Wiley CPAexcel Exam Review Study Guide Financial Accounting And Reporting 2015 14th Edition O. Ray Whittington - Solutions

Discover a comprehensive resource for mastering Financial Accounting and Reporting with the Wiley CPAexcel Exam Review Study Guide, 14th Edition by O. Ray Whittington. Access online answers key, solution manual, and solutions PDF to enhance your understanding of complex concepts. Dive into solved problems and gain insights through detailed questions and answers. Explore the extensive test bank and chapter solutions for thorough preparation. Benefit from step-by-step answers and the instructor manual tailored for this textbook. Don't miss the opportunity for free download access, ensuring you're fully equipped for success in your accounting studies.

50. A nongovernmental not-for-profit college has a portfolio of bond investments that had an original cost of $2,000,000. The college’s board of trustees voted to hold the principal of this fund intact in perpetuity and designated the earnings to reimburse faculty for travel to academic
49. A statement of financial position for a nongovernmental not-for-profit organization reports amounts for which of the following classes of net assets?a. Current.b. Long-term.c. Permanently restricted.d. Temporarily unrestricted.
48. Land and other real estate held as investments by endowments in a government’s permanent fund should be reported ata. Historical cost.b. The lower of cost and net realizable value.c. Fair value.d. Fair value less costs of disposal.
47. A city government reported a $9,000 increase in net position in the motor pool internal service fund, a $12,000 increase in net position in the water enterprise fund, and a $7,000 increase in the employee pension fund. The motor pool internal service fund provides service primarily to the
46. Which of the following is a required part of a local government’s management’s discussion and analysis (MD&A) as part of its financial statements?a. The MD&A should be presented with other required supplementary information.b. The MD&A should compare current-year results to the prior year
45. On January 1, year 1, a company capitalized $100,000 of costs for software that is to be sold. The company amortizes the software costs on a straight-line basis over five years. The carrying value of the software costs on January 1, year 3, was $60,000. As of December 31, year 3, the estimated
44. Isle Co. owned a copy machine that cost $5,000 and had accumulated depreciation of $2,000. Isle exchanged the copy machine for a computer that cost $4,000. Isle’s future cash flows are not expected to change significantly as a result of the exchange. What amount of gain or loss should Isle
43. A company leases a machine from Leasing, Inc. on January 1, year 1. The lease terms include a$100,000 annual payment beginning January 1, year 1. The machine’s fair value is $500,000 and the residual value is estimated at $20,000. The company guarantees the residual value. The useful life of
42. On June 1, year 1, ABC Co. issued a 200,000 euro purchase order for equipment to be supplied by a German company. ABC’s functional currency is the U.S. dollar. The equipment was delivered to ABC on November 1, year 1, and ABC recorded a payable due to the German company. ABC paid for the
41. Which of the following phrases best describes a Level 1 input for measuring the fair value of an asset or liability?a. Inputs for the asset or liability based on the reporting entity’s internal data.b. Quoted prices for similar assets or liabilities in active markets.c. Inputs that are
40. Based on the stock transactions below, what is the weighted average number of shares outstanding as of December 31, year 1, that should be used in the calculation of basic earnings per share in financial statements issued on March 1, year 2?Date Transactions January 1, year 1 Beginning balance
39. A company incurred the following costs to complete a business combination in the current year:Issuing debt securities $30,000 Registering debt securities 25,000 Legal fees 10,000 Due diligence costs 1,000 What amount should be reported as current-year expenses, not subject to amortization?a. $
38. A company recorded a decommissioning liability and recognized the amount recorded as part of the cost of the related property. After the property was fully depreciated, the decommissioning liability was reviewed and adjusted. How should this change in the decommissioning liability be recognized
37. At the beginning of year 1, a company amends its defined benefit pension plan for an additional$500,000 in prior service cost. The amendment covers employees with a 10-year average remaining service life. At the end of year 1, what is the net entry to accumulated other comprehensive income,
