ACCT 312 Intermediate Accounting III Week 4 Midterm Exam Devry

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ACCT 312 Week 4 Midterm Devry 1.Question :(TCO 1) Which creates a deferred tax liability?Student Answer:An unrealized loss from recording inventory at lower cost than market.Estimated warranty expenseSubscriptions collected in advanceAccelerated depreciation in the tax returnQuestion 2.Question :(TCO 1) A deferred tax asset represents aStudent Answer:future cash collection.future income tax benefit.future tax refund.future amount of money to be paid out.Question 3.Question :(TCO 2) The three components of pension expense that are present most often areStudent Answer:service cost, prior service cost, and gain on plan assets.service cost, interest cost, and gain from revisions in pension liability.ervice cost, contribution cost, and prior service cost.service cost, interest cost, and expected return on plan assets.Question 4.Question :(TCO 2) Which of the following constitutes the accumulated benefit obligation?Student Answer:Present value of vested benefits at present pay levelsPresent value of nonvested benefits at present pay levelsPresent value of additional benefits related to projected pay increasesBoth A and BQuestion 5.Question :(TCO 3) Prior to 1993, postretirement benefits other than pensions generally were accounted for on theQuestion 6.Question :(TCO 4) Which of the following transactions decreases retained earnings?Question 7.Question :(TCO 4) When a property dividend is declared, the reduction in retained earnings is forQuestion 8.Question :(TCO 5) Executive stock options should be reported as compensation expenseQuestion 9.Question :(TCO 5) Our company granted options for 2 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $35 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $9 per option. If the options have a vesting period of 5 years, which would be the balance in Paid-in Capital – Stock Options 3 years after the grant date?Question 10.Question :(TCO 6) Which of the following is not a potential common stock?Question 11.Question :(TCO 6) When computing diluted earnings per share, which of the following will be omitted from the calculation?Question 12.Question :(TCO 1) Please describe permanent differences and provide three examples.Question 13.Question :(TCO 2) Please describe defined-contribution plans. What is an example? Who bears the risk? Who typically contributes to these plans?Question 14.Question :(TCO 4) What are the two ways for a company to reacquire stock? Please also discuss when a company reacquires stock and whether there is a difference between the amount the shares were originally sold for and the cash paid to buy the shares back.Question 15.Question :(TCO 5) What is FASB’s stance on companies recording compensation expense for stock option plans? What method is preferable? What is the journal entry to record compensation expense?

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