ACCT 551 Week 8 Final Exam

ACCT 551 Week 8 Final Exam

Author: Christine Farr


1. (TCO C) Which of the following characteristics do intangible assets possess?
2. (TCO C) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be
3. (TCO C) Which of the following is often reported as an extraordinary item?
4. (TCO D) Which of the following is true about accounts payable? 
(1.) Accounts payable should not be reported at their present value. 
(2.) When accounts payable are recorded at the net amount, a Purchase Discounts account will be used. 
(3.) When accounts payable are recorded at the gross amount, a Purchase Discounts Lost account will be used
5. (TCO D) Jeff Beck is a farmer who owns land that borders on the right-of-way of the Northern Railroad. On August 10, 2010, due to the admitted negligence of the railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the railroad for several years concerning the ownership of a small parcel of land. The representative of the railroad has offered to assign any rights the railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the railroad's offer. The railroad's 2010 financial statements should include the following related to the incident
6. (TCO D) Which of the following best describes the cash-basis method of accounting for warranty costs?
7. (TCO D) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
8. (TCO D) On July 1, 2009, Noble, Inc. issued 9% bonds in the face amount of $5,000,000, which mature on July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond discount of $305,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2011, Noble's unamortized bond discount should be
9. (TCO E) Stockholders' equity is generally classified into two major categories
10. (TCO F) Houser Corporation owns 4,000,000 shares of stock in Baha Corporation. On December 31, 2010, Houser distributed these shares of stock as a dividend to its stockholders. This is an example of a
1. (TCO C) 
- What are intangible assets? 
- How are limited-life intangibles accounted for subsequent to acquisition?
2. (TCO D) On August 31, Jenks Co. partially refunded $180,000 of its outstanding 10% note payable, made 1 year ago to Arma State Bank by paying $180,000 plus $18,000 interest (having obtained the $198,000 by using $52,400 cash and signing a new 1-year $160,000 note discounted at 9% by the bank). 

(1) Make the entry to record the partial refunding.

(2) Prepare the adjusting entry to record interest expense at December 31, assuming straight-line amortization of the discount
3. (TCO D). Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar.)
The December 31, 2010 balance sheet of Wolfe Co. included the following items: 
7.5% bonds payable due December 31, 2018 $1,200,000; and
unamortized discount on bonds payable 48,000.
The bonds were issued on December 31, 2008 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)
On April 1, 2011, Wolfe retired $240,000 of these bonds at 101 plus accrued interest.

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