FARE REVIEW KQ 해답

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1 FARE REVIEW KQ 해답

2 Review 교재 (2010 V1/5) Key question 정답-Inventory D. Gross margin = Sales $150,000 - CGS 55,000 = $95,000 1 * CGS =. +Purchase - E. * Sales commission은 selling expense로 gross margin의금액엔영향이없음. 2.. 해법교재참조. C. 3.. CGS +Purchase Freight -in Ending balance - Purchase discount etc Goods available for sale은위의그림에서보듯 E.+ CGS로도구할수있음. CGS = $1,800,000 x (1-0,4) = $1,020,000 + E. = $120,000 Goods available for sale= $1,2000,000 D. a의경우 CGS가과소평가되므로 CGS만큼만 purchase할경우소모된 inventory를매입할수없게되며따라서 CGS금액보다큰 current cost에해당하는금액이 reinvest되어야한다. 4 반면 D 의경우는 FIFO 의경우 purchase 된금액이 ending inventory(/s) 항목에 남으므로 purchase 를 control 한다하더라도 income 에는영향을미칠수없다 ( 먼 저사온것부터팔린다고보므로 ). 반면 LIFO 의경우는 purchase 를조절함으로써 (purchase가먼저팔리므로 ) income을조작할여지가있다 C. $300,000* ,000*1.1 Price index = $440,000/$400, D. gross profit method. Sales x GP %=Estimated CGS Lot class # of Sales price Total sales value A 100 x $12,000 = $1,200, x 8,000 = 800,000 C 200 x 5,000 = 1,000,000 $3,000,000 Total cost Fraction allocated to Class A Allocated cost # of Cost per lot in Class A

3 $1,050,000 x ($1,200/$3,000) = $420, = $4,200 D. 시에기부할땅은어차피자기땅이라생각하지않으므로원가를배부시키지 않는다.. NRV=$7.00 NRV-Normal profit =$5.40 Replacement cost =$5.30이므로 Market은 $5.40/unt D. Completed contract method는완공된시점에서 gross profit을인식한다. 완공된시점이 2007이고 total revenue= K price $600,000이고 total cost = $480,000($225, ,000) 이므로 gross profit은 $120,000임. A. $14,000 *0.4=$5.600과 held on consignment $9,000의재고가 reduced되어야함. Inventory를 selling price로 record할수없고위탁판매관계에서보유중인물건의 Title은 consignor에게있음. 맡긴물건 (out on consignment) 은우리재고이나맡은물건 (held on consignment) 는우리재고가아님. *2003년중선적된것이므로 2003 매출에포함. * 그래서어쩌라고. Risk의부담은 buyer에게있음. 물건이망실되었다할지라도 buyer/seller의거래관계는변동하지않음. * 반품은 authorized된시점에서기록되어야함. D.$2,015,000 ($2,000,000 + $40,000 $25,000). Inventory turnover= CGS($1,200,000) Average inventory(312,000) = 3.85 일년 (300일) 에재고회전이 3.85회이므로 the number of days in inventory는 78일 ( 한번에몇일?)

4 Key-Q PPE 정답 (2010 V1) 1 2 D Land xxxx Cash 800,000 Mortgage payable 200,000 C Land: Purchase price of land + Legal fees + Demolition-Proceeds from scrap uilding : Architects fee + Construction cost 3 $252,000(240,000+12,000) 을 appraisal value비율로 allocate. 4 Renovation: capital expenditure. 나머지 2개는 revenue expenditures. 5. A. Old boiler의매각과 new boiler의매입은별개의문제임. C Avoidable interest : AAE x 15% AAE= $3,000,000($6,000,000 이년중 evenly 지출되었다하였으므로 ) Actual interest 는 $10,000,000 에대해발생하였을것이므로 avoidable interest가 capitalized interest임. A. 1월2일에차입하여전액지출하였으므로발생이자전체가 capitalize됨. 따라서 expense처리할이자는없음. C with commercial substance는일반거래와마찬가지임. 따라서취득한자산 은 fair value of asset received로최초인식한다. D. Commercial substance가없는교환에 gain situation,boot given인상황임. commercial substance 가없는경우엔 boot received 의경우에만 partial gain 을인 식하므로인식할 gain은없음. C 주식의시가가더욱정확한 fair value임 Land 21,000 CS 8,000($8 x 1,000 주 ) APIC 13,000 A. Commercial substance가있는교환에서 asset received는 fair value로기록된 다. 받은자산의 fair value 는넘긴자산의 fair value 에 boot given 금액을더한금 액이므로 $5,000+6,000=$11,000이다 년도는취득 3년차. 따라서 depreciation expense는 depreciation base의 13. 8/55 $24,000 = 8/55* Depreciation base Depreciation base=$165,000 Depreciation base= Acquisition cost- residual value 이므로 Acquisition cost =$165,000+5, A. $350,000 x 0.6 x /55 x Depreciation base(acquisition cost- salvage value) = $24,000 D. group depreciation의 book value 감소액 = cash proceeds. 이문제의경우엔 insurance recovery. Cash xxxx A/D xxxx Truck xxxx. Machine A S/L 감가상각 :$25,000 Machine S/L 감가상각 :$12,000 Machine C S/L 감가상각 :$8,000

5 Annual depreciation $45,000 Group depreciation base $720,000/ Annual depreciation $45, C Acquisition cost =3,400, ,000 Residual value =$200,000이므로 Depletion base는 $4,000,000 Depletion rate=$1/ton 19. D eventual disposal 포함임. 20. A.2007년에 impair되었고 remaining life 3년임. impair시점의 fair value가 new cost basis이므로 07년감가상각은 $40, D gain= insurance proceeds($100,000)- ook value at fire($75,000) 22. C. 회계에선 involuntary conversion이나 sale이나마찬가지임.

