Intermediate Accounting (Test)

1. Jelaskan apa yang dimaksud dengan Future Deductible Amount dan Future Taxable Amount?

Berikan contoh untuk masing-masing perlakuan.

Choose the right answer

2. A major distinction between temporary and permanent differences is……

a. permanent differences are not representative of acceptable accounting practice.

b. temporary differences occur frequently, whereas permanent differences occur only once.

c. once an item is determined to be a temporary difference, it maintains that status, however, a permanent difference can change in status with the passage of time.

d. temporary differences reverse themselves in subsequent accounting periods ;whereas permanent differences do not reverse.

Choose the right answer

3. A company records an unrealized loss on short-term securities. This would result in what type of difference and in what type of deferred income tax?

Type of Difference Deferred Tax

a. Temporary Liability

b. Temporary Asset

c. Permanent Liability

d. Permanent Asset

Choose the right answer

4. Jelaskan Hubungan antara Unrecognized gain or loss dengan pengakuan Corridor?

Choose the right answer

6. Which of the following items should be included in pension expense calculated by an employer who sponsors a defined-benefit pension plan for its employees?

FV Plan Assets Amortization PSC

a. Yes Yes

b. Yes No

c. No Yes

d. No No

Write and Choose the right answer

7. Sebutkan Masalah khusus Akuntansi dalam hal Leasing, minimal 3.

8. Executory costs include

a. maintenance.

b. property taxes.

c. insurance.

d. all of these.

9. Which of the following would not be included in the Lease Receivable account?

a. Guaranteed residual value

b. Unguaranteed residual value

c. A bargain purchase option

d. All would be included

10. In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income…

a. should be amortized over the period of the lease using the effective interest method.

b. should be amortized over the period of the lease using the straight-line method.

c. does not arise.

d. should be recognized at the lease's expiration.

11. If the residual value of a leased asset is guaranteed by a third party…….

a. it is treated by the lessee as no residual value.

b. the third party is also liable for any lease payments not paid by the lessee.

c. the net investment to be recovered by the lessor is reduced.

d. it is treated by the lessee as an additional payment and by the lessor as realized at the end of the lease term.

12. Explain shortly about three possible approach for reporting changes in accounting policies.

13. Dalam Pembuatan cash flow, apa saja yang perlu diperhatikan?

14. When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?

Gross A/R Net A/R

a. Indirect Direct

b. Direct Indirect

c. Direct Direct

d. Neither Indirect

15. If non-cash investing and financing activities are part cash and part non-cash, which of the following is true?

a. Companies should report only the cash portion on the statement of cash flows and ignore the non-cash component.

b. Companies should report the non-cash component in a separate note and report the cash portion on the statement of cash flows.

c. Companies should report the cash portion lass the cash equivalent of the non-cash component on the statement of cash flows.

d. None of these is correct.

Quiz Ch 19

INTERMEDIATE ACCOUNTING II

SELF EXERCISES FOR CHAPTER 19

1. Which of the following statements is correct regarding deferred taxes under IFRS?

a. Income tax payable plus or minus the change in deferred income taxes equals income tax expense.

b. The current portion of income tax expense is the amount of change in deferred taxes related to the current period.

c. In computing income tax expense, a company deducts an increase in a deferred tax liability to income tax payable.

d. All of the choices are correct

2. A major distinction between temporary and permanent differences is

a. permanent differences are not representative of acceptable accounting practice.b. temporary differences occur frequently, whereas permanent differences occur only once.c. once an item is determined to be a temporary difference, it maintains that status; however,

a permanent difference can change in status with the passage of time.d. temporary differences reverse themselves in subsequent accounting periods,

whereas permanent differences do not reverse.

3. Which of the following will not result in a temporary difference?

a. Product warranty liabilitiesb. Advance rental receiptsc. Gain on involuntary conversion of non-monetary asset.d. All of these will result in a temporary difference

4. A company records an unrealized loss on short-term securities. This would result in what type of difference and in what type of deferred income tax?

Type of Difference Deferred Taxa. Temporary Liabilityb. Temporary Assetc. Permanent Liabilityd. Permanent Asset

5. Under IFRS deferred tax assets are recognized for

I. Deductible temporary differences.

II. Deductible permanent differences.

III. Operating loss carryforwards.

IV. Operating loss carrybacks.

a. I, II, and III.

b. I and III only.c. I and IV only.d. II and III only.

