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ACC 305 ACC/305 ACC305 MidTerm Part 1



ACC 305 ACC/305 ACC305 MidTerm Part 1 Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation? Presented below is pension information related to Waters Company as of December 31, 2015: Presented below is information related to Noble Inc. as of December 31, 2015. Midland Company follows U.S. GAAP for its external financial reporting whereas Bailey Company follows IFRS for its external financial reporting. The remaining service lives of employees at both firms is estimated to be 10 years. The following information is available for each company at December 31, 2015 related to their respective defined-benefit pension plans. The relationship between the amount funded and the amount reported for pension expense is as follows: Vested benefits The cost-recovery method Under the cost-recovery method of revenue recognition, Cost estimates on a long-term contract may indicate that a loss will result on completion of the entire contract. In this case, the entire expected loss should be The principal disadvantage of using the percentage-of-completion method of recognizing revenue from long-term contracts is that it The revenue recognition principle provides that revenue is recognized when Moon Co. records all sales using the installment-sales method of accounting. Installment sales contracts call for 36 equal monthly cash payments. According to the FASB’s conceptual framework, the amount of deferred gross profit relating to collections 12 months beyond the balance sheet date should be reported in the An alternative available when the seller is exposed to continued risks of ownership through return of the product is When an investor’s accounting period ends on a date that does not coincide with an interest receipt date for bonds held as an investment, the investor must Richman Company purchased $900,000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2014, with interest payable on July 1 and January 1. The bonds sold for $937,422 at an effective interest rate of 7%. Using the effective interest method, Richman Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2014 and December 31, 2014 by the amortized premiums of $3,186 and $3,294, respectively. At December 31, 2014, the fair value of the Carlin, Inc. bonds was $954,000. What should Richman Company report as other comprehensive income and as a separate component of stockholders’ equity? On August 1, 2014, Dambro Company acquired 800, $1,000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2014, and mature on April 30, 2020, with interest paid each October 31 and April 30. The bonds will be added to Dambro’s available-for-sale portfolio. The preferred entry to record the purchase of the bonds on August 1, 2014 is “Gains trading” or “cherry picking” involves In accounting for investments in debt securities that are classified as trading securities, A requirement for a security to be classified as held-to-maturity is A major distinction between temporary and permanent differences is Larsen Corporation reported $100,000 in revenues in its 2014 financial statements, of which $33,000 will not be included in the tax return until 2015. The enacted tax rate is 40% for 2014 and 35% for 2015. What amount should Larsen report for deferred income tax liability in its balance sheet at December 31, 2014? Which of the following are temporary differences that are normally classified as expenses or losses that are deductible after they are recognized in financial income? Lyons Company deducts insurance expense of $126,000 for tax purposes in 2014, but the expense is not yet recognized for accounting purposes. In 2015, 2016, and 2017, no insurance expense will be deducted for tax purposes, but $42,000 of insurance expe


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