M$4-1$

LO $4\mathrm{.}1$ A donated fixed asset $($from a governmental unit$)$ for which the fair value has been determined should be recorded as a debit to Fixed Assets and a credit to:

Contributed Capital

Retained Earnings

Deferred Income

Other Income

M$4-2$

LO $4\mathrm{.}2$ A company receives an advance payment for special$-$order goods to be manufactured and delivered within $6$ months. The advance payment should be reported on the company$$s balance sheet as a:

deferred charge

contra$-$asset account

current liability

noncurrent liability

M$4-3$

LO $4\mathrm{.}2$ Which of the following may be used to determine fair value based on Level $3$ inputs?

Estimated Market Value Present Value

a$.$ No No

b$.$ No Yes

c$.$ Yes No

d$.$ Yes Yes

M$4-4$

LO $4\mathrm{.}3$ On October $2,2020,$ a company borrowed cash and signed a $3-$year, interest$-$bearing note on which both the principal and interest are payable on October $2,2023.$ At December $31,2022,$ the principal and accrued interest should:

be reported on the balance sheet as current liabilities

be reported on the balance sheet as noncurrent liabilities

be reported on the balance sheet as long$-$term notes payable

not be reported on the balance sheet as liabilities

M$4-5$

LO $4\mathrm{.}3$ Land reported in the property, plant, and equipment section of a manufacturing company$$s balance sheet is reported at:

historical cost

historical cost, less accumulated depreciation

fair value

lower of cost or market value

M$4-6$

LO $4\mathrm{.}6$ Rent revenue collected $1$ month in advance should be accounted for as:

revenue in the month collected

a current liability for deferred revenue

a separate item in shareholders$$ equity

an accrued liability

M$4-7$

LO $4\mathrm{.}5$ GAAP related to the disclosure of accounting policies:

requires a description of every accounting policy followed by a reporting entity

provides a specific listing of all types of accounting policies that must be disclosed

requires disclosure of the format for the statement of cash flows

requires a description of all significant accounting policies to be included as an integral part of the financial statements

M$4-8$

LO $4\mathrm{.}5$ Which of the following contingencies should generally be accrued on the balance sheet when the occurrence of the contingent event is probable and its amount can be reasonably estimated?

Gain Contingency Loss Contingency

a$.$ Yes Yes

b$.$ Yes No

c$.$ No Yes

d$.$ No No

M$4-9$

LO $4\mathrm{.}5$ Which of the following should be disclosed in the Summary of Significant Accounting Policies?

rent expense amount

maturity dates of long$-$term debt

methods of amortizing intangibles

composition of plant assets

M$4-10$

LO $4\mathrm{.}6$ The balance sheet provides information about each of the following items, except:

operating capability of entity

results of entity$$s operations

entity$$s liquidity

financial flexibility of entity