6. Deferred taxes should be presented on the statement of financial position

a. as one net debit or credit amount.b. as a net amount in the non-current section.c. in two amounts: one for the net debit amount and one for the net credit amount.d. as reductions of the related asset or liability accounts

7. Tanner, Inc. incurred a financial and taxable loss for 2012. Tanner therefore decided to use the carryback provisions as it had been profitable up to this year. How should the amounts related to the carryback be reported in the 2012 financial statements?

a. The reduction of the loss should be reported as a prior period adjustment.b. The refund claimed should be reported as a deferred charge and amortized over five years.c. The refund claimed should be reported as revenue in the current year.d. The refund claimed should be shown as a reduction of the loss in 2012.

8. Companies allocate income tax expense (or benefit) to all of the following except

a. discontinued operations.b. prior period adjustments.c. gross profit.d. other comprehensive income.

9. Which of the following statements is correct regarding permanent differences under IFRS?

a. Permanent differences result from items that enter into pretax financial income but never into taxable income.

b. Permanent differences result from items that enter into taxable income but never into pretax financial income.

c. Permanent differences affect only the period in which they occur.d. All of the choices are correct

10. Which of the following temporary differences results in a deferred tax asset in the year the temporary difference originates?

I. Accrual for product warranty liability.

II. Subscriptions received in advance.

III. Prepaid insurance expense.

a. I and II only.b. II only.c. III only.d. I and III only.

11.Lehman Corporation purchased a machine on January 2, 2009, for $2,000,000. The machine has an estimated 5-year life with no residual value. The straight-line method of depreciation is being used for financial statement purposes and the following accelerated depreciation amounts will be deducted for tax purposes:

2009 $400,000 2012 $230,0002010 640,000 2013 230,0002011 384,000 2014 116,000Assuming an income tax rate of 30% for all years, the net deferred tax liability that should be reflected on Lehman's statement of financial position at December 31, 2010, should be

Deferred Tax Liability Current Noncurrent

a. $0 $72,000b. $4,800 $67,200c. $67,200 $4,800d. $72,000 $0

2000.000 : 5 thn= 400.000

(640.000 – 400.000) × 30% (pajak) = 72.000

Use the following information for questions 12 and 13.

Mathis Co. at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $ 500,000

Estimated litigation expense 1,250,000

Installment sales (1,000,000)

Taxable income $ 750,000

The estimated litigation expense of $1,250,000 will be deductible in 2012 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $500,000 in each of the next two years. The estimated liability for litigation is classified as non-current and the installment accounts receivable are classified as $500,000 current and $500,000 noncurrent. The income tax rate is 30% for all years.

12.The income tax expense is

a. $150,000.b. $225,000.c. $250,000.d. $500,000.

Income tax payable = (750.000 × 30%) = 225.000

Change in deferred tax liability = (1.000.000 × 30%) = 300.000

Change in deferred tax asset = (1.250.000 × 30%) = 375.000

Income tax expense = 225.000 + 300.000 – 375.000 = 150.000

13.The net deferred tax asset to be recognized is

a. $0.b. $150,000.c. $375,000.d. $225,000.

(1.250.000 × 30%) = 375.000

14.Cross Company reported the following results for the year ended December 31, 2010, its first year of operations:

2007

Income (per books before income taxes) $ 750,000

Taxable income 1,200,000

The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2011. What should Cross record as a net deferred tax asset or liability for the year ended December 31, 2010, assuming that the enacted tax rates in effect are 40% in 2010 and 35% in 2011?

a. $180,000 deferred tax liabilityb. $157,500 deferred tax assetc. $180,000 deferred tax assetd. $157,500 deferred tax liability

(1200000 – 750000) × 40% = 180.000

15. Ferguson Company has the following cumulative taxable temporary differences:

12/31/11 12/31/10

$1,350,000 $960,000

The tax rate enacted for 2011 is 40%, while the tax rate enacted for future years is 30%. Taxable income for 2011 is $2,400,000 and there are no permanent differences. Ferguson's pretax financial income for 2011 is

a. $3,750,000.b. $2,790,000.c. $2,010,000.d. $1,050,000

2.400.000 + (1.350.000 – 960.000) = 2.790.000

16.Georgia, Inc.has no temporary or permanent differences. The company experiences the following:

Year Taxable income/loss Tax rate Tax paid2009 $ 100,000 35% $ 35,0002010 200,000 30% 60,0002011 400,000 40% 160,0002012 (500,000) ---- -0-

In 2012, Georgia, Inc. decides to carry back its NOL. What amount of income tax refund receivable will Georgia record for 2012?

a. $200,000

b. $180,000

c. $190,000

d. $ -0-

(500.000) ditutupdengan400.000 x 40% = 160.000

100.000 x 15% = 30.000

160.000 + 30.000 = 190.000

Use the following information for questions 17 and 18.

Wilcox Corporation reported the following results for its first three years of operation:

2010 income (before income taxes) $ 100,000

2011 loss (before income taxes) (900,000)

2012 income (before income taxes) 1,000,000

There were no permanent or temporary differences during these three years. Assume a corporate tax rate of 30% for 2010 and 2011, and 40% for 2012.

17. Assuming that Wilcox elects to use the carryback provision, what income (loss) is reported in 2011? (Assume that any deferred tax asset recognized is probable to be realized.)

a. $(900,000)b. $ -0-c. $(870,000)d. $(550,000)

(100000 × 30%) = 30000

800.000 × 40% = 320.000

(900.000 – 30.000 – 320.000) = 550.000

18.Assuming that Wilcox elects to use the carryforward provision and not the carryback provision, what income (loss) is reported in 2011?

a. $(900,000)b. $(540,000)c. $ -0-d. $(870,000)

(900.000 × 40%) = 360.000

900.000 – 360.000 = 540.000

Use the following information for questions 19 and 20.

Operating income and tax rates for C.J. Company’s first three years of operations were as

follows:

Income _ Enacted tax rate

2010 $100,000 35%

2011 ($250,000) 30%

2012 $420,000 40%

19. Assuming that C.J. Company opts to carryback its 2011 NOL, what is the amount of income tax payable at December 31, 2012?

a. $68,000b. $168,000c. $123,000d. $108,000

[420.000 – ($250.000 – 100.000)] 40% = 108.000

20. Assuming that C.J. Company opts only to carryforward its 2011 NOL, what is the amount of deferred tax asset or liability that C.J. Company would report on its December 31, 2011 balance sheet?

Amount _ Deferred tax asset or liabilitya. $75,000 Deferred tax liabilityb. $87,500 Deferred tax liabilityc. $100,000 Deferred tax assetd. $75,000 Deferred tax asset

250.000 40% = 100.000

1. Taxable income of a corporation

a. differs from accounting income due to differences in intraperiod allocation between the two methods of income determination.

b. differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination.

c. is based on international financial reporting standards.

d. is reported on the corporation's income statement.

2. A major distinction between temporary and permanent differences in accounting for income tax is:

a. permanent differences are not representative of acceptable accounting practice.

b. temporary differences occur frequently, whereas permanent differences occur only once.

c. once an item is determined to be a temporary difference, it maintains that status; however, a permanent difference can change in status with the passage of time.

d. temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse.

3. Which of the following statements is correct regarding deferred taxes under IFRS?

a. Income tax payable plus or minus the change in deferred income taxes equals income tax expense.

b. The current portion of income tax expense is the amount of change in deferred taxes related to the current period.

c. In computing income tax expense, a company deducts an increase in a deferred tax liability to income tax payable.

d. All of the choices are correct.

4. Which of the following statements is correct regarding permanent differences under IFRS?

a. Permanent differences result from items that enter into pretax financial income but never into taxable income.

b. Permanent differences result from items that enter into taxable income but never into pretax financial income.

c. Permanent differences affect only the period in which they occur.

d. All of the choices are correct

5. Companies allocate income tax expense (or benefit) to all of the following except

a. discontinued operations.

b. prior period adjustments.

c. gross profit.

d. other comprehensive income.

6. Deferred taxes should be presented on the statement of financial position

a. as one net debit or credit amount.

b. as a net amount in the non-current section.

c. in two amounts: one for the net debit amount and one for the net credit amount.

d. as reductions of the related asset or liability accounts.

7. Eckert Corporation's partial income statement after its first year of operations is as follows:

Income before income taxes $ 3,750,000

Income tax expense

Current $ 1,035,000

Deferred 90,000 1,125,000

Net income $ 2,625,000

Eckert uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was $1,500,000. No other differences existed between book income and taxable income except for the amount of depreciation. Assuming a 30% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year?

a. $ 1,200,000 b. $ 1,425,000

c. $ 1,500,000 d. $ 1,800,000

(30% × Temporary Difference) = $90,000;

Temporary Difference = ($90,000 ÷ 30%) = $300,000;

$ 1,500,000 + $ 300,000 = $ 1,800,000.

