NAME:______SOLUTIONS______ CLASS TIME:_________________ ACC 440 External Reporting II Exam 1 Fall 2013

You are required to work independently on this exam. Please note that there may be several versions of this exam.

Guidelines 1. This exam is closed book and closed notes. The primary reason for this approach is that the CPA, CFA and other professional exams that many students will take are closed note. In addition, in many business situations you simply will not have an opportunity to refer to books, notes, etc. You may use a financial (or basic arithmetic) calculator. Other electronic devices such as cell phones, laptops, music playing devices, etc, etc are not allowed. You may NOT share calculators. This exam contains 12 pages (including the cover sheet). Please make sure your copy is not missing any pages. Please write your name on the cover page and initial those following. The exam should be completed within class time (1 hour 15 minutes). Please budget your time accordingly. Points 1. 2. Multiple Choice Short Problems Total 60 40 100

2.

3.

4.

Section

3.

Please work the problems in a clear, readable manner and show all computations. A well-written answer is more likely to receive partial credit. Good Luck!!

4.

1

Section 1 - Multiple Choice (60 points total; 7.5 points each) CIRCLE YOUR RESPONSE. DO NOT WRITE LETTERS NEXT TO THE QUESTION. 1. [7.5 POINTS] Taxable income of a corporation differs from pretax financial income because of
Permanent Differences No No Yes Yes Temporary Differences No Yes Yes No

A. B. C. D.

2. [7.5 POINTS] Sentosa, Inc. leased an olive press for 10 years. The olive press has a 12 year useful life. Sentosa guaranteed a residual value of $25,000 for the olive press at the end of the lease. At the end of the lease term, the contractually agreed upon appraiser appraised the fair value of the olive