PRACTICAL ACCOUNTING 1 TEST BANK

1. Vance Company provided the following information on December 31, 2013: Copyright Deposit with advertising agency sed to promote goodwill "ond sin#ing f nd $%cess of cost over fair val e of identifiable net assets of ac& ired s bsidiary (rademar# a. b. c. d. +,,00,000 -,0!0,000 -,100,000 -,3!0,000 300,000 2!0,000 !00,000 3,'00,000 '00,000

)n December 31, 2013, what amo nt sho ld be reported as total intangible assets*

2. .ogan Company reported the following information for the c rrent year: /ales Cost of sales 0dministrative e%penses .oss on sale of e& ipment Commissions to salespersons 1nterest reven e 2reighto t .oss on disposition of wholesale division "ad debt e%pense 1,+00,000 -00,000 2-0,000 '0,000 ,0,000 -0,000 30,000 120,000 30,000

(he income ta% rate is 303. 2inished goods inventory was 4,00,000 on 5an ary 1 and 4!00,000 on December 31. 6hat is the income from continuing operation before ta%* a. b. c. d. 7+0,000 3-0,000 +!0,000 2+-,000

3. 8 th Company provided the following events for !"1#. (he ta% rate is 303. Depreciation for !"11 was fo nd to be nderstated 0 litigation settlement res lted in a loss (he inventory on $ecem%er #1& !"11 was overstated (he entity disposed of the recreational division at a loss 6hat wo ld be the effect of these events on !"1# net income net of ta%* a. 1!,-00 b. 37!,-00 c. 3,,,-00 d. +17,-00 +. Colaw Company paid all salaried employees on a biwee#ly basis. )vertime pay is paid in the ne%t biwee#ly period. (he entity accr ed salaries e%pense only on December 31. .ast payroll was paid on December 27, 2013, for the 29wee# period ended December 27, 2013. )vertime pay earned in the 29wee# period ended December 27, 2013 was 410,000. 8emaining wor# days in 2013 were December 2', 30, 31 on which days there was no overtime. (he rec rring biwee#ly salaries total 41,0,000. 0ss ming a fi'e()a* +or, +ee,, what amo nt sho ld be recorded as liability on December 31, 2013 for accr ed salaries* a. b. c. d. -+,000 7+,000 10,,000 11,,000 30,000 2-,000 +0,000 -00,000

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-. D ring 2013, .ope: Company disposed of 4ine Division, a ma;or component. (he entity reali:ed a gain of 41,200,000 on the sale of 4ine<s assets. (he operating loss was 41,+00,000 in 2013. 6hat amo nt sho ld be reported in discontin ed operation* a. 1,200,000 gain b. 1,+00,000 loss c. 200,000 loss d. 0 7. =ohler Company owned the following investments: (rading sec rities at fair val e 700,000 0vailable for sale sec rities at fair val e 3-0,000 >eld to mat rity sec rities at amorti:ed cost 6hat total amo nt sho ld be reported as long9term investments* a. 1,0!0,000 b. 1,+20,000 c. '-0,000 d. ,20,000 !. /tine Company reported the following balances on December 31, 2013: 0cco nts receivable (rading sec rities 0cc m lated depreciation on e& ipment and f rnit re Cash 1nventory $& ipment 4atent 4repaid e%penses .and held for f t re b siness site 2,+00,000 700,000 1,-00,000 1,100,000 3,000,000 2,-00,000 +00,000 200,000 1,,00,000

