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Summary WGU D104 Intermediate Accounting II Units 4-6 exam review
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WGU D104 Intermediate Accounting II Units 4-6 exam review
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WGU D104 Intermediate Accounting II Units4-6 exam review
Asset Turnover Ratio - net sales/average total assets
Profit Margin Ratio - net income/total sales
Rate of return on assets - net income/average total assets
Current ratio - current assets/current liabilities
acid-test ratio - (cash + short-term investments + net receivables) / current
liabilities
rate of return on common stock equity - (net income - preferred dividends) /
average common stockholders' equity
payout ratio - cash dividends / (net income - preferred dividends)
book value per share - common stockholders' equity / outstanding shares
,WGU D104 Intermediate Accounting II Units
4-6 exam review
sum-of-the-years'-digits method - Accelerated depreciation with higher
depreciation cost in beginning and lower charges in the end. Numerator is the # of
years of est. life remaining at the 1st of the year, denominator is sum of the years
individually. (e.g. 5/15, 4/15, 3/15, 2/15, 1/15)
Variable charge depreciation method (activity method or units-of-activity/
production approach) - ((cost - salvage value) X current units) / total estimated
units
activity method - (actual activity in period / total estimate activity) X (cost -
salvage value)
double declining balance method - An accelerated depreciation method that
computes annual depreciation by multiplying the depreciable asset's decreasing
book value by a constant percent that is two times the straight-line depreciation
rate.
Multiple assets group depreciation method - Assets similar in nature and have
approx. same useful lives. Total of the annual depreciation expense for all assets in
the group / total cost of the assets.
, WGU D104 Intermediate Accounting II Units
4-6 exam review
Multiple assets composite depreciation method - Assets are dissimilar and have
different lives. Total annual depreciation expense of all assets / total cost of all
assets.
Composite life - (Original cost - salvage value) / total annual depreciation
Composite depreciation rate - Total annual depreciation of all assets / total cost of
all assets.
Journal entry for gain on sale of composite depreciation equipment - Debit cash &
accumulated depreciation (subtract gain), credit equipment.
Impairment - If the carrying amount exceeds the undiscounted future cash flows.
Loss = carrying amount > fair value.
Journal entry for impairment - Debit impairment loss, credit accumulated
depreciation
When is the restoration of an impairment loss permitted? - When an assets is held
for disposal. Impairment loss is reported at the lower of cost or net realizable
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