Review View Help Tell me what you want to do es. Unless you need to edit, it's safer to stay in Protected View Enable Editing Reactivate 1. Berful Industries, a US corporation using US GAAP accounting standards, asks your advice in preparing its year-end financial statements. Indicate your answer by checking the appropriate line next to your selected answer. a. Berful is going to select straight-line depreciation for the new assets it acquires this year instead of the sum-of-the-years-digits method. Does this increase net income? Yes No b. Berful has a machine that has gold electrical connectors-the price of gold has risen so much that the fair market value of the machine has risen dramatically. Does this increase in fair market value for the machine require Berful to write up the value of the machine in its accounts and increase depreciation expense associated with the machine? Yes No c. Berful plans to sell treasury stock at a gain this year. Does this gain on the sale of treasury stock increase net income? Yes No d. Are Berful's liabilities required to be valued at the lower-of-cost-or- market-value? Yes No e. Berful would like to report as revenue the manufacturer's list price for goods it makes and sells, although it often cannot sell them for a price this high. Is this acceptable? Yes No f. Berful plans to issue new common shares this year at a price above par value. Increases net income? Yes No a disabled Reactivate h. Berful has used the direct write-off method to account for bad debts, but must change to the allowance method, in a year in which it has no write-offs, but expects to discover next year that some of the current year sales are uncollectible. Does this change increase net income? Yes No i. Berful wishes to accelerate the timing of the recognition of revenue by collecting cash in advance of performing services or delivering goods. Does this increase net income? Yes No j. Berful is planning to sell land it has owned for many years, at a loss of $50,000. Does this affect net income in the year of the sale? Yes No k. Berful is considering purchasing a machine, but is concerned that the delivery charges will drive down its reported profit in the year of purchase. Will these costs decrease net income in the year of purchase? Yes No 1. Berful wants to keep its current ratio high, and classifies compensating balance checking accounts as cash. Is this properly reported as cash? Yes No m. Berful is planning to treat as part of the cost its truck repairs and maintenance costs incurred. spreading the income statement effect over several years as depreciation expense. Is this appropriate? Yes No O a Oo o. Berful is planning to acquire another company this year, and hopes to avoid the recognition of goodwill . Will the recognition of goodwill reduce the net income of Berful in the year of acquisition? Yes No p. Berful is reducing the dividends it declares. Will this increase net income in the year declared? Yes No q. Berful plans to acquire land to use as a future plant site. Will the company depreciate the land when it is used as a building site for a new plant? Yes No r. Berful purchased a patent from another company this year, believing that the patent's value was grossly understated. It intends to value the patent for balance sheet purposes at its fair market value. Is this correct? Yes No S. Berful is being sued in court in a contract dispute. Its attorneys indicate that it is likely that the firm will lose when the court renders its verdict next year. Is this loss required to be reported this year or next year? This year Next year t. Berful plans to purchase treasury stock this year, and to classify it as a current asset on its balance sheet carried at its historical cost. Is this correct? Yes No