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Intermediate Accounting Exam 2 Review with Complete Solutions | Verified & Updated
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Intermediate Accounting Exam 2 Review with Complete Solutions | Verified & Updated
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Intermediate Accounting Exam 2 Reviewwith Complete Solutions | Verified &
Updated
Where is an impairment loss reported on an income statement? - ✔✔Under "Other gains
and losses"
How do we know if an asset is impaired? - ✔✔If future CF > CV
If an impaired asset is intended to be disposed of rather than used, it should be reported at
_____________________________. - ✔✔Lower of cost or net realizable value
Net realizable value = - ✔✔FV - Selling costs
_____________________ is not recorded for impaired assets being held for disposal because
their costs will be recovered during the sale. - ✔✔Depreciation
Current liabilities are typically reported on financial statements at their
_______________________. - ✔✔Maturity value
, Examples of current liabilities: (Accounted for using the accrual method of accounting) - ✔✔1.)
Accounts payable
2.) Short-term notes payable
3.) Dividends payable
4.) Customer advances and deposits
5.) Unearned revenues
6.) Sales tax payable
7.) Income taxes payable
8.) Payroll taxes
9.) Current maturities of long-term debt
10.) Short-term obligations expected to be refinanced
What is a contingent liability? - ✔✔A potential obligation that is dependent upon the
occurrence or nonoccurrence of one or more future events to resolve its status.
When should an estimated loss from a loss contingency be accrued? - ✔✔1.) It is probable that
a liability has been incurred
2.) The amount of the loss may be reasonably estimated
If a loss is either probable or estimable, but NOT both, and there is at least a reasonable
possibility that a liability may have been incurred, then the following note disclosures
are required: - ✔✔1.) The nature of the contingency.
2.) An estimate of the possible loss or range of loss or a statement than an estimate cannot
be made.
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