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RSM220H1 Study Guide - Final Guide: Computer Hardware, Menton, Aeroplan


Department
Rotman Commerce
Course Code
RSM220H1
Professor
Xin Baohua
Study Guide
Final

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University of Toronto
Faculty of Arts and Science
and
Rotman School of Management
RSM 220 H1F – Financial Accounting
Final Examinations, April 2013
Duration: 3 hours
Aids allowed: Hand-held, battery-operated calculator
Please answer all questions on this exam paper (or in booklets, etc.)
8 questions – you must answer ALL questions.
The exam consist of 21 pages
FIRST NAME: ___________________________________________________________
LAST NAME: ___________________________________________________________
Student #: ___________________________________
Question Grade
1 /22
2 /31
3 /10
4 / 7
5 /11
6 /23
7 /11
8 /65
Total : /180
Following formulas are provided for your reference:
Present value of a lump sum:
( )
1
n
PMT
PV
r
=+
Present value of an annuity:
RSM220H1S Final Exam (Winter 2013) Page 1 of 21

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QUESTION 1 – Multiple Choice (22 marks)
REQUIRED: Please answer the following questions (2 marks each) by choosing the best answer:
1.Which of the following statements best describes the accounting for intangible assets after acquisition under
IFRS?
a) They may be accounted for under the cost model or the revaluation model.
b) They should be accounted for under the cost model.
c) They should be accounted for under the revaluation model if an active market exists for the asset.
d) None of the above.
2. Which of the following facts concerning depreciable assets should be included in the summary of significant
accounting policies?
Amortization Method Composition of Assets
a) No Yes
b) Yes No
c) Yes Yes
d) No No
3. Zenox Corp’s comparative balance sheets as at December 31, 2012 and December 31, 2011 reported
accumulated depreciation balances of $800,000 and $600,000, respectively. Property with a cost of $50,000
and a carrying amount of $40,000 was the only property sold in 2012. Depreciation expense for 2012 was:
a) $210,000.
b) $200,000.
c) $190,000.
d) $220,000.
e) None of the above.
4.Hopper Company acquired machinery on January 1, 2005 which it amortized under the straight-line method
with an estimated life of fifteen years and no residual value. On January 1, 2010, Hopper estimated that the
remaining life of this machinery was six years with no residual value. How should this change be accounted
for by Hopper?
a) As a prior period adjustment.
b) As a cumulative effect of a change in accounting policy in 2010.
c) By setting future annual depreciation equal to one-sixth of the book value on January 1, 2010.
d) By continuing to amortize the machinery over the original fifteen year life.
5.Parry Co. purchased land as a factory site for $500,000. Parry paid $20,000 to tear down two buildings on the
land. Salvage was sold for $2,700. Legal fees of $1,740 were paid for title investigation and making the
purchase. Architect's fees were $20,600. Title insurance cost $1,200, and liability insurance during
construction cost $1,300. Excavation cost $5,220. The contractor was paid $1,200,000. An assessment made
by the city for pavement was $3,200. Interest costs during construction were $85,000.
The cost of the land that should be recorded by Parry Co. is:
a) $520,240.
b) $523,440.
c) $524,940.
d) $528,140.
6.For sale of physical goods, the following condition has to be satisfied for a seller to recognize sales revenue:
a. The legal title of the goods has to be transferred from the seller to the buyer.
b. The risks and rewards associated with the goods have to be transferred from the seller to the buyer.
c. The physical possession of the goods has to be transferred from the seller to the buyer.
d. Partial payment has been made from the buyer to the seller.
RSM220H1S Final Exam (Winter 2013) Page 2 of 21

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7.On April 16 2013, a fire destroyed the entire uninsured inventory of a retail store. The following data are
available:
Sales, January 1 through April 15 $500,000
Inventory, January 1 100,000
Purchases (net), January 1 through April 15 420,000
Markup on cost 25%
The amount of the inventory loss is estimated to be
a. $120,000.
b. $20,000.
c. $100,000.
d. $145,000.
8. THW has only one product in inventory, and all units of that product are identical (homogenous). During
June, the following changes in inventory took place:
June 1 Balance 1,400 units @ $24
8 Sold 400 units @ $50
10 Sold 1,000 units @ $40
24 Purchased 1,500 units @ $30
29 Sold 600 units @ $44
THW maintains a perpetual inventory system.
The cost of the ending inventory by the end of June under FIFO is
a. $33,600.
b. $26,400.
c. $21,600.
d. $27,000.
9. THW has only one product in inventory, and all units of that product are identical (homogenous). During
June, the following changes in inventory took place:
June 1 Balance 1,400 units @ $24
8 Sold 400 units @ $50
10 Sold 1,000 units @ $40
24 Purchased 1,500 units @ $30
29 Sold 600 units @ $44
THW maintains a perpetual inventory system.
The cost of goods sold recognized in June under average cost is
a. $33,600.
b. $51,600.
c. $54,207.
d. $27,000.
10.For consignment sales, when is it appropriate for the consignor to recognize sales revenue?
a. When the consignment goods are shipped from the consignor to the consignee.
b. When the consignee acknowledges the receipt of the consignment goods.
c. When the consignor receives notification from the consignee that the consignment goods have been sold.
d. When the consignor receives payment of the consignment goods from the consignee.
11.Inventory is generally valued at the lower of cost and net realizable value (LC&NRV). If the net realizable value
is less than the cost, under the indirect method, which of following account should be debited to record the
change in inventory value?
a.Cost of goods sold
b.Allowance to reduce inventory
c.Loss due to decline in net realizable value
d.Inventory
RSM220H1S Final Exam (Winter 2013) Page 3 of 21
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