6 23 $204,000/50= $4,080. previous owner 의 book value 는무의미함. 답 ) 1st step of impairment test C.V of reporting unit Fair value of reporting unit Telecomm $2,500,000 $2,900,000 Networking 3,000,000 2,800, 둘다 C.V가크므로 second step 진행 F.V of reporting unit- Fair value of net asset Implied GW Telecomm $2,900,000 - $2,100,000 = $700,000 Networking 2,800,000-2,500,000 = $300,000 둘중 Telecommunications reporting unit의 implied goodwill이 carrying value of reporting unit보다크므로 impairment가일어나지않았음, 답 )C 25 답 )C Organization cost는창업과정에서발생하는 one-time activity cost 26 답 )A 창업단계에서발생하는누적적자는당연히 stockholders' equity 27 답 )

7 Current Asset 1 안팔린물건을 inventory로잡은오류. 따라서 A/R에서 -$26,000하고 inventory에 +$20,000(inventory는 selling price가아닌 cost로평가함 ) 한 C 다. 2. 매입시점에서의만기가 3 개월미만으로남아야 cash equivalent 임. C ($2,000,000 x 12%- 200,000 x 6%)/$1,800,000 $400,000중 $200,000이 compensating balance임. Dec.31. ank balance $21,720 - outstanding checks 2,500 A Correct cash balance $19,220 * per book 조정사항이없으므로 Correct cash = book balance net method를사용하므로 discount period 종료후받는금액에대해서는 2% 씩discount not taken이발생한다. 이경우 $15,0000x 25% x 2% 인 $750의 D discount not taken이발생함. A/R E. =. + Sales -collection = $0 +$392,000( CGS x 1.4 ) -200,000 * CGS =. of inventory+ purchase - E. of inventory $100, ,000-45, ,000=$75,000 Recovery 된부분은이미현금화되었을것이므로 A/R balance와는관계없 C 음에유의할것. ad debt expense는 allowance T-account에서구한다. Write-off $5,000. $6,000 ad debt expense A E. 4, /S approach를사용하며 bad debt expense를구하는문제. efore adjustment allowance balance가 $40,000이고 ending allowance balance가 $50,000($1,000,000x 5%) 인상황이므로 allowance를 $10,000 increase ( 둘다 ) Net realizable value of accounts receivable = Gross A/R - allowance E. * Allowance의 ending balance는 aging schedule의결과물인 $71,100 따라서 NRV= $800,000- $71, Write-off $19,500 Year-end adjustment ($3,500). $24,000 Accruals during the year 20,000 A E. 21,000

8 기중엔 I/S approach 를쓰다가기말에 aging of receivable(/s approach) 로전환하는경우임. Accruals bad debt expense $20,000 Allowance $20,000 Year-end adjustment Allowance $3,500 ad debt expense $3,500 ad-debt expense를물어본것이므로답은 12 $200,000-3% fee-5% hold back 41 days interest at 15% C Fair value option을 financial assets and liabilities를 measure하는데사용할 13 경우그차액은 net income에보고됨

9 KeyQ Current liability 1 $1,000,000중 collateral의가치 80% 에해당하는부분은 long-term, 나머지 A $40,000은 short-term 16% 짜리전액과 14% 짜리중첫번째 payment $50,000이 refinance되었음. 2 14% 짜리는 6회나눠서받는조건이었으므로애초에 $50,000만 current D liability였음. 3 $75,000 x 3/10 + $4,200(overtime payment는발생한 2주간이아닌다음 2주간에지불한다하였으므로 12/31현재지불된상황이아닐것이다.) $20,000+20,000 x 7% employer s share 4 *withheld 된부분은모두 gross wage에포함되므로. A * 이문제의경우급여및급여관련세금을한구좌에집어넣는경우이고 이경우그구좌에얼마를입급해야할것인지묻는문제임. Sales revenue : net $10,000+7,000+9,000= $26,000 Sales tax payable : $ = $960 Jan 5 Cash 10,600 sales 10,600 D Feb Sales 600 cash 600- sales tax가 $500을넘으므로바로송금 Cash 7,420 sales 7,420 etc 6. Minimum range로 recognize하고 range내의나머지금액은 additional disclosure 7. 화재등의재난은 contingency로보지않음 A Expenditures $45,000 Accruals $900,000 x 8% 8 E. $27,000 C Series A coupon은 6.30발행되었으므로 현재관련 liability없음 ( 유효기간경과 ) Series coupon When issued 9. Exp $200,000 x60%(redemption %) x 110%( 수수료포함 ) C Liabilities $132, Liabilities $40,500 Cash $40, $220,000(320, ,000) 0.1X = X 1.1X= 220,000 X=$20,000 D Todd는불쌍하게도휴가도쓰지않았고안쓴휴가도다날라감. 따라서 11 Ryan에대해서만부채와비용인식함.

