Question 17
. J & J exchanged an asset with a book value of $10,000 and paid $1,000 in cash for a another asset from W & W Company with a book value of $10,300. The fair value of the given asset was $9,500 and the new asset was $10,500. Calculate the gain or loss to be recognized by J & J. Assume commercial substance.
$10,500
$9,500
$11,500
None of the above
Question 18
Which of the following statements concerning exchanges of like kind assets without commercial substance is not true?
Always recognize losses
Gains are not recognized if cash is paid
Losses are recognized if cash is paid
Gains are never recognized
Question 19
J & J trades an asset that had a book value of $18,000 for another asset with a fair market value of $20,000. Assume lack of commercial substance. J & J pays $500 in cash. J & Jâs asset has a fair market value of $19,500. J & J would record the cost of the new asset at?
$21,500
$18,500
$19,500
$20,000
Question 20
A loss on the sale of an operating asset results if the proceeds from the sale
are less than the book value of the asset
exceed the book value of the asset
are less than the fair market value of the asset
exceed the fair market value of the asset
Question 21
During periods of inflation which of the following will yield the highest cost of sales
average cost
LIFO
FIFO
Gross profit method
Question 22
Which of the following is considered an advantage to using he first-in, first-out method
higher net income with inflation
lower income tax with inflation
higher cash flows from operation with inflation
a closer match between earnings and current cost income
Question 23
Which of the following will not be a result of a LIFO liquidation?
The value of ending inventory will decline
Net income will be higher
The ending inventory will exceed beginning inventory
None of the above would result from LIFO liquidation
Question 24
Which statement about dollar-value LIFO is false?
it assumes that inventory is a quantity of value rather than a quantity of physical goods
it measures increases and decreases in inventory in dollar amounts rather than in the number of objects
it helps companies avoid some of the problems associated with traditional LIFO
none of the statements are false
Question 25
J & J began using the dollar-value LIFO method in 2015 when its ending inventory was recorded at $50,000. The 2016 ending inventory at year-end prices was $54,000. Calculate the increase or decrease of inventory for 2016 in real terms assuming 106 percent is the price index
$7,240 increase
$3,773 increase
$943 increase
$1,000 increase
Question 26
Regarding debt securities, amortized cost is the
acquisition cost adjusted for the amortization of discounts or premiums
acquisition cost adjusted for the changes in fair value
fair value adjusted for the amortization of discounts or premiums
maturity value adjusted for the amortization of discounts or premiums
question 27
The journal entry to record an increase in the fair value of an available-for-sale security would include a debit to
AdjustmentâAvailable-for-Sale Securities and a credit to Unrealized Holding GainâEquity
Unrealized Holding GainâEquity and a credit to AdjustmentâAvailable-for-Sale Securities
AdjustmentâAvailable-for-Sale Securities and a credit to Unrealized Holding GainâIncome
Unrealized Holding GainâIncome and a credit to AdjustmentâAvailable-for-Sale Securities
Question 28
On May 1, 2015, J & J purchased bonds issued by W & W Company. The bonds have a face value of $100,000, pay interest annually at 6 percent on November 1 and May 1, and mature in five years from the date of purchase. J & J purchased the bonds for $106,000. J & Jâs accounting fiscal year ends on December 31. Assume the J & J uses the straight-line method of amortization andthe bonds are classified as Held to Maturity. What is the amount of interest income reported on the 2015 income statement?
$6000
$3000
$3,200
$2,400
Question 29
On May 1, 2015, J & J purchased bonds issued by W & W Company. The bonds have a face value of $100,000, pay interest annually at 6 percent on November 1 and May 1, and mature in five years from the date of purchase. J & J purchased the bonds for $106,000. J & Jâs accounting fiscal year ends on December 31. Assume the J & J uses the straight-line method of amortization andthe bonds are classified as Held to Maturity. What is the amortized cost at December 31, 2015?
$100,000
$105,200
$104,800
$106,000
Question 30
The following information is available for J & Jâs investment in equity securities for 2015:
Net income (including appropriate investment income)
$800,000
Unrealized holding gainâequity, January 1, 2015
50,000
Unrealized gain on available-for-sale securities during 2015
20,000
Reclassification adjustment for realized gain on the sale of available-for-sale securities
8,000
Unrealized holding lossâincome
10,000
What is the accumulated other comprehensive income at December 31, 2015?
$70,000
$50,000
$30,000
None of the above
Question 17
. J & J exchanged an asset with a book value of $10,000 and paid $1,000 in cash for a another asset from W & W Company with a book value of $10,300. The fair value of the given asset was $9,500 and the new asset was $10,500. Calculate the gain or loss to be recognized by J & J. Assume commercial substance.
