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What amount should Clear report as total current assets in its balancesheet?

$64,000

$67,000

$72,000

$74,000

2.Martin Co. had net income of $70,000 during the year. Depreciationexpense was $10,000. The following information is available:

Accounts receivable increase $20,000

Equipment gain on saleincrease

10,000

Nontrade notes payableincrease

50,000

Prepaid insurance increase 40,000

Accounts payable increase 30,000

What amount should Martin report as net cash provided by operatingactivities in its statement of cash flows for the year?

$0

$ 40,000

$ 50,000

$100,000

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3.Which of the following should be disclosed in a summary of significantaccounting policies?

Basis of consolidation.

Concentration of credit risk of financial instruments.

Composition of plant assets.

Adequacy of pension plan assets in relation to vested benefits.

4.Each of the following events is required to be reported to the UnitedStates Securities and Exchange Commission on Form 8-K, except

The creation of an obligation under an off-balance sheet arrangementof a registrant.

The unregistered sale of equity securities.

A change in a registrant's certifying accountant.

The quarterly results of operations and financial condition of aregistrant.

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13.A company recorded a decommissioning liability and recognized theamount recorded as part of the cost of the related property. After theproperty was fully depreciated, the decommissioning liability was reviewedand adjusted. How should this change in the decommissioning liability berecognized under IFRS?

The change in the liability is recognized in other comprehensiveincome.

The change in the liability is recognized in profit or loss.

The change in the liability is recognized as a change in the carrying

amount of the property if the liability increases but is otherwise recognizedin profit or loss.

The change in the decommissioning liability is notrecognized until it issettled.

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14.A company incurred the following costs to complete a businesscombination in the current year:

Issuing debt securities $30,000

Registering debt securities 25,000

Legal fees 10,000

Due diligence costs 1,000

What amount should be reported as current-year expenses, notsubject toamortization?

$ 1,000

$11,000

$36,000

$66,000

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15.Based on the stock transactions below, what is the weighted averagenumber of shares outstanding as of December 31, year 1, that should beused in the calculation of basic earnings per share in financial statementsissued on March 1, year 2?

Date Transactions

January 1, year 1 Beginning balance 100,000

April 1, year 1 Issued 30,000 shares for cash

June 1, year 1 50% stock dividend

February 15, year 2 2 for 1 stock split

March 15, year 2 Issued 40,000 shares for cash

147,500

183,750

295,000

367,500

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16.Which of the following phrases best describes a Level 1 input formeasuring the fair value of an asset or liability?

Inputs for the asset or liability based on the reporting entity's internaldata.

Quoted prices for similar assets or liabilities in active markets.

Inputs that are principally derived from or corroborated by observablemarket data.

Unadjusted quoted prices for identical assets or liabilities in active

markets.

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18.A company leases a machine from Leasing, Inc. on January 1, year 1.The lease terms include a $100,000 annual payment beginning January 1,year 1. The machine's fair value is $500,000 and the residual value isestimated at $20,000. The company guarantees the residual value.

The useful life of the machine is six years, and the lease term is five years.The implicit rate of interest is 6% and is known by the company. Thefollowing present value factors are provided:

Five years Six years

Present value of $1 at 6% 0.7473 0.7050

Present value of an annuity due at6%

4.4651 5.2124

Present value of an ordinary annuityat 6% 4.2124 4.9173

What is the value of the machine in the company's balance sheet at lease

inception?

$446,510

$461,456

$520,000

$535,340

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What amount should Clear report as total current assets in its balancesheet?

$64,000

$67,000

$72,000

$74,000

2.Martin Co. had net income of $70,000 during the year. Depreciationexpense was $10,000. The following information is available:

Accounts receivable increase $20,000

Equipment gain on saleincrease

10,000

Nontrade notes payableincrease

50,000

Prepaid insurance increase 40,000

Accounts payable increase 30,000

What amount should Martin report as net cash provided by operatingactivities in its statement of cash flows for the year?