8. Stephens Company has a deductible temporary difference of $2,000,000 at the end of its first year of operations. Its tax rate is 40 percent. Stephens has $1,800,000 of income taxes payable. After a careful review of all available evidence, Stephens determines that it is probable that it will not realize $ 200,000 of this deferred tax asset. On Stephens Company’s statement of financial position at the end of its first year of operations, what is the amount of deferred tax asset?

a. $ 2,000,000

b. $ 1,800,000

c. $ 800,000

d. $ 720,000

($ 2,000,000 – $ 200,000) × .40 = $ 720,000.

9. Kraft Company made the following journal entry in late 2010 for rent on property it leases to Danford Corporation.

Cash 60,000

Unearned Rent 60,000

The payment represents rent for the years 2011 and 2012, the period covered by the lease. Kraft Company is a cash basis taxpayer. Kraft has income tax payable of $ 92,000 at the end of 2010, and its tax rate is 35%.

What amount of income tax expense should Kraft Company report at the end of 2010?

a. $ 53,000 b. $ 71,000

c. $ 81,500 d. $ 113,000

$ 92,000 – ($ 60,000 × .35) = $ 71,000.

10. Operating income and tax rates for C.J. Company’s first three years of operations were as follows:

Income _ Enacted tax rate

2010 $ 100,000 35%

2011 ($ 250,000) 30%

2012 $ 420,000 40%

Assuming that C.J. Company opts only to carryforward its 2011 NOL, what is the amount of deferred tax asset or liability that C.J. Company would report on its December 31, 2011 balance sheet?

Amount _ Deferred tax asset or liability

a. $ 75,000 Deferred tax liability

b. $ 87,500 Deferred tax liability

c. $ 100,000 Deferred tax asset

d. $ 75,000 Deferred tax asset

$ 250,000 .40 = $ 100,000.

Quiz Ch 20

1. In accounting for a defined-benefit pension plan

a. an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the benefits promised.

b. the employer's responsibility is simply to make a contribution each year based on the formula established in the plan.

c. the expense recognized each period is equal to the cash contribution.

d. the liability is determined based upon known variables that reflect future salary levels promised to employees.

2. The computation of pension expense includes all the following except

a. service cost component measured using current salary levels.

b. interest on defined benefit obligation.

c. expected return on plan assets.

d. All of these are included in the computation.

3. One component of pension expense is expected return on plan assets. Plan assets include

a. contributions made by the employer and contributions made by the employee when a contributory plan of some type is involved.

b. plan assets still under the control of the company.

c. only assets reported on the statement of financial position of the employer as pension asset/liability.

d. none of these.

4. According to the IASB, recognition of a liability is required when the defined benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the defined benefit obligation, the Board

a. requires recognition of an asset.

b. requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount.

c. recommends recognition of an asset but does not require such recognition.

d. does not permit recognition of an asset.

5. The following information is related to the pension plan of Long, Inc. for 2011.

Actual return on plan assets $ 200,000

Amortization of net gain 82,500

Amortization of past service cost due to increase in benefits 150,000

Expected return on plan assets 230,000

Interest on defined benefit obligation 362,500

Service cost 800,000

Pension expense for 2011 is

a. $ 1,195,000. b. $ 1,165,000.

c. $ 1,030,000. d. $ 1,000,000.

$ 800,000 + $ 362,500 – $ 230,000 – $ 82,500 + $ 150,000 = $ 1,000,000.

6. Seigel Co. maintains a defined-benefit pension plan for its employees. At each statement of financial position date, Yeager should report a pension asset / liability equal to the

a. accumulated benefit obligation.

b. defined benefit obligation.

c. vested benefit obligation.

d. funded status relative to the defined benefit obligation.

7. At December 31, 2011, the following information was provided by the Vargas Corp. pension plan administrator:

Fair value of plan assets $ 4,500,000

Defined benefit obligation 7,200,000

What is the amount of the pension liability that should be shown on Vargas' December 31, 2011 statement of financial position?

a. $ 7,200,000

b. $ 2,700,000

c. $ 1,620,000

d. $1,080,000

$ 7,200,000 – $ 4,500,000 = $ 2,700,000.

QUIZ Ch 21

1. The amount to be recorded as the cost of an asset under a, finance lease is equal to the

a. present value of the minimum lease payments.

b. present value of the minimum lease payments or the fair value of the asset, whichever is lower.

c. present value of the minimum lease payments plus the present value of any unguaranteed residual value.

d. carrying value of the asset on the lessor's books.

2. Which of the following is a correct statement of one of the capitalization criteria?

a. The lease transfers ownership of the property to the lessor.

b. The lease contains a purchase option.

c. The lease term is equal to or more than 75% of the estimated economic life of the leased property.

d. The minimum lease payments (excluding executory costs) equal or exceed 90% of the fair value of the leased property.

