Question

Interim Reporting please choose the correct choice.

1. Macy’s sales traditionally peak in November and December for the holiday season and then decline sharply in January and February due to the inclement wintry-weather. According to the interim reporting standards, Macy’s 1Q 2020 (January – March 2020) interim statement should exhibit Macy’s  

   1. Sharp decline in sales after its peak holiday season

   2. “Smoothened” sales based on an average of quarterly sales of the 4th quarter of the prior year (2019) and 1st quarter of the subsequent year (2020).

   3. “Smoothened sales based on an average of quarterly sales for all four quarters of 2020.     

2. ASC 250 was promulgated by

   1. Congress

   2. The FASB

   3. The IASB

   4. The Internal Revenue Service

   5. The SEC

3. On April 1, 2019, Burge Company paid property taxes of $180,000 on its factory building for calendar year 2019. On July 2, 2019 Burge made $300,000 in unanticipated repairs to its plant equipment. The repairs will benefit operations for the remainder of 2019. What total amount of these expenses should be included in Burge’s quarterly income statement for the 3rd quarter of 2019 (July 2019 – September 2019)?

   1. 120,000

   2. 150,000

   3. 195,000

   4. 300,000

   5. 345,000

  

4. Which of the following reporting practices is permitted for interim financial reporting?

   1. Use of the gross profit method for determining the ending inventory balance

   2. Use of the gross profit method for determining COGS

   3. Both a and b

   4. Neither a nor b

5. During the second quarter of 2019, Flammerton Company sold equipment at a $24,000 gain. What portion of the gain should Flammerton report in its income statement for the second quarter of 2019?

   1. Zero

   2. $6,000

   3. $8,000

   4. $24,000

6. Dunder Miflin revised the useful life of its PP&E in the 4th quarter of 2019 from 10 remaining years to 15 remaining years. How should this change be applied in 2019?

   1. This change should be reported in all four quarters of 2019.

   2. This change should be reported prospectively beginning in the 4th quarter of 2019.

   3. This change should be applied retroactively since the acquisition of the asset.

   4. This change should be reported only in the current period.

7. ER Company reports ¼ of its annual pension expense each quarter.

   1. This is an acceptable application

   2. This is not an acceptable application

8. During 2019, Party City generated sales of $60,000 in the 1st Quarter, $32,000 in 2nd Quarter, $40,000 in 3rd Quarter, and $20,000 in 4th Quarter. In addition, Party City sold an operating asset in the 2nd Q for a $16,000 gain. What should Party City report on its 4th Quarter statement?

                                 Sales Gain

1. $38,000 $4,000

2. $38,000 zero

3. $20,000 $4,000

4. $20,000 zero

Answer 1

9 1) 10 ASC 250 was promulgated by 11 Answer B The FASB 12 13 2) 14 180000 300000 15 Property Taxes paid on 1st April Repairs made on july 2 Amount of expense included for the 3rd Quarter of 2019 (300000/6*3+180000/12*3) 16 17 195000 18 19 Answer C)$195000 20 Both a and b Answer d) $24,000 21 3) 22 23 4) 24 25 5) 26 27 6) 28 This change should be applied retroactively since the acquisition of the asset. This is an acceptable application 297) Answer d) $20,000 zero