1, (14.5) The correction of a prior period error that omitted $60,000 of operating revenue will increase shareholders equity by $60,000 for a company using ASPE.

• A :

  True

• B :

  False

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2. (14.4) if a prior period correction is made for revenue that had been understated by $20,000, what adjustment will be made to the current year opening balance for retained earnings? Assume a 25% tax rate.

• A :

  The opening balance will increase by $15,000.

• B :

  The opening balance will increase by $20,000.

• C :

  The opening balance will decrease by $15,000.

• D :

  No adjustment is made in the current year; the error was from a prior year.

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3. (14.3) A privately owned company that is using ASPE can classify fair value gains and losses as other comprehensive income.

• A :

  True

• B :

  False

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4. (12.2) the following data was available for Wingate Corporation on December 31, 2019: Common shares (30,000 authorized; 10,000 issued) $260,000 (CR) Contributed surplus - Reacquisition of Shares 20,000 (CR) The only change in 2020 was that Wingate paid $15,000 to reacquire 500 of its own shares. For the reacquisition, what amount would be recorded for contributed surplus?

• A :

  DR Contributed Surplus, $2,000

• B :

  CR Contributed Surplus, $2,000

• C :

  DR Contributed Surplus, $15,000

• D :

  CR Contributed Surplus, $15,000

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5. (14.1)A big corporation had 10,000 $3 preferred shares with an average cost per share of $6.50. Their common shares account had a total of $3,554,000 for 1 million shares issued. On the day the board of directors declared a 5% stock dividend on its common shares, the fair market values were $7.50 and $3.25 for preferred and common shares respectively. They also had $714,000 in retained earnings. What is the dollar amount of preferred shares after the declaration?

• A :

  $75,000

• B :

  $65,000

• C :

  $68,250

• D :

  $68,750