Acct 557 Final Exam

ACCT 557 Final Exam

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. (TCO A) Benny Building, Inc. won a bid for a new warehouse building contract.

Below is information from the project accountant. 

Total Construction Fixed Price $25,000,000 

Construction Start Date June 13, 2012 

Construction Complete Date December 16, 2013

As of Dec. 31… 2012 2013

Actual cost incurred $11,500,000 $8,360,000 

Estimated remaining costs $8,250,000 $- 

Billed to customer $9,000,000 $16,000,000 

Received from customer $7,500,000 $16,500,000 

Assuming Benny Building, Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013?

2. (TCO B) At the beginning of 2012, Barbara, Inc. has a deferred tax asset of $8,000 and deferred tax liability of $6,500. In 2012, pretax financial income was $600,000 and the tax rate was 35%.

Pretax income included: 

Interest income from municipal bonds $25,000 

Accrued warranty costs, estimated to be used in 2013 $74,000 

Prepaid rent expense, will be used in 2013 $16,000 

Installment sales revenue, to be collected in 2013 $45,000 

Operating loss carryforward $36,000

What is the adjustment needed to correct the balance of deferred tax asset for 2012?

3. (TCO C) Presented below is pension information related to Baked Goods, Inc. for the year 2013.

Service cost $103,000 

Interest on projected benefit obligation $65,000 

Interest on vested benefits $12,000 

Amortization of prior service cost due to increase in benefits $14,000 

Expected return on plan assets $18,000

The amount of pension expense to be reported for 2013 is

4. (TCO C) Bunny Hopping, Inc. sponsors a defined-benefit pension plan. The following data relate to the operation of the plan for the year 2013.

Service cost $135,000 

Contributions to the plan $105,000 

Actual return on plan assets $120,000 

Projected benefit obligation (beginning of year) $1,800,000 

Fair value of plan assets...