Professional Documents
Culture Documents
Heavy Company sold metal scrap to a Brazilian company for 200,000 Brazilian reals on
December 1, 20X8, with payment due on January 20, 20X9. The exchange rates were:
Based on the preceding information, which of the following is true of dollar's movement
vis--vis Brazilian real during the period?
Answer: D
What entry is required to revalue foreign currency payable to U.S. dollar equivalent
value on October 10?
5. On March 1, 20X8, Wilson Corporation sold goods for a U.S. dollar equivalent of
$31,000 to a Thai company. The transaction is denominated in Thai baht. The payment
is received on May 10. The exchange rates were:
What entry is required to revalue foreign currency payable to U.S. dollar equivalent
value on May 10?
D. Sales 93
Foreign Currency Transaction Gain 93
6. Hunt Co. purchased merchandise for 300,000 British pounds from a vendor in
London on November 30, 20X1. Payment in British pounds was due on January 30,
20X2. The exchange rates to purchase one pound were as follows:
In its December 31, Year One, income statement, what amount should Hunt report as
foreign exchange gain?
A. $9,000
B. $12,000
C. $6,000
D. $0
7. A U.S. firm has a Belgian subsidiary that uses the British pound as its functional
currency. According to GAAP, the U.S. dollar from Belgian unit's point of view will be
9. All of the following factors would be used to define a foreign entity's functional
currency, except
A. high volume of intercompany transactions.
B. expenses for foreign entity primarily driven by local factors.
C. financing for foreign entity denominated in local currency.
D. foreign entity's status as a local tax haven for transfer pricing purposes.
13. The management approach to the definition of segments for financial reporting
expects a company to:
A. I
B. II
C. Both I and II
D. Neither I nor II
14. Zeus Corporation has determined that it has 15 reportable operating segments. In
order to comply with the standard for segment disclosures, Zeus Corporation should do
which of the following?
15. Biometric Corporations revenue for the year ended December 31, 20X6, was as
follows:
16. Five of eight internally reported operating segments of Rollins Company qualify
under the standards set by ASC 280 for segment reporting. However, the five identified
segments do not meet the 75 percent revenue test. ASC 280 prescribes that
management:
B. consolidate the remaining operating segments and include them under an all other
category.
17. The following information pertains to revenue earned by Timm Co.'s industry
segments for the year ended December 31st:
Sales to
Unaffiliat
ed
Custome Intersegm Total
Segment rs ent Sales Revenue
Alo $ $ 3,000 $
5,000 8,000
Bix 4,000
8,000 12,000
Cee
4,000 4,000
Dill 16,000
43,000 59,000
Combined 23,000
60,000 83,000
Eliminatio ______ (23,000)
n (23,000)
Consolidat $ 0 $ 60,000
ed 60,000
In conformity with the revenue test, Timm's reportable segments were
A. Only Dil
B. Only Bix and Dil
C. Only Alo, Bix, and Dil
D. Alo, Bix, Cee, and Dil
21. How would a company report a change in an accounting principle made on the last day of the
third quarter?
A. Retrospective application to all pre-change interim periods reported.
B. No change is required.
C. Apply to current and prospective interim periods only.
D. Apply to prospective interim periods only.
22. On June 30, 20X8, String Corporation incurred a $220,000 net loss from disposal of a
business component. Also, on June 30, 20X8, String paid $60,000 for property taxes assessed for
the calendar year 20X8. What amount of the preceding items should be included in the
determination of String's net income or loss for the six-month interim period ended June 30,
20X8?
A. $250,000
B. $220,000
C. $140,000
D. $280,000
Bard Co., a calendar-year corporation, reported income before income tax expense of $10,000 and
income tax expense of $1,500 in its interim income statement for the first quarter of the year. Bard had
income before income tax expense of $20,000 for the second quarter and an estimated effective annual
rate of 25%. What amount should Bard report as income tax expense in its interim income statement
for the second quarter?
$3,500
$5,000
$6,000
$7,500
Due to a decline in market price in the second quarter, Petal Co. incurred an inventory loss. The market
price is expected to return to previous levels by the end of the year. At the end of the year, the decline
had not reversed. When should the loss be reported in Petal's interim income statements?
Ratably over the second, third, and fourth quarters.
Farr Corp. had the following transactions during the quarter ended March 31, 20x5:
Loss on early extinguishment of debt $ 70,000
Payment of fire insurance premium for calendar year 20x5 100,000
What amount should be included in Farr's income statement for the quarter ended March 31, 20x5?
$70,000 $100,000
$70,000 $25,000
$17,500 $25,000
$0 $100,000
corporation issues quarterly interim financial statements and uses the lower cost or net realizable
value to value its inventory in its annual financial statements. Which of the following statements is
correct regarding how the corporation should value its inventory in its interim financial statements?
For interim financial reporting, a company's income tax provision for the second quarter of 20x4 should
be determined using the:
Effective tax rate expected to be applicable for the full year of 20x4 as estimated at the end of the first
quarter of 20x4.
Effective tax rate expected to be applicable for the full year of 20x4 as estimated at the end of the second
quarter of 20x4.
Effective tax rate expected to be applicable for the second quarter of 20x4.