TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
WGU D366 Section 2 Questions and
Answers | 100% Pass
What constitutes representational fairness of financial information? - Answer✔️✔️-An
error-free accounts receivable balance
What is one challenge in valuing assets and liabilities under the mixed attribute
measurement model? - Answer✔️✔️-Deciding on the proper valuation method of certain
assets and liabilities
Valuation methods include historical, fair value, and mixes of the two. Each method will
give different results, affecting both the balance sheet and income statement.
A company purchased a truck with a list price of $200,000 subject to a 5% discount if
paid within 30 days. The company paid within 30 days, so it received the discount. It
paid $3,000 to obtain the title to the truck and a $700 license fee for the first year of
operation. It paid $1,000 to paint the firm's name on the truck and $2,000 for property
and liability insurance for the first year of operation.
What is the acquisition cost of this truck that the company should record in its
accounting records? - Answer✔️✔️-$194,000
An aircraft manufacturer sold a plane to an airline on January 1, 2020. The sales
agreement required the airline to pay $1 million immediately and $1 million on
December 31 of each year for 20 years, beginning on December 31, 2020. The aircraft
,TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
manufacturer and airline agree that 7% is an appropriate interest rate for this
arrangement.
What is the present value of the receivable on the aircraft manufacturer's books on
January 1, 2020, immediately after receiving the $1 million down payment? -
Answer✔️✔️-$10,594,014
A company purchased land, prepared it for use, and constructed a building on it. The
costs were as follows:
Purchase price of the land$250,000Commission paid to real estate
agent$10,000Rezoning permit fee$7,500Cost of razing and removing existing
building$25,000Cash received for scraps of old building materials$7,000Construction
cost of new building$500,000Cost of landscaping the property$28,000Cost of property
taxes for first year of occupation$15,000
What should the company record as the cost of the land on the balance sheet? -
Answer✔️✔️-$285,500
Which of these would be recorded on a company's balance sheet as an asset? -
Answer✔️✔️-An increase in the value of stocks of another company held as an
investment
What represents an exchange of economic value in terms of revenue recognition? -
Answer✔️✔️-Comprehensive income is realized in a market transaction
Two friends contribute $40,000 each to form a new business. The owners use this
amount to purchase a piece of equipment for $80,000 cash. They estimated that the
, TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
useful life of the equipment is five years, and the salvage value is $15,000. They rent
out the equipment to a customer for an annual rental of $20,000 per year for five years.
Annual cash operating costs for insurance, taxes, and the other items total $5,000
annually. At the end of the fifth year, the owners sell the equipment for $18,000 instead
of the original estimated $15,000 salvage value.
What is the total net income for the five-year period? - Answer✔️✔️-$13,000
Two friends contribute $40,000 each to form a new business. The owners use the
contriubtions to purchase a piece of equipment for $80,000 cash. They estimate that the
useful life of the equipment is five years, and the salvage value is $15,000. They rent
out the equipment to a customer for an annual rental of $20,000 per year for five years.
Annual cash operating costs for insurance, taxes, and other items totals $5,000
annually. At the end of the fifth year, the owners sell the equipment for $18,000 instead
of the $15,000 salvage value initially estimated.
What is the total amount of cash flows for the five-year period? - Answer✔️✔️-$93,000
Total cash flows for the five-year period is calculated as:Contributions by owners -
Purchase of equipment + (Annual rent revenue x 5) - (Annual operating expenses x 5) +
Sale of equipment= $80,000 - $80,000 + ($20,000 x 5) - ($5,000 x 5) + $18,000=
$80,000 - $80,000 + $100,000 - $25,000 + $18,000= $93,000
A company purchases a tract of land on January 1, 2018. The following information
summarizes the changes in value:
