Question: Quartech Enterprises manufactures and distributes

> Wayne Computer Consultants, Incorporated develops and installs integrated computer systems and networks for large utilities. On January 2, 2018, the company signed a contract to deliver an electricity deployment system for a grid covering three New Engla

> Repeat the requirements of P8-7 assuming Bigelow Contractors uses the completed-contract method to report its long-term contracts. Additionally, compare the reported gross profit and net asset (liability) position reported under the percentage-of-complet

> Bigelow Contractors signed a contract to construct a storage facility for RGN Manufacturing, Inc. The fixed-fee contract specifies that the facility is to be completed in three years. Bigelow uses the percentage-of-completion method (cost-to-cost approac

> Nance Network Consultants, Incorporated uses the percentage-of completion method to account for its long-term contracts. It uses the cost-to-cost approach to measure progress. During the current year, Nance signed a contract to develop a computer network

> The transaction price must reflect the time value of money if: a. The vendor expects the period between customer payment and delivery of goods or services will be less than two years. b. The contract has a financing component that is significant to the c

> Telecom Co. enters into a two-year contract with a customer to provide wireless service (voice and data) for $40 per month. To induce customers, Telecom Co. provides a free phone. Telecom Co. normally sells the phone on a standalone basis for $200. Telec

> The following information pertains to Pewter Cup Company at August 30. Prepare the bank reconciliation for Pewter Cup by determining the correct balances for both book and bank. Prepare any required journal entries. 1. Cash balance per bank, $769 2. Au

> A performance obligation is: a. An enforceable promise in a contract with a customer to transfer a good or service to the customer. b. An offer to transfer a good or service to the customer. c. An expectation of a customer for the receipt of a good or se

> All of the following are elements of a contract except: a. The contract has commercial substance. b. The vendor can identify payment terms for the goods or services. c. It is not approved by both parties to the agreement. d. The vendor can identify each

> Pate paid $50,000 and gave a plot of undeveloped land with a carrying amount of $320,000 and a fair value of $450,000 to Bizzell Co. in exchange for a plot of undeveloped land with a fair value of $500,000. The land was carried on Bizzell’s books at $350

> Hi-Tech Corp. spent $300,000 on research and development to generate new product lines. Only one of the five product lines resulted in a patented item; the remaining four were considered unsuccessful. The cost of the product that was successfully patente

> Hi-Tech Corp. spent $300,000 on research and development to generate new product lines. Only one of the five product lines resulted in a patented item, and the remaining four were considered unsuccessful. Under U.S. GAAP, how much of the $300,000 should

> Holly Company incurred research and development costs in Year 1 as follows: The total research and development expense in Holly ’s Year 1 income statement under U.S. GAAP should be: a. $930,000 b. $870,000 c. $530,000 d. $470,000

> Visual Graphics Company sold a printing press for $74,000 on the last day of the reporting period. The printing press had a gross and net amount of $100,000 and $65,000, respectively, reflected on the balance sheet at that date. Which of the following is

> Lavery Company purchased a machine that was installed and placed in service on July 1, Year 1, at a cost of $240,000. Salvage value was estimated at $40,000. The machine is being depreciated over 10 years by the double-declining balance method. For the y

> On January 1, Year 1, Bluebird Inc. borrowed $10 million at a rate of 9% for 5 years and began construction of its new regional office building. Bluebird has no other debt. During Year 1, Bluebird’s weighted-average accumulated construction expenditures

> On June 30, Year 1, Bluebird Inc. purchased a $750,000 tract of land for a new regional office. Costs related to purchasing the property and preparing the land for construction included: In its December 30, Year 1, balance sheet, Boyd should report a ba

> The following information pertains to Silver Key Company. Prepare the bank reconciliation at July 31 by determining the correct balances for both book and bank using the following template. Prepare any required journal entries.

