Question 2. 2. Santa Corporation NOTE: These multiple choice questions require present value information. Santa Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Santas incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Santa and a portion of the company's operating lease footnote.

	2012	2011	2010
Property, Plant, & Equipment (net)	$ 882,468	$ 717,453	$ 658,214
Total Assets	1,756,854	1,405,484	1,254,896
Common Shareholders Equity	867,992	652,626	587,951
Sales	$2,922,915	$2,415,632
Cost of Goods Sold	2,016,811	1,642,630
Depreciation Expense	78,584	67,542
Interest Expense	106,663	90,343
Net Income	248,448	217,407

Santa Corp. Operating Lease Disclosure (amounts in thousands) Operating Lease Commitments at the end of 2012 Year Reported Lease Commitments 2013 $148,239 2014 $252,800 2015 $278,327 2016 $279,210 2017 $285,452 Beyond 2017 $2,471,600 Using the information provided by Santa Corporation what would be an estimate of the average life of the operating leases? (Points : 2)

8.66 years 13.66 years 10 years Not able to determine

Question 3. 3. When a foreign entity has the foreign currency as its functional currency, it uses which exchange rate to translate revenues and expenses in the income statement? (Points : 2)

Average exchange rate during the period End of the period exchange rate Historical exchange rate Exchange rate on the date the asset or liability was obtained

Question 4. 4. Record Corporation CD Inc. acquires 100% of the outstanding shares of Record Corp. for $1,200,000 and accounts for the transaction using the purchase method. Record Corps balance sheet at the date of acquisition appears below:

Record, Corp. Balance Sheet Acquisition Date Assets Cash	Historical Cost	Current Market Value
	$ 479,000	$479,000
Accounts Receivable	225,400	210,000
Inventory	98,900	105,000
Depreciable Assets less Accumulated Depreciation	554,700	600,000
Note Receivable Goodwill	100,000	100,000
Total Assets	$1,458,000
Liabilities and Equities Accounts Payable	$ 458,000	$458,000
Note Payable	325,000	325,000
Deferred Income Tax Liability	125,000	125,000
Shareholders' Equity	550,000
Total Liabilities and Equities	$1,458,000

Based on the information concerning Record Corp. what amount of goodwill should CD record at the acquisition date? (Points : 2)

($294,000) $614,000 $1,200,000 $350,000

Question 5. 5. Playtime Corporation Assume that Playtime Corp. has agreed to construct a new playground for SurreyCounty for $2,450,000. Construction of the new playground will begin on March 17, 2012 and is expected to be completed in August 2013. At the signing of the contract Playtime Corp. estimates that the it will cost $1,750,000 to build the playground. At the end of 2012 Funtime provided the following information about the project: Costs incurred Estimated costs Year to date remaining 2012 $1,200,000 $600,000 If Playtime uses the percentage of completion to recognize revenue on the long-term contract how much gross margin should Playtime recognize in 2012? (Points : 2)

$389,200 $278,000 $556,000 $433,550