.

The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:

Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4.

28. What amount of cash was available for safe payments, based on the above information? 
A. $30,000.
B. $85,000.
C. $25,000.
D. $35,000.
E. $40,000.

 

Use the following information for 29 and 30

A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners capital accounts are as follows Harry $40,000, Landers $30,000 and Waters 15,000. The partners share profits and losses 4:4:2.

29. If the building is sold for $50,000, how much cash will Harry receive in the final settlement? 
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.

30. If the building is sold for $50,000, how much cash will Waters receive in the final settlement? 
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.

 


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ACCT 495 Midterm Exam Advanced Accounting

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