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ACCT 557 Final Exam

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(TCO A) Benny Building, Inc. won a bid for a new warehouse building contract. Below is information from the project accountant.;TCO B) At the beginning of 2012, Barbara, Inc. has a deferred tax asset of $8,000 and deferred tax liability of $6,500. In 2012, pretax financial income was $600,000 and the tax rate was 35%.;(TCO C) Presented below is pension information related to Baked Goods, Inc. for the year 2013;(TCO C) Bunny Hopping, Inc. sponsors a defined-benefit pension plan. The following data relate to the operation of the plan for the year 2013;(TCO D) Bucky, Inc. leased equipment from Green Enterprises under a 4-year lease requiring equal annual payments of $65,000, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Bucky, Inc.?s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the amount of interest expense recorded by Bucky, Inc. in the first year of the asset?s life?;(TCO E) On December 31, 2013, Antique Salvage, 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 $1,000,000 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;(TCO E) Which of the following is not a change in accounting estimate;(TCO F) Balancing Act, Inc recognized net income of $489,000 including $7,500 in depreciation expense;(TCO G) The disclosure of accounting policies is important to the financial statements when determining;(TCO G) Adventure, Inc is a company that operates in four different divisions. The following information relating to each segment is available for 2013;(TCO A) Bentley Corporation has several divisions. All operations keep their own accounting books and have chosen the appropriate method of revenue recognition;(TCO B) Buffy, Inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an installment basis. The total gain of $750,000 was reported for financial reporting purposes in the period of sale. The installment period is 3 years, one third of the sale price is collected in 2012 and the rest in 2013. The tax rate was 40% in 2012, 35% in 2013, and 35% in 2014. The accounting and tax data is shown below;(TCO D) Bing Leasing, Inc. agrees to lease equipment to Boyd, Inc. on January 1, 2012. They agree on the following terms;(TCO F) Financial data of Beautiful Beadwork Company for 2013 and 2012 are presented below;(TCO G) Selected financial ratios.;The following information pertains to Allbright, Inc;(TCO E) Changes in accounting principle include direct and indirect effects. Please discuss how the indirect effects of a change in accounting principle should be treated and disclosed

 

Paper#73914 | Written in 18-Jul-2015

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