Question 17

. J & J exchanged an asset with a book value of $10,000 and paid $1,000 in cash for a another asset from W & W Company with a book value of $10,300. The fair value of the given asset was $9,500 and the new asset was $10,500. Calculate the gain or loss to be recognized by J & J. Assume commercial substance.

		$10,500
		$9,500
		$11,500
		None of the above

Question 18

Which of the following statements concerning exchanges of like kind assets without commercial substance is not true?

		Always recognize losses
		Gains are not recognized if cash is paid
		Losses are recognized if cash is paid
		Gains are never recognized

Question 19

J & J trades an asset that had a book value of $18,000 for another asset with a fair market value of $20,000. Assume lack of commercial substance. J & J pays $500 in cash. J & Js asset has a fair market value of $19,500. J & J would record the cost of the new asset at?

		$21,500
		$18,500
		$19,500
		$20,000

Question 20

A loss on the sale of an operating asset results if the proceeds from the sale

		are less than the book value of the asset
		exceed the book value of the asset
		are less than the fair market value of the asset
		exceed the fair market value of the asset

Question 21

During periods of inflation which of the following will yield the highest cost of sales

		average cost
		LIFO
		FIFO
		Gross profit method

Question 22

Which of the following is considered an advantage to using he first-in, first-out method

		higher net income with inflation
		lower income tax with inflation
		higher cash flows from operation with inflation
		a closer match between earnings and current cost income

Question 23

Which of the following will not be a result of a LIFO liquidation?

		The value of ending inventory will decline
		Net income will be higher
		The ending inventory will exceed beginning inventory
		None of the above would result from LIFO liquidation

Question 24

Which statement about dollar-value LIFO is false?

		it assumes that inventory is a quantity of value rather than a quantity of physical goods
		it measures increases and decreases in inventory in dollar amounts rather than in the number of objects
		it helps companies avoid some of the problems associated with traditional LIFO
		none of the statements are false

Question 25

J & J began using the dollar-value LIFO method in 2015 when its ending inventory was recorded at $50,000. The 2016 ending inventory at year-end prices was $54,000. Calculate the increase or decrease of inventory for 2016 in real terms assuming 106 percent is the price index

		$7,240 increase
		$3,773 increase
		$943 increase
		$1,000 increase

Question 26

Regarding debt securities, amortized cost is the

		acquisition cost adjusted for the amortization of discounts or premiums
		acquisition cost adjusted for the changes in fair value
		fair value adjusted for the amortization of discounts or premiums
		maturity value adjusted for the amortization of discounts or premiums

question 27

The journal entry to record an increase in the fair value of an available-for-sale security would include a debit to

AdjustmentAvailable-for-Sale Securities and a credit to Unrealized Holding GainEquity

Unrealized Holding GainEquity and a credit to AdjustmentAvailable-for-Sale Securities

AdjustmentAvailable-for-Sale Securities and a credit to Unrealized Holding GainIncome

Unrealized Holding GainIncome and a credit to AdjustmentAvailable-for-Sale Securities

Question 28

On May 1, 2015, J & J purchased bonds issued by W & W Company. The bonds have a face value of $100,000, pay interest annually at 6 percent on November 1 and May 1, and mature in five years from the date of purchase. J & J purchased the bonds for $106,000. J & Js accounting fiscal year ends on December 31. Assume the J & J uses the straight-line method of amortization andthe bonds are classified as Held to Maturity. What is the amount of interest income reported on the 2015 income statement?

		$6000
		$3000
		$3,200
		$2,400

Question 29

On May 1, 2015, J & J purchased bonds issued by W & W Company. The bonds have a face value of $100,000, pay interest annually at 6 percent on November 1 and May 1, and mature in five years from the date of purchase. J & J purchased the bonds for $106,000. J & Js accounting fiscal year ends on December 31. Assume the J & J uses the straight-line method of amortization andthe bonds are classified as Held to Maturity. What is the amortized cost at December 31, 2015?

		$100,000
		$105,200
		$104,800
		$106,000

Question 30

The following information is available for J & Js investment in equity securities for 2015:

Net income (including appropriate investment income)	$800,000
Unrealized holding gainequity, January 1, 2015	50,000
Unrealized gain on available-for-sale securities during 2015	20,000
Reclassification adjustment for realized gain on the sale of available-for-sale securities	8,000
Unrealized holding lossincome	10,000

What is the accumulated other comprehensive income at December 31, 2015?

		$70,000
		$50,000
		$30,000
		None of the above