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Chapter 24 - Full Disclosure in Financial Reporting (MC Computational)

Terms in this set (9)

Presented below are four segments that have been identified by Haley Productions:

Seg Tot Rev Operating Ident Asset
A $255,000 $30,000 $900,000
B 600,000 (55,000) 800,000
C 225,000 6,000 450,000
D 90,000 4,000 225,000
For which of the segments would information have to be disclosed in accordance with professional pronouncements?
a. Segments A, B, C, and D
b. Segments A, B, and C
c. Segments A and B
d. Segments A and D
b

Revenue test: Total revenue = $1,170,000 × 10% = $117,000.
Operating profit test: $55,000 × 10% = $5,500.
Asset test: Total assets = $2,375,000 × 10% = $237,500
57. In January 2015, Post, Inc. estimated that its year-end bonus to executives would be $840,000 for 2015. The actual amount paid for the year-end bonus for 2014 was $770,000. The estimate for 2015 is subject to year-end adjustment. What amount, if any, of expense should be reflected in Post's quarterly income statement for the three months ended March 31, 2015?
a. $ -0-.
b. $192,500.
c. $210,000.
d. $840,000.
c

$840,000 ÷ 4 = $210,000
58. On January 15, 2015, Vancey Company paid property taxes on its factory building for the calendar year 2015 in the amount of $960,000. In the first week of April 2015, Vancey made unanticipated major repairs to its plant equipment at a cost of $2,400,000. These repairs will benefit operations for the remainder of the calendar year. How should these expenses be reflected in Vancey's quarterly income statements?
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15
a.$240,000 $1,040,000 $1,040,000 $1,040,000
b.$240,000 $2,640,000 $240,000 $240,000
c.$960,000 $1,600,000 $ -0- $ -0-
d.$840,000 $840,000 $840,000 $840,000
a

$960,000 ÷ 4 = $240,000.
$2,400,000 ÷ 3 = $800,000 + $240,000 = $1,040,000
An inventory loss from market decline of $1,200,000 occurred in May 2015, after its March 31, 2015 quarterly report was issued. None of this loss was recovered by the end of the year. How should this loss be reflected in the company's quarterly income statements?
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15
a.$ -0- $ -0- $ -0- $1,200,000
b.$ -0- $400,000 $400,000 $400,000
c.$ -0- $1,200,000 $ -0- $ -0-
d.$300,000 $300,000 $300,000 $300,000
c

Conceptual
71. Perez Company's net accounts receivable were $800,000 at December 31, 2014 and $880,000 at December 31, 2015. Net cash sales for 2015 were $520,000. The accounts receivable turnover for 2015 was 8.0. What were Perez's total net sales for 2015?
a. $4,160,000.
b. $6,720,000.
c. $7,240,000.
d. $6,200,000.
c

(X - $520,000) / [($800,000 + $880,000) / 2] =
8.0, X = $7,240,000
72. During 2015, Quirk, Incorporated purchased $3,500,000 of inventory. The cost of goods sold for 2015 was $3,600,000 and the ending inventory at December 31, 2015, was $400,000. What was the inventory turnover for 2015?
a. 7.0.
b. 7.2.
c. 8.0.
d. 9.0.
c

$3,600,000 + $400,000 - $3,500,000 = $500,000

$3,600,000 / [($500,000 + $400,000) ÷ 2 ] = 8.0
76. The following information pertains to Nixon Corp. and its divisions for the year ended December 31, 2015.
Sales to unaffiliated customers $3,000,000
Intersegment sales of products similar to those sold to
unaffiliated customers 900,000
Interest earned on loans to other operating segments 60,000
Nixon and all of its divisions are engaged solely in manufacturing operations. Nixon has a reportable segment if that segment's revenue exceeds
a. $396,000.
b. $390,000.
c. $306,000.
d. $300,000.
b

($3,000,000 + $900,000) × 10% = $390,000
78. Mayo Corp. has estimated that total depreciation expense for the year ending December 31, 2015 will amount to $450,000, and that 2015 year-end bonuses to employees will total $900,000. In Mayo's interim income statement for the six months ended June 30, 2015, what is the total amount of expense relating to these two items that should be reported?
a. $0.
b. $225,000.
c. $675,000.
d. $1,350,000.
c

($450,000 + $900,000) ÷ 2 = $675,000
79. Fina Corp. had the following transactions during the quarter ended March 31, 2015:
Loss from hurricane damage $420,000
Payment of fire insurance premium for calendar year 2015 700,000
What amount should be included in Fina's income statement for the quarter ended
March 31, 2015?
Extraordinary Loss Insurance Expense
a. $420,000 $700,000
b. $420,000 $175,000
c. $105,000 $175,000
d. $0 $700,000
b

Extraordinary loss = $420,000
Insurance expense = $700,000 ÷ 4 = $175,000.
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