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$1.$ Keston Cookies estimates the cost of its physical inventory at March $31$ for use in an interim financial statement. The rate of markup on cost is $25\%.$ The following account balances are available:

Inventory, March $1$ $$220,000$

Purchases $172,000$

Purchase returns $8,000$

Sales during March $300,000$

The estimate of the cost of inventory at March $31$ would be

a$.$ $$84,000.$

b$.$ $$144,000.$

c$.$ $$159,000.$

d$.$ $$112,000.$

$2.$ Exxon Mobil hired Nicholson Construction to construct an office building for $8,000,000$ on land costing $2,000,000,$ which Exxon owned in London. The building was complete and ready to be used on January $1,2018$ and it has a useful life of $40$ years. The price of the building included land improvements costing $600,000$ and a smaller unit costing $750,000.$ The useful lives of the land improvements and the smaller unit are $10$ years and $5$ years, respectively. Exxon uses component depreciation, and the company uses straight$-$line depreciation for other similar assets. What total amount of depreciation expense should Exxon report on its income statement for the year ended December $31,2018?$

a$.335,000$

b$.200,000$

c$.426,250$

d$.376,250$

$3.$ On January $1,2018,$ Dell sold specialized computers costing $$760,000$ to Crater, Inc. for $$990,000.$ Dell$$s technicians must complete the installation, and their trainers present numerous training sessions for Crater$$s employees during the installation period. Carter made a $50\%$ down payment, with the balance due upon completion of installation. How much revenue should Dell recognize on its books on January $1,2018?$

a$.$ $$-0-$

b$.$ $$760,000.$

c$.$ $$495,000.$

d$.$ $$990,000.$

$4.$ Air Express Travel sells airplane tickets for Serene Airways. Air Express collects the full airfare from the client and remits this amount, less a commission, to Serene Airways. Air Express receives a commission of $6\%$ of the total price. During June $2018,$ Air Express sold tickets worth $640,000$ and remits $601,600$ to Serene Airways. For June $2018,$ what amount of revenue should Air Express Travel record?

a$.640,000$

b$.601,600$

c$.38,400$

d$.36,096$

$5.$ In January $2017,$ Samsung Inc. purchased equipment with a cost of $$10,440,000,$ a useful life of $10$ years and no salvage value. The Company uses straight$-$line depreciation. At December $31,2017$ and December $31,2018,$ the company determines that impairment indicators are present. The following information is available for impairment testing at each year end:

$12/31/201712/31/2018$

Fair value less cost to sell $$9,315,000$ $$8,350,000$

Value$-$in$-$use $$9,350,000$ $$8,315,000$

There is no change in the asset$$s useful life or salvage value. The $2018$ income statement will report

a$.$ Recovery of Impairment Loss of $$3,889.$

b$.$ Impairment Loss of $$10,000.$

c$.$ Recovery of Impairment Loss of $$38,889.$

d$.$ Impairment Loss of $$1,000,000.$

$6.$ Packages Ltd has the following information related to an item in its ending inventory. Order number $158$ has a cost of Rs$\mathrm{.}65,000,$ a selling price of Rs$\mathrm{.}71,000,$ a cost to complete of Rs$\mathrm{.}6,000,$ and a cost to sell of Rs$\mathrm{.}4,000.$ What is the lower$-$of$-$cost$-$or$-$net realizable value for order number $158?$

a$.$ Rs$\mathrm{.}59,000.$

b$.$ Rs$\mathrm{.}61,000.$

c$.$ Rs$\mathrm{.}65,000.$

d$.$ Rs$\mathrm{.}67,000.$

$7.$ Bechtel Construction Corporation contracted to construct a building for $$1,500,000.$ Construction began in $2017$ and was completed in $2018.$ Data relating to the contract are summarized below:

Year ended

December $31,$

$20172018$

Costs incurred $$600,000$ $$450,000$

Estimated costs to complete $400,000$

Bechtel uses the percentage$-$of$-$completion method as the basis for income recognition. For the years ended December $31,2017,$ and $2018,$ respectively, Bechtel should report gross profit of

a$.$ $$270,000$ and $$180,000.$

b$.$ $$900,000$ and $$600,000.$

c$.$ $$300,000$ and $$150,000.$

d$.$ $$0$ and $$450,000$

$8.$ Which of the following statements about materiality is not correct?

a$.$ An item must make a difference, or it need not be disclosed.

b$.$ Materiality is a matter of relative size or importance.

c$.$ An item is material if its inclusion or omission would influence or change the judgment of a reasonable person.

d$.$ All of these are correct statements about materiality.

$9.$ Which of the following items is an agricultural asset and would normally be carried at fair value?

a$.$ A herd of farm animals

b$.$ Logs held in a wood yard

c$.$ Farm land which is used for growing vegetables

d$.$ The cost of developing a new type of crop seed which is resistant to tropical diseases

$10.$ In $2022,$ Shalimar Co$.$ reported a discontinued operations loss of Rs$1,000,000$ net of tax. It declared and paid preference dividends of Rs$100,000$ and ordinary share dividends of Rs$300,000.$ During $2022,$ Shalimar had a weighted average of $400,000$ ordinary shares outstanding. Compute the effect of the discontinued operations loss, net of tax, on earnings per share.

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