10 12 -Refund $210,000 - Expired 20,000. $195,000 + Receipt $260,000 C E. $225,000 -Refund $550,000. $150,000 + Receipt $500, E. $100,000 위의 T account는 returnable container deposit liability(current) 이며 sublease에대한보증금은마지막기수의 rent로간주되나그시점이 1년을초과하므로 non-current임

11 Present Value 1 Annuity due concept 에부합하는경우는기초불에해당하는경우이므로 A 2. 위의경우 note와 aircraft의가치중 aircraft의가치가보다확정적이므로 (established cash sale price) 의 note의 present value를 $651,460으로보는게맞다. Note receivable $800,000 A Aircraft $651,460 Discount 148, book value =$200,000*0.75=$150, interest entry C Discount on note receivable $15,000 Interest revenue $15, beginning book value=$165,000(150, ,000 discount amortization) 2008interest revenue =$16, Franchise 33,025 Discount 6,975 Cash 15,000 N/P 25, Initial entry D Note receivable $100,000 Cash $100,000 Advance to supplier 19,000 Discount 19,000 *note의 book value는 $81,000임. 또한유효이자는 10% 이므로 6. Loan origination cost는 book value에 add. Non-refundable fee는 book value C 에서 minus. 따라서 book value of the loan= $495,000이므로 discount 발생. Discount의경우 effective interest rate가 stated interest보다높다는점유의바람. 7. $1,000,000* $8,000(interest payment) * =$877,600 D 8. Interest payment(cash) = Par x stated rate x 기간 C 12,000= $200,000 x X x 1/2( 반년임 ) 9 Discount인경우 straight line이 book value가높음. C Discount/premium을 막론하고 초기에는 straight-line의 상각액이 높고 discount amortization은 interest expense를높이므로 (credit이므로) 10. Interest expense는실발행일부터계산함. C

12 11. Cash xxxx D ond issue costs 10,000 ond payable $200,000( 액면가 ) Accrued interest 3,000( 액면발행일과실발행일차이 ) Premium 6,000(103발행이므로 ) 12. Cash xxxx ond issue costs 5,000 ond payable $100,000( 액면가 ) Accrued interest 1,500( 액면발행일과실발행일차이 ) Premium 3,000(103발행이므로 ) 13. ond issue cost를 effective interest method로상각하면 bond issue cost를 discount로처리한것과마찬가지의비용이발생된다. Discount를상각하는것이나 bond issue cost를상각하는것이나같은금액을같은방법으로상각하므로 14. ook value method는부채소멸의입장임. 주식및사채의시가의미없음. C ond payable 500,000 Premium 15,000( 미상각분의반 ) APIC 10,000 Common stock $20*20,000 APIC xxxx(plug) 15. Market value method는주식발행의입장임. 따라서주식을시가로평가하고 loss on conversion을인식함. 단 bond의시가는의미없음. C ond payable 1,000,000 Premium 200,000( 미상각분 ) Loss on conversion 50,000 Common stock $5*50,000 APIC 20*50,000 *CS+APIC = Fair value at issuance. 16. 행사가격 / 주식의시가의미없음. 이경우 bond시가가제공되지않으므로 A (incremental method) proceeds $1,020,000에서 warrants의 시가 $25,000($5*5,000) 을뺀 $995,000이답임. 17 Call했을때손익을인식함. ond book value= par +unamortized premium. C

13 18 Creditor의경우 effective interest 불변임. 따라서 02초의 new carrying amount는 * * =563,717임. 두번째기수임을생각하고 bond amortization table( 유효이자 12%, interest payment 5,600) 을만들어보면답은 8,100 C

14 Pension Key-question 정답. 1. C $100,000x4/( ) 2. C. Corridor,1500,000*10%=150,000 전년도 Unrecognized pension loss =$200,000이므로 $50,000이상각대상 loss이고이를 avg remaining service life 20년으로상각하면 3. eginning $350,000 enefit paid 85,000 Contribution 110,000 Actual return? Ending $525, D. enefit paid 15,000 eginning $72,000 Interest cost 7,200(b.b*10%) Service cost 18,000 Ending $82,200 5 D 2006 entry Pension expense $150,000 Prepaid pension cost 20,000 Cash $170, entry Pension expense $162,000(S+I-R) Prepaid pension cost 23,000(plug) Cash $185, PPC E. $20,000+$23,000 = $43, C 닥치고 Pension Asset or liability = PO와 PA의차액 7 A 1.1 PO- PA = $ PO-PA = $180,000 이므로부채 $180,000잡아야함. Pension expense 180,000 OCI 90,000(150,000 x 0.6)-plug DTA 60,000 Cash 150,000(contribution) APPC 180, C 세가지 rate 모두공시되어야함.

15 9. Post retirement benefit의 경우 postretirement benefit expense와 cash contribution의차액으로 prepaid/ accrued post-retirement cost의금액이계산된 다. Journal entry) Post-retirement benefit expense $41,000(28,000+5,000+8,000) Cash $10,000(benefit) Accrued post-retirement benefit cost 31,000 Lease key question 정답 1 D. Capital lease가아님. 2 C. Normal depreciation policy( 자기소유인것처럼 ) 1.2번조건 번이여러개입니다. 반성하도록하겠습니다. D Lease bonus journal entry - At inception Cash xxxx Unearned rent revenue xxxx - At year-end Unearned rent revenue xxxx Rent revenue xxxx 위의분개는 non-refundable deposit과거의같으나차이점은 non-refundable deposit은 lease기간에걸쳐상각하지않고 at the expiration of the lease에 unearned rent revenue account를 reverse하는데있음. 2-2 A Rent revenue $32,000 X 11= $352,000 -Depreciation expense $1,440,000/8 = $180,000 Net rental income $172,000 3 C. argain purchase option이존재함. 따라서 capital lease이고 200,000* *0.39=$1,449, D $505,000/9 years

