1. Under the equity method of accounting for investments, an investor recognizes its share of theearnings in the period in which thea. Investor sells the investmentb. Investee declares a dividendc. Investee pays a dividendd. Earnings are reported by the investee in its financial statements2. Pence Corporation, which accounts for its investments in the common stock of Walsh Companyby the equity method, should ordinarily record a dividend received from Walsh asa. An addition to the carrying value of the investmentb. Dividend revenuec. A reduction of the carrying value of the investmentd. Revenue from affiliate3. On January 15, 2002, a corporation was granted a patent on a product. On January 2, 2010,to protect its patent, the corporation purchased a patent on a competing product the originallywas issued on January 10, 2008. Because of its unique plant, the corporation does not feel thecompeting patent can be used in producing a product. The cost of the competing patent should bea. Amortized over a maximum period of 17 yearsb. Amortized over a maximum period of 13 yearsc. Amortized over a maximum period of 9 yearsd. Expensed in 20104. Pacer Company purchased 300 of the 1, 000 outstanding shares of Queen Company’s commonstock for $80,000 on January 2, 2008. During 2009, Queen Company declared dividends of$8,000 and reported earnings for the year of $20,000.If Pacer Company uses the equity method of accounting for its investment in Queen Company,its Investment in Queen Company account at December 31, 2009 should bea. $100, 000b. $88,000c. $83,600d. $80,0005. Refer to the facts in problem (4). If Pacer Company uses the lower of cost or market method ofaccounting for its investment in Queen Company, and the value of its investment hasn’t changed,its Investment in Queen Company account on December 31, 2009, should bea. $100, 000b. $88,000c. $80,000d. $73,6006. A large, publicly held company developed and registered a trademark during 2010. The cost ofdeveloping and registering the trademark should be accounted for bya. Charging it to an asset account that should not be amortizedb. Expensing it as incurredc. Amortizing it over 25 years if in accordance with management’s evaluationd. Amortizing it over its useful life or 17 years, whichever is shorter7. Goodwill should be written offa. As soon as possible against retrained earningsb. When there is evidence that its carrying value has been impairedc. By systematic charges against retained earnings over the period benefited, but not morethan 40 yearsd. By systematic charges to expense over the period benefited, but not more than 40 years8. A net unrealized loss on a company’s long-term portfolio of available for sale securities shouldbe reflected in the current financial statements asa. An extraordinary item shown as a direct reduction from retained earningsb. A current loss resulting from holding marketable equity securitiesc. A footnote or parenthetical disclosure onlyd. A component of other comprehensive income9. Changes in the fair value of a long-term available for sale equity securities portfolio should bereported as a component ofa. Other comprehensive incomeb. Noncurrent assetsc. Noncurrent liabilitiesd. Net income10. Cash dividends declared out of current earnings are distributed to an investor. How will theinvestor’s investment account be affected by those dividends under each of the followingaccounting methods?a. Decrease No effectb. Decrease Decreasec. No effect Decreased. No effect No effect11. An activity that would be expensed currently as research and development costs is thea. Testing in search for or evaluation of product or process alternativesb. Adaptation of an existing capability to a particular requirement or customer’s need as a partof continuing commercial activityc. Legal work in connection with patent applications or litigation, and the sale or licensing ofpatentsd. Engineering follow-through in an early phase of commercial productionFair Value Method Equity Method12. Should the following fees associated with the registration of an internally developed patent becapitalized? Legal fees feesa. Yes Yesb. Yes Noc. No Yesd. No No13. Which of the following assets acquired in 2010 are amortizable? Goodwill Trademarksa. No Nob. No Yesc. Yes Nod. Yes No14. A purchased patent has a remaining life of 15 years. It should bea. Expensed in the year of acquisitionb. Amortized over 15 years regardless of its useful lifec. Amortized over its useful life if less than 15 yearsd. Amortized over 40 years15. Which of the following amounts incurred in connection with a trademark should be capitalized? Cost of a Registration Successful defense feesa. Yes Nob. Yes Yesc. No Yesd. No No16. Zink Company owns 32% of Ace Company’s outstanding voting stock. Zink Company normallyshould account for its investment in Ace Company using thea. Fair value method.b. Cost method.c. Consolidation procedure.d. Equity method.1. An investor purchased a bond as a long-term investment on January 1. Annual interest wasreceived on December 31. The investor’s interest income for the year would be lowest if the bondwas purchased ata. A discountb. A premiumc. Pard. Face value19. The theoretical justification for expensing research and