Intermediate Test 2 l Distinctionmadebetweenmulti stepandsinglestepincomestatement format is the separationof A Costofgoodssoldexpense andadministrative expenses Incometax expense and administrative expenses A andnon operaring dara Operaring D I heeffecton incometa esdueto exlraordinary ilemsandrheeffecton rncometaxesdueto incomebeforeextraordinaryitems 2 Whichoneofthe followingtJDesoflossesis excludedfrom thedetermination of netii q ome in incomestatements Material lossesresultingfrom co ectionof erro relatedto prior periods y B Materiallossesresultingfrom transaction in thecompany s investments account C Material lQlsesresultingftom the write off of intangibles ofOt j D Materiallosses resulting fromunusucl salesofas ei nolacqllired for resale 3 ABC Companyreportedtheibllowingin its year 3 single step incomestatement N e ts a l e s 150 066 Extraordinary gain netof gl 0O0taxeffec0 Z OOO G a i no ns a l eo f m a c h i n e r y 1 3 3 0 0 0 D i v i d e nrde v e n u e 4 0 0 0 Cumulativechangein year l 2 incomedueto Changein depreciarion method nerof 450 tax 1 000 T o t arl e v e n u e 4 1 3 3 0 0 In theincomefromconlinuing operation seclionof lts year income slatemenr Atj snoutdhavereponed lotalre enueof A 379 000 J 0 12 tt 3tl s sz ooo c 412 000 D 413 000 4 Whichof thefollowingitemswouldbe reportednetof tax on thefaceof the lncomestatement A Cumulativeeffectof a changein an accounting principle B Priorperiodadjustment Unusualgain operations D Discontinued 5 A reviewofthe December 3l financialstatements ofXyZ Coryorationrcvealed extraordinary that underthecaption losses XyZ reporteda iotal of 3g0 000 compo cd of thefollouingiremr Y l XYZ recordeda lossol 30 000incured in the abandonment of equiDmenr IormerlyuseJin rheburine 2 A lossof 70 000wassustained asa resultof thefirst earthquake in thearea 3 Duringtheyear severalfactorieswereshutdownduringa majorstrikeby employees Shutdownexpenses totaledof 300 000 4 Accountsreceivable of 10 000werew ftenoffas unco lectible Ignoringincometaxes whatamountofloss shouldXyZ reportasql ffaordinary on il annual st ementol income A 100 000 tB 70 000 c 80 000 D 380 000 6 On December31 XYZ Corp s balancesheetaccountsincreasedby the following amountsconparcd with thoseat the end of the prior year I 1t A s s e r s 1 7 8 0 0 0 Liabilities 42 000 t t C a p i t aslt o c k 1 2 5 0 0 0 r rr ir Additionalpaidincapital l7 000 l7 XYZ had no accumulatedother comprehensiveincome OCI and the only chargeto retainedearningsduring the year was for a dividendpaymentoi t3 000 Net income folt e year was r y 1 7 0 0 0 Y zs ooo lfr r l F l E Lr c J1 000 D 6 0 0 0 0 ril i e 7 Thefollowingwercrecognized duringthecurent fiscalyearby ABC Corporation Losson earlyextinguishment of noncurrent debt g30 000 Depreciare i oxnp e n s e 2 4 0 0 0 Co ectionofunderstand expenses in thepriorperiod glg 000 L o s s er e s l a t et oda s t r i k e 1 5 0 0 0 I m p a i r m eonftg o o d w i i l 3 000 Whatnetamountofthe aboveitemsshouldbe includedin incomelrom contmuingoperations A 90 000 A 75 ooo E 72 000 D s1 000 li I fJl l d t i jc r C t 1 r g R l t l It i tt cF 1 i r1E i r Whichofthe followingitemswouldbe reportedat its grossamounton thefaceof theincomestatement A Priorperiodadjustmont J CumulativeelTectof