16 4 Date Interest expense Reduction of V of Lease lease liability Liability (Current liability at year-end) (Non-current liability at yearend) ,636(9,000-1,364 75,000 1,364) 05, ,500 1,500 73, C. Profit =Cash selling price-cost =720,000 Interest income for 2003 =(3,520, ,000)*10%/2( 반년치이므로 ) 5-1 A Gross lease receivable이란용어는 gross investment와같은의미임. 따라서 present value는따지는게아니고 lessor가 lease기간중에얻을수있는전체현금 흐름의의미임 ( Gross investment = MLP + URV). 따라서답은 $10,000 X 6 = $60,000임 5-2 C Interest 계산의원칙 = 원금 (beginning balance) x 이자율 x 기간 = $115,000(135,000-first payment 20,000) x 10% x 1/2 = $5, ,000(first month s rent)+9,600/10=15, Leasehold improvement는 lease term과 economic life중짧은쪽으로상각한다. Lease term을고려할때는 extension option을고려해야하는바 2007년현재 12년 lease기간중 2년이경과하였고 option을행사하겠다하였으므로 07년 1월 1일현재 remaining lease term = 18 years. Economic life= 15 years이므로 Carrying amount at = $540,000 x 14/15 = $504, A unearned gain :$50,000 1년지나서 1/10상각되었으므로

17 Equity 1. Cash 225,000 Common stock 150,000(stated value =par) Preferred stock 30,000 A APIC 45, Preferred stock $800,000(8,000 x $100) D APIC-PS 40,000 Common stock $600,000(24,000 shares x $25 par) APIC-CS 240,000 * Conversion of preferred stock엔 fair value method없으므로시장정보무시 ,000 shares * $15 =$3,000,000 A + 00 to 03 net income = 750, to 03 dividends = 380, treasury purchase = 144,000(12,000 shares x $12) treasury sale = 64,000 Total $3,290, APIC 20,000 X $5(par와 issue price의차 ) =100,000 - APIC 감소 5,000 X $5( 손실이므로 APIC와관계무 ) =25,000 + APIC 증가 5,000X $10(par와 reissue price와의차 ) =50, Common stock $10 x 100,000 shares D APIC 3 x 100,000 shares(original issue시 par : APIC) R/E 500,000(plug) Cash $1,800, C Retained earnings $3,800,000( 년중배당선언액 ) Cash $2,700,000( 배당지불액 ) Dividend payable 1,100,000(4분기배당미지급 ) Retained earnings $300,000 Common stock $10*15,000 shares(300,000 x 5%) APIC 10*15,000( 배당당시 F/V =$20) 7. Declaration date에 gain인식함. 8. Value 측정시점은 declaration 시점. A 9. $8 X 40,000/ 2 years Exercise period 4 년, vesting period 2 년임. Compensation expense= Deferred compensation / vesting period Deferred compensation = Fair value of option x no. of option

18 10. 즉각행사가능한 option의경우이미제공된 service에대한대가이므로즉각 C 비용으로전액 (fair value of option x no.of options) 을인식한다. 11. EPS = $550,000/110,000 = $5.0 DEPS = $550,000/(110,000+4,000) A *treasury stock method: assumed issue- assumed repurchase= 4,000 + Investment 2. $70,000 dividend declared x 15% D 3 기말의시가가 $96,450이고현재까지의누적손실 (AOCI) 이 19,800(before tax D 로환원하면 ) 이므로 historical cost는 4. +2,000(W)-3,000(X)-7,000(Z)=-8,000 D *reclassify하더라도당기 (transfer 직전까지 ) 에발생한 income effect는 net income에반영됨. 5. Transfer value는 reclassification의종류에상관없이무조건 fair value임. 6. Marketable equity securities이면서 long-term이므로 AFS로분류된상황임. A 하지만 의경우 market decline이 other than temporary이므로 impair된상황이므로 market decline이 AOCI에반영되지않고 net income에반영됨. 7. Dividend revenue라는 account는지분법에없음. Preferred stock은지분법이 C 없음. 8. Cost of investment $800,000(20%) D.V of shares 600,000이고 book value와 cost의차이는 intangible의시 가와장부가액차이라하였으므로 Investment 800,000 Cash 800,000( 지분취득 ) Investment 36,000 Investment income 36,000(180,000*0.2) Cash 8,000 Investment 8,000 Investment income 20,000 Investment 20,000($200,000/useful life: 지분율은이미고려된이후임 ) 9. Fair value election으로인해 trading에서 held to maturity로 class가변경되더라도 1년간의 fair value의변동은모두 net income으로보고됨. 10. Premium=Expense +CSV 00: CSV 없음. 01: : : 900