3. Which of the following would not be included in the Lease Receivable account?

a. Guaranteed residual value

b. Unguaranteed residual value

c. A bargain purchase option

d. All would be included

4. On January 1, 2011, Dean Corporation signed a ten-year noncancelable lease for certain machinery. The terms of the lease called for Dean to make annual payments of $100,000 at the end of each year for ten years with title to pass to Dean at the end of this period. The machinery has an estimated useful life of 15 years and no residual value. Dean uses the straight-line method of depreciation for all of its fixed assets. Dean accordingly accounted for this lease transaction as a finance lease. The lease payments were determined to have a present value of $671,008 at an effective interest rate of 8%. With respect to this capitalized lease, Dean should record for 2011

a. lease expense of $100,000.

b. interest expense of $44,734 and depreciation expense of $38,068.

c. interest expense of $53,681 and depreciation expense of $44,734.

d. interest expense of $45,681 and depreciation expense of $67,101.

$671,008 × .08 = $53,681, $671,008 ÷ 15 = $44,734

5. Metcalf Company leases a machine from Vollmer Corp. under an agreement which meets the criteria to be a finance lease for Metcalf. The six-year lease requires payment of $102,000 at the beginning of each year, including $15,000 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 10%; the lessor's implicit rate is 8% and is known by the lessee. The present value of an annuity due of 1 for six years at 10% is 4.79079. The present value of an annuity due of 1 for six years at 8% is 4.99271. Metcalf should record the leased asset at

a. $ 509,256.

b. $ 488,661.

c. $ 434,366.

d. $ 416,799.

($102,000 – $15,000) × 4.99271 = $434,366

1. Which of the following is an advantage of leasing?

a. Off-balance-sheet financing

b. Less costly financing

c. 100% financing at fixed rates

d. All of these

2. Which of the following is a correct statement of one of the capitalization criteria?

a. The lease transfers ownership of the property to the lessor.

b. The lease contains a purchase option.

c. The lease term is for the major part of economic life of the asset.

d. The minimum lease payments (excluding executory costs) equal or exceed 90% of the fair value of the leased property.

3. Minimum lease payments may include

a. penalty for failure to renew.

b. bargain purchase option.

c. guaranteed residual value.

d. any of these.

4. Executory costs include

a. maintenance.

b. property taxes.

c. insurance.

d. all of these.

5. In computing the present value of the minimum lease payments, the lessee should

a. use its incremental borrowing rate in all cases.

b. use either its incremental borrowing rate or the implicit rate of the lessor, whichever is higher, assuming that the implicit rate is known to the lessee.

c. use the implicit rate of the lessor if known or practicable, unless use the incremental borrowing rate

d. none of these.

6. If the residual value of a leased asset is guaranteed by a third party

a. it is treated by the lessee as no residual value.

b. the third party is also liable for any lease payments not paid by the lessee.

c. the net investment to be recovered by the lessor is reduced.

d. it is not included in the minimum lease payment

7. Which of the following statements is correct?

a. In a direct-financing lease, initial direct costs are added to the net investment in the lease.

b. In a sales-type lease, initial direct costs are expensed in the year of incurrence.

c. For operating leases, initial direct costs are deferred and allocated over the lease term.

d. All of these.

8. When a company sells property and then leases it back, any gain on the sale should usually be

a. recognized in the current year.

b. recognized as a prior period adjustment.

c. recognized at the end of the lease.

d. deferred and recognized as income over the term of the lease.

9. The primary difference between a direct-financing lease and a sales-type lease is the

a. manner in which rental receipts are recorded as rental income.

b. amount of the depreciation recorded each year by the lessor.

c. recognition of the manufacturer's or dealer's profit at the inception of the lease.

d. allocation of initial direct costs by the lessor to periods benefited by the lease arrangements.

10. Mika company leases telecommunication equipment. Assume the following data for equipment leased from phlash company. The lease term is 5 year and requires equal rental payment of ¥3,150,000 at the beginning of each year. the present value of the payment was ¥13,135,059.The equipment has a fair value at the inception of the lease of ¥13,900,000, an estimated useful life of 8 year, and no residual value.mika pays all executory costs directly to third parties. Phlash set the annual rental to earn a rate of return of 10%, and this fact is known to mika. The lease does not transfer title or contain a bargain-purchase option. based on this information, which of the following statement is true?.

a. The lease should be classified as an operating lease.

b. The lease meets the economic life test to be classified as a finance lease.

c. The lease should be classified as a finance lease based on passing the recovery of investment test

d. The lease is classified as an operating lease for Mika and a finance lease for Phlash.

