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##### A depreciable asset has an estimated 10 percent re...

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A depreciable asset has an estimated 10 percent residual value. At the end of the assets estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods? Answer Double-Declining Balance: Yes, Units-of-Production: No Double-Declining Balance: Yes, Units-of-Production: Yes Double-Declining Balance: No, Units-of-Production: Yes Double-Declining Balance: No, Units-of-Production: No Cruiser Video was involved in the following transactions during August concerning DVD players:August 1Beginning inventory10 @ \$60,August 10Purchased 5 @ \$64,August 15Sold 12 for \$80 per unit,August 28Purchased 5 @ \$66,Calculate the ending inventory of DVDs for Cruiser Video in August assuming the use of the LIFO method under a perpetual inventory system. Answer \$522 \$514 \$510 \$500 Sigma Corporation exchanged an asset with a book value of \$10,000 and paid \$1,000 in cash for a another asset from Phi Corporation with a book value of \$10,300. The fair value of the given asset was \$9,500 and the acquired asset was \$10,500. Calculate the cost to be used to record the new asset for Sigma. Answer \$11,000 \$8,500 \$9,500 \$10,500 A firm experiencing inflation and increasing inventory will have the highest net income under the Answer average cost method. first-in, first-out method. last-in, last-out method. Cannot be determined without additional information A firm experiencing deflation and increasing inventory will have the highest cost of sales under the Answer average cost method. first-in, first-out method. last-in, last-out method. Cannot be determined without additional information Assume that on January 1, 2005, Weber Company issues bonds with a face value of \$300,000 that pay 6 percent interest, semiannually (3 percent per period) and mature in 10 years. Assume that the market interest rate at the date of issuance is 10 percent (5 percent per semiannual period). What is the issue price of the bond? Answer \$300,000 \$226,265 \$225,227 \$210,111 On January 1, 2003, ABC Co. purchased a computer system with a four-year useful life and no residual value for \$200,000. The machine was depreciated by an accelerated method for book and tax purposes. The machine s carrying amount was \$80,000 on December 31, 2004. On January 1, 2005, ABC changed to the straight-line method for financial statement purposes. ABC s income tax rate is 30 percent. On its 2005 income statement, what amount should ABC report as the cumulative effect of this change? Answer \$20,000 \$14,000 \$6,000 \$0 Determine the second year depreciation for an asset purchased at the beginning of the first year for \$100,000. Assume the asset has a 5-year useful life and a residual value of \$10,000. Use the double-declining-balance method. Answer \$18,000 \$16,000 \$24,000 \$25,600 Superior Camera Shop began using the dollar-value LIFO method in 2006 when its ending inventory was costed at \$50,000. The 2007 ending inventory at year-end prices was \$54,000. Calculate Superior Camera Shop s ending inventory assuming 109 percent is an appropriate price index. Answer \$54,000 \$49,541 \$49,500 \$46,000 Assuming a company is using a periodic inventory system, when is it not an appropriate time to use the gross profit method of estimating the cost of inventory? Answer For the annual report For an interim balance sheet For a potential merger To determine a fire loss HCI, Inc. understated its ending inventory by \$6,000 in 2006. Assume HCI, Inc. has a 25 percent income tax rate. Which of the following statements about the financial reports of HCI, Inc. for 2006 is correct? Answer Ending inventory will be overstated by \$4,500. Ending inventory will be understated by \$4,500. Cost of sales will be overstated by \$1,500. Net income will be understated by \$4,500. In an exchange of assets, Junger Co. received equipment with a fair value equal to the carrying amount of the equipment given up. Junger also contributed cash equal to 10% of the fair value of the exchange. If the exchange is not considered to have commercial substance, Junger should recognize -A loss equal to the cash (boot) given up. -A loss determined by the proportion of cash paid to the total transaction value. -A gain determined by the proportion of cash paid to the total transaction value. -Neither gain nor loss

Paper#9726 | Written in 18-Jul-2015

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