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1. Trevor Companydiscloses supplementaryoperatingsegment information for its threereportable segments. Data for 20X8areavailable asfollows:
Additional 20X8 expenses includeindirect operatingexpenses of $200,000.Appropriatelyselected common indirect operatingexpenses areallocatedto segments based on the ratio of each segment’ssales to total sales. The20X8operatingprofitforSegment Bwas:
A.$180,000
B.$120,000
C.$150,000
D.$250,000
2. Trevor Companydiscloses supplementaryoperatingsegment information for its threereportable segments. Data for 20X8areavailable asfollows:
Allocable costsfortheyear was $180,000. Allocable costsare assigned based on the ratio ofasegment’s incomebefore allocablecoststo total incomebeforeallocable costs. The20X8 operatingprofit for SegmentBwas:
A.$110,000
B.$180,000
C.$126,000
D.$120,000
3. Themanagement approach to thedefinition ofsegments for financial reportingexpects acompanyto:
I.Report disaggregated information on the same organizational basis as used bythecompany’s internal decision makers.
II.Report disaggregated information for at least ten segments.
A.I B.II
C.BothIandII
D.NeitherInorII
4. ASC 280 uses a(n) approach to thedefinition ofsegments.
A.lineof business B.entityapproach C.portfolio
D.management
5. All of thefollowing aredifferences between international standards and U.S. GAAP regardingoperating segments,except:
A.IFRSrequires disclosures about geographical segments, not business segments.
B.IFRSrequires two different bases ofsegmentation, a primarybasisandasecondarybasis. C.IFRSrequired moredisclosureforprimarysegments.
DThe amounts disclosedunderIFRS arebased onthe same accountingpolicies as the financial
.statements, not based on amounts reported to thechiefoperatingdecisionmaker.
6. In 20X6 and 20X7,eachof PutneyCompany’s four operatingsegments metoneof thethreequantitative tests forsegment reporting.In 20X8, Segment B failed to qualifyunder theprescribed testsbecauseof abnormal financial conditions. Theotherthreesegments qualified forreporting. For 20X8, Segment
B:A.should be excluded from segment disclosurebut referred to in the management letter to shareholders. B.should bedistinctlyseparated from the other threesegmentsand listed as a”nonqualifying”segment. C.should be combined with one ofthe other threesegments andreported.
D.should beincluded in thesegment disclosures at thediscretion ofmanagement.
7. Zeus Corporation has determined that ithas 15 reportable operatingsegments.In order to complywith the standard for segmentdisclosures,Zeus Corporation should do which of thefollowing?
A.Report 10 reportablesegments and disclose theremaining5 segments as other operatingsegments.
B.Report 10 reportablesegments bycombiningthemost closelyrelated segments.
C.Report 15 reportablesegments as longas the 75 percentrevenuetest has been satisfied.
D.Report 12 reportable segments and show allother operatingsegments in a column labeled”Other
OperatingSegments.”
8. TrimesterCorporation’s revenuefor theyear ended December 31,20X8, was as follows:
Trimesterhas areportable operatingsegment if that segment’srevenue exceeds: A.$65,500
B.$60,000
C.$64,500
D.$61,000
9. Five of eight internallyreported operatingsegments of Rollins Companyqualifyunder thestandardsset byASC 280 for segmentreporting. However, thefiveidentified segmentsdo not meet the75 percent revenuetest.ASC 280 prescribes that management:
A.subdivide segments untilthereareat least 10 reportablesegments.
B.consolidate theremainingoperatingsegments andincludethem under an”all other” category.
C.select additional operatingsegments untilthe 75%threshold is met.
D.includethe heading “corporate headquarters”as an operatingsegment.
10. An analysisof AbbeyCompany’s operatingsegments provides thefollowinginformation:
Refer to the aboveinformation. Which ofthe operatingsegments abovemeet therevenuetest?
A.B, D, and E
B.A and D
C.A, B, andD
D.B, C, D, and E
11. An analysisof AbbeyCompany’s operatingsegments providesthe followinginformation:
Refer to the aboveinformation. Which ofthe operatingsegments abovemeet theoperatingprofit(loss)
test?A.Band E
B.A and B
C.A, B, and E
D.A, B, C, and E
12. An analysisof AbbeyCompany’s operatingsegments provides thefollowinginformation:
Refer to the aboveinformation. Which ofthe operatingsegments abovearereportable segments? A.B, C, and D
B.A, B, D,and E C.B, D, and E
D.A, B, C, D, and E
13. Crisfield Companyhas two reportablesegments,C and D. Segment Cmade$4,000,000 ofsales to external customers and $400,000 ofsales to otheroperatingsegments. Segment D, on theotherhand, madesales of$8,000,000to external customers and $1,600,000 ofsales tootheroperatingsegments. Crisfield Companyreported $13,200,000 ofrevenues on its consolidated income statement. What calculation belowcorrectlydetermines whether Crisfield Company’s reportable segments satisfythe75% revenuetest?