$0

$ 40,000

$ 50,000

$100,000

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3.Which of the following should be disclosed in a summary of significantaccounting policies?

Basis of consolidation.

Concentration of credit risk of financial instruments.

Composition of plant assets.

Adequacy of pension plan assets in relation to vested benefits.

4.Each of the following events is required to be reported to the UnitedStates Securities and Exchange Commission on Form 8-K, except

The creation of an obligation under an off-balance sheet arrangementof a registrant.

The unregistered sale of equity securities.

A change in a registrant's certifying accountant.

The quarterly results of operations and financial condition of aregistrant.

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5.Garcel, Inc. held unfinished inventory at a cost of $85,000 with a salesvalue of $125,000. The inventory will cost $10,500 to complete. The normalprofit margin is 30% of sales. The replacement cost of the inventory was$75,000. What amount should Garcel report as inventory on balancesheet?

$114,500

$ 85,000

$ 77,000

$ 75,000

6.Sea Manufacturing Corp. is constructing a new factory building. Duringthe current calendar year, Sea made the following payments to theconstruction company:

January 2 $1,000,000

December 31 1,000,000

Sea has an 8%, three-year construction loan of $3,000,000. What is theamount of interest costs that Sea may capitalize during the current year?

$0

$ 80,000

$160,000

$240,000

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7.Under IFRS, which of the following statements about intangible assets iscorrect?

Internally generated goodwill cannot be recognized as an asset.

Intangible assets within a class may be measured differently usingeither the cost model or the revaluation model.

Research and development costs are capitalized as incurred.

Intangible assets with indefinite lives must be amortized annually.

8.A note payable was issued in payment for services received. Theservices had a fair value less than the face amount of the note payable.The note payable has no stated interest rate. How should the note payablebe presented in the statement of financial position?

At the face amount.

At the face amount with a separate deferred asset for the discountcalculated at the imputed interest rate.

At the face amount with a separate deferred credit for the discountcalculated at the imputed interest rate.

At the face amount minus a discount calculated at the imputedinterest rate.

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9.Which of the following statements is correct regarding valuationallowances in accounting for income taxes?

The effect of a change in the opening balance of a valuationallowance that results from a change of circumstances ordinarily isincluded in income from operations.

Both deferred tax assets and deferred tax liabilities can be reduced bya valuation allowance.

Only negative evidence, not positive evidence, should be consideredwhen determining whether a valuation allowance is needed.

A valuation allowance is necessary when the realistic probabilitystandard of evidence is satisfied.

10.A company issues $1,500,000 of par bonds at 98 on January 1, year 1,with a maturity date of December 31, year 30. Bond issue costs are$90,000, and the stated interest rate of the bonds is 6%. Interest is paidsemiannually on January 1 and July 1. Ten years after the issue date, theentire issue was called at 102 and canceled.

The company uses the straight-line method of amortization for bonddiscounts and issue costs, and the result of this method is not materiallydifferent from the effective interest method. The company should classifywhat amount as the loss on extinguishment of debt at the time the bondsare called?

$ 30,000

$ 50,000

$ 90,000

$110,000

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11.On day 1, Clothes Co., sells clothing to Link Corp. for $40,000. Clothesships the clothing on day 1 and Link is obligated to pay Clothes within sixmonths. Link is given 12 months to return any of the clothing for a refund ifthey experience low demand. Link is also given 18 months to exchangeany clothing due to low demand. At the time of sale, Clothes cannotreasonably estimate returns, but estimates $5,000 in exchanged goods.Clothes should recognize revenue for the aforementioned transaction

On the day of the sale.

Six months after the date of sale.

12 months after the date of sale.

18 months after the date of sale.

12.At the beginning of year 1, a company amends its defined benefitpension plan for an additional $500,000 in prior service cost. Theamendment covers employees with a 10-year average remaining servicelife. At the end of year 1, what is the net entry to accumulated othercomprehensive income, ignoring income tax effects?

A $450,000 debit.

A $500,000 debit.

A $550,000 credit.

A $450,000 credit.

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