36. On day 1, Clothes Co., sells clothing to Link Corp. for $40,000. Clothes ships the clothing on day 1 and Link is obligated to pay Clothes within six months. Link is given 12 months to return any of the clothing for a refund if they experience low demand. Link is also given 18 months to exchange
35. A company issues $1,500,000 of par bonds at 98 on January 1, year 1, with a maturity date of December 31, year 30. Bond issue costs are $90,000, and the stated interest rate of the bonds is 6%. Interest is paid semiannually on January 1 and July 1. Ten years after the issue date, the entire
34. Which of the following statements is correct regarding valuation allowances in accounting for income taxes?a. The effect of a change in the opening balance of a valuation allowance that results from a change of circumstances ordinarily is included in income from operations.b. Both deferred tax
33. A note payable was issued in payment for services received. The services had a fair value less than the face amount of the note payable. The note payable has no stated interest rate. How should the note payable be presented in the statement of financial position?a. At the face amount.b. At the
32. Under IFRS, which of the following statements about intangible assets is correct?a. Internally generated goodwill cannot be recognized as an asset.b. Intangible assets within a class may be measured differently using either the cost model or the revaluation model.c. Research and development
31. Sea Manufacturing Corp. is constructing a new factory building. During the current calendar year, Sea made the following payments to the construction company:January 2 $1,000,000 December 31 1,000,000 Sea has an 8%, three-year construction loan of $3,000,000. What is the amount of interest
30. Garcel, Inc. held unfinished inventory at a cost of $85,000 with a sales value of $125,000. The inventory will cost $10,500 to complete. The normal profit margin is 30% of sales. The replacement cost of the inventory was $75,000. What amount should Garcel report as inventory on balance sheet?a.
29. Each of the following events is required to be reported to the United States Securities and Exchange Commission on Form 8-K, excepta. The creation of an obligation under an off-balance sheet arrangement of a registrant.b. The unregistered sale of equity securities.c. A change in a
28. Which of the following should be disclosed in a summary of significant accounting policies?a. Basis of consolidation.b. Concentration of credit risk of financial instruments.c. Composition of plant assets.d. Adequacy of pension plan assets in relation to vested benefits.
27. Martin Co. had net income of $70,000 during the year. Depreciation expense was $10,000. The following information is available:Accounts receivable increase $20,000 Equipment gain on sale increase 10,000 Nontrade notes payable increase 50,000 Prepaid insurance increase 40,000 Accounts payable
26. Clear Co.’s trial balance has the following selected accounts:Cash (includes $10,000 in bond-sinking fund for long-term bond payable) $50,000 Accounts receivable 20,000 Allowance for doubtful accounts 5,000 Deposits received from customers 3,000 Merchandise inventory 7,000 Unearned rent 1,000
25. A nongovernmental, not-for-profit organization provided the following data in regard to $500,000 of donations received during the year:Purchase of investments to be held in perpetuity at the donor’s request $100,000 Future repairs to the organization’s building and equipment at the
24. A donor gives $10,000 to a nongovernmental, not-for-profit organization with instructions that it must be used to fund the organization’s general operating expenses during the following fiscal year. The donation will increase the organization’sa. Unrestricted net assets.b. Temporarily
23. A storm damaged the roof of a nongovernmental, not-for-profit organization’s building. A professional roofer repaired the roof at no charge. How should the roof repairs be recognized in the statement of activities?a. As an increase in expenses and an increase in contributions from donated
22. Which of the following funds of a local government would report transfers to other funds as an other financing use?a. Enterprise.b. Internal service.c. Pension trust.d. General.
21. A city government would report each of the following categories in its government-wide statement of net position excepta. Governmental activities.b. Business-type activities.c. Fiduciary activities.d. Component units.
20. Which basis of accounting is required for a city’s government-wide financial statements?a. Cash.b. Modified cash.c. Modified accrual.d. Accrual.
