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TRUE OR FALSE

Item Ans. Item Ans. Item Ans. Item Ans.


1. T 6. F 11. F 16. F
2. F 7. T 12. F 17. T
3. F 8. F 13. T 18. F
4. T 9. F 14. F 19. T
5. F 10. T 15. T 20. T

MULTIPLE CHOICEConceptual
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
21. d 26. b 31. d 36. a 41. a 46. d *51. d
22. d 27. b 32. c 37. d 42. c 47. c
23. b 28. a 33. a 38. a 43. c 48. c
24. c 29. c 34. b 39. c 44. b *49. d
25. a 30. d 35. a 40. d 45. c *50. b

Multiple Choice AnswersComputational


Item Ans Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
52. b. 59. d 66. c 73. c 80. d 87. c 94. c
53. c 60. c 67. d 74. a 81. a 88. c 95. b
54. c 61. c 68. a 75. b 82. d 89. c 96. d
55. d 62. a 69. c 76. b 83. a 90. c 97. d
56. c 63. b 70. d 77. c 84. d 91. a *98. b
57. a 64. d 71. c 78. a 85. b 92. b *99. b
58. c 65. c 72. b 79. c 86. b 93. c

Multiple Choice AnswersCPA Adapted


Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
100. c 102. d 104. d 106. c *108 d
101. a 103. a 105. d 107. a *109. d

DERIVATIONS Computational

$495, 000 1 59. d 8/10 = .8 > 75% of economic life.


52.b $90,000 + = $94,125.
10 12
60. c ($102,000 - $15,000) 4.99271 =
$434,366.
53. c $671,008 .08 = $53,681,
$671,008 15 = $44,734. 61. c $1,173,685 $200,000 =
$973,685 .10 = $97,369
54. c $3,000,000 6.14457 = $488,236 $973,685 ($200,000 $97,369)
(PV of Ordinary Annuity Table). = $871,054.
55. d $488,236 + $10,000 = $498,237. 62. a ($208,493 $50,000) .10 =
$15,849.
56. c Conceptual.
63. b [$158,493 ($50,000 - $15,849)]
57. a Conceptual, FV exceeds cost. .10 = $12,434.
58. c $3,000,000 10 = $300,000. 64. d $880,264 $150,000 = $730,264.
65. c $227,448 .10 = $22,745; ($227,448 0) 7 = $32,493.

66. c [$227,448 ($60,000 $22,745)] .10 = $19,019.

67. d ($450,000 $50,000) 8 = $50,000.

68 a $86,038 3.57710 = $307,767.

69. c $86,038 3.57710 = $307,767


($307,767 $86,038) .08 = $17,738.

70. d $86,038 3.57710 = $307,767


$86,038 [($307,767 $86,038) .08] = $68,300.

71. c $86,038 3.57710 = $307,767


($307,767 0) 4 = $76,942.

72. b ($325,000 .90) 3.99271 = $73,259


$73,259 3.99271 = $292,502
$292,502 .08 = $23,400.

73. c $325,000 (325,000 .40) = $195,000


$73,259 3.99271 = $292,502
$292,502 [$73,259 ($292,502 .08)] = $242,643.

74. a ($325,000 .90) 3.99271 = $73,259.

75. b $155,213 2.48685 = $385,991;

$385,991
= 96% > 90%.
$400,000

76. b Conceptual.

77. c $400,000 [$155,213 ($400,000 .1)] = $284,787.


$155,213 ($284,787 .1) = $126,734.

78. a Fails to meet Group II requirements.

79. c Fair value = $400,000.

80. d Conceptual.

81. a Hook: ($60,000 6) + ($75,000 6) (4,800,000 8) = $210,000


Emley: ($60,000) 6 = $(360,000)
Terry: ($75,000) 6 = $(450,000).

82. d $720,000.

83. a $720,000 $64,000 $360,000 = $296,000.

84. d ($40,000 3.99271) + ($25,000 .68508) = $176,835.


85. b [$400,000 ($40,000 .50663)] 4.60478 = $82,465.

86. b ($40,000 3.99271) + ($25,000 .68508) = $176,835.


$40,000 ($176,835 .08) = $25,853.

87. c ($40,000 3.99271) + ($25,000 .68508) = $176,835


$40,000 ($176,835 .08) = $25,853
($176,835 $25,853) .08 = $12,079 Interest exp.

88. c $8,800 $16,000 = ($7,200).

89. c ($525,000 $75,000) .09 6/12 = $20,250.

90. c $560,000 $496,000 = $64,000; ($560,000 $80,000) .09 6/12 = $21,600.


$4, 500, 000 1
91. a = $225,000.
10 2
($4,500,000 $621,000) .04 = $155,160.

92. b $4,500,000 $3,900,000 = $600,000.


($4,500,000 $621,000) .04 = $155,160.

93. c $1,861,875 $1,650,000 = $211,875.


($1,861,875 $300,000) .04 = $62,475.

94. c Conceptual.

95. b $40,000 $400,000


= 10% or = 6.1446*
$400,000 $65,098.13
*6.1446 = PV factor of ordinary annuity of $1 for 10 years at 10%.

96. d [($400,000 $40,000) 15] + $37,490 = $61,490.

97. d $316,925 (See amortization table.)

*98. b ($400,000 $360,000) 15 = $2,667.

*99. b $7,000 6 = $42,000.

DERIVATIONS CPA Adapted


100. c Conceptual.
105. d $900,000 15 = $60,000.
101. a ($160,000 4.7908) $160,000
= $606,528. 106. c Conceptual.

102. d $2,502,000 $630,000 + $30,000 107. a $770,000 $600,000 = $170,000.


= $1,902,000 (2010).
$1,902,000 [$600,000 *108. d Conceptual.
($1,902,000 .10)] = $1,492,200 (2011). $85,000
*109. d = 9.44%, < 10% of FV
$900,000
103. a Conceptual.
of asset it is a minor leaseback.
104. d $900,000 .10 = $90,000.