Looking for the correct answers to the attached problems.

ACT 312 Quiz#1 1. Which intangible assets are amortized? Limited-Life Indefinite-Life a. Yes Yes b. Yes No c. No Yes d. No No 2. Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are) Recoverability Test a. Yes b. Yes c No d. No Fair Value Test Yes No Yes No 3. Which of the following research and development related costs should be capitalized and depreciated over current and future periods? a. Research and development general laboratory building which can be put to alternative uses in the future b. Inventory used for a specific research project c. Administrative salaries allocated to research and development d. Research findings purchased from another company to aid a particular research project currently in process 4. Which of the following is often reported as an extraordinary item? a. Amortization expense. b. Impairment losses for intangible assets other than goodwill. c. Impairment losses on goodwill. d. None of the above. 5. The general ledger of Vance Corporation as of December 31, 2011, includes the following accounts: Copyrights Deposits with advertising agency (will be used to promote goodwill) Discount on bonds payable Excess of cost over fair value of identifiable net assets of Acquired subsidiary Trademarks $ 30,000 27,000 70,000 390,000 90,000 In the preparation of Vance's balance sheet as of December 31, 2011, what should be reported as total intangible assets? a. $480,000. b. $507,000. c. $510,000. d. $537,000. 1 ACT 312 Quiz#1 6. Blue Sky Company's 12/31/10 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000. All of Blue Sky's assets' book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/10, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky. What amount of goodwill should Horace Wimp record as a result of this purchase? a. $ -0b. $100,000 c. $1,800,000 d. $2,100,000 7. Twilight Corporation acquired End-of-the-World Products on January 1, 2010 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2010, the End-of-the-World Products Division had a fair value of $3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2010? a. $ -0b. $250,000 c. $350,000 d. $600,000 8. Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? a. Amount of loss is reasonably estimable and event occurs infrequently. b. Amount of loss is reasonably estimable and occurrence of event is probable. c. Event is unusual in nature and occurrence of event is probable. d. Event is unusual in nature and event occurs infrequently. 9. Which of the following best describes the accrual method of accounting for warranty costs? a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred. 10. Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that a. the effective yield or market rate of interest exceeded the stated (nominal) rate. b. the nominal rate of interest exceeded the market rate. c. the market and nominal rates coincided. d. no necessary relationship exists between the two rates. 2 ACT 312 Quiz#1 11. Downing Company issues $5,000,000, 6%, 5-year bonds dated January 1, 2010 on January 1, 2010. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue? Present value of a single sum for 5 periods Present value of a single sum for 10 periods Present value of an annuity for 5 periods Present value of an annuity for 10 periods a. b. c. d. 2.5% .88385 .78120 4.64583 8.75206 3.0% .86261 .74409 4.57971 8.53020 5.0% 6.0% .78353 .74726 .61391 .55839 4.32948 4.21236 7.72173 7.36009 $5,000,000 $5,216,494 $5,218,809 $5,217,308 12. A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2010? a. $780,000 b. $1,560,000 c. $1,568,498 d. $1,568,332 13. A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2010 balance sheet? a. $19,612,643 b. $20,000,000 c. $19,625,125 d. $19,608,310 14. Kant Corporation retires its $100,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $96,250. The entry to record the redemption will include a a. credit of $3,750 to Loss on Bond Redemption. b. credit of $3,750 to Discount on Bonds Payable. c. debit of $5,750 to Gain on Bond Redemption. d. debit of $2,000 to Premium on Bonds Payable. 3 ACT 312 Quiz#1 15. 16. At the date of the financial statements, common stock shares issued would exceed common stock shares outstanding as a result of the a. declaration of a stock split. b. declaration of a stock dividend. c. purchase of treasury stock. d. payment in full of subscribed stock. What effect does the issuance of a 2-for-1 stock split have on each of the following? a. b. c. d. 17. Par Value per Share No effect Increase Decrease Decrease Retained Earnings No effect No effect No effect Decrease A corporation declared a dividend, a portion of which was liquidating. How would this distribution affect each of the following? a. b. c. d. Additional Paid-in Capital Decrease Decrease No effect No effect Retained Earnings No effect Decrease Decrease No effect 18. On May 1, 2010, Ziek Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Ziek had 100,000 shares of $1 par value common stock issued and outstanding. The fair value of Ziek 's common stock was $20 per share on May 1, 2010. As a result of this stock dividend, Ziek's total stockholders' equity a. increased by $200,000. b. decreased by $200,000. c. decreased by $10,000. d. did not change. 19. A company has not declared a dividend on its cumulative preferred stock for the past three years. What is the required accounting treatment or disclosure in this situation? a. Record a liability for cumulative amount of preferred stock dividends not declared. b. Disclose the amount of the dividends in arrears. c. Record a liability for the current year's dividends only. d. No disclosure or recognition is required. 4 ACT 312 Quiz#1 20. On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows: Common stock, par value $10; authorized 30,000 shares; issued and outstanding 9,000 shares Additional paid-in capital Retained earnings Total stockholders' equity $ 90,000 116,000 174,000 $380,000 On March 31, 2011, Arndt declared a 10% stock dividend, and accordingly 900 additional shares were issued, when the fair market value of the stock was $18 per share. For the three months ended March 31, 2011, Arndt sustained a net loss of $32,000. The balance of Arndt's retained earnings as of March 31, 2011, should be a. $125,800. b. $133,000. c. $134,800. d. $142,000. 5