Quiz 9-13 D

Question 0

A note due in 5 years where the interest is calculated at 3% per year and payable when the note is due. The present value of $1 due in 5 years is .6806

How do you calculate the amount that the note should be reported at on the balance sheet?

Answer 0

Maturity amount x present value factor =

(10k + (10k x 3% x 5 years)) x .6806

Question 1

When you are given a purchase price, estimated ore removable, salvage value, development costs and ore removed/sold during the year, how do you calculate depletion expense for the year?

Answer 1

Depletion expense =
(Purchase price + development costs - salvage value)
X (ore removed and sold)/removable ore estimated

Question 2

The initial test for determining whether an impairment of the carrying amount of a long lived fixed asset is…

Answer 2

Carrying amount exceeds undiscounted future cash flows

Question 3

Which of the following is Reported on a proprietorship income statement and why?

Depreciation

Proprietor’s draw

Answer 3

Depreciation: yes, is an expense incurred in generating income

Proprietor’s draw: no, it’s a distribution of owners equity to owner,
It does not effect income and is not an expense

Question 4

Reliable is synonymous with…

Answer 4

Faithful representation

Question 5

To be reliable, information about an item must be…

Answer 5

representationally faithful, verifiable and neutral

Question 6

Values assigned to property based on management’s estimate of fair value are…

Answer 6

Not representationally neutral and not reliable

Question 7

Debtors gains are calculated based on…

Answer 7

Undiscounted amounts

Question 8

Total future cash payments, including interest, are used to compute…

Answer 8

The gain on troubled debt restructuring

Question 9

Sinking fund:

Current maturities on long term debt include…

Answer 9

Term notes due within 1 year and payments on serial notes

Due within 1 year

Question 10

Non monetary exchanges should be recorded at…

Answer 10

Fair values unless 1 of the 3 criteria are met

Question 11

Name the following 3 criteria, in a monetary exchange, for which if met she be based on carrying amounts?

Answer 11

1 fair value is not determinable

2 exchange transaction is to facilitate sales for customers

3 exchange transaction lacks commercial substance

Question 12

In a nonmonetary exchange, if one of the 3 criteria are met, and inventory given up exceeds fair value…2

Answer 12

1 the inventory given up should be written down and

2 a loss recognized before exchange is recorded

Question 13

Debt ratio equation

Answer 13

Debt ratio = total liabilities/total assets