Chapter 1 - 5 Practice Exam II - Practice Exam Chapters...

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Practice Exam Chapters 1-5 (2)Short answer exercises (Answer in the space provided)1.On July 1, 2016, Doe Corp. agreed to sell the assets and product line of its Hart Division. The division qualifies as a component of the entity. The sale was completed on February 15, 2017. At the end of 2016, the book value of Hart’s assetswas $300,000 lessthan their net fair value. The division’s operating losses for 2016 were $600,000. Disregarding income taxes, what should be reported in the 2016 income statement related to the discontinued operation?2.Refer to question 1. Assume that at the end of 2016, the book value of Hart’s assets was $300,000 morethan their net fair value. Disregarding income taxes, what should be reported in the 2016 income statement related to the discontinued operation?3.Record year-end (December 31) adjusting entries for the following situations:a. An insurance policy covering three years was purchased on July 1, for $6,000.The entire amount was debited to insurance expense.b.The company borrowed $40,000 from a local bank on October 1.

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