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Which method should be used to handle indirect costs of self-constructed assets? Assigning no variable overhead to a constructed asset Allocating overhead on the basis of gained production Assigning a pro rata portion of all overhead to the asset Allocating the total overhead to the asset - correct answer ✅Assigning a pro rata portion of all overhead to the asset A company purchases land for development into a subdivision. The land has a factory building on it that will need to be demolished. Where should the interest costs be allocated? Interest expenses General administrative expenses Cost of the land Cost of the plant - correct answer ✅Cost of land In which situation can capitalization of interest be included in the cost of land? When holding the land as an investment When purchasing land with the intension of developing it for lots sales When selling the land When building a structure on the land - correct answer ✅When purchasing land with the intension of developing it for lots sales Which value should be used to record machinery that was purchased with a long- term note?
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Sum of all estimated payments Market price of the machinery Present value of the future payments Appraised value of the machinery - correct answer ✅Present value of the future payments Which item is considered to be a technology-related intangible asset? Trade secrets Goodwill Artistic-related rights Licensing agreements - correct answer ✅Trade Secrets Pay out ratio - correct answer ✅Pay out ratio = cash dividends/net income (less preferred dividends, if applicable) Return on common stockholders' equity - correct answer ✅Return on Common Stockholders' Equity = (Net Income - Preferred Dividends) / Average Common Stockholders' Equity Book value per share - correct answer ✅Book Value per Share = common stockholders equity/outstanding shares Dilutive Securities - correct answer ✅Are securities that can be converted to common stock. Upon conversion or exercise by the holder, the dilutive securities reduce (dilute) earnings per share
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The company should reverse the prior impairment and measure the asset at its current fair value of $260,000. The company should reverse the prior impairment and measure the asset at its fair value prior to the initial impairment of $250,000. The company should not reverse the impairment and should depreciate the asset by $10,000 to a new book value of $215,000. The company sh - correct answer ✅The company should not reverse the impairment and should depreciate the asset by $10,000 to a new book value of $215,000. A company invested $15,000,000 in a coal mine estimated to have 1,500,000 tons of coal. In the first year, the company extracted 100,000 tons of coal. At the end of the first year, it became clear that the coal mine was likely to have only another 700,000 tons of coal remaining. Which depletion rate will be used starting in the second year? $6.36 per ton $10.00 per ton $20.00 per ton $21.43 per ton - correct answer ✅$20.00 per ton On January 1, a company received $24,000 in advance for monthly pest services for the year. Which entry should the company use to record the month of May's revenue? Debit Unearned Sales Revenue for $2,000; Credit Sales Revenue for $2, Debit Unearned Sales Revenue for $10,000; Credit Sales Revenue for $10, Debit to Sales Revenue for $2,000; Credit Unearned Sales Revenue for $2,
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Debit to Sales Revenue for $10,000; Credit Unearned Sales Revenue for $10,000 - correct answer ✅Debit Unearned Sales Rev for $2000; Credit Sales Rev for $ A company reported the following excerpts from its balance sheet: Cash: $150, Short-term investments: $350, Accounts receivable (net): $200, Inventory: $300, Property, plant, and equipment (net): $500, Total current liabilities: $400, What is the company's current ratio?
3.75 - correct answer ✅2. On February 1, a company borrowed $24,600 from a bank. The terms of the loan require five equal annual installments beginning January 31. The company has a calendar year-end. Which entry should the company use to record the loan? Debit cash $24,600, credit current maturities of long-term debt $4,920, credit note payable $19, Debit cash $24,600, credit current maturities of long-term debt $4,510, credit note payable $20, Debit note payable $20,090, debit current maturities of long-term debt $4,510, credit cash $24,
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Credit Common Stock for $ Debit Retained Earnings for $ Credit Convertible Preferred Stock for $ Debit Paid-in Capital in Excess of Par-Preferred Stock for $50 - correct answer ✅Debit Paid-in Capital in Excess of Par-Preferred Stock for $ A company receives a lump sum of $1,015 for a $1,000 par value bonds with one warrant attached. The warrant is for the purchase one share of common stock for $30 within the next five years when the stock is trading at $60, and the warrant can be traded separately from the bond. The bond's market price is 99. How much of the lump-sum sale proceeds is allocated to the warrant if the incremental method is used? $ $ $ $60 - correct answer ✅$ A company reports a net income of $5,000,000. Shares outstanding at the beginning of the calendar year equal 1,000,000. There are 950,000 shares outstanding on April 1.How much are earnings per share? $5. $5. $5. $5.00 - correct answer ✅$5.
