- Information
- AI Chat
Interim Reporting - Exercises and Answers - Copy
Accountancy and Business Management (ABM001)
Related Studylists
I3Preview text
Problem 1
L Company experienced a 500,000 decline in the market value of its inventory at the end of the first quarter. L had expected this decline to reverse in the second quarter, and in fact, the second quarter recovery exceeded the previous decline by 100,000. What amount of gain or loss should be reported in the interim statements for the first and second quarters? First quarter Second quarter a. 500,000 loss 500,000 gain b. 500,000 loss 600,000 gain c. 500,000 loss 100,000 gain d. P 0 P 0
Answer A First Quarter – Loss of 500, Second Quarter – Gain of 600,000, but gain is only up to the previously recorded loss of 500,
Problem 2
A Company’s 6,000,000 net income for the quarter ended September 30, 2020, included the following after-tax items: I. P 900,000 gain realized in May 2020 was allocated equally to the second, third and fourth quarters of 2020. II. P 500,000 cumulative effect loss resulting from a change in inventory valuation method was recognized on August 31, 2020. III. In addition, the entity paid 200,000 on February 1, 2020, for 2020 calendar-year real property tax. Of this amount, 50,000 was allocated to the third quarter of 2020.
What is the net income for the quarter ended September 30, 2020? a. 5,700, b. 6,150, c. 6,200, d. 6,500,
3rd Quarter (July-August-September)
Answer C Third Quarter (July, August and September) Unadjusted Net Income 6,000, I. (900,000 / 3) (300,000) II. Included in Statement of RE, not in IS 500, III. Properly Included P Adjusted Net Income 6,200,
Problem 3
J Company prepares quarterly interim financial reports. The entity sells electric goods, and normally 5% of customers claim on their warranty. The provision in the first quarter was calculated as 5% of sales to date, which was 10,000,000. However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales in the second quarter were 15,000,000. What would be the provision charged in the second quarter’s financial statement? a. 2,000, b. 1,250, c. 1,500, d. 750,
Total Warranty Expense – First and Second Quarter (10M + 15M) x 10% 2,500, Warranty Expense Recognized in First Quarter (10M x 5%) (500,000) Warranty Expense – Second Quarter 2,000,
Problem 4
D Company, a calendar-year corporation, has the following income before tax provision and estimated effective annual tax rates for the first three quarters of 2020: Quarter Income before income tax Effective annual tax rate First 6,000,000 40% Second 7,000,000 40% Third 4,000,000 45%
What is the income tax provision in the interim income statement for the third quarter? a. 1,800, b. 2,450, c. 2,550, d. 7,650,
Answer B Cumulative Income Tax (17,000,000 x 45%) 7,650, Previously Reported Income Tax (13,000,000 x 40%) (5,200,000) Income Tax Provision for Third Period 2,450,
Interim Reporting - Exercises and Answers - Copy
Course: Accountancy and Business Management (ABM001)
