ACCT 551 Week 4 Midterm (Version 1)

Multiple Choice

1. Question: (TCO C) The major problem of accounting for intangibles is determining
2.  Question: (TCO C) Wriglee, Inc. went to court this year and successfully defended its patent from infringement by a competitor…….
3. Question: (TCO C) Purchased goodwill should
4. Question: (TCO C) The general ledger of Vance Corporation as of December 31, 2011, includes the following accountsQuestion:
5. Question: (TCO C) General Products Company bought Special Products Division in 2010 and appropriately recorded $500,000 of goodwill related to the purchase. On December 31, 2011, the fair value of Special Products Division is $4,000,000 and it is carried on General Products’ books for a total of $3,400,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $400,000 exists on December 31, 2011. What goodwill impairment should be recognized by General Products in 2011?
6. Question: (TCO D) An employee’s net (or take-home) pay is determined by gross earnings minus amounts for income tax withholdings and the employee’s
7. Question: (TCO D) Which of the following taxes does not represent a payroll deduction a company may incur?
8. Question: (TCO D) Which of the following is not acceptable treatment for the presentation of current liabilities?
9. Question: (TCO D) On December 31, 2010, Irey Co. has $2,000,000 of short-term notes payable due on February 14, 2011……….. at 1% above the prime rate for 3 years. On February 2, 2011, Irey borrowed $1,200,000 from County Bank and used $500,000 additional cash to liquidate $1,700,000 of the short-term notes payable. The amount of the……… issued on March 5, 2011 is
10. Question: (TCO D) Tender Foot, Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that it may lose the case. The attorneys estimated that there is a 40% chance of losing. Tender Foot’s attorney estimated that if it loses, then the amount of any payment would be $500,000……. of this litigation?
11. Question: (TCO D) If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will
12. Question: (TCO D) If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
13. Question: (TCO D) Feller Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2010 at 97 plus accrued interest……… issue date?
14. Question: (TCO D) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010………. The proceeds from the bonds are $19,604,145. What is the interest expense for 2011, using straight-line amortization?
15. Question: (TCO D) On January 1, Patterson, Inc. issued $5,000,000, 9% bonds for $4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Patterson uses the effective-interest method of amortizing bond discount. At the end of the first year, Patterson should report unamortized bond discount of
    

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Explanatory

1. Question: (TCO C) Barkley Corp. obtained a trade name in January 2009, incurring legal costs of $15,000. The company amortizes the trade name over 8 years. Barkley successfully defended its trade name in January 2010, incurring $4,900 in legal fees. At the beginning of 2011, based on new marketing research, Barkley determines that the fair value of the trade name is $12,000. Estimated total future cash flows from the trade name are $13,000 on January 4, 2011.
2. Question: (TCO C) It has been argued………. Discuss the accounting arguments against this treatment.
3. Question: (TCO D) Edwards Co. includes one coupon in each bag of dog food it sells. In return for four coupons, customers receive a dog toy that the company purchases for $1.20 each……….. 60,000 coupons were redeemed.
4. Question: (TCO D) On January 1, 2011, Piper Co. issued 10-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31…….. Table values are:
5. Question: (TCO D) Hurst, Inc. sold its 8% bonds with a maturity value of $3,000,000 on August 1, 2009 for $2,946,000. At the time of the sale, the bonds had 5 years until they reached maturity. Interest on the bonds is payable semiannually on August 1 and February 1. The bonds are callable at 104 at any time after August 1, 2011. By October 1, 2011, the market rate of interest has declined and the market price of Hurst’s bonds has risen to a price of 101. The firm decides to refund the bonds by selling a new 6% bond issue to mature in 5 years. Hurst begins to reacquire its 8% bonds in the market and is able to purchase $500,000 worth at 101………….. (Assume the firm used straight-line amortization.) Show calculations.