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8/18/2019 Fcomprehensiveexam f
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COMPREHENSIVE EXAMINATION F
PART 6
(Chapters 22-24)
Approx!ate
Pro"#e! Top$ T!eF-I Multiple Choice Questions. 25 min.F-II Statement of Cash Flows. 25 min.F-III Accounting Changes, Error Corrections, an
!rior !erio A"ustments. #$ min.F-I% & Anal'sis of Financial Statements. 25 min.F-% Segment (eporting. )5 min.
)2$ min.
&*his topic is ealt with in an Appeni+ to the chapter.
Pro"#e! F-I Multiple Choice Questions.
). hich of the following transactions woul e consiere a financiacti/it' in preparing a statement of cash flows0
a. Amorti1ing a iscount on ons pa'ale . (ecoring net income from operationsc. Selling common stoc . !urchasing in/entor'
2. *he net income for the 'ear ene 3ecemer #), 2$)#, for *Consultants I4C. was 62$,$$$. Aitional information is as follows7
Capital e+penitures ),2$$,$$$3epreciation on plant assets 85$,$$$Cash i/iens pai on common stoc )9$,$$$Increase in noncurrent eferre ta+ liailit' 85,$$$Amorti1ation of patents 2),$$$
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Test Bank for Intermediate Accounting, Fourteenth Edition
:ase on the information gi/en ao/e, what shoul e the net ca pro/ie ' operating acti/ities in the statement of cash flows for the 'eene 3ecemer #), 2$)#0
a. ),25;,$$$. . ),#8;,$$$.c. ),#6),$$$.. ),8#;,$$$.
#. Information concerning the et of Cole Compan' is as follows7Short-term orrowings7
:alance at 3ecemer #), 2$)2 525,$$$!rocees from orrowings in 2$)# #25,$$$!a'ments mae in 2$)# ?ong-*erm 3et> 5$$,$$$!a'ments mae in 2$)# Current !ortion of ?ong-*erm 3et>
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Comprehensive Examination F
. #,)5,$$$
Pro"#e! F-I special> t'pe of reporting that nee not follow generall' accept
accounting principles. . As useful onl' if acti/it' is e/enl' sprea throughout the 'ear so th
estimates are unnecessar'.c. As reporting for a asic accounting perio.
. As reporting for an integral part of an annual perio.
5. hich of the following items represents a potential use of cash0a. !atent amorti1ation . Sale of plant assets at a lossc. 4et loss from operations. 3eclaration of a stoc i/ien
;. orthington Compan' purchase a machine on Banuar' ), 2$)$, 8,9$$,$$$. At the ate of acuisition, the machine ha an estimatuseful life of si+ 'ears with no sal/age. *he machine is eing epreciaton a straight-line asis. @n Banuar' ), 2$)#, orthington etermine, aresult of aitional information, that the machine ha an estimate useflife of eight 'ears from the ate of acuisition with no sal/age. Aaccounting change was mae to reflect this aitional information. h
amount of epreciation e+pense shoul e reporte in orthingtonincome statement for the 'ear ene 3ecemer #), 2$)#0a. 9$$,$$$ . ;$$,$$$c. 89$,$$$. #$$,$$$
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Test Bank for Intermediate Accounting, Fourteenth Edition
. @n Banuar' , 2$)), oer Corporation acuire machiner' at a cost ),5$$,$$$. oer aopte the sum-of-the-'earsD-igits metho epreciation for this machine an ha een recoring epreciation o/er
estimate life of fi/e 'ears, with no resiual /alue. At the eginning 2$)#, a ecision was mae to change to the straight-line metho epreciation for this machine. Assuming a #$ ta+ rate, the cumulatieffect of this accounting change, net of ta+, isa. $ . 2$$,$$$c. 2)$,$$$. #$$,$$$
&9. Information from Collins Compan'Ds alance sheet is as follows7
Current assets7Cash )2,$$$,$$$Short-term in/estments 2$,$$$,$$$Accounts recei/ale 5$,$$$,$$$
In/entories ;;,$$$,$$$!repai e+penses 2,$$$,$$$*otal current assets )5$,$$$,$$$
Pro"#e! F-I
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Comprehensive Examination F
. ).;8 to )c. ).;9 to ). #.$$ to )
&6. Fargo, Inc. isclose the following information as of an for the 'eene 3ecemer #), 2$)#7
4et cash sales ;$$,$$$ 4et creit sales 6$$,$$$In/entor' at eginning )$$,$$$In/entor' at en )5$,$$$ 4et income #$,$$$Accounts recei/ale at eginning of 'ear))$,$$$Accounts recei/ale at en of 'ear)#$,$$$
FargoDs recei/ales turno/er isa. ;.6 to ). . .5 to ).c. )2.5 to ).. )#.; to ).
&)$. *he calculation of the numer of times interest is earne in/ol/es i/iina. net income ' annual interest e+pense. . net income plus income ta+es ' annual interest e+pense.c. net income plus income ta+es an interest e+pense ' annual intere+pense.. none of the ao/e.
Pro"#e! F-II Statement of Cash Flows.