A.$14,000,000/$15,200,000
B.$14,000,000/$13,200,000
C.$12,000,000/$13,200,000
D.$12,000,000/$15,200,000
14. Main ManufacturingCorporation reportedconsolidated revenues of $50,000,000 on its incomestatement for20X8. Themanagement of the corporation identified 3 industrysegments, M, N, and O. These segments had the followingintersegment sales and transfers during20X8:
For Main Manufacturing Corporation, the revenuetest would besatisfied ifanyof its industrysegments had revenue equal to orgreater than which of thefollowing?
A.$7,400,000
B.$5,740,000
C.$5,000,000
D.$4,260,000
15. Note: This isaKaplan CPAReviewQuestion
Thefollowinginformation pertains to revenueearned byTimm Co.’s industrysegments fortheyear ended December 31st:
Inconformitywith therevenuetest, Timm’s reportable segments were
A.OnlyDil
B.OnlyBixand Dil
C.OnlyAlo,Bix, and Dil
D.Alo, Bix, Cee, and Dil
CorreyCorp. and its divisions areengaged solelyin manufacturingoperations. Thefollowingdata
(consistent with prioryears’data)pertain to the industries in which operations were conductedforthe year ended December 31st:
In its segment information for theyear, howmanyreportable segments does Correyhave? A.Five
B.Three
C.Four
D.Six
17. Note: This isaKaplan CPA ReviewQuestion
CottCo.’s fourbusiness segments haverevenues and identifiable assets expressed as percentages ofCott’s total revenuesand total assets as follows:
Which ofthesebusiness segmentsaredeemed tobereportable segments? A.Ebon, Fair, Gel, and Hak
B.Ebon only
C.Ebon and Fair only
D.Ebon, Fair,and Gel only
18. Note: This isaKaplan CPA ReviewQuestion
Thekeyto reporting accountinginformation bysegments is determining what constitutes asegment. Of the following, which is not a method of determiningareportable segment?
A.Operatingprofit
B.Revenues
C.Number of employees
D.Combined identifiable assets
19. Note: Thisis a Kaplan CPA ReviewQuestion
Which ofthe followingcharacteristics would render theoperatingunit”reportable”?Theoperatingunit comprises at least:
A.5 percent of the assets ofa companyasawhole.
B.10 percent of therevenues of the companyasawhole.
C.50 percent of thelongterm debt ofthe companyas awhole.
D.20 percent of theoperatingprofit of the companyas awhole.
Reportable segments are not required to disclosewhich of thefollowing: A.Amortization expense
B.Intersegment sales
C.Capital expenditures
D.Long-term debt
21. Note: This isaKaplan CPA ReviewQuestion
Tecumseh Co. (Tecumseh), apubliclyowned corporation, assesses performance and makes operating decisions usingthe followinginformation for its reportable segments:
Total revenues $768,000
Total profitand loss $40,600
Includedinthetotalprofitandlossare intersegmentprofitsof$6,100.Inaddition,Tecumsehhas$500of commoncostsfor itsreportablesegmentsthatarenotallocatedinreportsusedinternally.Forpurposesof segmentreporting, Tecumseh should report total combined segment profitof:
A.$35,000
B.$34,500
C.$40,600
D.$46,700
E.$41,100
22. Note: This isaKaplan CPA ReviewQuestion
Thefollowinginformation pertains to Aria Co. (Aria) and its operatingsegments fortheyear ended
December 31,20X6:
Sales to unaffiliated customers $2,000,000
Intersegment sales of products $600,000
Interest earned on loans to otherindustrysegments $40,000
Ariaandallitsdivisionsareengagedsolely inmanufacturingoperations.Ariaevaluatesdivisional performancebasedoncontrollablecontribution by segments.Ariahasareportablesegmentifthat segment’srevenue exceeds:
A.$200,000
B.$260,000
C.$204,000
D.$264,000
23. Collins Companyreported consolidated revenueof $120,000,000 in 20X8. Collins operatesin two geographicareas, domestic and Asia. Thefollowinginformation pertains tothesetwo areas:
What calculation below is correct to determineif therevenuetest issatisfied forthe Asian operations? A.$58,000,000/$140,000,000
B.$50,000,000/$120,000,000
C.$58,000,000/$120,000,000
D.$50,000,000/$140,000,000
24. ASC 280 requirescertaindisclosures about majorcustomers. Allof thefollowingstatementsabout those disclosures aretruewiththe exception ofwhich statement?
