Deck 8: Segment and Interim Reporting

Question 1

The Fratilo Co. had three operating segments with the following information: $$\begin{array} { | l | r | r | c | } \hline & \text { Pens } & \underline { \text { Pencils } } & \underline { \text { Erasers } } \\\hline \text { Sales to outsiders } & \$ 11,200 & \$ 5,600 & \$ 8,400 \\\hline \text { Intersegment revenues } & 840 & 1,400 & 1,960 \\\hline\end{array}$$ In addition, revenues generated at corporate headquarters are $1,400.

-Combined segment revenues are calculated to be

A) $29,400.
B) $25,200.
C) $26,600.
D) $28,000.
E) $27,300.

Answer 1

$29,400.

Question 2

Which of the following statements is false concerning the number of operating segments that should be disclosed?

A) At least 75 percent of total company sales made to outsiders should be presented.
B) Even though an operating segment has been reportable in the past and is of continuing significance, it must meet at least one of the three reporting tests to report separately in the current year.
C) If the 75 percent rule is not met by the results of applying all three reporting tests, additional segments must be disclosed separately despite their failure to satisfy even one of the three quantitative thresholds.
D) If an operating segment qualifies for disclosure in the current year, prior period segment data presented for comparative purposes must be restated to reflect the newly reportable segment as a separate segment.
E) The practical limit to the number of operating segments is 10.

Answer 2

B

Question 3

When totaling the revenues to use as the basis for the 75% rule, what is the 75% hurdle that must be exceeded by the revenues of the reportable segments?

A) $1,670,000.
B) $12,525,000.
C) $15,487,500.
D) $16,700,000.
E) $20,650,000.

Answer 3

B

Question 4

The Fratilo Co. had three operating segments with the following information: $$\begin{array} { | l | r | r | c | } \hline & \text { Pens } & \underline { \text { Pencils } } & \underline { \text { Erasers } } \\\hline \text { Sales to outsiders } & \$ 11,200 & \$ 5,600 & \$ 8,400 \\\hline \text { Intersegment revenues } & 840 & 1,400 & 1,960 \\\hline\end{array}$$ In addition, revenues generated at corporate headquarters are $1,400.

-The Rivers Co. had four separate operating segments:
What amount of revenues must be generated from one customer before that party must be identified as a major customer?

A) $57,680.
B) $64,960.
C) $52,640.
D) $78,960.
E) $63,560.

Question 5

Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar?

A) The geographical location of the operations.
B) The nature of the production process.
C) The distribution methods.
D) The nature of the regulatory environment, if applicable.
E) The type or class of customer.

Question 6

Whitley Corporation identified four operating segments: Automotive, Electrical, Lawn Equipment, and Sporting Goods. Automotive met the revenue test and the profit or loss test. Electrical met all three tests. Lawn Equipment met only the asset test. Sporting Goods did not meet any of the three tests. Which of these segments must be disclosed separately? $$\begin{array} { | l | c | c | c | c | } \hline & \text { Automotive } & \text { Electrical } & \text { Lawn Equipment } & \text { Sporting Goods } \\\hline \text { A) } & \text { Yes } & \text { Yes } & \text { Yes } & \text { Yes } \\\hline \text { B) } & \text { No } & \text { Yes } & \text { No } & \text { No } \\\hline \text { C) } & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \\\hline \text { D) } & \text { Yes } & \text { Yes } & \text { No } & \text { No } \\\hline \text { E) } & \text { No } & \text { No } & \text { No } & \text { Yes } \\\hline\end{array}$$

A) Option A
B) Option B
C) Option C
D) Option D
E) Option E

Question 7

Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments for 2011:
What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable?

A) $769,263.
B) $812,000.
C) $854,737.
D) $897,000.
E) $833,368.

Question 8

Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements?
(I) Revenue from external customers.
(II) Total Segment Assets
(III) Revenues from foreign customers, identified by country.

A) I, II, and III
B) I and III only
C) II and III only
D) I and II only
E) There is no requirement of information to disclose for operating segments.

Question 9

A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. Which of the following statement(s) is correct?
(I) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance.
(II) If more than one set of organizational units exists, each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible.
(III) If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered.

A) I, II, and III.
B) I and III only.
C) I and II only.
D) II and III only.
E) None of the above.

Question 10

The hardware operating segment of Bloom Corporation has the following revenues for the year ended December 31, 2011:
For purposes of the revenue test, what amount will be used as total revenues of the hardware operating segment?

A) $417,000.
B) $440,000.
C) $424,000.
D) $460,000.
E) $480,000.

Question 11

Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments for 2011:
What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable?

A) $4,343,684.
B) $4,826,316.
C) $5,067,632.
D) $4,585,000.
E) $4,705,658.

Question 12

Generally accepted accounting principles require a U.S. corporation to disclose the following disaggregated information for each operating segment, except:

A) Revenues from external customers.
B) Discontinued operations.
C) Cost of goods sold.
D) Depreciation expense.
E) Intersegment revenues.

Question 13

The Fratilo Co. had three operating segments with the following information: $$\begin{array} { | l | r | r | c | } \hline & \text { Pens } & \underline { \text { Pencils } } & \underline { \text { Erasers } } \\\hline \text { Sales to outsiders } & \$ 11,200 & \$ 5,600 & \$ 8,400 \\\hline \text { Intersegment revenues } & 840 & 1,400 & 1,960 \\\hline\end{array}$$ In addition, revenues generated at corporate headquarters are $1,400.

-What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable?

A) $2,730.
B) $2,660.
C) $2,800.
D) $2,940.
E) $2,520.

Question 14

Which of the following statements is true regarding the determination of operating segments in order to decide which segments will be separately reported?

A) An operating segment is a component of an enterprise that engages in business activities from which it only earns revenues.
B) The operating results of an operating segment are reviewed regularly by the corporate controller to assess performance.
C) There is integral financial information available for each operating segment.
D) An organizational unit can be an operating segment if all of its revenues or expenses result from transactions with other segments.
E) All parts of a company must be included in some operating segment.

Question 15

Which tests must a company use to determine which operating segments require separate disclosure?

A) Revenue test and asset test.
B) Revenue test, profit or loss test, and asset test.
C) Revenue test and profit or loss test.
D) Profit or loss test and asset test.
E) Revenue test, asset test, and liability test.

Question 16

Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments for 2011:
What is the minimum amount of assets that each of these segments must own to be considered separately reportable?

A) $9,450,000.
B) $8,624,272.
C) $10,643,000.
D) $12,936,408.
E) $10,413,000.

Question 17

Kaycee Corporation's revenues for the year ended December 31, 2010, were as follows:
Consolidated Revenue per the Income Statement: $1,200,000
Upstream Intersegment Sales: $180,000
Downstream Intersegment Sales: $60,000
For purposes of the Revenue Test, what amount will be used as the benchmark for determining whether a segment is reportable?

A) $24,000.
B) $120,000.
C) $138,000.
D) $144,000.
E) $0

Question 18

Kurves Corp. had six different operating segments reporting the following operating profit and loss figures: $\begin{array}{cc}&\text { Profit or }\\\text { Segment }&\text { (Loss) }\\\mathrm{A} & \$ 112,000 \\\mathrm{~B} & (196,000) \\\mathrm{C} & 1,316,000 \\\mathrm{D} & (616,000) \\\mathrm{E} & (126,000) \\\mathrm{F} & (140,000)\end{array}$
Which one of the following statements is true?

A) Segment A is a reportable segment based on this test.
B) Segment B is not a reportable segment based on this test.
C) Segment E is a reportable segment based on this test.
D) Segment C is not a reportable segment based on this test.
E) Segment D is a reportable segment based on this test.

Question 19

For purposes of the profit or loss test, segment C's operating profit or (loss) is

A) $1,300,000.
B) $700,000.
C) $2,000,000.
D) $200,000.
E) $(200,000).

Question 20

When defining a reportable segment, which of the following conditions would be sufficient to allow a company to combine two operating segments for purposes of testing?

