ABC, Inc. prepares its financial statements consistent with a 12/31 fiscal period end. On 6/30/2014 ABC, Inc. received $100,000 for a basket of goods and services that were sold to XYZ, Inc. In exchange for the $100,000 ABC, Inc. agreed to deliver and install a state of the art machine on 7/1/2014, they also agreed to conduct an 8-hour training session for the current employees on 7/15/2014, and to conduct a second 8-hour training session on 1/15/2015.  Finally, ABC, Inc. will provide four years of customer support which will begin on 7/1/2014.  If sold separately, ABC, Inc. generally charges the following:                                                                   Amount                   Machine                            $80,000                   Installation                      $12,000                   Training                             $500 per hour                   Customer Support      $25,000 When ABC, Inc. prepares their financial statements on 12/31/2014, how much will the record for Unearned Revenue at the end of 2014?

Which of the following cash discounts results in the lowest APR assuming the discount window is missed?

Spacey has been hired to build a new space shuttle for NASA for $2 Billion that will transport humans to Mars. Spacey expects it will take five years to build the shuttle.  They use the percentage of completion method to account for long-term construction projects.  Use the following information about the first 4 years of construction to answer the following questions.                                                                                     Year 1                   Year 2                   Year 3                       Year 4 Cash Cost incurred to date               $200 million        $390 million        $1,100 million   $1,400 million Estimated future costs                        $800 million        $910 million        $1,100 million      $700 million Current year Billings                            $350 million        $300 million         $500 million          $400 million Current year Cash coll                         $270 million        $420 million        $490 million           $405 million What will they record on the balance sheet related to this contract (please provide both the amount and indicate whether it is a liability [billings in excess of revenue] or an asset [revenue in excess of billings]) for Year 4?

On 1/1/2009 ABC, Inc. purchases a 5-year $1,000,000, 6% bond requiring semiannual interest payments from XYZ, Inc.  Interest payments are scheduled to occur on 6/30 and 12/31 each year.  They classify this investment as “Trading”.  ABC, Inc. pays an amount for the bond that creates an effective yield of 5%. Assuming that ABC, Inc. prepares its financial statements (balance sheet, income statement, etc.) on 12/31 each year, please prepare the journal entry on 6/30/2009 (when they receive the first interest payment)?

On 1/1/2009 ABC, Inc. purchases a 5-year $1,000,000, 6% bond requiring semiannual interest payments from XYZ, Inc.  Interest payments are scheduled to occur on 6/30 and 12/31 each year.  They classify this investment as “Trading”.  ABC, Inc. pays an amount for the bond that creates an effective yield of 5%. Assuming that ABC, Inc. prepares its financial statements (balance sheet, income statement, etc.) on 12/31 each year, and further that the market value of the XYZ, Inc. bonds is $980,000 on 12/31/2009, what are the journal entries necessary on 12/31/2009?

CPA Exam Question #1 (Bonus – 2 percent) Seadrill Engineering licensed software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides consulting services and support to ensure smooth operation of the software. The total transaction price is $350,000 which is paid when the software is installed. Based on standalone values, the company estimates the consulting services and support have a value of $100,000 and the software license has a value of $250,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction includes

On 1/1/2006 Red, Inc. purchased 100,000 shares of Blue, Inc (representing a 40% ownership interest) for $10 per share. The book value of Blue Inc. was $1,500,000.  In assessing the purchase, Red, Inc. identified that a building owned by Blue, Inc. had a fair value that was $500,000 greater than its book value.  The building had a remaining useful life of 10 years.  In addition, Red, Inc. also identified a machine that had a fair value that was $100,000 higher than its book value, and a 5 year useful life.  Red, Inc. decides to amortize these excesses using the straight-line method. If Blue, Inc. earns $2,000,000 in 2013, pays $1,000,000 in dividends, and is selling for $20 per share at the end of 2013, how much total “Equity in Investee Income” will Red, Inc. record in their income statement from the investment in Blue, Inc. for 2013?  

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Spacey has been hired to build a new space shuttle for NASA for $2 Billion that will transport humans to Mars. Spacey expects it will take five years to build the shuttle.  They use the percentage of completion method to account for long-term construction projects.  Use the following information about the first 4 years of construction to answer the following questions.                                                                                     Year 1                   Year 2                   Year 3                       Year 4 Cash Cost incurred to date               $200 million        $390 million        $1,100 million   $1,400 million Estimated future costs                        $800 million        $910 million        $1,100 million      $700 million Current year Billings                            $350 million        $300 million         $500 million          $400 million Current year Cash coll                         $270 million        $420 million        $490 million           $405 million What is the income statement impact (current period profit or loss) for Year 3?

I have read my course addendum.