19 2010 v 1 FARE review Key question- Deferred tax/ Cash flow statement Deferred tax 1. C. Income tax accounting의목적은 asset과 liabilities를인식하는것임. 2 Royalty income $40,000 -$20,000 $20,000 Depreciation (100,000) -25,000 (125,000) Penalty (15,000) +15,000 0 ook income $400,000-30,000 Taxable income $370,000 3 Current income tax expense= TI x tax rate(40%)=$148,000 eginning balance (600, ,000) *0.3 =60,000 Deferred tax expense $90,000 Ending balance($500,000) *0.3 =150, A 50,000*0.3+75,000* ,000*0.25 = $62, Current은 Current끼리 non current은 non current끼리 netting 6. Investee s (net income dividend ) X 지분율 (0.5) X 0.2 X tax rate(0.3) = $12, D Percentage depletion은 permanent difference임. 따라서 no deferred tax consequence Cash flow statement 1. Cash 70,000(plug) Revenues 75,000 A/R 5, Insurance expense 20,000 Cash Prepaid insurance 25,000 * income statement account는작년정보가필요없다. 3 Depreciation expense 28,000 A/D 28,000( 작년보다 +18,000) D Cash 26,000 Machine 40,000 A/D 10,000 Loss on sale 4,000 Machine 110,000 Cash 110,000 ( 작년보다 +70,000) 4. R/E(dividend declared) 85,000 Cash C D/P 35,000 NI 200,000 R/E 200,000 * R/E이 $115,000 증가하였고 NI은 $200,000이므로 dividend declared $85, Debit은 Deduction. Premium amortization은 Premium의감소이므로 debit D

20 6. Depreciation expense 28,000 A/D 28,000( 작년보다 +18,000) Cash 26,000 Machine 40,000 A/D 10,000 Loss on sale 4,000 Machine 110,000 Cash 110,000 ( 작년보다 +70,000) 7. Non cash revenue는 deduction. Investment income over dividend received은 non cash revenue임. Investment 15,000 Investment income 15,000 C D +15,000-15, ook income operating cash flow 8. Cash Net income 75,000 D A/R 3,000( 증가 ) Allowance 100 Prepaid rent 2,100 A/P 1, Significant non cash activity는 disclosure사항임. A

21 asic Concepts Key question 1. -Income determination Under what condition is it proper to recognize revenues prior to the sale of the merchandise? A: When the ultimate sale of the goods is at an assured sales price. : When the revenue is to be reported as an installment sale. C: When the concept of internal consistency (of amounts of revenue) must be complied with. D: When management has a long-established policy to do so. 답 )A Key question 2. -Accrual of royalty income Seldin Co. owns a royalty interest in an oil well. The contract stipulates that Seldin will receive royalty payments semiannually on January 31 and July 31. The January 31 payment will be for 20% of the oil sold to jobbers between the previous June 1 and November 30, and the July 31 payment will be for oil sold between the previous December 1 and May 31. Royalty receipts for 2006 amounted to $80,000 and $100,000 on January 31 and July 31, respectively. On December 31, 2005, accrued royalty revenue receivable amounted to $15,000. Production reports show the following oil sales: June 1, November 30, 2005 $400,000 December 1, May 31, ,000 June 1, November 30, ,000 December 1, December 31, ,000 What amount should Seldin report as royalty revenue for 2006? A: $179,000 : $180,000 C: $184,000 D: $194,000 Earned 12/1/05 to 5/31/06 (20% x $500,000) $100,000 Less amt. earned 12/1/05 to 12/31/05 15,000 Earned 1/1/6 to 5/31/06 85,000 Earned 6/1/06 to 11/30/06 (20% x $425,000) 85,000 Earned 12/1/06 to 12/31/06 (20% x $70,000) 14,000 Amount earned in 2006 $184,000 source의정답에서제시한답은위와같으나답이없는것으로보임. 의도대로라면 의 accrued royalty revenue 가 $95,000 이어야함. 12 월 31 일현재 accrued royalty receivable 은 06 년 6 월 1 일부터 12 월 31 일까지의 amount earned 임. Key question 3. -Accrual Which of the following is an accrued liability? A: Cash dividends payable. : Wages payable. C: Rent revenue collected 1 month in advance. D: Portion of long-term debt payable in current year. 답 )

22 Key question 4. -Deferral Wright Company sells for cash major household appliance service contracts agreeing to service customers appliances for a 1-year, 2-year, or 3-year period. Cash receipts from contracts are credited to unearned service contract revenues and this account had a balance of $1,440,000 at December 31, 2006, before year-end adjustment. Service contract costs are charged to service contract expense as incurred and this account had a balance of $360,000 at December 31, Outstanding service contracts at December31, 2006, expire as follows: During 2007 $300,000 During ,000 During ,000 What amount should Wright report as unearned service contract revenues at December 31, 2006? A: $ 490,000 : $ 712,500 C: $ 950,000 D: $1,080,000 unexpired portion of contract의합이 $950,000이므로답 ) C Key question 5. -Cash to accrual Weaver Company sells magazine subscriptions for a 1-year, 2-year, or 3-year period. Cash receipts from subscribers are credited to magazine subscriptions collected in advance, and this account had a balance of $1,700,000 at December 31,2005. Information for the year ended December 31, 2006, is as follows: Cash receipts from subscribers $2,100,000 Magazine subscriptions revenue (credited at 12/31/06) 1,500,000 In its December 31, 2006 balance sheet, what amount should Weaver report as the balance for magazine subscriptions collected in advance? A: $1,400,000 : $1,900,000 C: $2,100,000 D: $2,300,000 Cash $2,100,000 Subscription revenue $1,500,000 magazine subscriptions collected in advance 600,000 eginning balance가 $1,700,000이었으므로답 ) D Key question 6. -Cash to accrual Under Gerber Company s accounting system, all insurance premiums paid are debited to prepaid insurance. For interim financial statements, Gerber makes monthly estimated charges to insurance expense with an offset to prepaid insurance. Additional information for the year ended December 31, 2006, is as follows: Prepaid insurance at December 31, 2005 $150,000 Charges to insurance expense during 2006 (including a year-end adjustment of $25,000) 625,000 Unexpired insurance premiums at December 31, ,000 What was the total amount of insurance premiums paid by Gerber during 2006? A: $475,000 : $600,000 C: $625,000 D: $650,000 Insurance expense 625,000 Prepaid insurance 25,000 Cash 650,000 답 ) D.