A) The products sold by each segment are produced in the same plant.
B) Both segments have several customers in common.
C) The segments may sell different products, but they have a similar production process.
D) Both segments are required to adhere to U.S. Department of Labor regulations regarding immigration laws.
E) Both segments are owned by the same parent company.

Question 21

The following items are required to be disclosed for each operating segment except:

A) Factors used to allocate company-wide pension expense.
B) Revenues from transactions with other operating segments.
C) Interest revenue and interest expense.
D) Depreciation, depletion, and amortization expense.
E) Revenues from external customers.

Question 22

Which operating segments are separately reportable under the revenues test?

A) DVDs only.
B) DVDs and MP3s.
C) DVDs and VCRs.
D) VCRs and MP3s.
E) DVDs, VCRs, and MP3s.

Question 23

Dean Hardware, Inc. is comprised of five operating segments. Information about each of these segments is as follows (in thousands; Intersegment loans are receivables):
In applying the asset test, what is the minimum amount an operating segment must have in order to meet the asset test for a reportable segment?

A) $12.5.
B) $15.2.
C) $17.2.
D) $18.4.
E) $19.8.

Question 24

Elektronix, Inc. has three operating segments with the following information:
What is the minimum amount of assets an operating segment must have to be considered a reportable segment?

A) $1,400,000.
B) $2,500,000.
C) $4,100,000.
D) $5,000,000.
E) $25,000,000.

Question 25

Elektronix, Inc. has three operating segments with the following information:
What is the operating profit or loss for the VCRs segment?

A) $121,000 profit.
B) $121,000 loss.
C) $124,000 profit.
D) $124,000 loss.
E) $500,000 profit.

Question 26

Which operating segments are separately reportable under the assets test?

A) DVDs only.
B) DVDs and MP3s.
C) DVDs and VCRs.
D) VCRs and MP3s.
E) DVDs, VCRs, and MP3s.

Question 27

Dean Hardware, Inc. is comprised of five operating segments. Information about each of these segments is as follows (in thousands; Intersegment loans are receivables):
Which operating segments are reportable under the profit or loss test?

A) Rakes, Pails, and Shovels.
B) Rakes, Pails, Shovels, and Hardware.
C) Rakes, Pails, and Hardware.
D) Rakes, Pails, Shovels, Hardware, and Accessories.
E) Pails and Hardware.

Question 28

Peterson Corporation has three operating segments with the following information:
What amount of revenues must be generated from one customer before that party must be identified as a major customer?

A) $3,900.
B) $4,000.
C) $4,100.
D) $4,200.
E) $4,400.

Question 29

Which operating segments are separately reportable under the operating profit or loss test?

A) DVDs only.
B) DVDs and MP3s.
C) DVDs and VCRs.
D) VCRs and MP3s.
E) DVDs, VCRs, and MP3s.

Question 30

Schilling, Inc. has three operating segments with the following information:
What is the minimum amount of revenue an operating segment must have to be considered a reportable segment?

A) $12,000.
B) $15,000.
C) $15,500.
D) $16,200.
E) $16,700.

Question 31

Elektronix, Inc. has three operating segments with the following information:
What is the minimum amount of operating profit or loss an operating segment must have to be considered a reportable segment?

A) $124,000.
B) $127,600.
C) $100,000.
D) $130,000.
E) $140,000.

Question 32

Peterson Corporation has three operating segments with the following information:
What is the minimum amount of revenue an operating segment must have to be considered a reportable segment?

A) $3,900.
B) $4,000.
C) $4,100.
D) $4,200.
E) $4,400.

Question 33

Elektronix, Inc. has three operating segments with the following information:
What is the minimum amount of revenue an operating segment must have to be considered a reportable segment?

A) $650,000.
B) $660,000.
C) $670,000.
D) $680,000.
E) $690,000.

Question 34

Dean Hardware, Inc. is comprised of five operating segments. Information about each of these segments is as follows (in thousands; Intersegment loans are receivables):
In applying the profit or loss test, what is the minimum amount an operating segment must have in order to meet the profit or loss test for a reportable segment?

A) $8.2.
B) $9.0
C) $10.4.
D) $13.0.
E) $82.0.

