Exam _ an Introduction to Financial Accounting

11/27/2013 Exam | An Introduction to Financial Accounting

https://class.coursera.org/accounting-001/quiz/attempt?quiz_id=183 1/6

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Final Exam, Part 2

The due date for this exam is Wed 27 Nov 2013 8:59 PM PST.

You may attempt the exam three times. The highest of the three scores will be entered as your

grade for the exam. Please double-check your answers before submitting; I will not reset

attempts for mistaken submissions.

You will see your score as soon as you submit your exam. But, the solution will not be available

until after the deadline passes.

You are not allowed to provide answers or hints to the exam questions on the discussion

boards! You must work alone, but you can use any of the posted course materials to answer

the questions.

The deadline for completing the exam is 11:58:00 pm U.S. Eastern Time on November 27,

2013.

Good luck!

In accordance with the Coursera Honor Code, I (M. Faisal Niazi) certify that the

answers here are my own work.

Question 1

Gunawardena Ltd. has a building that it originally bought for $100,000. As of December 31,

2012, there is $10,000 of Accumulated Depreciation on the building (it was being straight-line

depreciated over 10 years with no salvage value). On January 1, 2013, the company decides to

change the remaining useful life to 5 years (starting now) with a $50,000 salvage value.

What will be the depreciation on the building in 2013?

$8,000

$10,000

$13,000

$12,500

$20,000

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Question 2

Myles Inc.’s Marketable Securities footnote had the following line items:

Marketable Securities at Dec 31, 2012 Amortized Cost Fair Value

Total Trading Securities $900 $1,000

Total Available-for-Sale Securities $4,000 $3,500

Total Held-to-Maturity Securities $1,000 $1,200

Total $5,900 $5,700

What is the book value of Marketable Securities on Myles Inc.’s Balance Sheet at December

31, 2012?

$5,800

$5,500

$5,900

$5,700

$6,100

Question 3

On January 1, 2012, Happe Corp. issued a 3-year, 5% coupon, $100,000 face value bond. The

bond was priced at an effective interest rate of 8%, yielding proceeds of $92,137. This is the first

and only bond that Happe has ever issued.

Happe’s Statement of Cash Flows for fiscal year 2012 had the following line items:

2012 2011

Net Income $11,500 $10,350

Depreciation $25,478 $23,675

Amortization of Bond Discount $2,418 $0

What was Happe’s Interest Expense on the bond during fiscal year 2012?



$7,418

$5,000

$2,418

$8,000

$7,371

Question 4

On January 1, 2012, Krishnan Ltd. signed a three-year lease on a delivery truck. The lease

requires annual payments of $29,103, which are due at the end of each year. Krishnan’s

managers computed the present value of the lease payments as $75,000 using an effective

interest rate of 8%. Krishnan had to use capital lease accounting treatment for the truck.

What was the total expense related to this lease during the fiscal year ended December 31,

2012?

$29,103

$6,000

$31,000

$0

$25,000

Question 5

Andersen Telecom had the following lines in its Income Taxes footnote:

Deferred Tax Liabilities 12/31/2012 12/31/2011

Insurance Receivables $(60) $(63)

Depreciation $(858) $(745)

Other $(808) $(883)

Total Deferred Tax Liabilities $(1,726) $(1,691)



Andersen Telecom had the following lines in its Statement of Cash Flows:

2012 2011

Net Income $4,511 $4,357

Depreciation $1,288 $1,236

Andersen Telecom is a US company with a 35% Federal Statutory Tax Rate. What was

Andersen Telecom’s depreciation expense for tax purposes in fiscal year 2012?

$965

$1,288

$1,611

$1,401

$1,175

Question 6

After completing its preliminary financial statements for 2012, Alexander-Martin Inc. found a

mistake in computing its straight-line Depreciation Expense. After fixing the mistake, Alexander-

Martin’s Depreciation Expense was now $10,000 higher. Alexander-Martin is a US company with

a 35% Federal Statutory Tax Rate.

How did the $10,000 increase in Depreciation Expense affect Net Income for 2012?

Net Income dropped by $6,500


Net Income increased by $3,500


Net Income increased by $10,000

Question 7

Martino Inc.’s Balance Sheet had the following line items:



Shareholders’ Equity 12/31/2012 12/31/2011

Common Stock, par value $1 per share $300,000 $300,000

(Shares Issued: 300,000 in 2012 and 300,000 in 2011;

Shares Outstanding: 250,000 in 2012 and 220,000 in 2011)

Additional Paid in Capital $1,750,500 $1,750,500

Retained Earnings $10,321,123 $8,675,309

Treasury Stock $(550,000) $(800,000)

Total $11,821,623 $9,925,809

What was the average price per share paid by Martino to acquire all of the treasury shares

held as of December 31, 2012?

$11.00

$10.50

Not enough information

$10.38

$10.00

Question 8

For the year ended 12/31/2013, Baumgart Corp. reported Net Income of $100,000, including

$10,000 of Interest Expense on convertible debt. Baumgart had 10,000 common shares

outstanding throughout 2013. Baumgart paid $4,000 of preferred dividends during 2013.

Baumgart’s convertible debt is convertible into 2,000 shares of common stock. Baumgart is a US

company with a 35% Federal Statutory Tax Rate.

What is Baumgart Corp.’s Diluted EPS for fiscal year 2013?

$8.29

$7.17

$7.46

$8.54

$8.83



Thank you!

In accordance with the Coursera Honor Code, I (M. Faisal Niazi) certify that the

answers here are my own work.

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Exam _ an Introduction to Financial Accounting

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