QUESTION 1

Which of the following is true?

1. The Financial Accounting Standards Board has never permitted the disclosure of the fair values of noncurrent operating assets in the notes to financial statements

2. The SEC currently requires the disclosure of the fair values of noncurrent operating assets

3. The Financial Accounting Standards Board currently requires the disclosure of the fair values of noncurrent operating assets in the notes to the financial statements

4. Disclosure of the fair values of noncurrent operating assets in the notes to the financial statements is currently encouraged but not required by the Financial Accounting Standards Board

QUESTION 2

Carter Company acquired three machines for $200,000 in a package deal. The three assets together had a book value of $160,000 on the seller's books. An appraisal costing the purchaser $2,000 indicated that the three machines had the following market values (book values are given in parentheses):

Machine 1: $60,000 ($40,000)

Machine 2: $80,000 ($50,000)

Machine 3: $100,000 ($70,000)

The three assets should be individually recorded at a cost of (rounded to the nearest dollar)

1. Machine 1 Machine 2 Machine 3

$40,000 $53,333 $66,667

2. Machine 1 Machine 2 Machine 3

$50,000 $62,500 $87,500

3. Machine 1 Machine 2 Machine 3

$40,000 $50,000 $70,000

4. Machine 1 Machine 2 Machine 3

$50,500 $67,333 $84,167

QUESTION 3

An adjusting entry in which revenue is recognized and a receivable is established indicates that revenue has been

Earned Collected

a.	Yes No
b.	Yes Yes
c.	No Yes
d.	No No

QUESTION 4

Franchise fees are properly recognized as revenue

a.	when received in cash
b.	when a contractual agreement has been signed
c.	after the franchise business has begun operations
d.	after the franchiser has substantially performed its service