Question 35

Schilling, Inc. has three operating segments with the following information:
According to the revenues test, which segment(s) are separately reportable?

A) Silver only.
B) Crystal and Silver.
C) China and Crystal.
D) China and Silver.
E) China, Crystal, and Silver.

Question 36

Which one of the following items is not required to be disclosed for each operating segment?

A) Factors used to identify operating segments.
B) Products and services from which each segment derives its revenues.
C) Revenues from external customers.
D) Factors used to allocate company-wide expenses.
E) Revenues from transactions with other operating segments.

Question 37

Peterson Corporation has three operating segments with the following information:
According to the revenues test, which segment(s) are separately reportable?

A) Mowers only.
B) Mowers and Edgers.
C) Mowers and Weedeaters.
D) Edgers and Weedeaters.
E) Mowers, Edgers, and Weedeaters.

Question 38

Dean Hardware, Inc. is comprised of five operating segments. Information about each of these segments is as follows (in thousands; Intersegment loans are receivables):
Which operating segments are reportable under the revenue test?

A) Pails and Hardware.
B) Rakes, Pails, and Hardware.
C) Rakes, Hardware, and Accessories.
D) Rakes and Pails.
E) Rakes and Hardware.

Question 39

Which operating segments are reportable under the asset test?

A) None.
B) Pails.
C) Rakes, Pails, and Shovels.
D) Rakes, and Hardware.
E) Rakes, Pails, and Hardware.

Question 40

Dean Hardware, Inc. is comprised of five operating segments. Information about each of these segments is as follows (in thousands; Intersegment loans are receivables):
What is the total amount of revenues in applying the revenue test?

A) $794.
B) $808.
C) $892.
D) $906.
E) $934.

Question 41

What information does U.S. GAAP require to be disclosed for a major customer?

A) The identity of the customer.
B) The operating segment reporting sales to the customer.
C) The geographic area of the customer.
D) The percentage of sales derived from the customer.
E) The length of time the customer has been a customer of the company.

Question 42

Which of the following statements is true?

A) In determining reportable segments, two tests are applied and both must be met.
B) In determining reportable segments, three tests are applied and all three must be met.
C) In determining reportable segments, two tests are applied and only one must be met.
D) In determining reportable segments, three tests are applied and only one must be met.
E) In determining reportable segments, at least 80% of the revenues from external customers must be reported.

Question 43

Which of the following is not a required disclosure in an interim financial report?

A) Net income.
B) Earnings per share.
C) Gross profit.
D) Significant changes in estimates or provisions for income taxes.
E) Disposal of a segment, net of income taxes.

Question 44

Which of the following statements is true according to U.S. GAAP regarding segment or enterprise-wide disclosure?

A) A reconciliation of segment assets to consolidated assets is required.
B) Segment information does not have to be in accordance with generally accepted accounting principles.
C) Disclosure of a major customer's identity is required.
D) Geographic area information must be disclosed in interim financial statements.
E) A company comprised of only one operating segment does not have to report geographic area information.

Question 45

Which of the following would be an acceptable grouping for a U.S. company to provide information by geographic area?

A) United States, All Other Countries.
B) United States, Europe, Taiwan.
C) United States, Asia, Germany.
D) United States, Central America, Mexico, Germany.
E) South America, Spain, All Other Countries.

Question 46

Which of the following must be disclosed by a geographic segment according to U.S. GAAP?

A) Operating profit or loss.
B) Gross profit.
C) Total assets.
D) Revenues from external customers.
E) Revenues from internal customers.

Question 47

Which of the following is not true for an operating segment according to U.S. GAAP?

A) Discrete financial information generated by the internal accounting system is available.
B) The segment earns revenues and incurs expenses.
C) The segment is regularly reviewed by a chief decision maker to assess performance decisions.
D) The segment is regularly reviewed by a chief decision maker to make resource allocations.
E) An organizational unit can not be an operating segment if all of its operating transactions are only with other segments of the organization.

Question 48

Which of the following is not a required disclosure in an interim financial report?

A) Sales or gross revenues.
B) Provision for income taxes.
C) Extraordinary items.
D) Gains on sales of major equipment.
E) Earnings per share.

