1.) On January 4, 2002 Wynn Inc. bought 15% of Parr Corporation's common stock for $60,000. Wynn appropriately accounts for this investment by the cost method. The following data concerning Parr are available for the years ended Dec 31, 2002 and 2003.
2002: Net Income $30,000
Dividend Paid None
2003: Net Income $90,000
Dividend Paid $80,000
In its income statement for the year ended December 31, 2003, how much should wynn report as income from this investment.
2. The calculation of the income recognized in the first year of a four-year construction contract accounting for using the percentage-of-completion method is generally based on the ratio of:
a. The total estimated costs to estimated costs complete.
b. Total estimated costs to actual costs incurred to date.
c. Actual costs incurred to date to total estimated costs.
d. Estimated costs to complete to total estimated costs.
3. A company used the percentage-of-completion method of accounting for a four-year contract. Which of the following items would be used to calculate the income recognized in the second year?
Income previously recognized/Progress billings to date
4. During 2009, Tidal wave company began construction on a project scheduled for completion in 2011. At Dec 31, 2009 an overall loss was anticipated at contract completion. What would be the effect of the project on 2009 operating income under the percentage-of-completion method and the completed contract method?
Percentage of Completion/Completed Contract
a. No effect/No effect
b. No effect/decrease
c. Decrease/no effect
5. Rosson Corporation, which began business on January 1, 2009, appropriately uses the installment sales method of accounting for income tax reporting purchases. The following data are available for 2008:
Installment accounts receivable, 12/31/2008 200,000
Installment Sales for 2008 350,000
Gross Profit on sales 40%
Under the istallment sales method, what would Rosson's deferred gross profit at December 31, 2008 be?
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