development (R&D) cost as it is incurredis based on which of the following arguments?a. R&D costs provide no future benefits, thus it does not meet the definition of an assetb. R&D costs are incurred to generate current period revenue, thus the matching conceptrequires that it be expensed as incurred.c. Whether R&D costs that have been incurred will provide future benefit is uncertain, thus itdoes not meet the definition of an asset.d. Since R&D costs have been incurred during the current period, they meet the definition of anexpense.20. When a patent is successfully defended in court, the cost of the lawsuita. Should be expensed as incurred because it is a period cost.b. Should be added to the cost of the patent and depreciated over the remaining useful life of thepatent.c. Should be added to the cost of the patent which is then expensed as a period cost.d. Has already been expensed so there is no further action to take.21. Goodwill is an intangible asseta. That has a definite life and its cost should be amortized over its useful life.b. That is recorded when the company has projected earnings in excess of earnings expected foran investment in a similar company in the same industry.c. That is reviewed for impairment when circumstances indicate that impairment may haveoccurred.d. That is reviewed annually to determine whether impairment has occurred.22. A trading security is measured at fair value on the balance sheet date and reported asa. A current asset, and changes in fair value are reported in earnings as unrealized gains andlosses.b. A current asset, and changes in fair value are reported in earnings as realized gains andlosses.c. Either a current or noncurrent asset depending on whether they meet the definition of acurrent asset.d. A current asset, and changes in fair value are reported in accumulated other comprehensiveincome as unrealized gains and losses.23. Current accounting for an available-for-sale (AFS) security is consistent witha. The financial capital maintenance concept of income because AFS security unrealized gainsand losses are reported in earnings.b. The financial capital maintenance concept of income because AFS security unrealized gainsand losses are reports in other comprehensive income.c. The physical capital maintenance concept of income because AFS security unrealized gainsand losses are reported in earnings.d. The physical capital maintenance concept of income because AFS security unrealized gainsand losses are reported in other comprehensive income.24. The physical capital maintenance concept of income would require that an investment in thecommon stock of another entity bea. Reported in the balance sheet at historical cost and that only realized gains and losses bereported in earnings.b. Reported in the balance sheet at historical cost and that unrealized gains and losses bereported in earnings.c. Reported in the balance sheet at fair value and that unrealized gains and losses be reported inearnings.d. Reported in the balance sheet at fair value and that unrealized gains and losses be reported inother comprehensive income.25. The economic concept of income would require that an investment in the common stock ofanother entity bea. Reported in the balance sheet at historical cost and that only realized gains and losses beb. Reported in the balance sheet at historical cost and that unrealized gains and losses bec. Reported in the balance sheet at fair value and that unrealized gains and losses be reported ind. Reported in the balance sheet at fair value and that unrealized gains and losses be reported inreported in earnings.reported in earnings.earnings.other comprehensive income.26. Under the fair value option, an investment in the common stock of another entity will bea. Reported as a current assetb. Reported as a noncurrent assetc. Reported as either a current or noncurrent asset depending on managerial intent.d. Reported as a current asset only if it was not previously reported as an equity methodinvestment.27. When a company reports goodwill in its balance sheet, we know thata. It was internally generated because the company has earnings in excess of those of otherb. The company purchased it.c. The company will be reporting amortization expense for the goodwill.d. The company will not be reporting an impairment loss for the goodwill.companies in the industry.Essay1. How are income and balance sheet values determined under the equity method?2. Discuss accounting for equity securities under the cost method.3. Discuss accounting for equity securities under the SFAS No. 115 now contained at FASB ASC320.4. Summarize the accounting requirements for investments in equity securities. That is, whatmethods are available and when is each method appropriate?5. Discuss the use of the fair value option originally described in SFAS No. 159 now contained atFASB ASC 825-10.6. Discuss accounting for investments in debt securities.7. What is an intangible asset? How is the cost of an intangible asset amortized?.8. What is goodwill? How is goodwill written off under the provisions of SFAS No. 142 now FASBASC 350?9. Define research and development. How are research and development costs recorded10. How does IAS No 39 define fair value?

