Question

1-The Suvari Company purchased a machine on November 1, 2003, for $148,000. At the time of acquisition, the machine was estimated to have a useful life of 10 years and a salvage value of $4,000. Suvari recorded monthly depreciation using the straight-line method. On July 1, 2017, the machine was sold for $13,000. What should be the loss recognized from the sale of the machine?
a.$4,000
b.$5,000
c.$10,200
d.$13,000
  
2-Which of the following statements is correct?
a.The choice of an inventory costing method is dependent upon the actual physical flow of the goods in inventory.
b. LIFO should not be not used under International Financial Reporting Starndards.
c. FIFO should be used during a period of decreasing unit costs when the objective is to maximize the gross profit reported on the balance sheet.
d.The average cost method will result in an ending inventory balance which is higher than the case where FIFO is applied when inventory unit costs are rising.

3-On December 31, 2014, Cruise Company has 10,000 units of an inventory item physically counted, which cost $40 per unit when purchased on October 15, 2014. The selling price was $60 per unit. On December 31, 2014, the net realizable value cost was $36 per unit. At what amount should the inventory be reported at on the December 31, 2014 balance sheet?

a.$200,000
b.$240,000
c.$360,000
d.$400,000

4-You have a goal of having $100,000 five years from today. The return on the investment is expected to be 10% and will be compounded semi-annually. The amount that needs to be invested today is closest to:
e.$61,390
f.$62,090
g.$78,350
h.$38,550

5-During the year, Trenton Company purchased 3,000 shares of ists $10 par common stock at $50 per share and later sold it for $40 per share. How much did total equity change because of these treasury stock transaction? (Assume Trenton Company applies the cost method for treasury stock transactions.)

a.$150,000 decrease
b.$120,000 increase
c.$30,000 decrease
d.$20,000 decrease

Answer 1

1.
Straight line Depreication = ($148000-4000) / 10 = $14400 per year
Answer should be Gain, since asset is sold after more than 10 years of use, book value of asset would be equal to salvage value i.e. $4000

Therefore Gain = $13000-4000 = $9000

The question is technically incorrect.

By hit and trial, by taking Date of purchase as Nov 1, 2008
Depreciation for 8 years and 8 months = $14400 / 12 x 104 = $124800
Loss on sale = $148000-124800-13000 = $10200
Answer could be c. $10200

2.
Answer is b. LIFO should not be not used under International Financial Reporting Standards

3.
Answer is c. $360000 i.e. 10000 x $36

4.
Amount today = $100000 x 0.614 = $61400
Answer is a. $61390

5.
Answer is c.$30,000 decrease
Since treasury stock resold at loss of $10 per share i.e. $50-40