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INTERMEDIATE ACCOUNTING II - D104 WGU QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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INTERMEDIATE ACCOUNTING II - D104 WGU QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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INTERMEDIATE ACCOUNTING II - D104WGU QUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
Which method should be used to handle indirect costs of self-constructed assets?
Assigning no variable overhead to a constructed asset
Allocating overhead on the basis of gained production
Assigning a pro rata portion of all overhead to the asset
Allocating the total overhead to the asset - ANSWER Assigning a pro rata portion of all overhead to the
asset
A company purchases land for development into a subdivision. The land has a factory building on it that
will need to be demolished.
Where should the interest costs be allocated?
Interest expenses
General administrative expenses
Cost of the land
Cost of the plant - ANSWER Cost of land
In which situation can capitalization of interest be included in the cost of land?
When holding the land as an investment
When purchasing land with the intension of developing it for lots sales
When selling the land
When building a structure on the land - ANSWER When purchasing land with the intension of developing
it for lots sales
Which value should be used to record machinery that was purchased with a long-term note?
Sum of all estimated payments
Market price of the machinery
Present value of the future payments
Appraised value of the machinery - ANSWER Present value of the future payments
Which item is considered to be a technology-related intangible asset?
Trade secrets
Goodwill
Artistic-related rights
Licensing agreements - ANSWER Trade Secrets
Pay out ratio - ANSWER Pay out ratio = cash dividends/net income (less preferred dividends, if
applicable)
Return on common stockholders' equity - ANSWER Return on Common Stockholders' Equity = (Net
Income - Preferred Dividends) / Average Common Stockholders' Equity
Book value per share - ANSWER Book Value per Share = common stockholders equity/outstanding shares
, Dilutive Securities - ANSWER Are securities that can be converted to common stock. Upon conversion or
exercise by the holder, the dilutive securities reduce (dilute) earnings per share
Antidilutive securities - ANSWER Securities, which upon conversion or exercise, increase earnings per
share (or reduce the loss per share). Companies with complex capital structures will not report diluted
EPS if the securities in their capital structure are antidilutive; they will report only the basic EPS number.
A company using the composite approach to depreciation sells equipment for $10,000. The equipment
was purchased five years earlier for $15,000, and the company has already recorded $5,000 in
accumulated depreciation. What is included in the journal entry for the sale of the equipment?
Debit loss on sale of equipment for $5,000
Credit loss on sale of equipment for $5,000
Debit accumulated depreciation-equipment for $5,000
Credit accumulated depreciation-equipment for $5,000 - ANSWER Debit accumulated depreciation-
equipment for $5,000.
Several years ago, a company acquired an asset at a cost of $400,000. Last year, the company recognized
an impairment loss of $25,000 and properly reduced the asset's book value from $250,000 to $225,000.
Using the asset's new base of $225,000, the company calculates depreciation for the current year to be
$10,000, bringing the book value down to $215,000. However, the company has also determined that
the asset's fair value has recovered and is now estimated to be $260,000.
How should the company measure the asset on its current balance sheet?
The company should reverse the prior impairment and measure the asset at its current fair value of
$260,000.
The company should reverse the prior impairment and measure the asset at its fair value prior to the
initial impairment of $250,000.
The company should not reverse the impairment and should depreciate the asset by $10,000 to a new
book value of $215,000.
The company sh - ANSWER The company should not reverse the impairment and should depreciate the
asset by $10,000 to a new book value of $215,000.
A company invested $15,000,000 in a coal mine estimated to have 1,500,000 tons of coal. In the first
year, the company extracted 100,000 tons of coal. At the end of the first year, it became clear that the
coal mine was likely to have only another 700,000 tons of coal remaining. Which depletion rate will be
used starting in the second year?
$6.36 per ton
$10.00 per ton
$20.00 per ton
$21.43 per ton - ANSWER $20.00 per ton
On January 1, a company received $24,000 in advance for monthly pest services for the year. Which
entry should the company use to record the month of May's revenue?
Debit Unearned Sales Revenue for $2,000; Credit Sales Revenue for $2,000
Debit Unearned Sales Revenue for $10,000; Credit Sales Revenue for $10,000
Debit to Sales Revenue for $2,000; Credit Unearned Sales Revenue for $2,000
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