a changein accounting principle C Unusualgain Y Extraordinary loss Du ng JanuaryYear4 DoeCorp ageedto sellthe assets andproductline of itb Hart division The salewascompletedon January15 yJg 5 andresultedin a ol 999O0O Han opcraring b SswereSoqq D0 t llear4 Bailojr di posal and 50 000 for lheperiodJdnurry4 rhrough JMuary15 year5 Disregarding ncome taxes andassuming thatthecriteriafor reportinga discontinued operation aremet whatzrnountofnet gain loss shouldbe repoftedin Doe scomparativc Year5 andYear4 incomestatements Year 5 Year 4 A 0 250 000 250 000 0 850 000 600 000 900 000 6s0 000 0 On December 31 Year l thelastdayof its fiscalyear ABC Companypurchased 2 000sharesof a ailable for sale secudties at a pdceof 10per share These securities hada fair valueof 24 000on December3l year 2 If ABC Stil rare is 2570 thetotalaftertax effecton comptehensive incomein year 2 ofthe foregoingt ran rcl i6i tas Ic lyjtr A 6 000 1 B 4 500 r t U q 4 ooo s ooo 5 r l1 11 Wli of thefbllowingis anexampleof managingeamingsdorn f t q Revising theestimated life ofequipmenrfrom l0 yearsto 8 years B Changingestimared baddebrsfrom 3qoro 2 5 of sales C Not writingoffobsoleteinventory D Redu ingresearch anddevelopment expenditures I2 XYZ Corporar ion reponsthe fujlowrnginformarionl orrectronol undcr lctcment ofdeprcciltioner pense In prlor years netoftax o i i t n a e c r a r e J ifi ffi 1 e It n c o m e Reri nedejrminss rrr ii p 0 tj 38 ffi XYZ shouldreportrerainedearnings l2l31 12 asadjustedat A 3 125 000 1 2 660 000 COU C e 2 19s 000 L 5i t D 1 805 000 ii ABc lfr it c o i n o s t a t e m et nb trt r 9 d December J I reporte d ner income or r s rol i r i ll l q estrons about the folowing amounts tharhadbeer irclude Unrealized holdinglosron arajlabl uarnon entryre rirement of bonas ffil neto 22 U00 lesecurities lu effect Adjusrmenr roprofitsof pfioryear fo i i netof 97 500 raxeft e 0 10 800 aa oooc6 to i n n i iT ioi ir f m 1i11 11 1 wasaninfrequenr burnorunu uat occurre ln lic in f f fl r rncome taremcnr shoutd reporr nerincome o 9ii1i d i ffi 14 AB Cory ha c l r i C 161 200 r rrreof40 anr C iLem ol suo ooo r r r ii r irli J il j J ffl opera ng L r n u u a9tt u n E x t r a o r d i nl ao rsys 7 4 0 0 0 r lj S oj ooo tlisposal of equipmem rr 1 g16 000 I rrit sl n Lhan8eIn accoun tjng prjnciple increasing r r r o r e u ri n c o m c 106 000 l ij l o n A 345 600 B 330 400 ic ts368 800 D 411 200 i t ol income ra expen e ABc outdreponon ir income ir ii 15 A limitationof thebalancesheetthatis not alsoa limitationof the income statement is A Omifteditems B Theu eofjudBmenr ande rimare C JValuationof itemsat histo cal cost b The numbersareaffectedby the accounting methodsemployed 16 XYZ Companyhasthefollowingitems commonstock 79O000 teasurystock deferredtaxes 125 000 andretainedeamings 654 000 Whattotal 1O5 000 amountshouldXYZ Companyrepoftasstockholders equity A tgl c D 1 124 000 1 249 000 1 354 000 1 374 000 lco r05 Jl q 17 Cashheldto financefutureconsffuction ofadditionalplantsshouldbe classified on a balancesheetas A Currentassets 8 Irng term investrnents C Property plant andequipment D Intangibleassets 18 In a statement ofcashflows paymentsto acquiredebtinstruments of other other entities thancashequivalents shouldbe