$10,500 | ||
$9,500 | ||
$11,500 | ||
None of the above |
Question 18
Which of the following statements concerning exchanges of like kind assets without commercial substance is not true?
Always recognize losses | ||
Gains are not recognized if cash is paid | ||
Losses are recognized if cash is paid | ||
Gains are never recognized |
Question 19
J & J trades an asset that had a book value of $18,000 for another asset with a fair market value of $20,000. Assume lack of commercial substance. J & J pays $500 in cash. J & Jâs asset has a fair market value of $19,500. J & J would record the cost of the new asset at?
$21,500 | ||
$18,500 | ||
$19,500 | ||
$20,000 |
Question 20
A loss on the sale of an operating asset results if the proceeds from the sale
are less than the book value of the asset | ||
exceed the book value of the asset | ||
are less than the fair market value of the asset | ||
exceed the fair market value of the asset |
Question 21
During periods of inflation which of the following will yield the highest cost of sales
average cost | ||
LIFO | ||
FIFO | ||
Gross profit method |
Question 22
Which of the following is considered an advantage to using he first-in, first-out method
higher net income with inflation | ||
lower income tax with inflation | ||
higher cash flows from operation with inflation | ||
a closer match between earnings and current cost income |
Question 23
Which of the following will not be a result of a LIFO liquidation?
The value of ending inventory will decline | ||
Net income will be higher | ||
The ending inventory will exceed beginning inventory | ||
None of the above would result from LIFO liquidation |
Question 24
Which statement about dollar-value LIFO is false?
it assumes that inventory is a quantity of value rather than a quantity of physical goods | ||
it measures increases and decreases in inventory in dollar amounts rather than in the number of objects | ||
it helps companies avoid some of the problems associated with traditional LIFO | ||
none of the statements are false |
Question 25
J & J began using the dollar-value LIFO method in 2015 when its ending inventory was recorded at $50,000. The 2016 ending inventory at year-end prices was $54,000. Calculate the increase or decrease of inventory for 2016 in real terms assuming 106 percent is the price index
$7,240 increase | ||
$3,773 increase | ||
$943 increase | ||
$1,000 increase |
Question 26
Regarding debt securities, amortized cost is the
acquisition cost adjusted for the amortization of discounts or premiums | ||
acquisition cost adjusted for the changes in fair value | ||
fair value adjusted for the amortization of discounts or premiums | ||
maturity value adjusted for the amortization of discounts or premiums |
question 27
The journal entry to record an increase in the fair value of an available-for-sale security would include a debit to
AdjustmentâAvailable-for-Sale Securities and a credit to Unrealized Holding GainâEquity | ||||||||||||||
Unrealized Holding GainâEquity and a credit to AdjustmentâAvailable-for-Sale Securities | ||||||||||||||
AdjustmentâAvailable-for-Sale Securities and a credit to Unrealized Holding GainâIncome | ||||||||||||||
Unrealized Holding GainâIncome and a credit to AdjustmentâAvailable-for-Sale Securities Question 28 On May 1, 2015, J & J purchased bonds issued by W & W Company. The bonds have a face value of $100,000, pay interest annually at 6 percent on November 1 and May 1, and mature in five years from the date of purchase. J & J purchased the bonds for $106,000. J & Jâs accounting fiscal year ends on December 31. Assume the J & J uses the straight-line method of amortization andthe bonds are classified as Held to Maturity. What is the amount of interest income reported on the 2015 income statement?
|
Question 29
On May 1, 2015, J & J purchased bonds issued by W & W Company. The bonds have a face value of $100,000, pay interest annually at 6 percent on November 1 and May 1, and mature in five years from the date of purchase. J & J purchased the bonds for $106,000. J & Jâs accounting fiscal year ends on December 31. Assume the J & J uses the straight-line method of amortization andthe bonds are classified as Held to Maturity. What is the amortized cost at December 31, 2015?
$100,000 | ||
$105,200 | ||
$104,800 | ||
$106,000 |
Question 30
The following information is available for J & Jâs investment in equity securities for 2015:
Net income (including appropriate investment income) | $800,000 |
Unrealized holding gainâequity, January 1, 2015 | 50,000 |
Unrealized gain on available-for-sale securities during 2015 | 20,000 |
Reclassification adjustment for realized gain on the sale of available-for-sale securities | 8,000 |
Unrealized holding lossâincome | 10,000 |
What is the accumulated other comprehensive income at December 31, 2015?
$70,000 | ||
$50,000 | ||
$30,000 | ||
None of the above |