+!0,000

6hat total amo nt sho ld be reported as c rrent assets on December 31, 2013* a. ',000,000 b. ,,200,000 c. !,!00,000 d. !,300,000 ,. =aniper Company reported the following items at year9end: Cash in ban# 4etty cash Commercial paper with mat rity of 2 months 4ostdated chec#s 6hat total amo nt sho ld be reported as cash and cash e& ivalents* a. 2,000,000 b. 2,030,000 c. 2,-,0,000 d. 2,!20,000 '. >en#e Company provided the following information for the c rrent year: "alance per ban# statement, 0pril 30 ?/2 chec# ret rned with 0pril 30 ban# statement Deposits in transit, 0pril 30 ) tstanding chec#s, 0pril 30 "an# service charges for 0pril 6hat is the correct balance of cash on 0pril 30* a. 3,'3!,000 b. 3,,'+,000 c. 3,,+',000 d. 3,,+!,000 3,'1+,000 +-,000 -00,000 -20,000 2,000 2,000,000 30,000 --0,000 1+0,000

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10. @oon Company assigned 41,-00,000 of acco nts receivable as collateral for a 41,000,000 loan with a ban#. (he ban# assessed a 33 finance fee and charged interest on the note at 73. 6hat wo ld be the ;o rnal entry to record this transaction* a. Debit cash 4'!0,000, debit finance charge 430,000, and credit note payable 41,000,000 b. Debit cash 4'!0,000, debit finance charge 430,000, and credit acco nts receivable 41,000,000. c. Debit cash 4'!0,000, debit finance charge 430,000, debit d e from ban# 4-00,000, and credit acco nts receivable 41,-00,000. d. Debit cash 4'10,000, debit finance charge 4'0,000, and credit note payable 41,000,000. 11. .ester Company received a seven9year :ero9interest9bearing note on 2ebr ary 1, 2013, in e%change for property it sold to 4orter Company. (here was no established e%change price for this property and the note has no ready mar#et. (he prevailing rate of interest for a note of this type was !3 on 2ebr ary 1, 2013, !.-3 on December 31, 2013, !.!3 on 2ebr ary 1, 201+, and ,3 on December 31, 201+. 6hat interest rate sho ld be sed to calc late the interest reven e from this transaction for 2013 and 201+, respectively* a. 03 and 03 b. !3 and !3 c. !3 and !.!3 d. !.-3 and ,3 12. 8oyal Company, an e& ipment distrib tor, sells a piece of machinery with a list price of 4,00,000 to 0rch Company. 0rch Company will pay 4,-0,000 in one year. 8oyal Company normally sells this type of e& ipment for '03 of list price. 6hat amo nt sho ld be recorded as reven e* a. b. c. d. !20,000 !7-,000 ,00,000 ,-0,000

13. Aroh Company recorded the following data pertaining to material B d ring 5an ary: $ate Recei'e) 5an. 1 1nventory 5an. 11 1ss e 5an. 31 4 rchase +,000 6hat is the moving9average nit cost on 5an ary 31* a. ,.!0 b. ,.,c. '.00 d. '.+0 Co t ,.00 '.+0 I ue) 1,700 On 1an) 3,200 1,700 -,700

1+. D b Dairy prod ces mil# to sell to local and national ice cream prod cers. D b Dairy began operations on 5an ary 1, 2013 by p rchasing ,+0 mil# cows for 41,1!7,000. (he entity reported the following information at year9end relating to the mil#ing cows: Carrying val e, 5an ary1, 2012 Change in fair val e d e to growth and price changes Decrease in fair val e d e to harvest @il# harvested d ring 2012 b t not yet sold 6hat amo nt of unrealized gain on harvested milk sho ld be reported for 2013* a. ?o gain is reported ntil the mil# is sold. b. 12,000 c. -+,000 d. 311,000 1,1!7,000 37-,000 C +2,000D -+,000

