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(TCO A) In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be

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  1. (TCO A) In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be
  2. (TCO A) Tim Construction Co. began operations in 2014. Construction activity for three different multi-year contracts, each begun in 2014, is shown below. Tim uses the completed contract method.

    Contract

    Contract Price

    Billings
    Through
    12/31/14

    Collections
    Through
    12/31/14

    Costs to
    12/31/14

    Estimated
    Costs to
    Complete

    1

    $5,200,000

    $3,500,000

    $2,600,000

    3,000,000

    1,000,000

    2

    3,600,000

    1,500,000

    1,000,000

    800,000

    1,600,000

    3

    3,300,000

    1,900,000

    1,800,000

    2,250,000

    1,200,000


    What amount of gross profit should Tim recognize on the Income Statement of 2014 related to Contract 3?

  3. (TCO B) In Year 2, Ajax, Inc. reported taxable income of $400,000 and pretax financial statement income of $300,000.  The difference resulted from $60,000 of nondeductible premiums on Ajax's officers' life insurance and $40,000 of rental income received in advance.  Rental income is taxable when received.  Ajax's effective tax rate is 30%.  In its Year 2 income statement, what amount should Ajax report as current tax expense (income taxes payable)?

  4. (TCO B) Deferred tax amounts that are related to specific assets or liabilities should be classified as current or noncurrent on the balance sheet based on:

  5. (TCO C) Presented below is pension information related to Woods, Inc. for the year 2016.

    Service cost                                                                                $84,000
    Interest on projected benefit obligation                                           $76,000
    Interest on vested benefits                                                            $30,000
    Amortization of prior service cost due to increase in benefits            $14,000
    Gain on plan assets                                                                     $21,000

    The amount of pension expense to be reported for 2016 is

  6. (TCO C) Presented below is pension information related to Woods, Inc. for the year 2016.

    Service cost                                                                                $135,000
    Interest on projected benefit obligation                                           $46,000
    Interest on vested benefits                                                            $30,000
    Amortization of prior service cost due to increase in benefits            $14,000
    Loss on plan assets                                                                     $21,000

    The amount of pension expense to be reported for 2016 is

  7. (TCO D) Lease methods of accounting include which of the following:

  8. (TCO D) Which one of the following is a criterion for designating a lease as a capital lease?

  9. (TCO D) Advantage(s) of leasing versus buying equipment is (are)

  10. (TCO A) Tim Construction Co. began operations in 2014. Construction activity for three different multi-year contracts, each begun in 2014, is shown below. Tim uses the percentage-of-completion method.

    Contract

    Contract Price

    Billings
    Through
    12/31/14

    Collections
    Through
    12/31/14

    Costs to
    12/31/14

    Estimated
    Costs to
    Complete

    1

    $5,200,000

    $3,500,000

    $2,600,000

    3,000,000

    1,000,000

    2

    3,600,000

    1,500,000

    1,000,000

    800,000

    1,600,000

    3

    3,300,000

    1,900,000

    1,800,000

    2,250,000

    1,200,000


    What amount of gross profit should Tim recognize on the Income Statement of 2014 related to Contract 2?

  11. (TCO D) Lease A does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75% of the estimated economic life of the leased property. Lease B does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. How should the lessee classify these leases?

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