Question

2. The completed contract method of accounting for long-term construction-type contracts is preferable when: Select one: a. Estimates of costs to complete and extent of progress toward completion are reasonably dependable. b. The contracts are of a relatively long duration. c. Lack of dependable estimates or inherent hazards cause forecasts to be doubtful d. A contractor is involved in numerous projects.

3. In preparing the adjusting journal entries for Year 4, the accountant for a large local law firm discovered that depreciation on furniture, fixtures and office equipment was understated by $40,000 for Year 3. The previous accountant had not depreciated a leasehold improvement because she believed that the improvement would revert to the office owner at the end of the lease term. The present accountant, knowing better, prepared the journal entry to make the correction. That entry, assuming a tax rate of 30%, would include which of the following: Select one: a. dr. accumulated depreciation $28,000. b. cr. retained earnings $28,000. c. dr. depreciation expense $28,000 d. dr. retained earnings $28,000.

4. King Corporation decided to sell its sporting goods business segment for $900,000, on September 1, Year 1, which is also the disposal date. The book value of the segment's net assets is $700,000 on this date. The pre-tax income for the segment for the period January 1 - September 1, Year 1, was $20,000. Assuming a tax rate of 40%, choose the correct reporting for discontinued operations in the income statement of King Corporation, for the year ended December 31, Year 1. Select one: a. Choice 1 b. Choice 2 c. Choice 3 d. Choice 4

Answer 1

answer to Question 2- Correct Option is c)

The completed contract method of accounting for long-term construction-type contracts is preferable when (c) Lack of dependable estimates or inherent hazards cause forecasts to be doubtful

Becuase The completed contract method is used to recognize all of the revenue and profit associated with a project only after the project has been completed. This method is used when there is uncertainty about the collection of funds due from a customer under the terms of a contract.

Answer to Q3 -

In preparing the adjusting journal entries for Year 4, the accountant for a large local law firm discovered that depreciation on furniture, fixtures and office equipment was understated by $40,000 for Year 3. The previous accountant had not depreciated a leasehold improvement because she believed that the improvement would revert to the office owner at the end of the lease term. The present accountant, knowing better, prepared the journal entry to make the correction. That entry, assuming a tax rate of 30%, would include which of the following: d). dr. retained earnings $28,000.

This is becuase we should charge the short-depreciation net of taxes and this will have the effect of reducing profits as expenses in the PY should have been more by $28000

Answer to Q4 - Question does not elaborate/present  the choices 1,2,3,4