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1-. D ring the prior fiscal year, 5eremiah Company signed a long9term noncancelable p rchase commitment with a primary s pplier to p rchase 42,-00,000 of raw materials. (he entity paid 42,-00,000 to ac& ire the raw materials when the raw materials were only worth 42,200,000. (he p rchase commitment was properly recorded. 6hat is the ;o rnal entry to record the p rchase* a. Debit 1nventory 42,200,000 and credit Cash 42,200,000 b. Debit 1nventory 42,200,000, debit Enreali:ed >olding .oss 4300,000 and credit Cash 42,-00,000 c. Debit 1nventory 42,200,000, debit 4 rchase Commitment .iability 4300,000 and credit Cash 42,-00,000 d. Debit 1nventory 42,-00,000 and credit Cash 42,-00,000 17. /iegle Company e%changed +0,000 shares of A inn Company ordinary shares which /iegle was holding as an investment for e& ipment from @ayo Company. (he A inn Company ordinary shares, which had been p rchased by /iegle for 4-0 per share, had a & oted mar#et val e of 4-, per share at the date of e%change. (he e& ipment had a recorded amo nt on @ayo<s boo#s of 42,100,000. 6hat ;o rnal entry sho ld be made to record the e%change* a. $& ipment 2,000,000 1nvestment in A inn Company )rdinary /hares 2,000,000 b. $& ipment 2,100,000 1nvestment in A inn Company )rdinary /hares 2,000,000 Aain on Disposal of 1nvestment 100,000 c. $& ipment 2,100,000 .oss on Disposal of 1nvestment 220,000 1nvestment in A inn Company )rdinary /hares 2,320,000 d. $& ipment 2,320,000 1nvestment in A inn Company )rdinary /hares 2,000,000 Aain on Disposal of 1nvestment 320,000 1!. /torm Company p rchased a new machine on )ctober 31. 0 4120,000 down payment was made and three monthly installments of 4370,000 each are to be made beginning on ?ovember 30. (he cash price wo ld have been 41,170,000. (he entity paid no installation charges nder the monthly payment plan b t a 420,000 installation charge wo ld have been inc rred with a cash p rchase. 6hat amo nt sho ld be capitali:ed as the cost of the machine* a. 1,220,000 b. 1,200,000 c. 1,1,0,000 d. 1,170,000 1,. 1n 2010, >orton Company p rchased a tract of land as a possible f t re plant site. 1n 5an ary, 2013, val able s lph r deposits were discovered on ad;oining property and the entity immediately began e%ploration on the property. 1n December 2013, after inc rring 4+00,000 in e%ploration costs which were acc m lated in an e%pense acco nt, the entity discovered s lph r deposits appraised at 42,2-0,000 more than the val e of the land. 6hat is the appropriate ;o rnal entry to record the discovery of the deposits* a. @a#e no entry b. Debit 4+00,000 to an asset acco nt c. Debit 42,2-0,000 to an asset acco nt d. Debit 42,7-0,000 to an asset acco nt 1'. @iser Company e%changed 20,000 ordinary shares of 42- par val e held in treas ry for a land to be held for a f t re plant site. (he treas ry shares were ac& ired previo sly at a cost of 4+0 per share and on the e%change date the ordinary shares had a fair val e of 4-0. (he entity received 470,000 for selling scrap when an e%isting b ilding on the property was removed from the site. 6hat amo nt sho ld be capitali:ed as cost of the land* a. 1,000,000 b. ,00,000 c. '+0,000 d. !+0,000

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20. )n 5an ary 1, 2011, @ no: Company p rchased machinery. (he machinery has an estimated sef l life of eight years and resid al val e of 430,000. (he depreciation applicable to this machinery was 47-,000 for 2013 comp ted by the s m of the years< digits method. 6hat is the ac& isition cost of the machinery* a. 370,000 b. 3'0,000 c. +20,000 d. +7,,000 21. D ring 2013, "ass Company constr cted assets costing 410,000,000. (he weighted average acc m lated e%pendit res on these assets d ring 2013 totaled 47,000,000. (o help pay for constr ction, 4+,+00,000 was borrowed at 103 on 5an ary 1, 2013, and f nds not needed for constr ction were temporarily invested in short9term sec rities, yielding 4'0,000 in interest reven e. )ther than the constr ction f nds borrowed, the only other debt o tstanding d ring the year was a 4-,000,000, 109year, '3 note payable dated 5an ary 1, 2010. 6hat is the amo nt of interest that sho ld be capitali:ed d ring 2013* a. 700,000 b. 300,000 c. +'+,000 d. '++,000 22. .oa:ia Company inc rred the following costs d ring the c rrent year: .aboratory research aimed at discovery of new #nowledge Costs of testing prototype and design modifications economic viability not yet achieved F ality control d ring commercial prod ction, incl ding ro tine testing Constr ction of research facilities having an estimated sef l life of 7 years b t no alternative f t re se 6hat total amo nt sho ld be recogni:ed as research and development e%pense* a. ---,000 b. ,--,000 c. -,-,000 d. 2,-,000 1,0,000 +-,000 2!0,000 370,000