Assignment 3:Activity Based Costing Help Save & Exit Submit Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: 3 Hi-Tek Manufacturing Inc. Income Statement Sales Cost of oods sold Gros marrin Selling and ministrative expenses Net operating loss 1.761,300 1247, 406 $13.892 650.000 points BOOK Pant Hi-Tek produced and sold 60,100 units of B300 at a price of $21 per unit and 12,800 units of T500 at a price of $39 per unit. The company&#39;s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company&#39;s two product lines is shown below: References 3300 $ 100, 200 $ 120,500 1500 $ 162.600 2800 $ Direct materials Direct laber Manufacturing overhead Cost of soods sold Total 562 900 200 21 1.247.00 $ The company has created an activity based costing system to evaluate the profitability of its products. Hi-Tek&#39;s ABC implementation team concluded that $59,000 and $100,000 of the company&#39;s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company&#39;s manufacturing overhead to four activities as shown below – T acturing Activity Total Activity Ceat Pool Cand activity Bene) Eachining chine-hours) Setups (setup hours) Prodact-utaining unter of product 15.00 Assignment 3:Activity Based Costing Help Save & Exit Submit The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek&#39;s ABC implementation team concluded that $59,000 and $100.000 of the company&#39;s advertising expenses could be directly traced to B300 and T500. respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company&#39;s manufacturing overhead to four activities as shown below B300 9 0, 700 Activity T500 62.100 T otal 152.800 Activity Cost Pool and activity Measure) Eachining machine-hours) Setup Cetup hours) Prodact-ustaining mumker of products Other organization sustaining costs) Total manufacturing gerhead cost nufacturing Overhead $ 200, 168 152, 101.500 700 $ 521. 309 eBook Print References Required: 1. Compute the product margins for the B300 and T500 under the company&#39;s traditional costing system 2. Compute the product margins for B300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 28 Compute the product margins for the 300 and T500 under the company&#39;s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) B300 T 500 Total Product mag $ 0 Total manufacturing overhead cost Required: 1. Compute the product margins for the B300 and T500 under the company&#39;s traditional costing system. 2. Compute the product margins for B300 and 1500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. points Complete this question by entering your answers in the tabs below. eBook Print Required 1 Required 2 Required 3 References Compute the product margins for the B300 and T500 under the company&#39;s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) B300T500 Total Product margin Required 2 > Assignment 3:Activity Based Costing i Help Save & Total manufacturing overhead cost $ 521,308 Required: 1. Compute the product margins for the B300 and T500 under the company&#39;s traditional costing system 2. Compute the product margins for B300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. points Complete this question by entering your answers in the tabs below. eBook Print Required 1 Rebuired 2 Required 3 References Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin < Required 1 Required 3 > Required 1 Required 2 Required 3 Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and Percentage” answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) B300 T500 Total points % of Amount Amount Amount Traditional Cost System eBook 1 Reference Total cost assigned to products BILLE AL OS 0 Total cost OCESO F B300 Total T500 % of Total Amount 5 Amount Total Amount mount Amount / Activity Based Costing System Direct costs Indirect costs 37- < Prev 2 of 10 Next > Total cost B300 Total T500 % of Total Amount Amount % of Total Amount Amount Amount points Activity-Based Costing System Direct costs eBook Print References Indirect costs 00 Total cost assigned to products Costs not assigned to products X S Total cost / Required 2

DU UI Del 31, 2017. Problem 4-7 The following information pertains to Island company on December 31, 2017: Overdraft with First Bank Accounts payable Dividends in arrears-Preference share Share dividend payable Accrued expenses Mortgage payable-due December 31, 2022 Customers&#39; deposits Reserve for contingencies Total liabilities 5,000 150,000 20,000 45,000 10.000 100,000 15,000 25,000 370.000 Required: What is the correct amount of liabilities for accounting purposes on December 31, 2017?

