Acc124Exam3FALL06(2)

Acc124Exam3FALL06(2) - NAME____________________...

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Unformatted text preview: NAME____________________ COMPREHENSIVE FINAL EXAM FALL 2006 Point Allocation Question Type Point Value Multiple Choice (PageOut) 20 Short Answer Questions 30 Problem 1 - Statement of Cash Flows 25 Problem 2 - Pensions 25 TOTAL 100 GOOD LUCK! FINAL EXAM / FALL 2005 / Page 1 of 10 NAME____________________ Short Answer Questions - 5 points each; 30 points total Instructions: You are required to select and complete six of the following ten short answer questions. Do not complete any more than six. If you complete more than six, only the first six will be graded and included in your exam score. 1. At December 31, 2006, Monet Corporation had a deferred tax asset balance of $42,000. At December 31, 2007, the deferred tax asset is $35,000. The corporations 2007 current tax expense is $60,000 and income before taxes is $145,000. What amount should Monet report as 2007 Net Income? (Chapter 19) 2. Jett, Inc. acquired 30% of Damon Corp.'s voting stock on January 1, 2006 for $240,000. Jett's 30% interest in Damon gives Jett the ability to exercise significant influence over Damon's operating and financial policies. During 2006, Damon earned $100,000 and paid dividends of $60,000. During 2007, Damon incurred a net loss of $20,000 and paid dividends of $30,000. What amount should Jett report as Investment in Damon on its December 31, 2007 balance sheet? (Chapter 17) FINAL EXAM / FALL 2005 / Page 2 of 10 NAME____________________ Short Answer Questions, continued 3. At December 31, 2006, Olsen Company had 600,000 shares of common stock outstanding. On September 1, 2007, an additional 120,000 shares of common stock were issued. In addition, Olsen had $5,000,000 of 6% convertible bonds outstanding for all of 2007. The bonds are convertible into 240,000 shares of common stock. No bonds were converted into common stock during 2007. The net income for the year ended December 31, 2007, was $2,400,000. Assuming the income tax rate was 30%, what amount should Olsen report as the diluted earnings per share for the year ended December 31, 2007? (Chapter 16) 4. Petry Company, a dealer in machinery and equipment, leased equipment to Geier, Inc., on July 1, 2007. The lease is appropriately accounted for as a sale by Petry and as a purchase by Geier. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2017. The first of 10 equal annual payments of $828,000 was received at the inception of the lease on July 1, 2007. Assume that at the inception of the lease (prior to receipt of the first lease payment) the present value of the rent payments over the lease term discounted at 8% (the appropriate interest rate) was $6,000,000. What is the amount of interest income that Petry should record for the year ended December 31, 2007? (Chapter 21) FINAL EXAM / FALL 2005 / Page 3 of 10 NAME____________________...
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Acc124Exam3FALL06(2) - NAME____________________...

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