Reference no: EM132793813

Question -

Q1. Quinto Ltd. purchased factory equipment for $200,000, and estimated that the equipment will have a $20,000 residual value at the end of its estimated 5-year useful life. If uses the double diminishing-balance method of depreciation, the depreciation expense for the second year after purchase would be:

(a) $43,200.

(b) $48,000.

(c) $72,000.

(d) $80,000.

Q2. In the recording of goodwill in the acquisition cost of an entire business:

(a) goodwill is recorded as the excess of the acquisition cost over the fair value of the identifiable net assets.

(b) goodwill is recorded only under ASPE (not under IFRS)

(c) goodwill, if it exists, is never recorded.

(d) goodwill is recorded as the excess of the acquisition cost over the carrying amount (book value) of the identifiable net assets

Q3. The entry to record interest expense on a note payable is a:

(a) debit to interest expense and credit to note payable.

(b) debit to note payable and credit to interest revenue.

(c) debit to interest payable and credit to interest revenue.

(d) debit to interest expense and credit to interest payable.

Q4. The following totals for the month of April were taken from the payroll register of Liu Corp.:

Gross salaries $26,850

CPP withheld 1,330

Employee income taxes withheld 5,785

Medical insurance deductions 930

EI withheld 478

Union dues withheld 446

The journal entry to record the accrual of the employee's portion of Canada Pension Plan (CPP) would include a:

(a) debit to CPP Payable of $1,330.

(b) debit to CPP Expense of $1,330.

(c) credit to Employee Benefits Expense of $1,330.

(d) credit to CPP Payable of $1,330.

Q5. Under IFRS, if a company can determine a reasonable estimate of an expected loss from a lawsuit and it is probable it will lose the lawsuit, it should:

(a) disclose the basic facts regarding the lawsuit in the notes to its financial statements.

(b) record the loss.

(c) neither disclose in the notes nor record the loss.

(d) pay the amount estimated.