11. Entity should calculate minimum lease payment at the date of :

a. Commencing of the lease term

b. Inception of the lease

c. Final payment of the lease

d. Cancelation of the lease

12. The following are correct statements regarding SIC 15/ISAK 23 except:

a. All incentives for the agreement of a new or renewed operating lease shall be recognised as an integral part of the net consideration agreed for the use of the leased asset

b. The lessee shall recognise the aggregate benefit of incentives as a reduction of rental expense over the lease term

c. All incentives for the agreement of a new or renewed operating lease shall be recognised immediately as gain

d. The lessee shall recognise the aggregate benefit of incentives as a reduction of rental expense on a straight-line basis

Kasus : Eubank Company, as lessee, enters into a lease agreement on July 1, 2011, for equipment. The following data are relevant to the lease agreement:

1. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $ 422,689 are due on June 30 of each year.

2. The fair value of the equipment on July 1, 2011 is $ 1,400,000. The equipment has an economic life of 6 years with no salvage value.

3. Eubank depreciates similar machinery it owns on the sum-of-the-years'-digits basis.

4. The lessee pays all executory costs.

5. Eubank's incremental borrowing rate is 10% per year. The lessee is aware that the lessor used an implicit rate of 8% in computing the lease payments (present value factor for 4 periods at 8%, 3.31213; at 10%, 3.16986.

Instructions :

(a) Indicate the type of lease Eubank Company.

(b) Prepare the journal entries on Eubank's books for the following dates: (Round all amounts to the nearest dollar. Include a partial amortization schedule.)

1. July 1, 2011.

2. December 31, 2011.

3. June 30, 2012.

4. December 31, 2012.

Jawab:

a) Capitalized amount:

$ 422,689 × PV of an ordinary annuity for 4 periods at 8%

$ 422,689 × 3.31213 = $ 1,400,000

Present value of the lease payments ($ 1,400,000) = fair value, $ 1,400,000, jadi merupakan finance lease

(b) 1. July 1, 2011

Leased Eqp Under Fin Leases 1,400,000

Lease Liability 1,400,000

(b) 2. December 31, 2011

Depreciation Expense 280,000

Acc Depr—Finance Leases 280,000

[($ 1,400,000 × 4/10) × 6/12] = 280,000

Interest Expense 56,000

Interest Payable 56,000

($ 112,000 × 6/12) = 56,000

(b) Lease Amortization Schedule

Annual Interest on Reduction Balance

Lease Unpaid of Lease Lease

Date Payment Liability Liability Liability

7/1/11 $ 1,400,000

6/30/12 $ 422,689 $ 112,000 $ 310,689 1,089,311

6/30/13 422,689 87,145 335,544 753,767

3. June 30, 2012

Interest Expense 112,000

Lease Liability 310,689

Cash 422,689

4. December 31, 2012

Depreciation Expense 490,000

Acc Depreciation—Finance Leases 490,000

[($ 1,400,000 × 4/10) × 6/12 + ($ 1,400,000 × 3/10) × 6/12] = 490,000

Interest Expense ($ 87,145 × 6/12) 43,573

Interest Payable 43,573

QUIZ Ch 22

1. Stone Company changed its method of pricing inventories from average cost to FIFO. What type of accounting change does this represent?

a. A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.

b. A change in accounting policy for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.

c. A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be restated.

d. A change in accounting policy for which the financial statements for prior periods included for comparative purposes should be restated

2. Which of the following is (are) the proper time period(s) to record the effects of a change in accounting estimate?

a. Current period and prospectively

b. Current period and retrospectively

c. Retrospectively only

d. Current period only

3. Which of the following statements is correct?

a. Changes in accounting policy are always handled in the current or prospective period.

b. Prior statements should be restated for changes in accounting estimates.

c. A change from expensing certain costs to capitalizing these costs due to a change in the period benefited, should be handled as a change in accounting estimate.

d. Correction of an error related to a prior period should be considered as an adjustment to current year net income.

4. Counterbalancing errors do not include

a. errors that correct themselves in two years.

b. errors that correct themselves in three years.

c. an understatement of purchases.

d. an overstatement of unearned revenue.

5. A company using a perpetual inventory system neglected to record a purchase of merchandise on account at year end. This merchandise was omitted from the year-end physical count. How will these errors affect assets, liabilities, and equity at year end and net income for the year?

