🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeStudy Guides420,000CA160,000

ACTG 3110 Midterm: ACTG 3110 Exam Cheat Sheet

114 views14 pages
School
York University
Department
Accounting
Course
ACTG 3110
Professor
Elizabeth Farrell

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Abandoned asset: asset that firm continues to own but has permanently stopped using. Recoverable amount = higher of a) fair value less to sell or b) value in use. Value in use = present value of cash flows. If no fair value less cost to sell or value in use, it"s written down to 0. Subject to continual impairment tests: written up no more than carrying value at time of abandonment. To record stopping of depreciation and classification as abandoned asset. Depreciation should continue even though asset is currently not being used. It is unlikely that management will withdraw or change terms to sell. Second, if it meets criteria, stop all depreciation on the asset: Third, write down asset to lower of a) fair value less cost to sell or b) carrying value: amount of write down will = carrying value (fair value cost to sell) To write down asset to lower of amount.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related Documents

ACTG 3110 Chapter 10: ACTG CHapter 10
turquoiseplatypus626
ACTG 3110
Final Exam
Study Guide
ACTG 3110 Study Guide - Midterm Guide: Weighted Arithmetic Mean, Comprehensive Income, Current Asset
ochremanatee677
ACTG 3110 Lecture 1: ACTG 3110 MIDTERM
purplefish449

Related Questions

The information that follows relates to equipment owned byWaterway Limited at December 31, 2017:

Cost $9,540,000
Accumulated depreciation to date 1,060,000
Expected future net cash flows (undiscounted) 7,420,000
Expected future net cash flows (discounted, value in use) 6,731,000
Fair value 6,572,000
Costs to sell (costs of disposal) 53,000

At December 31, 2017, Waterway discontinues use of the equipmentand intends to dispose of it in the coming year by selling it to acompetitor. It is expected that the costs of disposal will total$53,000. (Assume that Waterway is a private company that followsASPE.)

REQUIRED:

1a) Prepare the journal entry at December 31,2017, to record asset impairment, if any

b) Prepare the journal entry to record depreciation expense for2018.

c) Assume that the asset was not sold by December 31, 2018. Theequipment’s fair value (and recoverable amount) on this date is$6.890 million. Prepare the journal entry, if any, to record theincrease in fair value. It is expected that the costs of disposalwill total $53,000

2) Repeat the requirements in (a) aboveassuming that Waterway is a public company that follows IFRS, andthat the asset meets all criteria for classification as an assetheld for sale

Presented below is information related to non-current assets owned by Marley Company at December 31, 2015.

Equipment Copyright

Cost $7 000 000 $2 700 000

Accumulated depreciation to date 1 500 000

Carrying amount - 2 350 000

Value-in-use 5 000 000

Fair value less cost of sell 4 400 000

Recoverable amount - 1 500 000

Assume that Marley will continue to use both assets in the future. As of December 31, 2015, the equipment had a remaining useful of 4 years and the copyrights had a remaining useful life of 5 years. Please show all workings and attach in order for me to copy and paste.Please and thank yiu.

Required:

(a) Prepare the journal entries (if any) to record the impairment of the assets at December 31, 2015. (16 marks)

(b) Prepare the journal entries to record depreciation and amortization expense for 2016. (14 marks)

(c) The recoverable amounts at December 31, 2016, of the equipment is $5 750 000 and the copyrights is $1 600 000. Prepare the journal entries (if any) necessary to account for impairment. (16 marks)

(d) What is the amount for depreciation and amortization for 2017? (6 marks)

Read the 2015 annual report of Air France – KLM and answer the 20 questions asked regarding the accounting issues. Link is provided below:

http://www.airfranceklm.com/sites/default/files/publications/afkl_registration_doc_2015.pdf

1. Air France-KLM reports ‘Consolidated statement of recognized income and expenses’ for the year ended December 31, 2015. If this statement was a U.S. GAAP statement, what would be the title of this statement?

a. Consolidated statement of total net income

b. Consolidated statement of other comprehensive income

c. Consolidated statement of comprehensive income

d. Consolidated statement of recognized net income

2. What method does Air France-KLM use for the Statement of Cash Flows?

a. Indirect method

b. Direct method

c. Gross method

d. Net method

3. The basic and diluted earnings per share for the year ended December 31, 2015, indicates that Air France-KLM has:

a. no convertible debts.

b. some dilutive securities.

c. no preferred stocks.

d. some treasury stocks.

