midterm 2 review.docx

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Department
Accounting & Financial Management
Course
AFM 102
Professor
Robert Sproule
Semester
Winter

Description
630 Friday. F9-12, M1 and M2 30 multiple (30 marks) 3 short answers (55 marks) -Sold 120,000,000 worth of season tickets for the 24 home games to be played during the short season (75,000,000 cash and 45,000,000 on credit) Because games haven’t been played yet so its unearned (accounts receivable) -Amortization (apply all 3) asset cost: includes the purchase cost, sales tax, legal fees and other costs needed to acquire and prepare the asset for use residual (or salvage) value: is an estimate of the amount the company will receive when it disposes of the asset useful life: is the expected service life of an asset to the present owner. Land is the only tangible asset that has an unlimited life amortizable cost: is the portion of the asset’s cost that will be used in generating revenue; calculated as asset cost minus residual value Straight line method: a systemic and rational allocation of the cost of the asset in equal periodic amounts over its useful life (62,500 – 2,500) x 1/3 = 20,0000 per year
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