|
Q22. Pacific Sugar Corp. (PSC) shows balances of $35 million and $415 million for its notes payable and long-term debt, ffice ffice" />
respectively. However, a footnote to the financial statements indicates that the market value of the notes and the long-term debt
are $32 million and $398 million, respectively. What are the appropriate balance sheet adjustments need to adequately reflect
the commitment?
A) Reduce notes payable by $3 million, reduce long-term debt by $17 million, and increase equity by $20 million.
B) There is no need to adjust notes payable and long-term debt to reflect market values.
C) Reduce notes payable by $3 million, reduce long-term debt by $17 million.
Correct answer is A)
Reduce notes payable by $3 million, reduce long-term debt by $17 million, and increase equity by $20 million.
Q23. What does the LIFO reserve measure?
A) The results of older inventory flowing to cost of goods sold (COGS).
B) The overstatement relative to the current cost of inventory.
C) The accumulated difference between the reported inventory balance and the cost of that inventory if first in, first out (FIFO) had been used.
Correct answer is C)
The LIFO reserve measures the accumulated difference between the reported inventory balance and the cost of that inventory if FIFO had been used.
Q24. MKF Consolidated reports $500 million in goodwill on its balance sheet. The market consensus indicates that the value of
MKF’s intangible assets is $300 million. How should an analyst adjust MKF’s balance sheet? Reduce goodwill and:
A) increase liabilities by $200 million.
B) equity by $200 million.
C) equity by $500 million.
Correct answer is B)
If goodwill has no economic value apart from the firm, it should be eliminated from the balance sheet. If the value of the intangibles can be reliably estimated they can be substituted for accounting goodwill.
| 
发表于 2009-3-3 12:30
| 
