INTERMEDIATE ACCOUNTING

MIDTERM EXAMINATION

ANSWER THE FOLLOWING QUESTIONS. SHOW YOUR SOLUTIONS.

PART 4

PROBLEM 16

On April 1, 2017, Brandie Company had a machine with a cost of 5,000,000

and accumulated depreciation of 3,750,000.

On April 1, 2017, the entity classified the machine as held for sale and
decided to sell the machine within one year.

On April 1, 2017, the machine had an estimated selling price of 500,000 and
a remaining useful life of 2 years.

It is estimated that selling cost associated with the disposal of the machine
will be 50,000.

On December 31, 2017, the estimate selling price of the machine had
increased to 750,000 with estimated selling cost of 100,000.

What amount should be recognized as gain on reversal of impairment on

December 31, 2017?
_________________

PROBLEM 17

Harry Company incurred an inventory loss from market decline of 840,000

on June 30, 2017.

What amount of the inventory loss should be recognized in the quarterly

income statement for the three months ended June 30, 2017?
_______________

PROBLEM 18

On June 30, 2017, Miles Company incurred a 1,000,000 net loss from
disposal of a business segment. Also, on June 30, 2017, the entity paid
400,000 for property taxes assessed for the calendar year 2017.
What total amount should be included in the determination of the net
income or loss for the six-month period ended June 30, 2017? ______________

PROBLEM 19

Ford Company has historically reported bad debt expense of 5% of sales in

each quarter. For the current year, the entity followed the same procedure
in the three quarters of the year.

However, in the fourth quarter, the entity determined that bad debt
expense for the entire year should be 450,000.

Sales in each quarter of the year were first quarter 2,000,000, second
quarter 1,500,000, third quarter 2,500,000 and fourth quarter 4,000,000.

What amount of bade debt expense should be recognized for the fourth
quarter? _____________

PROBLEM 20

Kelly Company reported 950,000 net income for the quarter ended
September 30, 2017 which included the following after tax items:

 A 600,000 expropriation gain, realized on April 30, 2017, was

allocated equally to the second, third, and fourth quarters of 2017.
 A 160,000 cumulative-effect loss resulting from a change in inventory
valuation method was recognized on August 1, 2017.

In addition, the entity paid 480,000 on February 1, 2017, for 2017 calendar-
year property taxes. Of this amount, 120,000 was allocated to the third
quarter of 2017.

For the quarter ended September 30, 2017, what amount should be
reported as net income? ______________