23 Key question 7. -Cash to accrual The following information is available for art Company for 2006: Disbursements for purchases $580,000 Increase in trade accounts payable 50,000 Decrease in merchandise inventory 20,000 Cost of goods sold for 2006 was A: $650,000 : $610,000 C: $550,000 D: $510,000 CGS (Plug-650,000) Cash 580,000 A/P 50,000 Inventory 20,000 답 ) A Key question 8. -Cash to accrual On January 2, 2006, Smith purchased the net assets of Jones Cleaning, a sole proprietorship, for $350,000, and commenced operations of Spiffy Cleaning, a sole proprietorship. The assets had a carrying amount of $375,000 and a market value of $360,000. In Spiffy s cash-basis financial statements for the year ended December 31, 2006, Spiffy reported revenues in excess of expenses of $60,000. Smith s drawings during 2006 were $20,000. In Spiffy s financial statements, what amount should be reported as Capital-Smith? A: $390,000 : $400,000 C: $410,000 D: $415,000 $350,000+60,000-20,000 답 ) A Key question 9. -Installment method Taft Corp., which began business on January 1, 2005, appropriately uses the installment sales method of accounting. The following data are available for December 31, 2005 and alance of deferred gross profit on sales account $300,000 $120, ,000 Gross profit on sales 30% 40% The installment accounts receivable balance at December 31, 2006, is A: $1,000,000 : $1,100,000 C: $1,400,000 D: $1,500,000 Accounts receivable x GP% =DGP DGP/GP%=A/R $120,000/0.3=$400, ,000/0.4=1,100,000 답 ) D Key question 10. -Cost recovery method On October 1, 2005, Price Corp., a real estate developer, sold land to Greene Co. for $5,000,000. Greene paid $600,000 cash and signed a 10-year $4,400,000 note bearing interest at 12%. The carrying amount of the land was $4,000,000 on date of sale. The note was payable in forty quarterly principal installments of $110,000beginning January 2, Price appropriately accounts for the sale under the cost recovery method. On January 2, 2006, Greene paid the first principal installment of $110,000 and interest of $132,000. For the year ended December 31, 2005, what total amount of income should Price recognize from the land sale and financing? A: $0 : $120,000 C: $132,000 D: $252,000 답 ) A

24 Key question 11. -Franchise agreement On December 31, 2006, Reed, Inc. authorized Foy to operate as a franchisee for an initial franchise fee of $75,000. Of this amount, $30,000 was received upon signing the agreement and the balance, represented by a note, is due in three annual payments of $15,000 each beginning December 31, The present value on December 31, 2006, of the three annual payments appropriately discounted is $36,000. According to the agreement, the nonrefundable down payment represents a fair measure of the services already performed by Reed; however, substantial future services are required of Reed. Collectibility of the note is reasonably certain. On December 31, 2006, Reed should record unearned franchise fees in respect of the Foy franchise of A: $0 : $36,000 C: $45,000 D: $75,000 Substantial performance가일어나지않은부분인 $36,000이 unearned franchise fee가됨. 답 Supplemental questions- Error correction 1.During 2007, Olsen Company discovered that the ending inventories reported on its financial statements were understated as follows: Year Understatement 2004 $50, $60, $0 Olsen ascertains year-end quantities on a periodic inventory system. These quantities are converted to dollar amounts using the FIFO cost flow method. Assuming no other accounting errors, Olsen s retained earnings at December 31, 2006, will be A: Correct. : $ 60,000 understated. C: $ 60,000 overstated. D: $110,000 understated. 답 ) A balance sheet account 는 error 발생다음연도에모두 correct. 2.While preparing its 2006 financial statements, Dek Corp. discovered computational errors in its 2005 and 2004 depreciation expense. These errors resulted in overstatement of each year s income by $25,000, net of income taxes. The following amounts were reported in the previously issued financial statements: Retained earnings, 1/1 $700,000 $500,000 Net income 150, ,000 Retained earnings, 12/31 $850,000 $700,000 Dek s 2006 income is correctly reported at $180,000. Which of the following amounts should be adjusted to retained earnings and presented for net income in Dek s 2006 and 2005 comparative financial statements? Retained Year earnings Net income A $150, ($50,000) 180, ($50,000) $150, ,000 C ($50,000) $125, ,000 D $125, ,000 답 ) C.

