C. similar nonbarter transactions with unrelated parties.

11. Apex Consignment sells items over the Internet for individuals on a consignment basis.

Apex receives the items from the owner, lists them for sale on the Internet, and receives a

25 percent commission for any items sold. Apex collects the full amount from the buyer

and pays the net amount after commission to the owner. Unsold items are returned to

the owner after 90 days. During 2006, Apex had the following information:

Total sales price of items sold during 2006 on consignment was € 2,000,000.

Total commissions retained by Apex during 2006 for these items was € 500,000.

How much revenue should Apex report on its 2006 income statement?

A. €500,000

B. € 2,000,000

C. € 1,500,000

12. During 2007, Accent Toys Plc., which began business in October of that year, purchased

10,000 units of its most popular toy at a cost of £ 10 per unit in October. In anticipation

of heavy December sales, Accent purchased 5,000 additional units in November at

a cost of £ 11 per unit. During 2007, Accent sold 12,000 units at a price of £ 15 per unit.

Under the fi rst in, fi rst out (FIFO) method, what is Accent ’ s cost of goods sold for 2007?

A. £ 105,000

B. £ 120,000

C. £ 122,000

13. Using the same information as in Question 12, what would Accent ’ s cost of goods sold

be under the weighted average cost method?

A. £ 120,000

B. £ 122,000

C. £ 124,000

14. Which inventory method is least likely to be used under IFRS?

A. First in, fi rst out (FIFO)

B. Last in, fi rst out (LIFO)

C. Weighted average

15. At the beginning of 2007, Glass Manufacturing purchased a new machine for its assembly

line at a cost of $600,000. The machine has an estimated useful life of 10 years and

estimated residual value of $50,000. Under the straight - line method, how much depreciation

would Glass take in 2008 for fi nancial reporting purposes?

A. None

B. $55,000

C. $60,000

16. Using the same information as in Question 15, how much depreciation would Glass take

in 2007 for fi nancial reporting purposes under the double - declining balance method?

A. $60,000

B. $110,000

C. $120,000

17. Which combination of depreciation methods and useful lives is most conservative in the

year a depreciable asset is acquired?

A. Straight - line depreciation with a long useful life.

B. Straight - line depreciation with a short useful life.

C. Declining balance depreciation with a short useful life.

18. Under IFRS, a loss from the destruction of property in a fi re would most likely be

classifi ed as

A. continuing operations.

B. an extraordinary item.

C. discontinued operations.

19. For 2007, Flamingo Products had net income of $1,000,000. On 1 January 2007, there

were 1,000,000 shares outstanding. On 1 July 2007, the company issued 100,000 new

shares for $20 per share. The company paid $200,000 in dividends to common shareholders.

What is Flamingo ’ s basic earnings per share for 2007?

A. $0.73

B. $0.91

C. $0.95

20. Cell Services (CSI) had 1,000,000 average shares outstanding during all of 2007. During

2007, CSI also had 10,000 options outstanding with exercise prices of $10 each. The

average stock price of CSI during 2007 was $15. For purposes of computing diluted

earnings per share, how many shares would be used in the denominator?

A. 1,000,000

B. 1,003,333

C. 1,010,000

Chapter 5

1. Resources controlled by a company as a result of past events are

A. equity.

B. assets.

C. liabilities.

2. Equity equals

Date: 2016-03-03; view: 1053