Question 49

Which of the following is not correct regarding inventory procedures reported in an interim financial statement?

A) LIFO liquidations expected to be replaced by the end of the year are accounted for in cost of goods sold at expected replacement cost rather than original LIFO cost.
B) Lower-of-cost-or-market adjustments are not made for the interim period if they are expected to reverse by the end of the year.
C) Variances in a standard costing system are reported at the end of the interim period unless they are expected to be absorbed by year-end.
D) FIFO is remeasured using the LIFO method in an interim financial statement.
E) LIFO liquidations not expected to be replaced by the end of the year are reflected in cost of goods sold at original LIFO cost.

Question 50

According to U.S. GAAP, which of the following would be an acceptable grouping by a U.S. company for presentation of information by geographic area?

A) France, Germany, All Other Countries.
B) United States, Europe, Canada.
C) United States, Africa, Europe, Asia.
D) United States, Canada, Mexico, Germany.
E) North America, Spain, All Other Countries.

Question 51

Which of the following items of information are required to be included in interim reports for each operating segment?
(I) Revenues from external customers
(II) Segment profit or loss
(III) Reconciliation of segment profit or loss to the enterprise's total income before taxes
(IV) Intersegment revenues

A) I and III only.
B) I and II only.
C) I, II and III.
D) II and III only.
E) I, II, III, and IV.

Question 52

How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement?

A) Retrospectively restate the first-quarter income statement, net of income taxes, as though the change occurred at the beginning of the year.
B) Postpone recording of the change to the annual income statement.
C) Record the change in the third-quarter income statement, net of income taxes.
D) Adjust financial statements for each prior period presented to reflect the effects of the new principle in those reported periods.
E) These changes are prohibited by GAAP.

Question 53

Cement Company, Inc. began the first quarter with 1,000 units of inventory costing $25 per unit. During the first quarter, 3,000 units were purchased at a cost of $40 per unit, and sales of 3,400 units at $65 per units were made. During the second quarter, the company expects to replace the units of beginning inventory sold at a cost of $45 per unit. Cement Company uses the LIFO method to account for inventory.

-What is the correct journal entry to record cost of goods sold at the end of the first quarter? $$\begin{array} { | l | l | r | r | } \hline \text { A) } & \text { Inventory } & 8,000 & \\\hline & \text { Cost of Goods Sold } & & 8,000 \\\hline \text { B) } & \text { Inventory } & 8,000 & \\\hline & \text { Excess of replacement cost over historical cost of LIFO liquidation } & & 8,000 \\\hline \text { C) } & \text { Cost of goods sold } & 138,000 & \\\hline & \text { Inventory } & & 130,000 \\\hline & \text { Excess of replacement cost over historical cost of LIFO liquidation } & & 8,000 \\\hline \text { D) } & \text { Cost of goods sold } & 130,000 & \\\hline & \text { Excess of replacement cost over historical cost of LIFO liquidation } & 8,000 & \\\hline & \text { Inventory } & & 138,000 \\\hline \text { E) } & \text { No journal entry is required } & & \\\hline\end{array}$$

A) Option A
B) Option B
C) Option C
D) Option D
E) Option E

Question 54

How should revenues be recognized in interim periods?

A) In the same way as they are recognized on an annual basis.
B) On the cash basis.
C) On an annualized basis.
D) On a seasonal basis.
E) There are no revenues recognized in interim periods.

Question 55

Which of the following is a criterion for determining whether an operating segment is separately reportable?

A) An operating segment's assets are 10 percent or more of combined segment assets.
B) An operating segment's assets are 10 percent or more of consolidated assets.
C) An operating segment's assets are 10 percent or more of combined segment liabilities.
D) An operating segment's assets are 10 percent or more of consolidated liabilities.
E) An operating segment's assets are 10 percent or more of corporate assets.

Question 56

Which of the segments are separately reportable?

A) DVDs only.
B) DVDs and MP3s.
C) DVDs and VCRs.
D) VCRs and MP3s.
E) DVDs, VCRs, and MP3s.