4. What method is used to account for investments in companies over which Air France-KLM can ‘exercise significant influence on financial and operating policy decisions?’

a. Cost method

b. Liability method

c. Equity method

d. Fair value method

5. Sale of passenger tickets is accounted for at the time of ticket sale as:

a. Sales revenue

b. Deferred revenue

c. Contingent asset

d. No recognition

6. How does Air France account for business combination costs other than those related to the issuance of debt or equity securities?

a. Expensed as incurred

b. Capitalized as incurred

c. Included in goodwill

d. Used to offset fair value of the acquisition

7. Which of the following is not an ‘accumulated other comprehensive income’ item among those reported in the ‘reserves and retained earnings’ in the 2015 consolidated balance sheet of Air France-KLM?

a. Available for sale securities reserves.

b. Derivatives reserves.

c. Legal reserves.

d. Pension defined benefits reserves.

8. What is the carrying amount of investments in debt and equity securities that are classified as available-for-sale?

a. Fair value Cost

b. Amortized cost

c. Lower of cost or market

9. Inventories are carried at:

a. The lower of the first-in-first-out cost or net realizable value.

b. The first-in-first-out cost.

c. The lower of the weighted-average cost or net realizable value.

d. The weighted-average cost.

10. Air France-KLM classifies its frequent flyer programs as:

a. Noncurrent liability

b. Current liability

c. Current asset

d. Other debt

11. The followings are included in Air France-KLM’s intangible assets, except for:

a. Trademarks

b. Leased aircraft

c. Customer relationships

d. Slots for takeoff and landing

12. Air France-KLM reports bank overdrafts as:

a. A contra account to cash and cash equivalents.

b. A current liability.

c. An expense.

d. A bank deposits in transit.

13. Which method does Air France-KLM use to record depreciation expense for its flight equipment?

a. The activity-based method.

b. The sum-of-years’-digit method.

c. The straight-line method.

d. The group method.

14. Which accounting standards does Air France-KLM use?

a. U.S. GAAP

b. French GAAP

c. Netherlands GAAP

d. International Financial Reporting Standards

15. As of December 31, 2015, what assets are held for sale?

a. Land

b. Aircraft

c. Equipment

d. Buildings

16. Which of the following is included in ‘income from operating activities’ but not in ‘income from current operations?

a. Sale of aircraft equipment

b. Research and development costs

c. Bad debt expense

d. Interest revenue

17. Which of the following is not true about accounting treatment for the overhaul cost of major airframe and engine?

a. The cost is treated as separate asset component.

b. The cost is capitalized.

c. The cost is depreciated over the remaining useful life.

d. The cost is expensed as incurred.

18. How are financial assets accounted for if the Air France-KLM intends to sell them in the near future to realize capital gains?

a. At fair value with fair value changes recognized in the current period profit and loss

b. At fair value with fair value changes recognized as other comprehensive income

c. At cost with no recognition of fair value changes

d. At amortized cost with no recognition of fair value changes

19. Which of the following is not true about impairment test?

a. Tangible fixed assets, intangible assets, goodwill, and other assets with indefinite useful life are subject to an impairment test.

b. The impairment test is done at least once a year.

c. Recoverable value is the lower of the net realizable value and value in use.

d. The value in use is determined according to the discounted future cash flow method.

20. Which of the following is not an ‘other non-current income and expenses’ item?

a. Restructuring costs

b. Gains and losses on disposal of shares available for sale

c. Gains and losses on disposal of subsidiaries and affiliates

d. Gains and losses on sale of trading securities