23. Vopat Company is a retail store operating in a state with a -3 retail sales ta%. (he state law provides that the retail sales ta% collected d ring the month m st be remitted to the state d ring the following month. 1f the amo nt collected is remitted to the state on or before the twentieth of the following month, the retailer may #eep 33 of the sales ta% collected. )n 0pril 10, 2013, the entity remitted 4,1,+,0 ta% to the state ta% division for @arch 2013 retail sales. 6hat was the @arch 2013 retail sales s b;ect to sales ta%* a. 1,72',700 b. 1,-'7,000 c. 1,7,0,000 d. 1,7+-,000 2+. Vargas Company has 3- employees who wor# ,9ho r days and are paid ho rly. )n 5an ary 1, 2011, the entity began a program of granting the employees 10 days of paid vacation each year. Vacation days earned in 2011 may first be ta#en on 5an ary 1, 2012. 4ear 2011 2012 2013 1our2* 5age 2-.,0 2!.00 2,.-0 3acation $a* Earne) 3acation $a* U e) %* Eac6 Emp2o*ee %* Eac6 Emp2o*ee 10 0 10 , 10 10

(he entity has chosen to accr e the liability for compensated absences at the c rrent rate of pay in effect +6en t6e compen ate) time i earne). 6hat is the accr ed liability for compensated absences on December 31, 2013* a. '+,'20 b. '0,!20 c. !',,00

d. '-,!70

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2-. (o#yo Company offers a cash rebate of 410 on each 4+0 pac#age of batteries sold d ring 2013. >istorically, 103 of c stomers mail in the rebate form. D ring 2013, 700,000 pac#ages of batteries are sold, and 21,000 410 rebates are mailed to c stomers. 6hat is the rebate e%pense and liability, respectively, reported in the 2013 financial statements* a. 700,000 and 700,000 b. 700,000 and 3'0,000 c. 3'0,000 and 3'0,000 d. 210,000 and 3'0,000 27. "lit: Company, a man fact rer of cleaning prod cts, is preparing ann al financial statements on December 31, 2013. "eca se of a recently proven health ha:ard in one of the cleaning prod cts, the government has clearly indicated its intention of having the entity recall all cans of this paint sold in the last three months. (he entity estimated that this recall wo ld cost 4-,,00,000. 6hat acco nting recognition sho ld be accorded this sit ation* a. ?o recognition b. ?ote disclos re only c. $%pense of 4-,,00,000 and liability of 4-,,00,000 d. $%pense of 4-,,00,000, and retained earnings restriction of 4-,,00,000 2!. )n December 31, 2013, 2rye Company had 4+,000,000 of short9term note payable d e on 2ebr ary 2,, 201+. )n December 23, 2013, the entity arranged a line of credit with Co nty "an# which allows borrowing p to 43,-00,000 at one percent above the prime rate for three years. )n 7e%ruar* 1& !"18, the entity borrowed 42,-00,000 from Co nty "an# and sed 4-00,000 additional cash to li& idate 43,000,000 of the note payable. (he financial statements were iss ed on @arch 31, 201+. 6hat is the amo nt of note payable that sho ld be reported as c rrent on December 31, 2013* a. 0 b. -00,000 c. 1,000,000 d. +,000,000 2,. )n December 31, 2013, 8entro Company had bonds payable of 41,3,0,000 and interest payable of 43!,000. 1f the bonds are retired on 5an ary 1, 201+, for 41,-30,000, what amo nt sho ld be reported as a loss on redemption* a. 3!,000 b. 113,000 c. 1-0,000 d. 1,!,000 2'. )n December 31, 2013 "ordea % Company reported '3 bonds payable d e December 31, 2020 at 43,0,1,000. (he bonds were iss ed on December 31, 2010 and have a face amo nt of 43,000,000 with interest payable semiann ally on 5 ly 1 and December 31. )n 5an ary 1, 201+, the entity retired 41,000,000 of these bonds at ',. 6hat amo nt sho ld be reported as gain on the retirement of the bonds in 201+* a. 1+1,000 b. +!,000 c. 21,000 d. !,000 30. 0n /@$ has a deferred ta% asset acco nt with a balance of 4300,000 at the end of 2012 d e to a single c m lative temporary difference of 4!-0,000. 0t the end of 2013, this same temporary difference has increased to a c m lative amo nt of 41,000,000. (a%able income for 2013 is 41,!00,000. (he ta% rate is +03 for 2013, b t enacted ta% rate for all f t re years is 3-3. 1t is probable that !03 of the deferred ta% asset will be reali:ed. 6hat amo nt sho ld be reported for deferred ta% asset on December 31, 2013* a. 272,-00 b. 2,0,000 c. 2+-,000