Sharp Compan'Comparati/e :alance Sheet
3ecemer #)2$)# 2$)2
Cash 58,$$$ #;,$$$
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Test Bank for Intermediate Accounting, Fourteenth Edition
Accounts recei/ale, net 5#,$$$ 5,$$$In/entor' );),$$$ )2#,$$$?an )9$,$$$ 295,$$$
:uiling #$$,$$$ #$$,$$$Accumulate epreciation
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Comprehensive Examination F
2$)#Ds net income was properl' etermine after gi/ing effect to the followiaccounting changes, error corrections, etc. which too place uring the 'e
*he incomes for 2$)) an 2$)2 do not tae these items into account an astate at the amounts etermine in those 'ears. Ignore income ta+es.
I%str&$to%s
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Test Bank for Intermediate Accounting, Fourteenth Edition
Pro"#e! F-III
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Comprehensive Examination F
Assume no ifference etween ?IF@ an a/erage cost in/entor' /alues'ears prior to 2$)).
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Test Bank for Intermediate Accounting, Fourteenth Edition
?iailities an StocholersJ Euit'7Current liailities7
4otes pa'ale ,$$$,$$$ ),$$$,$$$
Accounts pa'ale 55,$$$,$$$ 52,$$$,$$$Accrue e+penses 2,5$$,$$$ #$,$$$,$$$Income ta+es pa'ale ),5$$,$$$ 2,$$$,$$$Current portion of long-term et )$,$$$,$$$ 6,5$$,$$$
*otal current liailities )$),$$$,$$$))$,5$$,$$$
?ong-term et )9$,$$$,$$$)6$,$$$,$$$3eferre income ta+es ;6,$$$,$$$ ;5,$$$,$$$@ther liailities )5,$$$,$$$ 6,5$$,$$$
*otal liailities #;5,$$$,$$$ #5,$$$,$$$
StocholersJ euit'7Common stoc, par /alue )K authori1e 2$,$$$,$$$
sharesK issue an outstaning )2,$$$,$$$ shares)2,$$$,$$$)2,$$$,$$$
)$ cumulati/e preferre shares, par /alue )$$K)$$ liuiating /alueK authori1e )$$,$$$ sharesKissue an outstaning ;$,$$$ shares;,$$$,$$$ ;,$$$,$$$
Aitional pai-in capital ))6,$$$,$$$))6,$$$,$$$(etaine earnings )8),$$$,$$$ )),$$$,$$$
*otal stocholersJ euit' 29,$$$,$$$ 258,$$$,$$$*otal liailities an stocholersJ euit';8#,$$$,$$$;26,$$$,$$$
'Pro"#e! F-IV
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Comprehensive Examination F
4et sales 58$,$$$,$$$5$$,$$$,$$$Cost an e+penses7
Cost of goos sol #6$,6$$,$$$8$$,$$$,$$$
Selling, general, an aministrati/e e+penses$,$$$,$$$;5,$$$,$$$@ther, net 6,)$$,$$$ ;,$$$,$$$
*otal costs an e+penses 8$,$$$,$$$ 8),$$$,$$$
Income efore income ta+es $,$$$,$$$ 26,$$$,$$$Income ta+es 2),$$$,$$$ )),;$$,$$$4et income 86,$$$,$$$ ),8$$,$$$
(etaine earnings at eginning of perio)),$$$,$$$))#,)$$,$$$3i/iens on common stoc
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Test Bank for Intermediate Accounting, Fourteenth Edition
(eporting 3isaggregate Information aou:usiness Enterprise,> ' appl'ing the following uantitati/e tests7
a. (e/enue test . @perating profit or loss testc. Ientifiale assets test
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Comprehensive Examination F
So#&to%s Co!prehe%se Exa!%ato% F
Pro"#e! F-I Solution). c ;. c2. . a#. &9. 8. &6. 5. c &)$. c
Pro"#e! F-II Solution.Sharp Compan'
Statement of Cash FlowsFor the ear Ene 3ecemer #), 2$)#
Cash flows from operating acti/ities 4et income )$8,$$$
A"ustments to reconcile net income to net cash pro/ie ' operating acti/ities7
3ecrease in accounts recei/ale 8,$$$Increase in in/entor'
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Test Bank for Intermediate Accounting, Fourteenth Edition
Cash flows from financing acti/ities!a'ment of cash i/iens
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Comprehensive Examination F
Allowance for 3outful Accounts............. 25,$$$
;.
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Test Bank for Intermediate Accounting, Fourteenth Edition
*otal stocholersJ euit' N liuiating /alue of preferre stoc 22,$$$,$$$ 22.; Common shares issue an
outstaning at 3ecemer #), 2$)# )2,$$$,$$$
f= Earnings per share on common stoc7
4et income N i/iens on preferre stoc 89,8$$,$$$
8.$#A/erage common shares issue an outstaning uring 2$)# )2,$$$,$$$
g= !rice-earnings ratio on common stoc7
Maret /alue of common stoc 58.$$ )#.8Earnings per share on common stoc 8.$#
h= !a'out ratio on common stoc7
3i/iens on common stoc 28,8$$,$$$ 5$.8 4et income N i/iens on preferre stoc 89,8$$,$$$
Pro"#e! F-V Solution.
a. (e/enue test a segment is reportale if its total sales are #5$,$$$ or mo