Chapter 4567

Chapter 4567 - Accounting 201 Intermediate Accounting Test...

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Accounting 201 Name _____________________________ Intermediate Accounting Test 2 (Chapters 4,5,6,7) 1. Freda's Florist reported the following before-tax income statement items for the year ended December 31, 2009: All income statement items are subject to a 40% income tax rate. In its 2009 income statement, Freda's separately stated income tax expense and total income tax expense would be: A. $128,000 and $128,000, respectively. B. $128,000 and $100,000, respectively. C. $100,000 and $128,000, respectively. D. $100,000 and $100,000, respectively. 2. On November 1, 2009, Jamison Inc. adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to SFAS No. 144 . The disposal of the division was expected to be concluded by April 30, 2010. On December 31, 2009, the company's year-end, the following information relative to the discontinued division was accumulated: In its income statement for the year ended December 31, 2009, Jamison would report a before- tax loss on discontinued operations of: A. $ 65 million. B. $ 50 million. C. $130 million. D. $145 million.
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On October 28, 2009, Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to SFAS No. 144 , and was properly classified as held for sale on December 31, 2009, the end of the company's fiscal year. The division's loss from operations for 2009 was $2,000,000. 3. The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $3,500,000, respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2009 income statement? A. $2,000,000 loss. B. $2,500,000 loss. C. None. D. $500,000 gain included in continuing operations and a $2,000,000 loss from discontinued operations. On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2009. The following additional facts pertain to the transaction: The Footwear Division's operations and cash flows can be clearly distinguished operationally and for financial reporting purposes from the rest of Foxtrot Co. The book value of Footwear's assets totaled $48 million on the date of the sale. Footwear's operating income was a pre-tax loss of $10 million in 2009. Foxtrot's income tax rate is 40%. 4. In the 2009 income statement for Foxtrot Co., it would report: A. Income (loss) on its total operations for the year without separation. B. Income (loss) on its continuing operation only. C. Income (loss) from its continuing and discontinued operations separately. D. Income and gains separately from losses. 5. An extraordinary event for financial reporting purposes is both:
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Chapter 4567 - Accounting 201 Intermediate Accounting Test...

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