d. -'-,000

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31. .ehman Company p rchased a machine on 5an ary 1, 2012 for 42,000,000. (he machine has an estimated -9year life with no resid al val e. (he straight line method of depreciation is sed for financial statement p rposes and the following accelerated depreciation amo nts will be ded cted for ta% p rposes: 2012 2013 201+ +00,000 7+0,000 3,+,000 2012017 201! 230,000 230,000 117,000

(he income ta% rate is 303 for all years. 6hat amo nt of nonc rrent deferred ta% liability sho ld be reported on December 31, 2013* a. !2,000 b. 7!,200 c. +,,00 d. 0 32. 1n 2013, =ra se Company accr ed for financial reporting estimated loss on disposal of n sed plant facility of 41,-00,000. (he facility was sold in @arch 201+ and a 41,-00,000 loss was recogni:ed for ta% p rposes. 0lso in 2013, the entity paid 4100,000 in fines for violation of environmental reg lations. (he enacted ta% rate is 303 in both 2013 and 201+. (he entity paid 4!,0,000 in income ta%es in 2013. 6hat amo nt sho ld be reported as deferred ta% asset or liability on December 31, 2013* a. b. c. d. +20,000 asset 370,000 asset 370,000 liability +-0,000 asset

33. )n 5an ary 1, 2013, Dean Company signed a ten9year noncancelable lease for certain machinery. (he terms of the lease called for ann al payment of 4100,000 at the end of each year for ten years with title to pass to the lessee at the end of this period. (he machinery has an estimated sef l life of 1- years and no resid al val e. (he straight line method of depreciation is sed. (he entity acco nted for this lease transaction as a finance lease. (he lease payments were determined to have a present val e of 47!1,000 at an effective interest rate of ,3. 6ith respect to this capitali:ed lease, what sho ld be recorded for 2013* a. b. c. d. .ease e%pense of 4100,000. 1nterest e%pense of 4++,!33 and depreciation e%pense of 43,,07!. 1nterest e%pense of 4-3,7,0 and depreciation e%pense of 4++,!33 1nterest e%pense of 4+-,7,0 and depreciation e%pense of 47!,100.

