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19 ~ffi~,§jjti: ~~t~~*±J)I ~~f4§: ~~t~ iIf~BWJ ; 0710 • (ij:x : 3 * ~~fI)±. : *ftitH ~ D1'OJ {@fflfttW. c. $122,750. d. $125,750. 6. Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating to the computation ofthe inventory at July 31, 2010, are as follows: Cost Retail Inventory, 2/1/10 $ 200,000 $ 250,000 Purchases 1,000,000 1,575,000 Markups, net 175,000 Sales 1,750,000 Estimated normal shoplifting losses 20,000 Markdowns, net 110,000 Under the lower-of-cost-or~net realizable value method, Henke's estimated inventory at July 31, 2010 is a.$72,OOO. b.$84,000. c.$96,000. d.$120,000. 7. When cash is involved in a non-monetary exchange having commercial substance. a. gains or losses are recognized in their entirety. b. a gain or loss is computed by comparing the fair value of the asset received with the fair value of the asset given up. . , c. only gains should be recognized. d. only losses should be recognized. Use the following information to answer questions 8-10. Arlington Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $2,400,000 on March 1, $1,980,000 on June 1, and $3,000,000 on December 31. Arlington Company borrowed $1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3~year, $2,400,000 note payable and an 11 %, 4-year, $4,500,000 note payable. 8. What are the weighted-average accumulated expenditures? a. $4,380,000 b.$3,155,000 c.$7,380,000 d.$3,690,000 9. What is the weighted-average interest rate used for interest capitalization purposes? a.l1% b.l0.85% c.lO.5% d.l0.65% 10. What is the avoidable interest for Arlington Company? a.$144,000 b.$463,808 c. $164,281 d.$352,208 I 11. Recovery of impairment is recognized for all the following except a. Patent held for sale.
19 ~pJTijllm: .gt~~~±fJI ~~f4 § : ff~t~ i :lIj~8WJ : 0710· e::jz : 3 b.Patent held for use. c. Trademark. d.GoodwilL 12. A company uses the equity method to account for an investment. This would result in what type of difference and in what type of deferred income tax? Type of Difference Deferred Tax a. Permanent Asset b. Permanent Liability c. Temporary Asset d. Temporary Liability Use the following information for questions 13 and 14. Eilert Construction Company had a contract starting April 2011, to construct a $15,000,000 building that is expected to be completed in September 2012, at an estimated cost of $13,750,000. At the end of 2011, the costs to date were $6,325,000 and the estimated total costs to complete had not changed. The progress billings during 2011 were $3,000,000 and the cash collected during 2011 was $2,000,000. Eilert uses the percentage-of-completion method. 13. For the year ended December 31, 2011, Eilert would recognize gross profit on the building of a. $0. b. $527,083. c. $575,000. d. $675,000. 14. At December 31,2011, Eilert would report Construction in Process in the amount of a. $6,900,000. b. $6,325,000. c. $5,900,000. d. $575,000. 15. Compensation expense resulting from a compensatory share option plan is generally a. recognized in the period ofexercise. b. recognized in the period ofthe grant. c. allocated to the periods benefited by the employee's required service. d. allocated over the periods ofthe employee's service life to retirement. Use the following information for questions 16 and 17. Hanson Co. had 200,000 ordinary shares, 20,000 shares of convertible preference shares, and $1,000,000 of 10% convertible bonds outstanding during 2011. The preference shares are convertible into 40,000 ordinary shares. During 2011, Hanson paid dividends of$1.20 per share on the ordinary shares and $4 per share on the preference shares. Each $1,000 bond is convertible into 45 ordinary shares. The net income for 2011 was $800,000 and the income tax rate was 30%. . 16. Basic earnings per share for 2011 is (rounded to the nearest penny) a. $2.94. b. $3.22. c. $3.35. d. $3.60. 17. Diluted earnings per share for 2011 is (rounded to the nearest penny) a. $2.77. b. $2.81. ,:g. c. $3.05. (,~ il1J1~:J! f1 ,it8l1t1f~) d. $3.33.
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