1. On January 1, 2013, Frank Company purchased equipment for $200,000. The equipment has an eight-year expected...

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1. On January 1, 2013, Frank Company purchased equipment for $200,000. The equipment has an eight-year expected useful life and a $10,000 expected residual value. Initially, Frank Company used double-declining-balance depreciation. On January 1, 2015, Frank Company changed to straight-line depreciation. The expected useful life and residual value are unchanged. Compute depreciation expense for 2015.

(a) $28,125

(b) $17,083

(c) $12,813

(d) $23,750

2. Jean Company decided to change from LIFO to FIFO as of January 1, 2015. The change is being made for both book and tax purposes. LIFO and FIFO data for 2015 and preceding years are given below.

1. On January 1, 2013, Frank Company purchased equipment for

Using the provisions of FASB ASC Topic 250, compute Jean Company's net income for 2015. Remember that Jean Company switched to FIFO on January 1, 2015.
(a) $84,750
(b) $100,500
(c) $85,500
(d) $93,750
3. Goods sold FOB destination were shipped by Brook Company (the seller) on December 31, 2015. The sale was recorded in 2015, and the goods were not included in 2015 ending inventory. The shipment arrived on January 4, 2016. The goods cost $3,000, and the sales price was $4,400. As a result of this transaction, was net income overstated or understated, and by how much? Ignore income taxes.
(a) Reported net income was correct.
(b) Net income in 2015 was overstated by $4,400.
(c) Net income in 2015 was understated by $3,000.
(d) Net income in 2015 was overstated by $1,400.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-1133957911

19th edition

Authors: Earl K. Stice, James D. Stice

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