19. A company began developing computer software to be sold as a separate product on January 1, year 1. During the planning, coding, and testing phases, the company incurred $1,300,000 of costs. On June 30, year 1, the product was determined to be technologically feasible. The company began
18. The following information relates to two projects performed by Miley Co. during the year for laboratory research aimed at discovering new knowledge:Project Costs Likelihood that effort will result in future benefits I. $100,000 Probable II. $ 50,000 Reasonably possible What should Miley report
17. Jensen performed legal services to assist Balm Co. in accomplishing its initial organization. Jensen accepted 1,000 shares of $5 par common stock in Balm as payment for his services. The Balm shares were not yet publicly traded, but they had a book value of $4 per share. Jensen provided 48
16. Which of the following is a criterion for classifying a lease as a capital lease by a lessee?a. The lease term is equal to 75% or more of the estimated economic life of the leased property.b. The present value of the minimum lease payments is 75% or more of the fair value of the leased
15. A foreign subsidiary of a U.S. parent company should measure its assets, liabilities and operations usinga. The subsidiary’s local currency.b. The subsidiary’s functional currency.c. The U.S. dollar.d. The best available spot rate.
14. The per-share amount must be reported on the face of a public company’s income statement for which of the following items?a. Income from continuing operations.b. Preferred stock dividend.c. U.S. Treasury stock.d. Compensation effect of fair value on stock options.
13. Which of the following examples would require restatement of prior years’ financial statements?a. A calculation change of warranty obligations based on updated claim information for the prior year.b. A change from the income tax basis of accounting to the accrual basis.c. An insurance premium
12. Which of the following circumstances would result in a deferred tax asset for the current year?a. Expenses that are recognized in financial income this year and deductible next year.b. Expenses that are deductible this year and recognized in financial income next year.c. Revenues that are
11. Harmony Co. has a single-employer defined benefit pension plan. Harmony should report a liability related to the plan equal to which of the following amounts?a. The unfunded projected benefit obligation.b. The accumulated benefit obligation.c. The projected benefit obligation.d. The unfunded
10. In February, Colt Corp. sold merchandise to Sink Co. for $10,000. Colt is using the cost recovery method to account for this sale, which had cost of goods sold of $2,500. Colt received the following payments from Sink during the year:Date Amount June $1,000 August 1,500 October 200 December
9. Aldrich Co. distributes cash dividends to its shareholders during the current year. The dividends are declared on March 9 and are payable to shareholders as of the date of record, which is April 15.The dividends are actually paid on May 19. At which of the following dates would the dividends
8. Anchor Co. is experiencing financial difficulties. Anchor negotiated a settlement of $100,000 in debt owed to Bowden, Inc. in exchange for Anchor’s gross receivables of $100,000. The receivables have an allowance for uncollectible accounts of $25,000. The impact of this transaction on
7. At the beginning of year 2, a company invested $40,000 in a marketable equity security. At that time the security was appropriately classified as an available-for-sale security. At the end of year 2, the security had a fair value of $28,500. The change in fair value is deemed temporary. How
6. Quick Co. acquired the following assets from a liquidating competitor for a $200,000 lump-sum purchase price:Competitor’s carrying amount Fair value Inventory $ 70,000 $ 50,000 Land 40,000 50,000 Building 110,000 150,000$220,000 $250,000 What amount should Quick report as the cost of the
5. A firm’s ending inventory balance was overstated by $1,000. Which of the following statements is correct according to a periodic inventory system?a. The retained earnings were overstated by $1,000.b. The cost of goods sold was overstated by $1,000.c. The cost of goods available for sale was
4. Savor Co. had $100,000 in accrual basis pretax income for the year. At year end, accounts receivable had increased by $10,000 and accounts payable had decreased by $6,000 from their prior year-end balances. Under the cash basis of accounting, what amount of pretax income should Savor report for
3. Dunbarn Co. had the following activities during the year:Purchase of inventory $120,000 Purchase of equipment 80,000 Purchase of available-for-sale securities 60,000 Purchase of treasury stock 70,000 Issuance of common stock 150,000 What amount should Dunbarn report as cash provided (used) by
2. Which of the following items should be shown as a component of comprehensive income?a. Dividend paid to a shareholder.b. Foreign-currency translation adjustment.c. Additional capital contribution.d. Deferred revenue.
