Question
Northern purchased the entire business of Southern including all its assets and liabilities for $2,880,000 on December 31, 2021. Below is information related to the
Northern purchased the entire business of Southern including all its assets and liabilities for $2,880,000 on December 31, 2021. Below is information related to the two companies at that date:
| Northern | Southern | |||||||
| Fair value of assets | $ | 5,040,000 | $ | 3,840,000 | ||||
| Fair value of liabilities | 2,520,000 | 1,440,000 | ||||||
| Reported assets | 3,840,000 | 3,120,000 | ||||||
| Reported liabilities | 2,400,000 | 1,200,000 | ||||||
| Net Income for the year | 288,000 | 240,000 | ||||||
How much goodwill did Northern pay for acquiring Southern?Multiple Choice
-
$720,000.
-
$1,440,000.
-
$960,000.
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$480,000.
On November 1, 2021, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, with the contract to start immediately. King agreed to pay Taylor $5,520 for the one-year period. Taylor is confident that King will pay that amount, but payment is not scheduled to occur until 2022. Taylor should recognize revenue in 2021 in the amount of
Multiple Choice
-
$2,760.
-
$0.
-
$5,520.
-
$920.
On August 1, 2021, Rocket Retailers adopted a plan to discontinue its catalog sales division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by June 30, 2022. On January 31, 2022, Rocket's fiscal year-end, the following information relative to the discontinued division was accumulated:
| Operating loss Feb. 1, 2021Jan. 31, 2022 | $ | 129,000 | |
| Estimated operating losses, Feb. 1June 30, 2022 | 74,000 | ||
| Impairment of division assets at Jan. 31, 2022 | 29,000 | ||
In its income statement for the year ended January 31, 2022, Rocket would report a before-tax loss on discontinued operations of:
Multiple Choice
-
$(203,000).
-
$(158,000).
-
$(129,000).
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$(45,000).
On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available:
| Sales, January 1 through July 8 | $ | 691,000 | |
| Inventory, January 1 | 145,000 | ||
| Purchases, January 1 through July 8 | 655,000 | ||
| Gross profit ratio | 22 | % | |
What is the estimated inventory on July 8 immediately prior to the fire?
Multiple Choice
-
$262,220.
-
$261,020.
-
$538,980.
-
$144,100.
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Intermediate Accounting Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian edition
978-1119496496
