During 2004, Beam Co. paid $1,000 cash and traded inventory, which had a carrying amount of $20,000 and a fair value of $21,000, for other inventory in the same line of business with a fair value of $22,000. The exchange was made to facilitate sales to their respective customers. What amount of gain (loss) should Beam record related to the inventory exchange?

The premium on a 3‐year insurance policy expiring on December 31, year 3, was paid in total on January 1, year 1.  Assuming that the original payment was initially debited to an expense account, and that appropriate adjusting entries have been recorded on December 31, year 1 and year 2, the balance in the prepaid asset account on December 31, year 2, would be

Adel Inc. uses the allowance method of accounting for bad debts. During year 5, the financial condition of Botel Co., one of Adel’s major customers, deteriorated rapidly due to accounting and other scandals. In February year 6 it has become clear that Botel will go out of business, although the firm has not declared or been forced into formal bankruptcy proceedings. Adel’s receivable from Botel, 9 months old as of the issuance of Adel’s year 5 financial statements, is 20 times the amount of bad debt expense otherwise reported by Adel. How should the Botel situation be reflected in Adel’s year 5 financial statements?

Which of the following facts concerning plant assets should be disclosed in the summary of significant accounting policies? Composition Depreciation expense amount

On the December 31, year 1 balance sheet of the Stat Company, the current assets were comprised of the following items: Cash $ 70,000 Accounts receivable 120,000 Inventories 60,000 An examination of the accounts revealed that the accounts receivable were composed of the following items: Trade accounts $ 93,000 Allowance for uncollectible accounts (2,000) Claim against shipper for goods lost in transit (11/Y1) 3,000 Selling price of unsold goods sent by Stat on consignment at 130% of cost (and not included in Stat’s ending inventory) 26,000   $120,000 What is the correct amount of current assets as of 12/31/Y1?

In 20×5, a firm decided to discontinue a segment with a book value of $200 million and a fair value of $250 million. The cost to dispose of the segment in 20×6 is estimated to be $10 million. In the 20×5 income statement, what amount of disposal gain or loss will be reported in the discontinued operations section?

If a company issues both a balance sheet and an income statement with comparative figures from last year, a statement of cash flows

On January 15, 2008, Able Co. made a significant investment in the debt securities of Baker Co., which it intends to hold until the debt matures. Able’s fiscal year‐end is December 31. If Able Co. intends to measure and report its investment in Baker Co. debt securities at fair value as permitted by ASC 820 on which one of the following dates must Able elect to implement the fair value option?

Bixby Company is in its first year of operations.  Bixby estimates its annual warranty expense at 2% of net annual sales. Bixby provides its customers with a three‐year warranty plan.  Expected warranty expense is shown below: Year Expected warranty expense Present value discounted at 8% Year 1 $40,000 $37,037 Year 2   10,000     8,573 Year 3   10,000     7,938 Total $60,000 $53,548 The current borrowing rate for Bixby is 8%. Bixby can contract with a third party to provide the warranty work. The cost for a contract to settle the warranties is $57,000.  If Bixby elects the fair value option to report warranty obligations, at what amount will the warranty liability be recorded on the balance sheet?

Which of the following items would best enable Driver Co. to determine whether the fair value of its investment in Favre Corp. is properly stated in the balance sheet?