> On March 1, Year 1, LuxWear Inc. had beginning inventory and purchases at cost of $50,000 and $20,000, respectively. The beginning inventory and purchases had a retail value of $75,000 and $30,000, respectively. The company had sales of $60,000, as well

> . The Loyd Company had 150 units of product Omega on hand at December 1, Year 1, costing $400 each. Purchases of product Omega during December were as follows: Sales during December were 500 units on December 30. Assume that a perpetual inventory system

> The Loyd Company had 150 units of product Omega on hand at December 1, Year 1, costing $400 each. Purchases of product Omega during December were as follows: Sales during December were 500 units on December 30. Assume that a perpetual inventory system i

> Simmons, Inc. uses the lower-of-cost-or-market method to value its inventory that is accounted for using the FIFO method. Data regarding an item in its inventory is as follows: What is the lower-of-cost-or-market method for this item? a. $18 b. $26 c.

> Simmons, Inc. uses the lower-of-cost-or-market method to value its inventory that is accounted for using the LIFO method. Data regarding an item in its inventory is as follows: What is the lower of cost or market for this item? a. $21 b. $20 c. $28

> The Loyd Company had 150 units of product Omega on hand at December 1, Year 1, costing $400 each. Purchases of product Omega during December were as follows: Sales during December were 500 units on December 30. Assume that a perpetual inventory system i

> Giddens Company adopted the dollar-value LIFO inventory method on December 31, Year 1. On December 31, Year 1, Giddens’ inventory was in a single inventory pool and was valued at $400,000 under the dollar value LIFO method. Inventory da

> Which of the following disclosures about accounts receivable are required? I. Accounts receivable serving as collateral II. The percentage used to calculate allowance for doubtful accounts III. Total allowance for doubtful accounts. a. I only b. I and I

> On November 30, Year 1, Derin Corporation agreed with its customers to change accounts receivable to notes receivable in order to allow a longer payment period. The terms of the note’s receivable are that the principal is due on Novembe

> Stanberry Company sold $500,000 of net accounts receivable to Cork Company for $450,000. The receivables were sold outright on a without recourse basis, and Stanberry Company retained no control over the receivables. The journal entries to record the sal

> Hanna Lighting recently transferred $60,000 of electrical supplies to Goshen Super markets on consignment. The retail price of the supplies is $81,000. Hanna offers its consignees a 25% fee on the retail price of the inventory sold. Hanna shipped the sup

> On its December 31, Year 2, balance sheet, Red Rock Candle Company reported accounts receivable of $855,000 net of an allowance for doubtful accounts of $45,000. On December 31, Year 3, Red Rock’s balance sheet showed gross accounts receivable of $922,00

> Fernandez Company had an accounts receivable balance of $150,000 on December 31, Year 2, and $175,000 on December 31, Year 3. The company wrote off $40,000 of accounts receivable during Year 3. Sales for Year 3 totaled $600,000, and all sales were on acc

> The following are held by YRT Corporation at December 31, Year 1: Cash in checking account $15,000 Petty cash 250 Check from customer dated 01/31/Year 2 350 3-month certificate of deposit, due 01/15/Year 2 40,000 12-month certificate of deposit, due 02/2

> Disclosures for annual periods of public companies must include all but which of the following with respect to contracts with customers? a. Identification of the top five largest customers. b. Disaggregation of reported revenues. c. Explanations of chan

> Assume a retailer sells 10 widgets for $2,000 each. The widgets cost $100 and the sale includes a return right for 90 days. The retailer determines that the probability of returns associated with sales of the widgets is 10% based on prior customer behavi

> All of the following are indicators that the vendor is acting as an agent instead of as a principal except: a. The other party is primarily responsible for fulfilling the contract. b. The vendor has latitude in establishing prices for the other party’s g

> During Year 1, Meriwether Construction Company started a construction job with a contract price of $3,000,000. The job was completed in Year 2, and the company uses the percentage of completion method. The following information is available for Year 1 an

> Which of the following indicators is not considered when determining whether performance obligations are satisfied at a point in time? a. The vendor has a present right to payment for the asset. b. The customer is likely to reject delivery of the asset.

> When allocating the transaction price to separate performance obligations, one must determine the standalone selling price of the goods or services. Which of the following is not an estimation method for determining the standalone selling price? a. Adjus

> Items that may cause variable consideration include: a. Discounts. b. An hourly rate for services. c. A fixed fee. d. A retainer.

