Explore BrainMass

Explore BrainMass

    Ajax segments; predictable events; discontinued operations

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. The Ajax Corp reported the following operating results and net income (net loss) from its components for the year ended December 31:

    Component Net eliminations Consolidated
    Astor $215,000 $(120,000) $95,000
    Bejax 30,000 0 30,000
    Carter (180,000) 50,000 (130,000)
    Davis 80,000 (50,000) 0
    Elbow (20,000) 20,000 0
    $125,000 $(100,000) $25,000

    Based purely on operating results, which of the components would be deemed reportable segment?

    A. Astor, Bejax, Carter, Davis, and Elbow
    B. Astor, Bejax, Carter, and Elbow
    C. Astor, Bejax, and Davis
    D. Astor, Carter, and Davis

    2. Users of financial statements frequently rely upon the data displayed in the financial statements to predict future financial
    outcomes. Financial accounting concepts refer to the characteristic of accounting information that provides predictive to users as the quality of:

    A. Relevance
    B. Reliability
    C. Comparability
    D. Understandibility

    3. ABC Corp changed its inventory costing method from last-in, first-out (LIFO) to first-in, first-out (FIFO). Assuming there is adequate justification for the change, ABC would:

    A. Report the change on its income statement as a component of income form continuing operations, before tax.
    B. Report the cumulative effect of the change on its income statement, net of tax, after income from continuing operations but before discontinued operations or extraordinary items.
    C. Report the cumulative effect of the change on its income statement, net of tax, after income from continuing operations, discontinued operations, and extraordinary items.
    D. Report the cumulative effect of the change as an adjustment to beginning retained earnings, net of tax.

    3. XYZ Corp is a component of 123 INC and has been losing $50,000 per month. On April 1, Year 1, 123, INC's management committed to a plan for the immediate sale XYZ and fully expected to find a buyer for the component by March of Year 2. The book value of the component's asset is $800,000, while the fair market value of the assets of $650,000. 123, INC sold XYZ on Feb 28 Year 2 for $550,000. 123, INC's loss from discontinued operations before consideration of taxes for the year ended Dec 31, Year 1, would be:

    A. $600,000
    B. $750,000
    C. $850,000
    D. $950,000

    4. Timber Co, was evaluating the likelihood of collecting various accounts receivable currently on its books. This evaluation resulted in the decision to change from the direct recognition method to the installment method for recognizing receivables. The accounting treatment for this change is best characterized as:

    A. Prospective
    B. Cumulative
    C. Retroactive
    D. Restatement

    © BrainMass Inc. brainmass.com March 4, 2021, 11:15 pm ad1c9bdddf
    https://brainmass.com/business/inventory/407190

    Solution Preview

    1. The Ajax Corp reported the following operating results and net income (net loss) from its components for the year ended December 31:

    Component Net eliminations Consolidated
    Astor $215,000 $(120,000) $95,000
    Bejax 30,000 0 30,000
    Carter (180,000) 50,000 (130,000)
    Davis 80,000 (50,000) 0
    Elbow (20,000) 20,000 0
    $125,000 $(100,000) $25,000

    Based purely on operating results, which of the components would be deemed reportable segment?

    A. Astor, Bejax, Carter, Davis, and Elbow
    B. Astor, Bejax, Carter, and Elbow
    C. Astor, Bejax, and ...

    Solution Summary

    A sentence explains the choice on each.

    $2.49

    ADVERTISEMENT