ACC 545 Final Exam Answers All Possible Questions http://www.projbid.com/downloads/acc-545-final-exam-answers/1) A company changes rom percentage!o!completion to complete"!contract# which is the metho" use" or tax purposes$ %he entry to recor" this change shoul" inclu"e a A.debit to Retained Earnings in the amount of the difference on prior ears! net of tax.".debit to #oss on #ong-$erm %ontracts in the amount of the difference on prior ears! net of tax.%.credit to &eferred $ax #iabilit.&.debit to %onstruction in 'rocess. &) 'hich o the ollowing is accounte" or as a change in accounting principle( A.A change from expensing immaterial expenditures to deferring and amorti(ing them as the become material".A change from the cash basis of accounting to the accrual basis of accounting%.A change in in)entor )aluation from a)erage cost to *+*,&.A change in the estimated useful life of plant assets )) A company changes rom straight!line to an accelerate" metho" o calculating "epreciation# which will be similar to the metho" use" or tax purposes$ %he entry to recor"this change shoul" inclu"e a A.debit to &eferred $ax Asset.".debit to Retained Earnings in the amount of the difference on prior ears.%.credit to &eferred $ax #iabilit.&.credit to Accumulated &epreciation. 4) Presenting consoli"ate" inancial statements this year when statements o in"i*i"ual companies were presente" last year is A.an accounting change that should be reported b restating the financial statements of all prior periods presented.".an accounting change that should be reported prospecti)el.%.-,$ an accounting change.&.a correction of an error. 5) +uring &,,-# a construction company change" rom the complete"!contract metho" to the percentage!o!completion metho" or accounting purposes but not or tax purposes$ %he ollowing lists inclu"e gross proit igures un"er both metho"s or the past ) years. Complete"!ContractPercentage!o!Completion&,,/0415#,,,0-,,#,,,&,,1/&5#,,,25,#,,,&,,-1,,#,,, 1#,5,#,,,01#-,,#,,,0-,,#,,,Assuming an income tax rate o 4,3 or all years# the aect o this accounting change on prior perio"s shoul" be reporte" by a cre"it o what( A$0)2,#,,, on the &,,- income statement4$0/,,#,,, on the &,,- income statementC$0)2,#,,, on the &,,- retaine" earnings statement+$0/,,#,,, on the &,,- retaine" earnings statement/) 5n 6anuary 1# &,,5# 4a"en Co$ purchase" a machine# which was its only "epreciable asset# or 0),,#,,,$ %he machine has a 5!year lie# an" no sal*age *alue$ 7um!o!the!years8!"igits "epreciation has been use" or inancial statement reporting an" the electi*e straight!line metho" or income tax reporting$ Eecti*e 6anuary 1# &,,-# or inancial statement reporting# 4a"en "eci"e" to change to the straight!line metho" or "epreciation o the machine$ Assume that 4a"en can 9ustiy the change$ "aden.s income before depreciation! before income taxes! and before the cumulati)e effect of theaccounting change! if an! for the ear ended &ecember /0! 1223! is 4152!222. $he income tax rate for 1223! and for 1225 through 1225! is /26. 7hat amount should "aden report as net income for the ear ended &ecember /0! 12238 A$021#,,,4$0/,#,,,C$0115#,,,+$0154#,,,1) %he "eerre" tax expense is the A$increase in balance o "eerre" tax liability minus the increase in balance o "eerre" tax asset$4$increase in balance o "eerre" tax asset minus the increase in balance o "eerre" tax liability$C$"ecrease in balance o "eerre" tax asset minus the increase in balance o "eerre" tax liability$+$increase in balance o "eerre" tax asset plus the increase in balance o "eerre" tax liability$-) A company recor"s an unreali:e" loss on short!term securities$ %his might result in whattype o "ierence an" in what type o "eerre" income tax( %ype o +ierence+eerre" %ax5ption 1%emporary;iability5ption &%emporaryAsset5ption )Permanent;iability5ption 4PermanentAsset A$5ption &4$5ption 1C$5ption 4+$5ption )2) A company uses the e the month!en" ban@ statement shows a balance o 0)/#,,,# outstan"ing chec@s are 01,,,# a "eposit o 04#,,, was in transit at month en"# an" a chec@ or 05,, was erroneously charge" by the ban@ against the account# what is the correct balance in the ban@ account at month en"( A$0&-#5,,4$0&1#5,,C$04)#5,,+$0&,#5,,1)) > a short!term obligation is exclu"e" rom current liabilities because o reinancing# theootnote to the inancial statements "escribing this e*ent shoul" inclu"e all o the ollowing inormation EACEP%. A$the terms o the new obligation incurre" or to be incurre"$4$the number o inancing institutions that reuse" to reinance the "ebt# i any$C$the terms o any e