3+. 4ye Company leased e& ipment to the 4olan Company on 5 ly 1, 2013 for a ten9year period e%piring 5 ne 30, 2023. $& al ann al payments nder the lease are 4,0,000 and are d e on 5 ly 1 of each year. (he first payment was made on 5 ly 1, 2013. (he rate of interest contemplated is '3. (he cash selling price of the e& ipment is 4-70,000 and the carrying amo nt of the e& ipment was 4+'7,000. (he lease is appropriately recorded as a sale. 6hat amo nt of profit on sale and interest reven e sho ld be recorded respectively for the year ended December 31, 2013* a. 7+,000 and -0,+00 b. 7+,000 and +3,200 c. 7+,000 and 21,700 d. 0 and 0

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4age 3-. (he e& ities of Aoebel Company and Dobbs Company on December 31, 2013 are: Geo%e2 .iabilities /hare capitalGordinary 8etained earnings 1,-00,000 7,000,000 +,-00,000 $o%%

2,2-0,000 -,--0,000 1,200,000

Aoebel Company ac& ired a 303 interest in Dobbs Company on December 31, 2013 for 42,02-,000. D ring 201+, Dobbs Company had net income of 4!-0,000 and paid a cash dividend of 4300,000. 6hat is the debit balance in the $& ity 1nvestment acco nt on December 31, 201+* a. 2,02-,000 b. 2,170,000 c. 2,22-,000 d. 2,1!-,000 37. )n 5 ne 1, 2013, )lsen Company p rchased a trademar# with a cost 4+,!20,000. (he trademar# is classified as an indefinite life intangible asset. )n December 31, 2013 and December 31, 201+, the following information is available for impairment testing: 2air val e less cost of disposal Val e in se $ecem%er #1& !"1# +,-70,000 +,7,0,000 $ecem%er #1& !"18 +,-30,000 +,!,0,000

6hat sho ld be reported in the 201+ income statement* a. ?o impairment loss or recovery of impairment b. 1mpairment loss of 4+0,000 c. 8ecovery of impairment of 4+0,000 d. 8ecovery of impairment of 4100,000 3!. >iro Company iss ed 100,000 4- par val e ordinary shares and 100,000 420 par val e preference shares for a l mp s m of 47,000,000. 0t the iss e date, the ordinary share was selling for 437 and the preference share was selling for 42,. 6hat is the credit for share premi m from ordinary shares* a. 3,100,000 b. 3,700,000 c. 2,72-,000 d. 2,,!-,000 3,. )n 5an ary 1, 2013, 8eese Company granted 5ac# " chanan, an employee, an option to b y 10,000 shares of 8eese Company for 4+0 per share, the option e%ercisable for - years. (he service period is for two years beginning 5an ary 1, 2013. Esing a fair val e option pricing model, total compensation e%pense is determined to be 4120,000. (he employee e%ercised the option on /eptember 1, 201-, and sold the 10,000 shares on December 1, 201-. 0s a res lt of the option, what amo nt sho ld be recogni:ed as compensation e%pense for 2013* a. 120,000 b. 1+0,000 c. 70,000 d. 0 3'. Colt Company p rchased @assey Company and agreed to give shareholders of @assey Company -0,000 additional shares in 201- if @assey Company has net income in 201+ of 4+00,000 or more. @assey CompanyHs net income is 4+10,000 for 2013. Colt Company has net income for 2013 of 4,00,000 and has an average n mber of ordinary shares o tstanding for 2013 of -00,000 shares. 6hat amo nt sho ld be reported as basic and dil ted earnings per share for 2013, respectively* a. 1.70 and 1.70 b. 1.+- and 1.70 c. 1.70 and 1.+-

d. 1.+- and 1.+-

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4age +0. ?iles Company provided the following data related to an item of inventory: 1nventory, @arch 1 4 rchase, @arch ! 4 rchase, @arch 17 1nventory, @arch 31 6hat is the val e assigned to co t of goo) a. b. c. d. 1,!23,000 1,7'7,000 -!',000 --2,000 o2) nder 212)* 1,000 3,-00 !00 1,300