25 Retained earnings 2006 년 1 월 1 일 balance 는 2005 년 12 월 31 일 balance 임. 따라서 2005 년 Retained earnings 를 50,000 낮춤 년 net income 은원래보고된수치인 $150,000 에서 $25,000 을낮춤 년은고친수치로보고하면 되므로 retained earnings(e,) 와 net income 을수정할필요가없음. Supplemental questions- accounting principle change 1.On January 1, 2005, Miller Company purchased for $275,000 a machine with an estimated useful life of 10 years and no salvage value. The machine was depreciated using the sum-of-the-years digits method. On January 1, 2006, Miller changed to the straight-line method of depreciation. The estimated useful life has not changed. Miller can justify the change. What should be the depreciation expense on this machine for the year ended December 31, 2006? A: $18,000 : $22,500 C: $25,000 D: $27,500 ook value at $275,000 x 45/55=$225,000 $225,000/9 years 답 ) C 2.On December31, 2006, Foster, Inc. appropriately changed to the FIFO cost method from the weighted-average cost method for financial statement and income tax purposes. The change will result in a $150,000 increase in the beginning inventory at January 1, Assuming a 30% income tax rate, the period-specific effect of this accounting change for the year ended December 31, 2005, is A: $0 : $ 45,000 C: $105,000 D: $150,000 답 ) C $150,000 x The effect of a change in accounting principle which is inseparable from the effect of a change in accounting estimate should be reported A: In the period of change and future periods if the change affects both. : y restating the financial statements of all prior periods presented. C: y showing the pro forma effects of retroactive application. D: As a correction of an error. 답 )

26 Key question- Financial statements 정답. Key question 1. -Administrative expense The following expenses were among those incurred by Sayre Company during Accounting and legal fees $160,000 Interest 60,000 Loss on sale of office equipment 25,000 Rent for office space 200,000 One-quarter of the rented premises is occupied by the sales department. How much of the expenses listed above should be included in Sayre s general and administrative expenses for 2006? A: $310,000 : $335,000 C: $360,000 D: $370,000 interest와 Loss는 other revenue항목이며 Rent중 1/4는 selling expense임. 답 ) A Key question 2. -Income statement items Coffey Corp. s trial balance of income statement accounts for the year ended December 31, 2006, was as follows: Debit Credit Net sales $1,600,000 Cost of goods sold $960,000 Selling expenses 235,000 Administrative expenses 150,000 Interest expense 25,000 Adjustment due to accounting change in depreciation method 40,000 Extraordinary loss 10,000 $1,420,000 $1,600,000 Coffey s income tax rate is 30%. Coffey prepares a multiple-step income statement for Income from operations before income tax is A: $190,000 : $200,000 C: $230,000 D: $240,000 Sales - CGS - Selling expense - Administrative expense -interest expense-adjustment due to depreciation =$190,000. 과거한때 depreciation method의변경을 Accounting principle change로보아비경상항목의 Cumulative effect로보고한적있었으나지금은회계추정의변경으로 income from continuing operation의요소임. 답 )A

27 Key question 3. -Income statement items Coffey Corp. s trial balance of income statement accounts for the year ended December 31, 2006, was as follows: Debit Credit Net sales $1,600,000 Cost of goods sold $960,000 Selling expenses 235,000 Administrative expenses 150,000 Interest expense 25,000 Adjustment due to accounting change in depreciation method 40,000 Extraordinary gain $1,410,000 $1,610,000 Coffey s income tax rate is 30%. income tax is Coffey prepares a multiple-step income statement for Income from operations after A: $140,000 : $161,000 C: $168,000 D: $200,000 Debit 에서 adjustment due to --- 를제외하면 debit total $1,370,000 Credit 에서 Extraordinary gain $10,000 을제거하면 credit total $1,600,000 Income from operation before tax = $230,000 이므로 Income from operation after tax 는 $230,000 x (1-0.3) 답 ) Key question 4. -Irregular items Thorpe Co. s income statement for the year ended December 31, 2006, reported net income of $74,100. The auditor raised questions about the following amounts that had been included in net income: Unrealized loss on decline in market value of available-for-sale marketable equity securities $(5,400) Gain on early retirement of bonds payable 33,000 Adjustment to profits of prior years for errors in depreciation (net of $3,750 tax effect) (7,500) Loss from fire (net of $7,000 tax effect) (14,000) The loss from the fire was an infrequent but not unusual occurrence in Thorpe s line of business. Thorpe s December 31, 2006 income statement should report net income of A: $65,000 : $66,100 C: $81,600 D: $87,000 $74,100+5,400+7,500 답 ) D

28 Key question 5. -Exit activities Which of the following is not normally an example of an exit activity? A: Sale or termination of a line of business. : Changes in management structure. C: Relocation of busines activities from one location to another. D: Outsourcing a customer service. 답 )D Key question 7. -Discontinued operation The following condensed statement of income of Helen Corporation, a diversified company, is presented for the two years ended December 31, 2006 and 2005: Net sales $10,000,000 $9,600,000 Cost of sales 6,200,000 6,000,000 Gross profit 3,800,000 3,600,000 Operating expenses 2,200,000 2,400,000 Operating income 1,600,000 1,200,000 Gain on sale of division 900,000 2,500,000 1,200,000 Provision for income taxes 1,000, ,000 Net income $ 1,500,000 $ 720,000 On January 1, 2006, Helen entered into an agreement to sell for $3,200,000 the assets and product line of one of its separate operating divisions. The sale was consummated on December 31, 2006, and resulted in a gain on disposition of $900,000. This division s contribution to Helen s reported income before income taxes for each year was as follows: 2006 $(640,000) loss 2005 $(500,000) loss Assume an income tax rate of 40%. In the preparation of a revised comparative statement of income, Helen should report income from continuing operations after income taxes for 2006 and 2005, respectively, amounting to A: $1,344,000 and $ 720,000 : $1,344,000 and $1,020,000 C: $1,500,000 and $ 720,000 D: $1,500,000 and $1,020, 년 income from continuing operation before tax에서 06년영업손실을제외시키면 $2,240,000. 여기에 x (1-0.4) 를하면 $1,344,000 마찬가지로 05년도 income from continuing operations after income tax는 $1,700,000*0.6=$1,020,000 답 )

