Cafe de Coral Horizontal Integration

The LINGNAN INSTITUTE OF FURTHER EDUCATION

AT LINGNAN UNIVERSITY

HIGHER DIPLOMA PROGRAMMES

FIRST TERM

TEST 2013 – 2014

ACT011 INTERMEDIATE ACCOUNTING

TIME ALLOWED: 2 hours

INSTRUCTIONS:

- This paper contains FIVE multiple choice questions and

THREE short questions

* Attempt ALL questions

* Marks allocated to each question are indicated in brackets

* Start with a new page for each question

* This paper carries 50 marks

* Non programmable calculator can be used in the test

* You are reminded of the necessity for clear and clearly presentation in your answer

* Do NOT take away this question paper

Multiple Choice Questions (2 marks each, total 10 marks)

1 | Kohlman Corporation owns machinery with a book value of $190,000. The machinery has a fair value less costs to sell is $175,000, and its value-in-use is $170,000. Kohlman should recognize a loss on impairment of |

| A | $0 |

| B | $5,000 |

| C | $15,000 |

| D | $20,000 |

2 | On January 1, 2010, Graham Company purchased a new machine for $2,100,000. The new machine has an estimated useful life of nine years and the residual value was estimated to be $75,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount of net book value should be shown in Graham's balance sheet at December 31, 2011, for this machine? |

| A | $1,575,000 |

| B | $1,335,000 |

| C | $1,306,666 |

| D | $1,244,250 |

3 | AG Inc. made a $10,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as sales revenue? |

| A | $9,800 |

| B | $9,900 |

| C | $10,000 |

| D | $11,00 |

| | |

4 | Wellington Corp. has outstanding accounts receivable totaling $2.54 million as of December 31 and sales on credit during the year of $12.8 million. There is also a debit balance of $6,000 in the allowance for doubtful accounts. If the company...