1. FASB’s due process for setting accounting standards includes which of the following procedures?a. The FASB can seek information about accounting and reporting issues by holding public forums, usually based on an exposure draft.b. The FASB delegates topics to the Financial Accounting Foundation
5. During the year, Jones Foundation received the following support:A cash contribution of $875,000 to be used at the board of directors’ discretion;A promise to contribute $500,000 in the following year from a supporter who has made similar contributions in prior periods;Contributed legal
4. Governmental financial reporting should provide information to assist users in which situation(s)?I. Making social and political decisions.II. Assessing whether current-year citizens received services but shifted part of the payment burden to future-year citizens.a. I only.b. II only.c. Both I
3. A bond issued on June 1, 2011, has interest payment dates of April 1 and October 1. Bond interest expense for the year ended December 31, 2011, is for a period ofa. Three months.b. Four months.c. Six months.d. Seven months.
2. Simm Co. has determined its December 31 inventory on a FIFO basis to be $400,000. Information pertaining to that inventory follows:Estimated selling price $403,000 Estimated cost of disposal 20,000 Normal profit margin 60,000 Current replacement cost 360,000 Simm records losses that result from
1. For $50 a month, Rawl Co. visits its customers’ premises and performs insect control services. If customers experience problems between regularly scheduled visits, Rawl makes service calls at no additional charge. Instead of paying monthly, customers may pay an annual fee of $540 in advance.
30. The fiscal 2009 year-end accumulated depreciation balance, using the double-declining balance method wasa. $12,000b. $16,000c. $25,600d. $32,000
29. The 2010 depreciation expense for the vehicle using the sum-of-the-years’ digits (SYD) method wasa. $6,000b. $8,000c. $10,000d. $13,333
28. Rouge Corporation prepares consolidated financial statements in accordance with International Financial Reporting Standards. Rouge has four subsidiaries, and it is considering excluding one of the subsidiaries from consolidation. Which of the following conditions are required for Rouge to
27. According to ASC Topic 250, Accounting Changes and Error Corrections, a change in the liability for warranty costs requiresa. Presenting prior period financial statements as previously reported.b. Presenting the effect of pro forma data on income and earnings per share for all prior periods
26. Which of the following is true about accounting for leases under IFRS?a. All leases are treated as capital leases.b. All leases are treated as operating leases.c. When land and building are leased, elements of the lease are considered separately in accounting for the lease.d. Operating leases
25. On January 1, 2010, Harry Corporation sold equipment costing $2,000,000 with accumulated depreciation of $500,000 to Anna Corporation, its wholly owned subsidiary, for $1,800,000. Harry was depreciating the equipment on the straight-line method over twenty years with no salvage value, which
24. Greene Company bought a patent from White Company on January 1, 2010, for $102,000. An independent research consultant retained by Greene estimated that the remaining useful life of the patent was four years. Its remaining legal life was six years. Its unamortized cost on White’s books at
23. On January 1, 2010, Mann Company’s allowance for doubtful accounts had a credit balance of$30,000. During 2010 Mann charged $64,000 to doubtful accounts expense, wrote off $46,000 of uncollectible accounts receivable, and unexpectedly recovered $12,000 of bad debts written off in the prior
22. Greg Corp. reported revenue of $1,250,000 in its accrual-basis income statement for the year ended June 30, 2010. Additional information was as follows:Accounts receivable June 30, 2009 $400,000 Accounts receivable June 30, 2010 530,000 Uncollectible accounts written off during the fiscal year
21. Warrants exercisable at $20 each to obtain 10,000 shares of common stock were outstanding during a period when the average market price of the common stock was $25. Application of the treasury stock method for the assumed exercise of these warrants in computing diluted earnings per share will
20. The following information is available for Cooke Company for 2010:Net sales $1,800,000 Freight-in 45,000 Purchase discounts 25,000 Ending inventory 120,000 The gross margin is 40% of net sales. What is an estimate of cost of goods available for sale?a. $840,000b. $960,000c. $1,200,000d.
