QUESTION 2

ABC alleges that new equipment from a supplier had a defect that resulted in substantial losses for ABC. ABC believes it has a 51% chance of winning the case. Furthermore, ABC estimates that the supplier's losses will be in the range of $ 1,000,000 and $ 3,000,000, in which any number is equally likely to occur. Under IFRS, ABC must accumulate a contingent asset for the amount of

$ 0

$ 3,000,000

$ 2,000,000

$ 1,000,000

5 points

QUESTION 3

ABC paid interest for a total of $ 785,000 during the year 2019, and increased the interest account payable by $ 125,000. What was the interest expense reported in the 2019 income statement?

$ 660,000

$ 910,000

$ 555,000

$ 785,000

5 points

QUESTION 4

ABC loaned $ 200,000 on January 1, 2011, and signed a two-year note at 12% interest. Interest is paid in full upon maturity on January 1, 2013. In relation to this note, ABC must report financial expenses as of December 31, 2011 in the amount of:

$ 0

$ 24,000

$ 48,000

$ 50,880

5 points

QUESTION 5

A company should accrue a loss contingency only if the probability that a liability has been incurred is:

More likely than not and the amount of the loss is known

At least reasonably possible and the amount of the loss is known

At least reasonably possible and the amount of the loss can be reasonably estimated

Probable and the amount of the loss can be reasonably estimated

5 points

QUESTION 6

ABC loaned $ 500,000 on June 1, 2019 and signed an 11-month document with a stipulated interest of 6%. Interest will be paid in full on the due date. In relation to this document, ABC must report an interest expense in 2020 for the amount of

$ 17,500

$ 10,000

$ 10,909

$ 5,000

5 points

QUESTION 7

An XYZ customer alleges that company equipment has a defect that resulted in serious injury to the customer. XYZ believes that the client has an 85% chance of winning the case, and that if the client wins the case, there is a range of losses between $ 300,000 and $ 1,000,000 in which any number is equally likely. Under GAAP, XYZ must accrue a liability in the amount of

$ 1,000,000

$ 650,000

$ 0

$ 300,000

QUESTION 8

On January 1, 2019, ABC sold $ 177,000 of 12% ten-year bonds. Interest is paid semi-annually on June 30 and December 31. The bonds were sold for $ 200,000, with an effective rate of 10%. Determine the interest expense that ABC must report on June 30, 2019 under the effective interest method.

$ 10,000

$ 12,000

$ 10,620

$ 20,000

5 points

QUESTION 9

Like the state performance tax (SUTA) there is a maximum wage base for the federal unemployment tax (FUTA) that must be used when determining both deductions from employee wages.

True

False

5 points

QUESTION 10

Unasserted assessment of penalty that is reasonably possible that will be asserted and in which case a loss is probable, should be recorded as a liability.

True

False

5 points

QUESTION 11

A prepayment from a customer produces a debt that is eliminated when control of the products or services is transferred to the customer.

True

False

5 points

QUESTION 12

Under GAAP, the term "likely" indicates a probability threshold that is substantially higher than a 50/50 probability.

True

False

5 points

QUESTION 13

Social security and medicare taxes must be withheld from employees' wages unless they reach the maximum wage limit.

True

False

5 points

QUESTION 14

When the probability is remote, the estimated cost of guarantees does not have to be reported in the 10k either as debt or as an expense, but as an explanatory note.

True

False

5 points

QUESTION 15

The discount on the bond payable account is amortized with a debit

True

False

5 points

QUESTION 16

According to IFRS, a liability refinanced after the balance sheet date, but before the financial statements are issued, would normally be classified as a current liability.

True

False