Assets Liabilities Equity Net Income

a. No effect Understate Overstate Overstate.

b. No effect Overstate Understate Understate.

c. Understate Understate No effect No effect.

d. Understate No effect Understate Understate.

6. On January 1, 2009, Hess Co. purchased a patent for $595,000. The patent is being amortized over its remaining legal life of 15 years expiring on January 1, 2024. During 2012, Hess determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the statement of financial position for the patent, net of accumulated amortization, at December 31, 2012?

a. $ 357,000

b. $ 408,000

c. $ 420,000

d. $ 436,375

$ 595,000 × 3/15 = $119,000

$ 595,000 – $119,000 – [($595,000 – $119,000) × 1/7]

= $ 408,000.

1. Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of

a. materiality. b. consistency.

c. prudence. d. objectivity.

2. IASB requires companies to use which method for reporting changes in accounting policies?

a. cumulative effect approach

b. retrospective approach

c. prospective approach

d. averaging approach

3. Which of the following is accounted for as a change in accounting policy?

a. A change in the estimated useful life of plant assets.

b. A change from the cash basis of accounting to the accrual basis of accounting.

c. A change from expensing immaterial expenditures to deferring and amortizing them as they become material.

d. A change in inventory valuation from average cost to FIFO.

4. Which of the following would be a reason where IASB would permit companies to change accounting policy?

a. The change would allow the company to present a more favorable profit picture.

b. The change would result in the financial statements providing more reliable and relevant information about a company`s financial position, financial performance, and cash flows.

c. The change is made by the internal auditor.

d. The change will be long-term.

5. The estimated life of a building that has been depreciated 30 years of an originally estimated life of 50 years has been revised to a remaining life of 10 years. Based on this information, the accountant should

a. continue to depreciate the building over the original 50-year life.

b. depreciate the remaining book value over the remaining life of the asset.

c. adjust accumulated depreciation to its appropriate balance, through net income, based on a 40-year life, and then depreciate the adjusted book value as though the estimated life had always been 40 years.

d. adjust accumulated depreciation to its appropriate balance through retained earnings, based on a 40-year life, and then depreciate the adjusted book value as though the estimated life had always been 40 years.

6. On January 1, 2009, Knapp Corporation acquired machinery at a cost of $ 250,000. Knapp adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2012, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2012 would be

a. $ 12,800. b. $ 18,286. c. 25,000. d. $ 35,714.

{$ 250,000 – [($ 250,000 × .2) + ($ 200,000 × .2) + ($ 160,000 × .2)]} ÷ 7 = $ 18,286

7. On December 31, 2011 Dean Company changed its method of accounting for inventory from the average cost method to the FIFO method. This change caused the 2011 beginning inventory to increase by $ 420,000. The cumulative effect of this accounting change to be reported for the year ended 12/31/11, assuming a 40% tax rate, is

a. $ 420,000.

b. $ 252,000.

c. $ 168,000.

d. $ 0.

$ 420,000 × (1 – .40) = $ 252,000

8. Equipment was purchased at the beginning of 2009 for $ 204,000. At the time of its purchase, the equipment was estimated to have a useful life of six years and a residual value of $ 24,000. The equipment was depreciated using the straight-line method of depreciation through 2011. At the beginning of 2012, the estimate of useful life was revised to a total life of eight years and the expected residual value was changed to $ 15,000. The amount to be recorded for depreciation for 2012, reflecting these changes in estimates, is

a. $ 12,375.

b. $ 19,800.

c. $ 22,800.

d. $ 23,625.

$ 204,000 – {[($204,000 – $24,000) ÷ 6] × 3} = $114,000

($ 114,000 – $ 15,000) ÷ (8 – 3) = $ 19,800.

9. In 2012, Krasny Corporation discovered that equipment purchased on January 1,2010, for € 52,500 was expensed at that time. The equipment should have been depreciated over 5 years, with no residual value. The effective tax rate is 30 %.Krasny’s 2012 journal entry to correct the error would include

a. a credit to Equipment for € 52,500

b. a debit to Retained Earnings for € 52,500.

c. a credit to Retained Earnings for € 22,050.

d. a credit to Deferred Tax Liability for € 15,750.

[€ 52,500 – (€ 52,500 × 2/5)] = € 31,500

[€ 31,500 × (1 – .30)] = € 22,050

10. Black, Inc. is a calendar-year corporation whose financial statements for 2010 and 2011 included errors as follows:

Year Ending Inventory Depreciation Exp ense

2010 $ 162,000 overstated $ 135,000 overstated

2011 54,000 understated 45,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2010, or at December 31, 2011. Ignoring income taxes, by how much should Black's retained earnings be retroactively adjusted at January 1, 2012?

a. $ 144,000 increase b. $ 36,000 increase

c. $ 18,000 decrease d. $ 9,000 increase

$54,000 (u) + $135,000 (u) – $45,000 (o) = $ 144,000 (u).