A.Theidentityof thesegment reportingtherevenuefrom asignificant customer must be disclosed a
footnote.
B.The amountof revenuefrom a significant customer must be disclosed in a footnote.
C.For applyingthe disclosuretest athreshold of 10 percent of total revenues is mandated. D.A local, state, orforeigngovernment can be considered amajor customer.
25. Stone Companyreported$100,000,000 ofrevenues on its 20X8 income statement. Duringtheyear ended December 31,20X8, Stone madesales of$8,000,000 to external customers in Western Europe.
Inaddition, Stone madesales of$10,000,000 to theU.S. government and $4,000,000 ofsales to various stategovernments.In thefootnotes to its financial statements for20X8, in reporting enterprisewide
disclosures, Stone is required to disclose:
A.Option A B.Option B C.Option C D.Option D
26. Which ofthe followingareestablished byASC 280as “enterprisewidedisclosure”standards to provide moreinformation about therisks to a company?
I.Information about dominant industrysegments. II.Information about majorcustomers.
III.Information aboutgeographic areas
A.BothIIandIII
B.BothIandIII C.BothIandII
D.I,II, andII
27. Note: This isaKaplan CPA ReviewQuestion
Grum Corp.,apublicly-owned corporation, is subject to the requirements for segment reporting.
In its incomestatement for theyear endedDecember 31st,Grumreportedconsolidated revenues of
$50,000,000, operatingexpenses of $47,000,000, and net income of$3,000,000. Operatingexpenses includepayroll costsof $15,000,000. Grum’scombined identifiable assetsof allindustrysegments at
December 31st,were$40,000,000.In itsyear-endfinancial statements, Grum would be most likelyto
disclose major customerdata if sales to anysinglecustomer amounted to atleast: A.$1,500,000
B.$300,000
C.$5,000,000D.$4,000,000
Based on theprecedinginformation, in the entryin August to record thesale ofthe 2,000 units: A.Cost of Goods Sold willbedebited for$70,000.
B.Inventorywillbe credited for$85,000.
C.Excess of ReplacementCost overLIFO CostofInventory Liquidation willbecreditedfor$15,000. D.Excess of ReplacementCost overLIFO CostofInventory Liquidation willbe creditedfor$67,000.
29. Wakefield Companyuses aperpetual inventorysystem.In August, it sold 2,000 units from itsLIFO- baseinventory, which had originallycost $35 perunit. Thereplacement cost is expected to be$45 per unit. The companyis planningto reduceits inventoryand expects to replaceonly1,500 of theseunits by December 31,the end ofits fiscalyear. The companyreplaced 1,500 unitsin November at anactualcost of $50 per unit.
Based on theprecedinginformation, in the entryto record thereplacementof the1,500 units in
November, Cost of Goods Sold will be debited for: A.$52,500.
B.$22,500. C.$15,000.
D.$7,500.
30. Wakefield Companyuses aperpetualinventorysystem.In August, it sold 2,000 units from itsLIFO- baseinventory, which had originallycost $35 perunit. Thereplacement cost is expected to be$45 per unit. The companyis planningto reduceits inventoryand expects to replaceonly1,500 of theseunits by December 31,the end ofits fiscalyear. The companyreplaced 1,500 unitsin November at anactualcost of $50 per unit.
Based on theprecedinginformation, in the entryto record thereplacementof the1,500 units inNovember,Inventorywill be debited for: A.$52,500.
B.$75,000. C.$67,500.
D.$60,000.
31. Wakefield Companyuses aperpetual inventorysystem.In August, it sold 2,000 units from itsLIFO- baseinventory, which had originallycost $35 perunit. Thereplacement cost is expected to be$45per unit. The companyis planningto reduceits inventoryand expects to replaceonly1,500 of theseunits by December 31,the end ofits fiscalyear. The companyreplaced 1,500 unitsin November at anactualcost of $50 per unit.
Based on theprecedinginformation, in the entryto record thereplacementof the1,500 units inNovember, Accounts Payablewillbe credited for: A.$67,500.
B.$75,000. C.$62,500.
