Questions from Intermediate Accounting

Q: Describe the fair value option that is available under IAS 40 to

Describe the fair value option that is available under IAS 40 to companies that own investment property.

Q: BodyTone Company sells lifetime health club memberships. For one up-

BodyTone Company sells lifetime health club memberships. For one up-front, nonrefundable fee, a customer becomes a lifetime member of BodyTone’s network of health clubs. The fee is $2,000. The fee inc...

Q: How is the fixed asset turnover ratio calculated, and what does

How is the fixed asset turnover ratio calculated, and what does the resulting ratio measure?

Q: On June 1, 2013, bids were submitted for a construction

On June 1, 2013, bids were submitted for a construction project to build a new municipal building and fire station. The lowest bid was $5,000,000, submitted by the Shannon Construction Company. Shanno...

Q: Espiritu Construction Co. has used the cost-to-cost

Espiritu Construction Co. has used the cost-to-cost percentage-of-completion method of recognizing revenue. Tony Espiritu assumed leadership of the business after the recent death of his father, Howar...

Q: Perfectionist Construction Company was the low bidder on an office building construction

Perfectionist Construction Company was the low bidder on an office building construction contract. The contract bid was $9,000,000, with an estimated cost to complete the project of $7,000,000. The co...

Q: Smokey International Inc. recently acquired the Kurtz Builders Company. Kurtz

Smokey International Inc. recently acquired the Kurtz Builders Company. Kurtz has incomplete accounting records. On one particular project, only the information below is available. Because the infor...

Q: Kylie Builders Inc. is building a new home for Cassie Proffit

Kylie Builders Inc. is building a new home for Cassie Proffit at a contracted price of $200,000. The estimated cost at the time the contract is signed (January 2, 2013) is $115,000. At December 31, 20...

Q: The company started business on January 1 and during the year had

The company started business on January 1 and during the year had oil and gas exploration costs of $500,000. Of these costs, $100,000 was associated with successful wells and $400,000 with so-called d...

Q: Southern California Builders Inc. entered into a contract to construct an

Southern California Builders Inc. entered into a contract to construct an office building and plaza at a contract price of $30,000,000. Income is to be reported using the percentage-of-completion meth...