Question 57

Betsy Kirkland, Inc. incurred a flood loss during the first quarter of 2011 that is deemed both unusual and infrequent. The loss is considered immaterial to the twelve-month period, but is material in amount relative to the first quarter. The proper accounting treatment in the first quarter interim statement is to:

A) Ignore the loss.
B) Record the loss in the first quarter as an extraordinary loss, net of income taxes.
C) Record one-fourth of the loss in the first quarter as an extraordinary loss, net of income taxes.
D) Ignore the loss in the first quarter, and record it in the annual statement only.
E) Record the loss in the first quarter, but not as an extraordinary loss, and disclose the loss in a separate note or in the income statement as a separate line item.

Question 58

Vapor Corporation has a fan products operating segment. Which of the following items does Vapor not have to report for this segment?

A) Depreciation expense.
B) Amortization expense.
C) Research and development expense.
D) Interest expense.
E) Interest income.

Question 59

Cement Company, Inc. began the first quarter with 1,000 units of inventory costing $25 per unit. During the first quarter, 3,000 units were purchased at a cost of $40 per unit, and sales of 3,400 units at $65 per units were made. During the second quarter, the company expects to replace the units of beginning inventory sold at a cost of $45 per unit. Cement Company uses the LIFO method to account for inventory.
The amount of gross profit for the first quarter is:

A) $83,000
B) $87,000
C) $90,000
D) $221,000
E) $250,000

Question 60

Which of the following operating segment disclosures is not required by U.S. GAAP?

A) Interest expense.
B) Intersegment sales.
C) Extraordinary items.
D) Discontinued operations.
E) Liabilities.

Question 61

Which of the following statements is true regarding the reporting of revenues in an interim report?

A) Revenues should be recognized on the income tax basis for interim reporting.
B) Revenues should be recognized in interim periods in the same way as they are on an annual basis.
C) Projected losses on long-term contracts should be deferred to the annual report.
D) The percentage-of-completion method of reporting long-term construction projects is not an acceptable method for interim reporting.
E) Revenues should be recognized on the cash basis of accounting for interim reporting.

Question 62

Which of the following costs require similar treatment to Property Tax Expense in an interim financial report?
1) Annual major repairs.
2) Advertising expense.
3) Bonus expense, if estimable.
4) Quantity discounts based on annual sales.

A) 1 and 2
B) 1, 2, and 3
C) 1, 2, and 4
D) 2, 3, and 4
E) 1, 2, 3, and 4

Question 63

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available:
Assuming Baker makes the change in the first quarter of 2011 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2011?

A) $400,000.
B) $405,200.
C) $427,950.
D) $894,850.
E) $905,200.

Question 64

What are the two approaches that can be followed in preparing interim reports?

A) Indiscrete and terminal.
B) Discrete and terminal.
C) Metric and integral.
D) Discrete and integral.
E) Discrete and metric.

Question 65

How are extraordinary gains reported in a third quarter interim financial report?

A) Recognized at year-end only.
B) Recognized in the first quarter.
C) Recognized ratably over the first three quarters.
D) Recognized in the third quarter.
E) Ignored.

Question 66

What is the appropriate treatment in an interim financial report for inventory that has cost below market value?

A) The loss should always be recorded in the interim period in which cost drops below market value.
B) The loss should be recorded in the interim period in which cost drops below market value if the loss is considered temporary.
C) The loss should be recorded in the interim period in which cost drops below market value if the loss is considered permanent.
D) The loss should be ignored for interim reporting purposes.
E) There is no loss to report.

Question 67

What is the appropriate treatment in an interim financial report for inventory that has market value below cost?

A) The loss should always be recorded in the interim period in which market value drops below cost.
B) The loss should be recorded in the interim period in which market value drops below cost if the loss is considered temporary.
C) The loss should be recorded in the interim period in which market value drops below cost if the loss is considered permanent.
D) The loss should be ignored for interim reporting purposes.
E) There is no loss to report.

Question 68

All of the following are required to be reported in interim financial statements for a material operating segment except:

A) Segment assets.
B) Segment revenues from external customers.
C) Intersegment revenues.
D) Segment profit or loss.
E) Reconciliation of segment profit or loss to total income before taxes.

