s showing how you got that answer Question 15 In presenting segment information, which of the following items must be reconciled to the entity's consolidated financial statements? Revenues Operating Profit (Loss) Identifiable Assets a. Yes Yes Yes b. No Yes Yes c. Yes No Yes d. Yes Yes No Question 10 Lanier Company began operations on January 1, 2010, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed: Final Inventory 2010 2011 FIFO $320,000 $360,000 LIFO 240,000 300,000 Net Income (computed under the FIFO method) 500,000 600,000 Based upon the above information, a change to the LIFO method in 2011 would result in net income for 2011 of $660,000. $620,000. $540,000. $600,000. Question 9 Gage Co. purchases land and constructs a service station and car wash for a total of $360,000. At January 2, 2010, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for $400,000 and immediately leased from the oil company by Gage. Fair value of the land at time of the sale was $40,000. The lease is a 10-year, noncancelable lease. Gage uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Gage at termination of the lease. A partial amortization schedule for this lease is as follows: Payments Interest Amortization Balance Jan. 2, 2010 $400,000.00 Dec. 31, 2010 $65,098.13 $40,000.00 $25,098.13 374,901.87 Dec. 31, 2011 65,098.13 37,490.19 27,607.94 347,293.93 Dec. 31, 2012 65,098.13 34,729.39 30,368.74 316,925.19 What is the amount of the lessee's liability to the lessor after the December 31, 2012 payment? (Rounded to the nearest dollar.) $347,294 $374,902 $316,925 $400,000 Question 6 The following data are provided: December 31 2011 2010 Cash $ 375,000 $ 250,000 Accounts receivable (net) 400,000 300,000 Inventories 650,000 550,000 Plant assets (net) 2,000,000 1,625,000 Accounts payable 275,000 200,000 Taxes payable 50,000 25,000 Bonds payable 350,000 350,000 10% Preferred stock, $50 par 500,000 500,000 Common stock, $10 par 600,000 450,000 Paid-in capital 400,000 325,000 Retained earnings 1,000,000 875,000 Net credit sales 3,200,000 Cost of goods sold 2,100,000 Operating expenses 725,000 Net income 375,000 Additional information: Depreciation included in cost of goods sold and operating expenses is $305,000. On May 1, 2011, 15,000 shares of common stock were issued. The preferred stock is cumulative. The preferred dividends were not declared during 2011. The rate of return on common stock equity for 2011 is 375 1,800. 325 1,800. 325 2,000. 375 2,000