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A company had both outstanding convertible bonds and stock warrants during the current year. The company determined that if the bonds had been converted during the year, calculated basic earnings per share (EPS) would have decreased, and if the warrants had been exercised during the year, calculated basic EPS would have increased. How should the company consider these securities when calculating and presenting diluted earnings per share on the income statement? The company should include the effects of both the bonds and the warrants. The company should exclude the effects of both the bonds and the warrants. The company should include the effect of the warrants, but exclude the effect of the bonds. The company should include the effect of the bonds, but exclude the effect of the warrants. - correct answer ✅The company should include the effect of the bonds, but exclude the effect of the warrants. A company's balance sheet displays common stock of $150,000, preferred stock of $50,000, additional paid-in capital from common stock of $100,000, and retained earnings of $80,000. Which amount represents stockholders' equity? $100, $300, $330, $380,000 - correct answer ✅$380, On Year 1, a company issued 10,000 shares of $2 par stock at $12 per share. On Year 3, the company reacquired 1,000 shares of its stock for $15 per share. How will this transaction in Year 3 affect Additional Paid-in Capital, if at all? It will not affect Additional Paid-in Capital. It will increase Additional Paid-in Capital by $15,000.
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the number of years of estimated life remaining as of the beginning of the year. In this method, the numerator decreases year by year, and the denominator remains constant (5/15, 4/15, 3/15, 2/15, and 1/15) B. The declining-balance method utilizes a depreciation rate (expressed as a percentage) that is some multiple of the straight-line method. For example, the double-declining rate for a 10-year asset is 20 percent (double the straight-line rate, which is 1/10 or 10 percent). Companies apply the constant rate to the declining book value each year. Unlike other methods, the declining-balance method does not deduct the salvage value in computing the depreciation base. Calculating the declining-balance method - correct answer ✅The declining- balance rate is multiplied by the book value of the asset at the beginning of each period Earnings Per Share - correct answer ✅net income - preferred dividends / weighted average common shares outstanding depletion cost per unit - correct answer ✅(total cost - salvage value) / total estimated units available Asset Turnover - correct answer ✅net sales/average total assets Profit Margin on Sales - correct answer ✅net income/net sales
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Return on Assets - correct answer ✅= Profit Margin on Sales x Asset Turnover = Net Income/Average Total Assets Current Ratio - correct answer ✅Current Assets/Current Liabilities Acid Test Ratio - correct answer ✅Cash + Short Term Investments + Current Receivable (net)/Current Liabilities Under the effective-interest method, companies: - correct answer ✅Compute bond interest expense first by multiplying the carrying value (book value) of the bonds at the beginning of the period by the effective-interest rate. Determine the bond discount or premium amortization next by comparing the bond interest expense with the interest (cash) to be paid. Debt to Asset Ratio - correct answer ✅total liabilities/total assets Times Interest Earned - correct answer ✅(Net Income + Interest Expense + Income Tax Expense) / Interest Expense Proportional Method - correct answer ✅If the fair value or other sound basis for determining relative value is available for each class of security, the company allocates the lump sum received among the classes of securities on a proportional basis. For instance, assume a company issues 1,000 shares of $10 stated value common stock having a market price of $20 a share, and 1,000 shares of $10 par value preferred stock having a market price of $12 a share, for a lump sum of $30,000.