> Historically, about 5% of the merchandise that Thompson Tools, Inc. sells is returned. In the month of March, Thompson Tools sold merchandise costing $546,000 to customers for $712,000. The company uses a perpetual inventory system and all sales are on a

> Shifty Beaver Transmission Company enters into a contract with a major U.S. auto manufacturer to design and produce four-speed transmissions for small SUVs. Under the terms of the contract, Shifty Beaver will deliver the transmission immediately, but the

> Skivoso Incorporated owns and operates high-priced ski resorts in Europe. Skivoso recently entered into a contract to provide lodging for several corporate events and conferences sponsored by JeffCo for a total fee of $10,000,000. JeffCo agreed to additi

> King Rat Pest Control, Incorporated was recently hired to exterminate pests in an office complex for $300,000. King Rat will receive an additional $10,000 based on the success of the extermination. The additional $10,000 will be paid in full if the exter

> Show now Film Company grants a customer the rights to broadcast three films under a single licensing agreement. The arrangement includes a fixed fee of $90,000. The arrangement provides for an even reduction in the film license fee if the third film is n

> Pagit Inc, a software development company, enters into a contract with Plato Company to provide computer and hosting services. Pagit will provide a hosted accounting software system that requires Plato to purchase hardware from Pagit. Plato also purchase

> Assume that the project in E11-8 was not completed in Year 1. Yawyag was required to make two additional payments to the contractor in Year 2: $900,000 on April 1 and $1,800,000 on August 1 of Year 2. On January 2 of Year 2, Yawyag was required to take o

> Yawyag Corporation engaged Sir Peter, Inc. to design and construct a manufacturing facility. Construction began on January 2 and was completed on December 31 of the current year. The following payments were made to the contractor during the year: To spec

> How would the solution to E11-6 change if Rolling Blackout Power Company was an IFRS reporter and earned $11,000 interest income on investing the excess funds from the construction loan during the year? Prepare the journal entry to record the cash intere

> Rolling Blackout Power Company constructed a new power plant to supply energy to the Northeast Electrical Grid. The construction began on January 2 and ended on December 31 of the current year. On the date of completion, the plant had a total cost of $8,

> Using the information provided in BE8-21, prepare the journal entry to record $5,000 of actual sales returns within one year after revenue was recognized by Botti Data From BE8-21: Botti Incorporated manufactures and sells professional ski equipment. Bo

> Spill Oil Corporation drilled 10 oil wells at the beginning of the current year. The total exploration costs associated with this oil and gas activity amounted to $8,500,000. Only six of the wells were producing; the remaining wells are dry or nonproduct

> Repeat the requirements in E11-40 assuming that FFC uses the successful-efforts method. Data from E11-40: a. Determine the total cost of the natural resource under the full-cost method. b. Prepare the journal entries to record the acquisition of the na

> Ferro Fuel Company (FFC) acquired a tract of land to be used for oil and gas exploration at the beginning of the current year. FFC paid $500,000 to acquire the land, paid $325,000 in development costs, and incurred $130,000 in exploration and evaluation

> On December 31, 2018, the Clearwater Corporation acquired a custom-made plant asset by issuing a promissory note with a face value of $750,000, a due date of December 31, 2023, and a stated (coupon) rate of interest of 2%. Interest is compounded annually

> Assume that Sebastian Company from E11-38 reports under IFRS. Prepare the journal entry to record the exchange on the books of Sebastian Company. Data from E11-38: Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Com

> Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF trucks owned by Sebastian Company. The DROF refrigerated trucks have a cost of $100,000 and accumulated depreciation u

> Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives.

> Clarke Company traded a used mixing machine for a new model. The used machine has a book value of $11,000 (cost $32,000 less $21,000 accumulated depreciation) and a fair market value of $8,000. The new mixing machine has a list price or fair value of $31

> Clayton Company exchanged a used machine with a book value of $26,000 (cost $54,000 less $28,000 accumulated depreciation) and cash of $8,000 for a delivery truck. The machine is estimated to have a fair market value of $36,000. The cash flows related to

> Doris Company traded a tract of land to Rick’s Real Estate for a similar tract of land with no significant effect on future cash flows. The old land had a carrying value of $6,500,000. The land was appraised for $9,000,000. As part of the exchange, Doris

> Botti Incorporated manufactures and sells professional ski equipment. Botti offers a money-back guarantee for one year after the date of purchase. Cash sales for the current year amounted to $620,000. Botti estimates that 5% of all sales are returned wit

> Mercurial Company traded its cutting equipment for the newer air-cooled equipment manufactured by Broad Street Corporation. The air-cooled equipment will increase Mercurial’s productivity. The old equipment had a book value of $140,000 (cost of $700,000

> Assume that the Ecara Video Game Company reports under IFRS. Repeat the requirement of E11-31, part (c). Data from E11-31: Prepare the journal entry for Ecara to record the exchange as if the exchange had lacked commercial substance.