Problem 14-5A Condensed statement of financial position and income statement data for Speedway Corporation follow: 2016 $17,900 48,100 63,700 129,700 SPEEDWAY CORPORATION Statement of Financial Position December 31 2018 2017 Assets Current assets Cash $25,200 $20,100 Accounts receivable (net) 55,300 45,300 Inventory 100,000 85,100 Total current assets 180,500 150,500 Long-term investments 57,500 69,700 Property, plant, and equipment (net) 498,900 371,800 Total assets $736,900 $592,000 Liabilities and Shareholders&#39; Equity Liabilities Current liabilities $85,700 $79,600 Non-current liabilities 155,700 85,400 Total liabilities 241,400 165,000 Shareholders&#39; equity Common shares 329,700 302,700 Retained earnings 165,800 124,300 Total shareholders&#39; equity 495,500 427,000 Total liabilities and shareholders&#39; equity $736,900 $592,000 256,000 $431,600 $30,100 19,900 50,000 299,100 82,500 381,600 $431,600 SPEEDWAY CORPORATION Income Statement Year Ended December 31 2018 Sales $747,100 Less: Sales returns and allowances 40,400 Net sales 706,700 Cost of goods sold 448,700 Gross profit 258,000 Operating expenses 150,000 Income from operations 108,000 2017 $509,900 49,900 460,000 300,800 159,200 83,400 75,800 SPEEDWAY CORPORATION Income Statement Year Ended December 31 2018 Sales Less: Sales returns and allowances Net sales Cost of goods sold Gross profit Operating expenses Income from operations Interest expense Income before income tax Income tax expense $747,100 40,400 706,700 448,700 258,000 150,000 108,000 10,100 97,900 19,580 $78,320 2017 $509,900 49,900 460,000 300,800 159,200 83,400 75,800 3,950 71,850 14,370 $57,480 Net Income Additional information: 1. The allowance for doubtful accounts was $4,800 in 2016, $4,500 in 2017, and $5,000 in 2018. 2. All sales were credit sales. 3. Net cash provided by operating activities was $120,100 in 2017 and $102,200 in 2018. 4. Net capital expenditures were $159,200 for 2017 and $180,500 for 2018. Calculate the following ratios for 2017 and 2018: (Round answers to 1 decimal place, e.g. 5.2:1 or 5.29 or 5.2. Enter negative answers preceeding either 2018 2017 1. Current ratio :1 2. Receivables turnover times times 3. Inventory turnover times times 4. Debt to total assets 5. Times interest earned times times 6. Free cash flow 7. Gross profit margin 8. Profit margin 9. Asset turnover times times 10. Return on assets Identify whether each ratio calculated in the above part was better, worse, or unchanged between 2017 and 2018. 1. Current ratio 2. Receivables turnover 3. Inventory turnover 4. Debt to total assets 5. Times interest earned Identify whether each ratio calculated in the above part was better, worse, or unchanged between 2017 and 2018. 1. Current ratio 2. Receivables turnover 3. Inventory turnover 4. Debt to total assets 5. Times interest earned 6. Free cash flow 7. Gross profit margin 8. Profit margin 9. Asset turnover 10. Return on assets Indicate whether overall (1) liquidity, (2) solvency, and (3) profitability improved, deteriorated, or remained the same between 2017 and 2018. (1) Liquidity (2) Solvency (3) Profitability