19. During the course of your audit of the financial statements of H Co., a new client, for the year ended December 31, 2010, you discover the following:Inventory at January 1, 2010, had been overstated by $3,000.Inventory at December 31, 2010, was understated by $5,000.An insurance policy covering
18. In January 2010 Bell Company exchanged an old machine, with a book value of $39,000 and a fair value of $35,000, and paid $10,000 cash for a similar used machine having a list price of $50,000.The transaction has commercial substance. At what amount should the machine acquired in the exchange
17. Kay Company, a lessor of office machines, purchased a new machine for $600,000 on January 1, 2010, which was leased the same day to Lee. The machine will be depreciated $55,000 per year. The lease is for a four-year period expiring January 1, 2014, and provides for annual rental payments
16. Howard Co. incurred research and development costs in 2010 as follows:Materials used in research and development projects $ 400,000 Equipment acquired that will have alternate future uses in future research and development projects 2,000,000 Depreciation for 2010 on above equipment 500,000
15. On July 1, 2010, Jasmine Corporation borrowed $30,000 from the bank on a 5-year note. On July 5, Jasmine used the money as a down payment to buy equipment costing $50,000. On the statement of cash flows for the year ending December 31, 2010, how should Jasmine disclose the July transactions?a.
14. Walker, Inc., a US corporation, ordered a machine from Nippon Corporation of Japan on July 15, 2010, for 1,000,000 yen when the spot rate for yen was 95 yen to the US dollar. Nippon shipped the machine on September 1, 2010, and billed Walker for 1,000,000 yen. The spot rate was 97 yen to the US
13. The books of Curtis Company for the year ended December 31, 2010, showed income of $360,000 before provision for income tax. In computing the taxable income for federal income tax purposes, the following differences were taken into account:Depreciation deducted for tax purposes in excess of
12. Lee Corporation’s checkbook balance on December 31, 2010, was $4,000. In addition, Lee held the following items in its safe on December 31:Check payable to Lee Corporation, dated January 2, 2011, not included in December 31 checkbook balance$1,000 Check payable to Lee Corporation, deposited
11. A gain on the sale of a marketable equity security from the available-for-sale portfolio should be presented in a statement of cash flows in which the operating section is prepared using the direct method as a(n)a. Inflow of cash under investing activities only.b. Deduction from net income
10. How is compensation expense measured by public entities for share-based payments classified as equity-based payments?a. Use the normal hourly rate of the employees.b. Measure the intrinsic value of options difference between market price and exercise price at measurement date.c. Measure the
9. In calculating the carrying amount of a loan, the lender deducts from the principal Direct loan origination costs incurred by the lender Loan origination fees charged to the borrowera. Yes Yesb. Yes Noc. No Yesd. No No
8. In accounting for a long-term construction contract using the percentage-of-completion method, the amount of income recognized in any year would be added toa. Deferred revenues.b. Progress billings on contracts.c. Construction in progress.d. Property, plant, and equipment.
7. If financial assets are exchanged for cash or other consideration, but the transfer does not meet the criteria for a sale, the transferor should account for the transaction as a Secured borrowing Pledge of collaterala. No Yesb. Yes Yesc. Yes Nod. No No
6. If inventory levels are stable or increasing, an argument that is not in favor of the LIFO method as compared to FIFO isa. Income taxes tend to be reduced in periods of rising prices.b. Cost of goods sold tends to be stated at approximately current cost in the income statement.c. Cost
5. Forkin Manor, a nongovernmental not-for-profit organization, is interested in having its financial statements reformatted using terminology that is more readily associated with for-profit entities. The director believes that the term “operating profit” and the practice of segregating
4. Nox City reported a $25,000 net increase in the fund balances for total governmental funds. Nox also reported an increase in net assets for the following funds:Motor pool internal service fund $ 9,000 Water enterprise fund 12,000 Employee pension fund 7,000 The motor pool internal service fund
3. According to GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, certain budgetary schedules are required supplementary information. What is the minimum budgetary information required to be reported in those schedules?a. A schedule
2. The statement of activities of the government-wide financial statements is designed primarily to provide information to assess which of the following?a. Operational accountability.b. Financial accountability.c. Fiscal accountability.d. Functional accountability.
