1. Land was acquired in 2016 for a future building site at acost of $42,000. The assessed valuation for tax purposes is$27,600, a qualified appraiser placed its value at $49,700, and arecent firm offer for the land was for a cash payment of $44,300.The land should be reported in the financial statements at:
A. $ 27,600.
B. $ 44,300.
C. $ 42,000.
D. $ 49,700.
2. Alpaca Corporation had revenues of $210,000 in its first yearof operations. The company has not collected on $19,500 of itssales and still owes $26,800 on $85,000 of merchandise itpurchased. The company had no inventory on hand at the end of theyear. The company paid $13,500 in salaries. Owners invested $17,000in the business and $17,000 was borrowed on a five-year note. Thecompany paid $4,200 in interest that was the amount owed for theyear, and paid $7,400 for a two-year insurance policy on the firstday of business. Alpaca has an effective income tax rate of 40%.Compute net income for the first year for Alpaca Corporation.
A. $ 62,160
B. $ 125,000
C. $ 59,940
D. $ 103,600
3. Tri Fecta, a partnership, had revenues of $377,000 in itsfirst year of operations. The partnership has not collected on$45,000 of its sales and still owes $38,600 on $245,000 ofmerchandise it purchased. There was no inventory on hand at the endof the year. The partnership paid $32,900 in salaries. The partnersinvested $48,000 in the business and $26,000 was borrowed on afive-year note. The partnership paid $2,340 in interest that wasthe amount owed for the year and paid $9,700 for a two-yearinsurance policy on the first day of business. Ignore incometaxes.Compute the cash balance at the end of the first year for TriFecta.
A. $ 154,660
B. $ 165,910
C. $ 161,060
D. $ 350,390
4. The most political issue in the FASB’s most recentdeliberations and amendments to GAAP on business combinationswas:
The negative effects on subsequent earnings of amortizinggoodwill if firms were required to use the purchase method ofaccounting for the combination.
The negative effects on subsequent earnings of amortizinggoodwill if firms were required to use the pooling method ofaccounting for the combination.
The unrealistic balance sheet assets that would be created iffirms were required to use the purchase method of accounting forthe combination.
The unrealistic balance sheet assets that would be created iffirms were required to use the pooling method of accounting for thecombination.
On December 31, 2015, Coolwear, Inc. had a balance in itsprepaid insurance account of $62,400. During 2016, $100,000 waspaid for insurance. At the end of 2016, after adjusting entrieswere recorded, the balance in the prepaid insurance account was49,000. Insurance expense for 2016 would be:
A. $113,400.
B. $100,000.
C. $13,400.
D. $162,400.
5. On December 31, 2016, the end of Larry’s Used Cars’ firstyear of operations, the accounts receivable was $52,900. Thecompany estimates that $1,800 of the year-end receivables will notbe collected. Accounts receivable in the 2016 balance sheet will bevalued at:
A. $51,100.
B. $54,700.
C. $52,900.
D. $1,800.
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