D.$60,000. Assume that thereplacement did nothappen in November.In December, the companydecided notto replace anyof the1,500units. The entryrequiredon December 31 to eliminate valuation accounts related to theinventorythat willnot be replaced willinclude:
A.adebitto Excess of Replacement Cost overLIFOCost ofInventoryLiquidation for $22,500. B.a creditto Cost of GoodsSold for$15,000.
C.adebittoInventoryfor $70,000. D.adebittoInventoryfor $15,000.
33. WilliamCorporation, which has afiscalyear endingJanuary31, had thefollowingpretaxaccounting income and estimated effective annual incometaxrates for thefirst threequarters oftheyear ended January31, 20X8:
William’s incometaxexpenses in its interimincomestatement for thethird quarterare: A.$36,000.
B.$73,500. C.$46,500.
D.$120,000.
34. On June30, 20X8, StringCorporation incurreda$220,000 net loss from disposal ofabusiness component. Also, on June30, 20X8, Stringpaid $60,000 forpropertytaxes assessed forthe calendaryear
20X8. What amount of theprecedingitems should be included in the determination ofString’s net income
or loss forthe six-monthinterim period ended June30, 20X8? A.$250,000
B.$220,000
C.$140,000
D.$280,000
35. Duringthethird quarterof 20X8, PrideCompanysold apieceofequipment at an $8,000 gain. What portion of thegain should Pridereport in its income statementforthe third quarter of20X8?
A.$0
B.$2,000
C.$4,000
D.$8,000
36. OnMarch15,20X9,ClarionCompanypaidpropertytaxesof$60,000onitsfactorybuildingforcalendar year20X9.OnJuly 1,20X9,Clarionmade$40,000inunanticipatedrepairstoitsmachinery.Therepairs willbenefitoperationsfortheremainderofthecalendaryear.Whattotalamountoftheseexpenses should beincluded in Clarion’s quarterlyincomestatement forthe threemonths ended September 30,20X9?
A.$55,000
B.$15,000
C.$35,000
D.$40,000
Forgedoes not havesufficient experiencewith theseasonal market forits inventoryunits and assumes that anyreductions in market valueduringtheyear will be permanent.
Based on theprecedinginformation, the cost ofgoods sold forthe first quarter is: A.$636,000
B.$564,000
C.$546,000
D.$624,000
38. ForgeCompany,a calendar-year entity, had 6,000 units in its beginninginventoryfor20X8.On December 31,20X7, theunits had been adjusted down to $470 per unit from an actual cost of $510per unit.It was the lower of cost or market. Noadditional units werepurchased during20X8. Thefollowing additional information is provided for20X8:
Forgedoes not havesufficient experiencewith theseasonal market forits inventoryunits and assumes that anyreductions in market valueduringtheyear will be permanent. Based on theprecedinginformation, the cost ofgoods sold forthe secondquarter is: A.$416,000
B.$364,000
C.$304,000
D.$424,000
Forgedoes not havesufficient experiencewith theseasonal market forits inventoryunits and assumes that anyreductions in market valueduringtheyear will be permanent. Based on theprecedinginformation, the cost ofgoods sold fortheyear 20X8, is: A.$2,080,000
B.$1,880,000
C.$1,835,000
D.$1,910,000
40. Samuel Corporation foresees adownturn inits business in the mediumterm.It expects to sustain an operatinglossof $160,000 forthe fullyear ending December 31,20X8. Samuel’s taxrate is 35 percent. Anticipated taxcredits for 20X8 total $8,000. Nopermanent differencesare expected. Realization of the full taxbenefit of the expected operatinglossand realization of anticipated taxcredits areassured beyond anyreasonable doubt becausetheywillbecarriedback. For thefirst quarterended March 31, 20X8, Samuel reportedan operatinglossof $30,000. How much of ataxbenefit should Samuel report for the interim period ended March 31, 20X8?
A.$8,000
B.$12,000
C.$13,500
D.$15,500
41. DerbyCompanypays itsexecutives abonus of 6 percent of income beforedeductingthebonus and incometaxes. For thequarterended March 31, 20X8, Derbyhad incomebeforethebonus and income tax of $12,000,000. For theyear ended December 31,20X8, Derbyestimates that its income beforebonus
and incometaxes willbe$70,000,000. For thequarter ended March 31, 20X8, whatis the amountof the bonus that Derbyshoulddeduct on its income statement?