1. Wildlife Fund, a private not-for-profit organization, received contributions restricted for research totaling $1,000,000 in 2009. None of the contributions were spent in 2009. In 2010, $650,000 of the contributions were used to support the research activities of the organization. The net effect
30. Milan Corporation prepares its financial statements in accordance with IFRS. Milan acquires 80% of the stock of Petri Corporation in a transaction that qualifies as a business acquisition. At what amount should Milan record the noncontrolling interest in Petri in its consolidated financial
29. Which of the following is not true about the presentation of financial statements under IFRS?a. A separate statement of comprehensive income and statement of changes in equity is required.b. The LIFO cost flow assumption is not allowed for inventories.c. Presentation of extraordinary items is
28. On December 1, Charles Company’s board of directors declared a cash dividend of $1.00 per share on the 50,000 shares of common stock outstanding. The company also has 5,000 shares of treasury stock. Shareholders of record on December 15 are eligible for the dividend, which is to be paid on
27. A change from the sum-of-the-years’ digits depreciation method to the straight-line depreciation method is accounted for as a(n)a. Accounting estimate change.b. Accounting principle change.c. Error correction.d. Prior period adjustment.
26. The impairment rules for long-lived assets apply to all of the following except:a. Buildings currently used in the business.b. Financial instruments.c. Land.d. Minicomputers used to run a production process.
25. A not-for-profit organization receives $1,000 from a donor. The donor receives two tickets to dinner with a fair market value of $150. What amount should be recorded as contribution revenue?a. $0b. $150c. $850d. $1,000
24. Cicci and Arias are partners who share profits and losses in the ratio of 7:3, respectively. On October 5, 2010, their respective capital accounts were as follows:Cicci $35,000 Arias 30,000 Total $65,000 On that date they agreed to admit Soto as a partner with a one-third interest in the
23. On December 1, 2010, Poplar, Inc. purchased for cash at $18 per share all 200,000 shares of the outstanding common stock of Spruce Co. At December 1, 2010, Spruce’s balance sheet showed a carrying amount of net assets of $3,200,000. The carrying amounts are equal to the fair values of all the
22. On January 1, 2007, Green Company purchased a machine for $800,000 and established an annual depreciation charge of $100,000 over an eight-year life. During 2010, after issuance of the 2009 financial statements, Green applied the recoverability test to the machine and concluded that: (1) the
21. At December 31, 2010, Arno Beauticians had 1,000 gift certificates outstanding that had been sold to customers during 2010 for $75 each. Arno operates on a gross margin of 60%. How much revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2010?a. $0b.
20. The balance in Ashwood Company’s accounts payable account at December 31, 2010, was $900,000 before any necessary year-end adjustment relating to the following:Goods were in transit from a vendor to Ashwood on December 31, 2010. The invoice cost was$50,000, and the goods were shipped FOB
19. West Company determined that it has an obligation relating to employees’ rights to receive compensation for future absences attributable to employees’ services already rendered. The obligation relates to rights that vest, and payment of the compensation is probable. The amounts of West’s
18. On July 1, 2010, Diamond, Inc. paid $1,000,000 for 100,000 shares (40%) of the outstanding common stock of Ashley Corporation. At that date the net assets of Ashley totaled $2,500,000 and the fair values of all of Ashley’s identifiable assets and liabilities were equal to their book
17. Included in Kerr Corporation’s liability account balances at December 31, 2010, were the following:14% note payable issued October 1, 2010, maturing September 30, 2011 $250,000 16% note payable issued April 1, 2008, payable in 6 equal annual installments of$100,000 beginning April 1, 2009
16. Tapscott, Inc., is indebted to Bush Finance Company under a $600,000, 10%, five-year note dated January 1, 2008. Interest, payable annually on December 31, was paid on the December 31, 2008 and 2009 due dates. However, during 2010 Tapscott experienced severe financial difficulties and is likely

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Wiley CPAexcel Exam Review Study Guide Financial Accounting And Reporting 2015 14th Edition O. Ray Whittington - Solutions

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