Essay :

1. Jelaskan pengertian dari ketidakpraktisan (impracticability) dalam konteks perubahan kebijakan akuntansi

2. Jelaskan motivasi dari entitas mengubah kebijakan akuntansinya

QUIZ Ch 23

1. A statement of cash flows typically would not disclose the effects of

a. ordinary shares issued at an amount greater than par value.

b. share dividends declared.

c. cash dividends paid.

d. a purchase and immediate retirement of treasury shares.

2. How should significant non-cash transactions be reported in the statement of cash flows?

a. They should be incorporated in the statement of cash flows in a section labeled, "Significant Noncash Transactions."

b. Such transactions should be incorporated in the section (operating, financing, or investing) that is most representative of the major component of the transaction.

c. These noncash transactions are not to be incorporated in the statement of cash flows. They appear in a note to the financial statements.

d. They should be handled in a manner consistent with the transactions that affect cash flows.

3. The primary purpose of the statement of cash flows is to provide information

a. about the operating, investing, and financing activities of a company during a period.

b. that is useful in assessing cash flow prospects.

c. about the cash receipts and cash payments of a company during a period.

d. about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.

4. All of the following would appear as significant non-cash transactions in the notes to the financial statements, except:

a. issuance of shares for attorney services

b. issuance of shares to liquidate debt

c. issuance of bonds for land

d. issuance of preference shares

5. When preparing a statement of cash flows (indirect method), an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because

a. cash was increased while cost of goods sold was decreased.

b. cost of goods sold on an accrual basis is lower than on a cash basis.

c. acquisition of inventory is an investment activity.

d. inventory purchased during the period was less than inventory sold resulting in a net cash increase.

6. All of the following are arguments in favor of using the indirect (reconciliation) method as opposed to the direct method for reporting a statement of cash flows except:

a. By providing a reconciliation between net income and cash provided by operations, the differences are highlighted.

b. The direct method is nothing more than a cash basis income statement which will confuse and create uncertainty for financial statement users who are familiar with the accrual-based income statements.

c. The direct method would probably lead to additional preparation cost because the financial records are not maintained on a cash basis.

d. The indirect method shows higher quality cash flows from investing and financing activities.

7. All of the following could potentially be classified as either operating or investing cash flows under IFRS, except:

a. Interest received

b. Dividends received

c. Taxes paid that are specifically identified with investing

d. Dividends paid

Essay :

Hartman, Inc. has prepared the following comparative statement of financial position for 2010 and 2011:

2011 2010

Plant assets $ 1,260,000 $ 1,050,000

Accumulated depreciation (450,000) (375,000)

Patent 153,000 174,000

Prepaid expenses 18,000 27,000

Inventory 150,000 180,000

Receivables 159,000 117,000

Cash 297,000 153,000

$ 1,587,000 $ 1,326,000

Mortgage payable $ 525,000 —

Accounts payable 120,000 —

Accrued liabilities 600,000 $ 600,000

Share capital-Preference 129,000 66,000

Share premium-preference — 450,000

Share capital-ordinary 153,000 168,000

Retained earnings 60,000 42,000

$ 1,587,000 $ 1,326,000

Additional infromation :

1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.

2. The Retained Earnings account has been charged for dividends of $138,000 and credited for the net income for the year.

The income statement for 2011 is as follows:

Sales $ 1,980,000

Cost of sales 1,089,000

Gross profit 891,000

Operating expenses 690,000

Net income $ 201,000

Instructions

(a) Prepare a statement of cash flows (indirect method) for Hartman, Inc. for the year ended December 31, 2011.

(b) Prepare a schedule of cash provided by operating activities using the direct method.

Essay :

1. Jelaskan 2 (dua) metode laporan cash flow dan dalam hal apa 2 (dua) metode tsb berbeda.

2. Jelaskan klasifikasi aktivitas dalam laporan cash flow.

3. Jelaskan kenapa depreciation expense dilakukan penyesuaian apabila kita menggunakan salah satu metode laporan cash flow diatas

QUIZ Ch 24

1. Sebutkan dan jelaskan 2 pendekatan yang menjadi perdebatan dalam menyusun laporan keuangan interim.

2. Jelaskan apa yang anda ketahui mengenai subsequent events dan berikan contohnya.