A.$4,200,000
B.$720,000
C.$1,050,000
D.$180,000
abovetheiracquisition cost. Market pricesremained higher than acquisition cost duringtheremainder of
20X8. How should Tylerreport thefacts aboveonits first and second quarter income statements?
A.Option A B.Option B C.Option C D.Option D 43. Denver Company,a calendar-year corporation, had the followingactual income beforeincometax expense and estimated effective annual income taxrates for thefirst threequarters in 20X8:
Denver’s incometaxexpensein its interimincomestatement for thethirdquarter should be: A.$126,000.
B.$68,400. C.$62,400.
D.$54,000.
44. ASC 270 uses which view ofinterim reporting?
A.Integral
B.Discrete
C.Segmental
D.Comprehensive
45. Which ofthe followingobservations is trueof thediscrete view of interim reporting?
A.An interimperiod is viewed as an installment ofan annual period.
BRecognition and adjustment of certain income or expenseitems maybeaffected byjudgments about
. the expected results of the entireyear’s operations.
C.Each interim period isconsideredas abasicaccountingperiod to beevaluated as if itwere anannual accountingperiod.
D.Oneinterim period would notbear the entireexpensethat benefits morethan oneinterim period.
and paid in JulyandAugust when operations areshut down so that machineryand equipmentcan be repaired. What amount should Mason deduct forpropertytaxes and repairs in each quarter for 20X9?
A.Option A B.Option B C.Option C D.Option D 47. ToledoImports, acalendar-year corporation, had thefollowingincomebeforetaxexpense and estimated effective annual income taxrates for thefirst threequarters in 20X8:
Toledo’s incometaxexpensein its interimincomestatement for theninemonths ended September 30and forthe third quarter, respectively, are:
A.$250,800 and $103,200.
B.$252,000 and $108,000. C.$252,000 and $103,200.
D.$250,800 and $108,000.
48. Estimated gross profit rates maybeused to estimate a company’s cost ofgoods sold and its ending inventoryfor:
A.quarterlybut notforannual financial statements.
B.both quarterlyandannual financial statements.
C.neither quarterlynor annual financial statements. D.annual butnot forquarterlyfinancial statements.
49. Davis CompanyusesLIFO for allof its inventories. Duringits second quarterof 20X9, Davis
experienced aLIFO liquidation. Davis fullyexpects to replacethe liquidated inventoryin theearlypart of the third quarter. How should Davis report the inventorytemporarilyliquidated onits incomestatement forthe secondquarter?
A.Cost of goods sold forthesecond quarter should include theacquisition cost of the goods temporarily liquidated.
B.Cost ofgoods sold forthe second quarter should includethe expected replacement cost of thegoods temporarilyliquidated.
C.Cost of goods sold forthe second quarter should not include the expected replacement cost of the
goods temporarilyliquidated.D.Cost of goods sold forthe second quarter is notaffected bythe temporaryliquidation ofLIFO
inventory.
50. Howwould a companyreport a changein anaccountingprinciplemadeonthe last dayof thethird quarter?
A.Retrospective application to all pre-changeinterimperiods reported.
B.No changeis required.
C.Applyto current and prospectiveinterim periodsonly. D.Applyto prospectiveinterim periods only.
disposal of discontinued segment of $600,000, netof taxes. What is the effect of this gain from disposal of discontinued segment?
A.Increasenet incomefromoperations fortheyear by$600,000.
B.Increasesecond quarter net income by$600,000. C.Increaseeach quarter’s net income by$150,000.
D.Increaseeach of thelast threequarters’net income by$200,000.
52. Frahm Companyincurred afirst quarter operating loss beforeincometaxeffect of $4,000,000. This is a normal occurrenceforFrahm becauseof seasonalfluctuations. Experiencehas demonstrated theincome earned duringthe remainingquarters far exceeds thefirst quarter losses eachyear.Frahmestimates its annual income taxrate will be 30 percent. What net loss should Frahm report for thefirst quarter?
A.$4,000,000
B.$2,800,000
C.$700,000
D.$0
53. Theincometaxexpense applicable to the secondquarter’s incomestatement is determined by:
A.dividingthe estimated annual income taxexpensebyfour and allocatingthe amountto thesecond quarter.
B.multiplyingthe effectiveincometaxrate times the income beforetaxforthe second quarter.
C.subtractingtheincometaxexpense applicable to thefirst quarter from the income taxexpense applicable to the first twoquarters.
D.subtractingtheincometaxliabilityapplicable to thefirst quarter from the income taxliability
applicable to the first twoquarters. 54. Ifa companychanges themethod ituses to computethe allowanceforuncollectible accounts receivable becausemorerecent information has becomeavailable, how is this changein method is accounted for?
