Evaluate the depreciation on the building

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Reference no: EM134986

Q1

Gunawardena Ltd. has a building that it initially bought for $100,000. As of December 31, 2012, there is $10,000 of Accumulated Depreciation on the building (it was being straight-line depreciated over ten years with no salvage value). On 1st January, 2013, the company decides to change the remaining useful life to 5 years (starting now) with a $50,000 salvage value.

Evaluate the depreciation on the building in 2013?
$8,000
$20,000
$13,000
$10,000
$12,500

Q2

Myles Inc.'s Marketable Securities footnote had the subsequent line items:

Marketable Securities at Dec 31, 2012

 

Amortized Cost

 

Fair Value

Total Trading Securities

 

$900

 

$1,000

Total Available-for-Sale Securities

 

$4,000

 

$3,500

Total Held-to-Maturity Securities

 

$1,000

 

$1,200

   Total

 

$5,900

 

$5,700

Determine the book value of Marketable Securities on Myles Inc.'s Balance Sheet at December 31, 2012?
$5,700
$5,500
$5,800
$6,100
$5,900

Q3

On 1st January, 2012, Happe Corp. issued a 3-year, 5% coupon, $100,000 face value bond. The bond was priced at an effective interest rate of 8 percent, yielding proceeds of $92,137. This is the first and only bond that Happe has ever issued.
Happe's Statement of Cash Flows for fiscal year 2012 had the subsequent line items:


 

2012

 

2011

Net Income

 

$11,500

 

$10,350

Depreciation

 

$25,478

 

$23,675

Amortization of Bond Discount

 

$2,418

 

$0


What was Happe's Interest Expense on the bond during fiscal year 2012?
$5,000
$2,418
$7,418
$7,371
$8,000

Q4

On 1st January, 2012, Krishnan Ltd. signed a three-year lease on a delivery truck. The lease needs annual payments of $29,103, which are due at the end of each year. Krishnan's managers computed the present value of the lease payments as $75,000 using an effective interest rate of 8 percent. Krishnan had to use capital lease accounting treatment for the truck.
What was the net expense related to this lease during the fiscal year ended December 31, 2012?
$6,000
$31,000
$0
$29,103
$25,000

Q5

Andersen Telecom had the subsequent lines in its Income Taxes footnote:

Deferred Tax Liabilities


12/31/2012

 

12/31/2011

Insurance Receivables

 

$(60)

 

$(63)

Depreciation

 

$(858)

 

$(745)

Other

 

$(808)

 

$(883)

   Total Deferred Tax Liabilities

 

$(1,726)

 

$(1,691)


Andersen Telecom had the subsequent lines in its Statement of Cash Flows:

 

2012

 

2011

Net Income

 

$4,511

 

$4,357

Depreciation

 

$1,288

 

$1,236


Andersen Telecom is a US company with a 35% Federal Statutory Tax Rate. What was Andersen Telecom's depreciation expense for tax purposes in fiscal year 2012?
$1,288
$1,401
$1,175
$965
$1,611

Q6

After completing its preliminary financial statements for 2012, Alexander-Martin Inc. found a mistake in computing its straight-line Depreciation Expense. After fixing the mistake, Alexander-Martin's Depreciation Expense was now $10,000 high. Alexander-Martin is a US company with a 35% Federal Statutory Tax Rate.
How did the $10,000 increase in Depreciation Expense affect remaining Income for 2012?
Net Income dropped by $10,000
Net Income increased by $3,500
Net Income dropped by $6,500
Net Income dropped by $3,500
Net Income increased by $10,000

Q7

Martino Inc.'s Balance Sheet had the subsequent line items:

Shareholders' Equity


12/31/2012

 

12/31/2011

Common Stock, par value $1 per share

 

$300,000

 

$300,000

  (Shares Issued: 300,000 in 2012 and 300,000 in 2011;

 


 


  Shares Outstanding: 250,000 in 2012 and 220,000 in 2011)

 


 


Additional Paid in Capital

 

$1,750,500

 

$1,750,500

Retained Earnings

 

$10,321,123

 

$8,675,309

Treasury Stock

 

$(550,000)

 

$(800,000)

    Total

 

$11,821,623

 

$9,925,809


What was the average price per share paid by Martino to get all of the treasury shares held as of 31st December, 2012?
Not enough information
$11.00
$10.38
$10.00
$10.50

Q8
For the year ended 12/31/2013, Baumgart Corp. reported remaining Income of $100,000, including $10,000 of Interest Expense on convertible debt. Baumgart had 10,000 common shares outstanding throughout 2013. Baumgart paid $4,000 of preferred dividends during 2013. Baumgart's convertible debt is convertible into 2,000 shares of common stock. Baumgart is a US company with a 35 percent Federal Statutory Tax Rate.

Determine Baumgart Corp.'s Diluted EPS for fiscal year 2013?
$8.83
$7.17
$8.29
$7.46
$8.54

Reference no: EM134986

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