> You have been asked to account for a plant asset exchange on the books of the Ecara Video Game Company. On January 1, 2013, Ecara acquired a plastic extruding machine at a cost of $260,000. This machine had an original estimated useful life of 10 years a

> Assume that Rascals Candy, Inc. reports under IFRS. Repeat the requirement of E11-29, part (c). Data from E11-29: a. Record the journal entry on the books of Temptations Corporation to record the exchange assuming that the transaction altered the economi

> Sonata Manufacturing Corporation decided to expand its operations and open a new facility in Illinois. Rather than constructing a new plant, Sonata negotiated a contract to purchase an existing facility from a former competitor for a total cost of $5,000

> On January 2, 2018, Temptations Corporation paid $31,500 in cash and exchanged a chocolate mixing machine, which had a fair value of $437,500 and a book value of $500,000 ($1,135,000 historical cost − $635,000 accumulated depreciation brought up to the d

> Alto Devices acquires Medifast, a small start-up company, by paying $2,170,000 in cash on January 2. Following are the book values and fair values of Medifast on the date of acquisition. Required: a. What is the amount of goodwill acquired? b. What in

> IFRS. Repeat the requirements in E11-26 assuming that Carlson reports under IFRS. Assume that all the conditions to capitalize development costs have been met and the project is completed on January 1. Capitalized development costs are amortized over 4 y

> During the current year, Carlson Industries, Inc. conducted significant research activities related to the development of a new computer chip. Carlson had the following costs Prepare all journal entries required to record Carlson’s R&am

> On January 2, 2019, Bubba and Company paid $5,000,000 in cash to acquire 100% of the Cire Company’s voting common stock. Cire’s balance sheet on that date showed the following balances in its accounts: The appraised v

> Spot-On Contractors, Inc. provided the following information for the current year’s construction activity Prepare the journal entries required to record Spot-On’s construction activity assuming that the company uses t

> Discuss whether the following scenarios would preclude a contract from a customer under the revenue recognition standard. a. Tarik Company is not certain that it can recognize revenue of sales made to a customer because it has no formal written agreement

> IFRS. Use the information in E11-14, part (a) to prepare the required footnote disclosure under IFRS for Kurtis Koal Company, Inc.’s property, plant, and equipment for Years 1 and 2, including a statement of its accounting policy and a table with account

> Use the information in E11-13, part (a) to prepare the required footnote disclosure for Kurtis Koal Company, Inc.’s property, plant, and equipment for Years 1 and 2, including a statement of its accounting policy and a table with accou

> The Aries Group sold one of its plant assets on April 1 of the current year for $250,000. The asset had an original cost of $500,000 and an estimated residual value of $80,000. Aries used the straight-line method of depreciation assuming an estimated use

> The Gemini Group sold one of its plant assets on August 1 of the current year for $200,000. The asset had an original cost of $500,000 and an estimated residual value of $80,000. The firm used the straight-line method of depreciation assuming an estimate

> IFRS. Repeat the requirements in E11-18 assuming that Ace acquired the asset on July 14 of the current year. Use partial-year depreciation assuming that the manufacturing equipment was acquired at the beginning of the month to simplify the computation.

> On January 2 of the current year, Vaughn, Inc. acquired land for $2,000,000 to be used to construct a new service and repair center. The closing costs amounted to $110,000, and Vaughn paid $20,000 for the current period’s property taxes. There was an exi

> Repeat the requirements in E11-17 assuming that Ace acquired the asset on July 14 of the current year. Use partial-year depreciation assuming that the manufacturing equipment was acquired at the beginning of the month to simplify the computation.

