[Earla Riopel (NYCARE)]

Studying FAR for 2017 Q4. Practicing on my speed, the following are some FAR questions, that must be answered in 1-1.5 min, before moving onto SIMs (testlets – just like in actual exam):

1. In Dart Co.’s Year 2 single-step income statement, as prepared by Dart’s controller, the section titled “Revenues” consisted of the following:
Sales $250,000 Purchase discounts 3,000 Recovery of accounts written off 10,000 Total revenues $263,000
In its Year 2 single-step income statement, what amount should Dart report as total revenues?
a. $250,000 b. $253,000 c. $260,000 d. $263,000

2. Young & Jamison’s modified cash-basis financial statements indicate cash paid for operating expenses of $150,000, end-of-year prepaid expenses of $15,000, and accrued liabilities of $25,000. At the beginning of the year, Young & Jamison had prepaid expenses of $10,000, while accrued liabilities were $5,000.
If cash paid for operating expenses is converted to accrual-basis operating expenses, what would be the amount of operating expenses?
a. $125,000 b. $135,000 c. $165,000 d. $175,000

3. Last year, Katt Co. reduced the carrying amount of its long-lived assets used in operations from $120,000 to $100,000, in connection with its annual impairment review. During the current year, Katt determined that the fair value of the same assets had increased to $130,000.
What amount should Katt record as restoration of previously recognized impairment loss in the current year’s financial statements under U.S. GAAP?
a. $0 b. $10,000 c. $20,000 d. $30,000

4. Northstar Co. acquired a registered trademark for $600,000. The trademark has a remaining legal life of five years, but can be renewed every 10 years for a nominal fee. Northstar expects to renew the trademark indefinitely.
What amount of amortization expense should Northstar record for the trademark in the current year?
a. $0 b. $15,000 c. $40,000 d. $120,000

5. Acme Co.’s accounts payable balance at December 31 was $850,000 before necessary year-end adjustments, if any, related to the following information:

At December 31, Acme has a $50,000 debit balance in its accounts payable resulting from a payment to a supplier for goods to be manufactured to Acme’s specifications. Goods shipped F.O.B. destination on December 20 were received and recorded by Acme on January 2, the invoice cost was $45,000.
In its December 31 balance sheet, what amount should Acme report as accounts payable?
a. $850,000 b. $895,000 c. $900,000 d. $945,000

6. On January 2 of the current year, LTTI Co. entered into a three-year, non-cancelable contract to buy up to 1 million units of a product each year at $.10 per unit with a minimum annual guarantee purchase of 200,000 units. At year end, LTTI had only purchased 80,000 units and decided to cancel sales of the product. What amount should LTTI report as a loss related to the purchase commitment as of December 31 of the current year?
a. $0 b. $8,000 c. $12,000 d. $52,000

7. Finch Co. reported a total asset retirement obligation of $257,000 in last year’s financial statements. This year, Finch acquired assets subject to unconditional retirement obligations measured at undiscounted cash flow estimates of $110,000 and discounted cash flow estimates of $68,000. Finch paid $87,000 toward the settlement of previously recorded asset retirement obligations and recorded an accretion expense of $26,000.
What amount should Finch report for the asset retirement obligation in this year’s balance sheet?
a. $238,000 b. $264,000 c. $280,000 d. $306,000

8. Falton Co. had the following first-year amounts related to its $9,000,000 construction contract:
Actual costs incurred and paid $2,000,000 Estimated costs to complete 6,000,000 Progress billings 1,800,000 Cash collected 1,500,000
What amount should Falton recognize as a current liability at year end, using the percentage-ofcompletion method?
a. $0 b. $200,000 c. $250,000 d. $300,000

9. A firm has basic earnings per share of $1.29. If the tax rate is 30%, which of the following securities would be dilutive?
a. Cumulative 8%, $50 par preferred stock.
b. Ten percent convertible bonds, issued at par, with each $1,000 bond convertible into 20 shares of common stock.
c. Seven percent convertible bonds, issued at par, with each $1,000 bond convertible into 40 shares of common stock.
d. Six percent, $100 par cumulative convertible preferred stock, issued at par, with each preferred share convertible into four shares of common stock.

10. Sun Co. was constructing fixed assets that qualified for interest capitalization. Sun had the following outstanding debt issuances during the entire year of construction:
$6,000,000 face value, 8% interest. $8,000,000 face value, 9% interest.
None of the borrowings were specified for the construction of the qualified fixed asset. Average expenditures for the year were $1,000,000.
What interest rate should Sun use to calculate capitalized interest on the construction?
a. 8.00% b. 8.50% c. 8.57% d. 9.00%

11. A non-governmental not-for-profit animal shelter receives contributed services from the following individuals valued at their normal billing rate:
Veterinarian provides volunteer animal care $8,000 Board members volunteer to prepare books for audit 4,500 Registered nurse volunteers as receptionist 3,000 Teacher provides volunteer dog walking 2,000
What amount should the shelter record as contribution revenue?
a. $8,000 b. $11,000 c. $12,500 d. $14,500

Disclaimer: The above questions are taken from older AICPA Newly Released Exams. They are only intended for ‘educational’ purposes, and extra MCQs practice.