A.The changeis onlyreported in the current period in which the changeis made. B.The changeis reported in all futureperiodsaffected bythechange.
C.Previouslyissuedfinancial statements arenotadjusted bythechange.
D.All of these are correct ways to account for the change.
55. All of thefollowingsituations requirearetrospective application ofachangein a reporting entityexcept for:
A.Presenting consolidated financials rather than individual statements forseparateentities
B.Changingthe specificsubsidiaries that makeup aconsolidated entity. C.Presenting foreign subsidiaries in addition to domesticsubsidiaries.
D.Changingentities that areincluded in combined financial statements.
56. ASC 280, Disclosure about Segments of an Enterprise and RelatedInformation, has taken what has been referred toas a”management approach”to thedefinition ofasegment andthe allocation of coststoa segment.
Required:
a)What is meant byamanagement approach?Howdoes this concept of amanagement approach impact the decision to disclose information?
b)How aredecisions aboutcost allocation handled in segment disclosures?
57. Lloyd Corporation reports the followinginformation for 20X8 forits threeoperatingsegments:
Indirect operatingexpenses are allocated to segments based upon the ratioof each segment’s traceable operatingexpenses to total traceable operatingexpenses.Interest expenseis allocated to segments based upon the ratio of each segment’s sales to total sales.
Required: a)Calculate theoperatingprofitor loss foreach of thesegments for20X8.
b)Determinewhich segments arereportable,applyingthe operatingprofitor loss test.
58. RidgeCompanyis in the process of determiningits reportable segments fortheyearended December 31,
20X8. As the person responsible for determiningthis information,yougather thefollowinginformation:
Required: a)Usingtheappropriate tests, determinewhich of theindustrysegments listed above arereportablefor
20X8. Showyour supportingcomputations in good form.
b)Indicate whetheror not Ridge’s reportable segments satisfythe 75 percent test. Showyour supporting
computations in good form. 59. FASBhas specifieda”75%percent consolidatedrevenuetest”.
Required: a)What is the 75%test?
b)Howis the75%test impacted bythe”10%SignificanceRule”?
60. IonaCorporation is in theprocess of preparingits financial statements for thefirst quarter of20X9and has askedyouradviceasto how to report several items. Theseitems include thefollowing events which took placeduringthe first quarterof 20X9 (assume allamounts arematerial):
1)Ionaredeemed bondswith a carryingvalue of$4,000,000 at a cost of $3,760,000. This early extinguishment occurredbecauseIonawants to issuenew debtat lower interest rates.
2)Ionauses theLIFO method forits inventories. On January1, 20X9, inventories amounted to
$10,000,000, while, on March 31, 20X9, inventories totaled $9,200,000.Ionaexpects to replacethe liquidated inventoryat thebeginningof thesecond quarterat a cost of $1,000,000.
3)Iona changed its depreciation method on $4,000,000 ofits deliverytrucks from the decliningbalance method to thestraight-linemethod. On January1,20X9, accumulated depreciation underthe declining
balancemethod was $2,800,000. Had the straight-linemethod been used, accumulated depreciation on
January1, 20X9, wouldhavebeen $2,300,000. Theremaininglifeof thetrucks is twoyears.
4)Ionapays itstop executives abonus atyear-end of6 percent of operatingincome beforebonus and incometaxes. Operating incomebeforebonus andincometaxes forthe threemonths ended March 31,
20X9, was $10,000,000.Iona estimates that itsyearlyoperatingincomebeforebonus and income taxes willbe$60,000,000.
5)Iona closes its manufacturingoperations in Julyofeachyear in order to makeits major annual repairs.
Iona estimates that the cost of theserepairs in 20X9 willbe$1,000,000.
Required: For each of the events numbered 1 through 5, indicate howthatevent should be reported onIona’s incomestatement for thethreemonths ended March 31, 20X9, and the balancesheetaccountseffects at March 31, 20X9.Ignoreincome taxes.
61. Theinformation below isforthe second quarter ofTampa Companyfor20X8:
Required: Prepare an interim incomestatement for thesecond quarter for Tampa Company.Assume theLIFO
liquidation is expected to berestored bythe end of20X8.
62. InterimincomestatementsarerequiredforSmithOrchards.Smithdoesmostofitssalesinthefallquarter oftheyear.Thesesalesare bothtoindividualandcommercialcustomers.HowdoyourecommendSmith report sales duringthe springquarter of theyear?