> Repeat the requirements in E11-17 assuming that Ace is an IFRS reporter and the manufacturing equipment has two components: computer controls and engine. The amount allocated to the computer controls is $500,000. The computer controls have a 5-year usefu

> Ace Manufacturing, Inc. purchased a new piece of manufacturing equipment at a total acquisition cost of $3,000,000 on January 4 of the current year. The firm estimates that the equipment has a useful life of 10 years or 13,250,000 units of output and a r

> Repeat the requirements in E11-14 assuming that Kurtis Koal Company, Inc. acquired the asset on August 1 of the current year. Use partial-year depreciation without adopting any of the acceptable conventions that simplify the computation Data from E11-14

> Prepare all journal entries necessary to reflect the use of the percentage-of-completion method in 2018 for CCC in BE8-18. Data From BE8-18:

> Repeat the requirements in E11-13 assuming that Kurtis Koal Company, Inc. acquired the asset on August 1 of the current year. Data from E11-13: Prepare the depreciation schedules for the machine assuming that Kurtis Koal used the following methods (each

> IFRS. Repeat the requirements in E11-13 assuming that Kurtis Koal Company, Inc. is an IFRS reporter and the mining machine has two components: casing and engine. The amount allocated to the engine is $800,000. The engine has a 6-year useful life and $60,

> Kurtis Koal Company, Inc. purchased a new mining machine at a total cost of $900,000 on the first day of its fiscal year. The firm estimates that the machine has a useful life of 6 years or 6,000,000 tons of coal and a residual value of $60,0

> IFRS. Avery Air, Plc, a UK company, conducts regularly scheduled maintenance and improvement of its fleet of airplanes. During the year, it replaced engines at a cost of £2,900,000, upgraded airplane interiors at a cost of £610,000, and spent £1,300,000

> Clave Building Products, Inc. conducts regularly scheduled maintenance of its machinery and equipment every Friday afternoon. The cost of maintenance for the current year amounted to $345,000. The regular maintenance revealed the need to conduct a major

> IFRS. Assume that the Yawyag Corporation in E11-8 is an IFRS reporter and complete the following: Required: a. Compute the weighted-average accumulated expenditures for the current year. b. Compute the amount of interest related to the construction p

> St. Charles Flooring Company recently purchased a new tile-cutting machine with an invoice price of $215,500. The cost of delivery was $2,000, and installation amounted to $3,550. To test the machine, St. Charles cut 100 tiles that cost $4.50 each. The t

> Joe the Grocer Markets, Inc. (JTGM) adopted the dollar-value LIFO inventory method using 2018 as the base year. JTGM uses FIFO for its internal books. Information related to its inventory is presented in the following table: Required: a. Compute JTGM&ac

> CWB Teleconcepts, Inc. manufactures and distributes three models of handheld devices: the Flame, the Globe, and the HD3. CWB uses the dollar-value LIFO method. Information for 2018, 2019, and 2020 is presented in the following table. The cumulative pric

> Total Color, Inc. manufactures and distributes house paints. Total Color uses the dollar-value LIFO method. Information for 2018, 2019, and 2020 is presented in the following table. Year Inventory – FIFO 2018 – Base year $356,000 2019 $379,700 2

> Cosmo Computer Consultants (CCC) signed a contract in 2018 to develop a computer network system for Platinum Entertainment. Cosmo uses the percentage-of completion method and determines its measure of progress using the cost-to-cost approach. The firm pr

> Burke Company uses the LIFO perpetual method for financial reporting and tax purposes. A summary of Burke’s inventory for the current year follows. Required: a. Compute the ending inventory and cost of goods sold for the current year.

> Inventory transactions for Jack Franklin Stores are summarized in the following table. The company uses the LIFO perpetual method for both financial and tax reporting The inventory footnote from Jack Franklin Stores’ annual report ind

> Answer the following questions using the information provided in E10-3 Required: a. Prepare a partial income statement and balance sheet for Zoola, Inc. under each of the inventory valuation methods. b. Assume that the company reported current assets

> Zoola, Inc. provided the following information regarding its inventory for the current year, its second year of operations. Compute Zoola’s ending inventory and cost of goods sold under each of the following cost-flow methods assuming

> Zorinak, Inc. uses the dollar-value LIFO retail inventory method for costing inventory. It has beginning inventory costing $154,000 at a cost-to-retail ratio of 72%. During the year, Zorinak purchased goods with a cost basis of $770,000 and a retail valu