29 Key question 6. -Discontinued operation On January 1, 2006, Dart, Inc. entered into an agreement to sell the assets and product line of its Jay Division, considered a segment of the business. The sale was consummated on December 31, 2006, and resulted in a gain on disposition of $400,000. The division s operations resulted in losses before income tax of $225,000 in 2006 and $125,000 in Dart s income tax rate is 30% for both years. In a comparative statement of income for 2006 and 2005, Dart should report a gain (loss) from discontinued operations for the years 2006 and 2005 of A. $ 122,500 $ 0. $ 122,500 $(87,500) C. $(157,500) $(87,500) D. $(157,500) $ 0 사업중단에따른손익은 retrospective basis, net of tax 로 reporting 하고영업손익과처분손익을 net 으로보고함. 답 ) Key question 8. -Extraordinary items On July 1, 2006, an erupting volcano destroyed Coastal Corporation s operating plant, resulting in a loss of $1,500,000, of which only $500,000 was covered by insurance. Coastal s income tax rate is 30%. How should this event be shown in Coastal s income statement for the year ended December 31, 2006? A: As an operating loss of $700,000, net of $300,000 income tax. : As an extraordinary loss of $700,000, net of $300,000 income tax. C: As an operating loss of $1,000,000. D: As an extraordinary loss of $1,000,000. 답 ) Key question 9. -Comprehensive income What is the purpose of reporting comprehensive income? A: To report changes in equity due to transactions with owners. : To report a measure of overall enterprise performance. C: To replace net income with a better measure. D: To combine income from continuing operations with income from discontinued operations and extraordinary items. 답 ) Key question 10. -Comprehensive income SFAS 130, Reporting for Comprehensive Income, applies to which of the following entities? I. II. Enterprises that develop a full set of financial statements which report cash flows, results of operations, and financial position. All enterprises even if no items classified as other comprehensive income exist for the periods presented. Not-for-profit organizations that follow the reporting requirements of SFAS 117, Financial Statements of III. Not-for-Profit Organizations. A: I : I and II. C: I and III. D: I, II and III comprehensive income 은비영리단체를제외한누구나보고해야한다. 단 OCI 항목이없으면 net income 과 comprehensive income 의차이가없으므로보고하지않는다. 답 )A

30 Key question 11. -Comprehensive income Comprehensive income is defined as A: Changes in equity for a period resulting from all sources. : Changes in retained earnings for a period resulting from owner sources. C: Changes in equity for a period from all sources except those by nonowner sources. D: Net income plus other comprehensive income 답 ) D Key question 12. -Reclassification adjustments Harris Inc. received $50,000 from the sale of available-for-sale securities in The securities were acquired in 2005 at a cost of $62,000, and had a market value of $55,000 at December 31, Ignoring income taxes, how would this information affect other comprehensive income (loss) for 2005 and 2006? A. $(7,000) $ (5,000). $(7,000) $ 7,000 C. $0 $(12,000) D. $(7,000) $ 12,000 05년도는 $(7,000) 이 OCI에, 06년도 $12,000( 처분시이익으므로 OCI엔그반대의효과 ) 답 ) -$5,000 $7,000 06년도 journal entry OCI 5,000 AFS 5,000 Cash 50,000 Loss 12,000 AFS 50,000 OCI 12,000(Reclassification adjustment)

31 Key question 13. -Comprehensive income The comparative balance sheets for Wellington Inc. reported the following information at December 31, 2005 and 2006: December Retained earnings $210,000 $140,000 Accumulated other comprehensive income 30,000 35,000 Wellington declared cash dividends of $20,000 in The decrease in accumulated other comprehensive income for 2006 was due to unrealized losses on available-for-sale securities. For the year ended December 31, 2006, what was Wellington s comprehensive income? A: $65,000 : $95,000 C: $90,000 D: $85,000 Comprehensive income = net income(r/e의증가 $70,000+dividend declared $20,000) $90,000 +other comprehensive income (5,000) $85,000 답 ) D * 문제의 $20,000 in 2005를 $20,000 in 2006으로바꿔야답이나옴. 오타임. Key question 14. -alance sheet Mirr, Inc. was incorporated on January 1, 2006, with proceeds from the issuance of $750,000 in stock and borrowed funds of $110,000. During the first year of operations, revenues from sales and consulting amounted to $82,000, and operating costs and expenses totaled $64,000. On December 15, Mirr declared a $3,000 cash dividend, payable to stockholders on January 15, No additional activities affected owners equity in Mirr s liabilities increased to $120,000 by December 31, On Mirr s December 31, 2006 balance sheet, total assets should be reported at A: $885,000 : $882,000 C: $878,000 D: $875,000 Total assets at 1.1 $750, ,000=$860,000 Liabilities increase 10,000 Net income 18,000 Dividend declared (3,000) Total assets at $885,000 답 ) A Key question 15. -disclosures Which of the following should be disclosed in the summary of significant accounting policies? A: Composition of plant assets. : Pro forma effect of retroactive application of an accounting change. C: asis of consolidation. D: Maturity dates of long-term debt 답 ) C