The balance sheet can be used to measure the firm’s capital structure?
YEs
operating cycle
time it takes to produce or purchase inventory, sell the product, and collect the cash.
current asset
- cash and cash equivalent
- marketable securities (Marketable securities are inancial assets that are traded in a public market and whose value can be readily determined. Examples include Treasury bills, notes, bonds, and equity securities. Details of the investment are disclosed in the inancial footnotes. )
- Account receivable( net realisable value)
- Inventories
- other current asset (Other current assets include amounts that may not be material if shown separately; thus, the items are combined into a single amount. An example is prepaid expenses, which are operating costs that have been paid in advance.)
under the cost model PP&E is reported at ?
amortised cost
historical cost minus accumulated depreciation, amortization, depletion, and impairment losses). Land is not depreciated because it has an inde inite life. Historical cost includes the purchase price plus any cost necessary to get the asset ready for use, such as delivery and installation costs.
How should the proceeds received from the advance sale of tickets to a sporting event be treated by the seller, assuming the tickets are nonrefundable?
A. Unearned revenue is recognized to the extent that costs have been incurred. B. Revenue is recognized to the extent that costs have been incurred.
C. Revenue is deferred until the sporting event is held.
C.
The ticket revenue should not be recognized until it is earned. Even though the tickets are nonrefundable, the
trading securities
are debt securities acquired with the intent to sell them over the near term. Trading securities are reported on the balance sheet at fair value, and the unrealized gains and losses (changes in market value before the securities are sold) are recognized in the income statement.
SF Corporation has created employee goodwill by reorganizing its retirement benefit package. An independent management consultant estimated the value of the goodwill at $2 million. In addition, SF recently purchased a patent that was developed by a competitor. The patent has an estimated useful life of five years. Should SF report the goodwill and patent on its balance sheet?
Goodwill Patent A. Yes No
B. No Yes
C. No No
B.
Goodwill developed internally is expensed as incurred. The purchased patent is reported on the balance sheet. (
t the beginning of the year, Parent Company purchased all 500,000 shares of Sub Incorporated for $15 per share. Just before the acquisition date, Sub’s balance sheet reported net assets of $6 million. Parent determined the fair value of Sub’s property and equipment was $1 million higher than reported by Sub. What amount of goodwill should Parent report as a result of its acquisition of Sub?
A. $0.
B. $500,000. C. $1,500,000.
B. Purchase price of $7,500,000 [$15 per share × 500,000 shares] – fair value of net assets of $7,000,000 [$6,000,000 book value + $1,000,000 increase in property and equipment] = goodwill of $500,000.
the beginning of the year, Company P purchased $80,000 face value of Company S corporate bonds for $77,000. Company P intends to hold these bonds for several years but sell them before they mature. At the end of the year, the market value of the bonds was $75,000. What amount should Company P report on its balance sheet at year-end for the investment in Company S bonds?
A. $75,000 B. $77,000 C. $80,000
A . Debt securities acquired with the intent to sell before maturity are reported on the balance sheet at their fair valu
Miller Corporation has 160,000 shares of common stock authorized. There are 92,000 shares issued and 84,000 shares outstanding. How many shares of treasury stock does Miller own?
A. 8,000. B. 68,000. C. 76,000.
A .The difference between the issued shares and the outstanding shares is the treasury shares. (L
