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 will be the value that ABC, Inc. will report for the XYZ Bond Investment on their 12/31/2009 balance sheet?

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?

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 or an asset ) for Year 4?

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

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?