@kanwal78 I will be happy to for the help you provided!
I just took the moderate questions from the 2106 released questions and I am hoping someone can help me understand how the answers are computed for the following three questions. I appreciate your help and thank you!! I take FAR tomorrow, and after taking these question I am not feeling too confident anymore.
1. A transportation company purchased a passenger bus for $100,000 on January 1, year 1. The company
expects the bus to be used for 20 years if it follows a maintenance schedule of replacing the engine after
10 years and replacing the seats every eight years. It estimates that the current cost to replace the engine
is $25,000 and the current cost to replace the seats is $10,000. The company uses straight-line
depreciation and the bus has no residual value. The company considers any component equal to or
greater than 10% of the overall cost to be significant. Under IFRS, how much depreciation expense
should the company recognize for the bus for the year ended December 31, year 1? Answer is B.
A. $5,000
B. $7,000
C. $7,250
D. $8,500
2. Howard Co. had the following first-year amounts for a $7,000,000 construction contract:
Actual costs $2,000,000
Estimated costs to complete 6,000,000
Progress billings 1,800,000
Cash collected 1,500,000
What amount should Howard recognize as gross profit (loss) using the percentage-of-completion method? Answer is A
A. ($1,000,000)
B. ($200,000)
C. $800,000
D. $1,750,000
3. A company reported net income available to common stockholders of $2,000,000 for the year ended December 31, year 2. The
company had 1,500,000 shares of common stock outstanding as of January 1, year 2, and issued 500,000 additional shares of
common stock on May 1, year 2. What amount is the company's basic earnings per share for the year ended December 31, year 2?
A. $1.00
B. $1.09
C. $1.20
D. $1.33
.