'

nits I 4+20 nits I 4++0 nits I 4+-0 nits

+1. .ee Company received 41,,00,000 s bsidy from the government to p rchase man fact ring e& ipment on 5an ary 1, 2013. (he e& ipment has a cost of 43,000,000, sef l life a si% years, and no resid al val e. (he entity depreciated the e& ipment on a straight9line basis. (he grant is acco nted for as an ad; stment to the asset. 6hat is the depreciation e%pense for 2013* a. -00,000 b. 200,000 c. 300,000 d. 0 +2. )n 5 ne 20, Jing Company p rchased goods from Chee9Chow Company for 4300,000, terms 2K10, nK30. (he invoice was paid on 5 ne 30. (he entity sed a perpet al inventory system and recorded p rchases gross. 6hat is incl ded in the 5 ne 30 ;o rnal entry to record payment of the acco nt payable* a. b. c. d. 0 credit to cash 4300,000 0 credit to p rchases disco nts for 47,000 0 debit to acco nts payable 42'+,000 0 credit to inventory for 47,000

+3. )n December 1, 2013, .ester Company iss ed at 103, 2,000 of '3, 41,000 bonds. 0ttached to each bond was one detachable share warrant entitling the holder to p rchase 10 ordinary shares of .ester Company. )n December 1, 2013, the fair val e of the bonds witho t the share warrants was '- and the fair val e of each share warrant was 4-0. 6hat amo nt of the proceeds from the iss ance sho ld be acco nted for as the initial carrying amo nt of the bonds payable* a. b. c. d. 1,'70,000 1,'00,000 2,000,000 2,070,000

++. 0 cash flow of 4200,000 may be received by .ydia Company in one year, two years, or three years, with probabilities of 203, -03, and 303, respectively. (he rate of interest on defa lt ris#9free investments is -3. (he present val e factors are as follows: 4V of 1, at -3 , for 1 year 4V of 1, at -3, for 2 years 4V of 1, at -3, for 3 years 6hat is the e%pected present val e of the cash flow* a. 1,1,+07 b. 1,0,72, c. '0,!03 d. ,','2.'-23, .'0!03 .,73,+

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10

+-. 0i:el Company, a lessor of office machines, p rchased a new machine for 4700,000 on 5an ary 1, 2013, which was leased the same day to another entity. (he machine is depreciated 4--,000 per year. (he lease is for a fo r9year period e%piring 5an ary 1, 201!, and provides for ann al rental payment of 4100,000 beginning 5an ary 1, 2013. 0dditionally, the lessee paid 47+,000 to the lessor as a lease bon s. 6hat amo nt of reven e and e%pense sho ld be reported respectively on the leased asset for 2013* a. b. c. d. 100,000 117,000 117,000 17+,000 and 0 and 0 and --,000 and --,000

+7. "eal Company provided the following increases CdecreasesD in the statement of financial position acco nts on December 31, 2013 and 2012: Cash and cash e& ivalents 0vailable for sale sec rities 0cco nts receivable, net 1nventory .ong9term investments 4lant assets 0cc m lated depreciation 0cco nts payable Dividend payable /hort9term ban# debt .ong9term debt /hare capital, 410 par /hare premi m 8etained earnings 120,000 300,000 9 ,0,000 C100,000D !00,000 9 C -,000D 170,000 32-,000 110,000 100,000 120,000 2'0,000

?et income for the year was 4!'0,000. Cash dividend of 4-00,000 was declared. " ilding costing 4700,000 and with carrying amo nt of 43-0,000 was sold for 43-0,000. $& ipment costing 4110,000 was ac& ired thro gh iss ance of long9term debt. 0 long9term investment was sold for 413-,000. (here were no other transactions affecting long9term investment. (he shares were iss ed for cash. 1. 6hat is the net cash provided by operating activities* a. 1,170,000 b. 1,0+0,000 c. '20,000 d. !0-,000 2. 6hat is the net cash u e) in investing activities* a. b. c. d. 1,00-,000 1,1'0,000 1,2!-,000 1,700,000

3. 6hat is the net cash pro'i)e) by financing activities* a. 20-,000 b. 1-0,000 c. +-,000 d. 20,000

EN$

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