Question 69

Which of the following are required to be disclosed in interim reports?

A) Cash flows from investing activities.
B) Change in cash.
C) Total current liabilities.
D) Total assets.
E) Gross revenues.

Question 70

Which of the following is reported for interim financial reports using the discrete approach?

A) Income tax expense.
B) Seasonal items.
C) Change in accounting principle.
D) Property tax expense.
E) Extraordinary gains.

Question 71

Which of the following is reported for interim financial reports using the integral approach?

A) Bonus expense.
B) Extraordinary losses.
C) Cash basis accounting.
D) Extraordinary gains.
E) Change in accounting principle.

Question 72

What is the appropriate treatment in an interim financial report for variances arising from the use of a standard costing system?

A) The variances are always ignored for interim reporting.
B) The variances should always be reflected in gross profit on an interim income statement.
C) The variances expected to be absorbed by year-end should not be reflected in the interim statement.
D) The variances should always be reflected in the interim income statement but not the interim balance sheet.
E) The variances should only be reflected in the interim balance sheet.

Question 73

Provo, Inc. has an estimated annual tax rate of 35 percent in the first quarter of 2011. Pretax income for the first quarter was $300,000. At the end of the second quarter of 2011, Provo expects the annual tax rate to be 32 percent because of anticipated tax credits. Pretax income for the second quarter was $350,000. Assume no items in either quarter requiring the net-of-tax presentation.
How much income tax expense is recognized in the first quarter of 2011?

A) $0.
B) $26,250.
C) $96,000.
D) $105,000.
E) $112,000.

Question 74

How should seasonal revenues be reported in an interim financial statement?

A) The seasonal nature should be disclosed, and a pro forma report for the next 12-month period should supplement the interim report.
B) The seasonal nature should be disclosed but no other reports should accompany the interim report.
C) The seasonal nature should be disclosed, and a supplemental report for the 12-month period ended at the interim date should supplement the interim report.
D) The financial statements should be adjusted to reflect the assumption that no seasonal revenues could be earned.
E) Seasonal revenues have no particular reporting requirement.

Question 75

What is the appropriate treatment in an interim financial report for a LIFO liquidation?

A) The LIFO liquidation is always ignored for interim reporting.
B) The LIFO liquidation should always be reflected in gross profit on an interim income statement.
C) The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim balance sheet and the interim income statement.
D) The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim income statement but not the interim balance sheet.
E) The LIFO liquidation should only be reflected in gross profit on an interim income statement if it is determined that it will not be replaced by year-end.

Question 76

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available:
Assuming Baker makes the change in the first quarter of 2011, how much is reported as net income for the first quarter of 2011?

A) $492,000.
B) $494,800.
C) $500,000.
D) $505,200.
E) $527,950.

Question 77

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available:
Assuming Baker makes the change in the first quarter of 2011, how much is reported as net income for the first quarter of 2010?

A) $300,000.
B) $322,750.
C) $335,000.
D) $265,000.
E) $277,250.

Question 78

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available:
Assuming Baker makes the change in the first quarter of 2011, compute net income per common share.

A) $4.92.
B) $4.95.
C) $5.00.
D) $5.05.
E) $5.28.

Question 79

How should contingencies be reported in an interim report?

A) Disclosed the same way as they are disclosed in annual reports.
B) Disclosed in the interim period discovered, and ignored in all future periods.
C) Recorded as gains or losses as incurred.
D) Recorded as gains or losses only if material.
E) Ignored.

Question 80

Provo, Inc. has an estimated annual tax rate of 35 percent in the first quarter of 2011. Pretax income for the first quarter was $300,000. At the end of the second quarter of 2011, Provo expects the annual tax rate to be 32 percent because of anticipated tax credits. Pretax income for the second quarter was $350,000. Assume no items in either quarter requiring the net-of-tax presentation.
How much income tax expense is recognized in the second quarter of 2011?

A) $103,000.
B) $104,000.
C) $112,000.
D) $122,500.
E) $208,000.