CPA FAR Practice Test 1

Parent Company owns stock in Subsidiary Company. The stock is traded on the NYSE and the London Stock Exchange. The stock price information is noted below:

What is the fair value of Subsidiary Company if there is NO principal market for the stock?

Gary, a consultant, keeps accounting records on a cash basis. In year 2, Gary collected $300,000 in fees from clients. At 12/31/Year 1, Gary had an accounts receivable of $50,000. At 12/31/Year 2, Gary had accounts receivable of $70,000, and unearned revenue of $6,000. If Gary used accrual basis, what would service revenue be for year 2?

True or False: GAAP and Tax use the same rules for contributions partners make when forming a partnership.

XYZ Corp. uses the aging of receivables method when calculating the estimated uncollectable amount. Use the below facts to determine the required amount in allowance account for accounts receivables.

ABC Corp’s beginning inventory at January 1, Year 1 was understated by $32,000 and the ending inventory was overstated by $57,000. As a result, ABC Corp’s cost of goods sold for year 3 was:

Salvage Value, also known as residual value, is:

On September 1, Year 3, Bobcat Corp. sold land to Crystal Corp for $300,000. The initial cost of the land to Bobcat Corp was $275,000. Crystal Corp and Bobcat Corp are both subsidiaries of Courtside Corp. On the consolidated balance sheet, what would be the value of the land?

Calculate the amount of depreciation in year 3 of the assets useful life assuming the following facts.

1. Cost of asset $11,000
2. Salvage Value $1,000
3. Useful life is four years
4. Sum of years digit method is used to calculate

An impairment loss is calculated for an asset held for use by the amount by which:

Company A owns 15 % of Company B. Company A’s CEO is on the board of directors for Company B. What type of accounting method should be used for this investment?