11/27/2013 Exam | An Introduction to Financial Accounting

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The due date forthis exam is W ed 27 Nov 2013 8:59 PM PST.

You may attemptthe exam three times.The highestofthe three scores wilbe entered as your grade
forthe exam.Please double-check youranswers before submitting;Iwilnotreset attempts
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You mustwork alone,butyou can use any ofthe posted course materials to answer the questions.

The deadline forcompleting the exam is 11:58:00 pm U.S.Eastern Time on November27,

2013.

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In accordance with the Coursera HonorCode,I(M .FaisalNiazi)certify thatthe

answers here are my own work. Thank you!

Question 1
Gunawardena Ltd.has a building thatitoriginaly boughtfor$100,000.As ofDecember31, 2012,there is

$10,000 ofAccumulated Depreciation on the building (itwas being straight-line depreciated over10

years with no salvage value).On January 1,2013,the company decides to change the remaining

usefullife to 5 years (starting now)with a $50,000 salvage value.

W hatwilbe the depreciation on the building in 2013?

$8,000

$10,000

$13,000

$12,500

$20,000

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Question 2
Myles Inc.’s Marketable Securities footnote had the folowing line items:

Marketable Securities atDec 31,2012 Amortized Cost FairValue

TotalTrading Securities $900 $1,000

TotalAvailable-for-Sale Securities $4,000 $3,500

TotalHeld-to-Maturity Securities $1,000 $1,200

Total $5,900 $5,700

W hatis the bookvalue ofMarketable Securities on Myles Inc.’s Balance SheetatDecember

31,2012?

$5,800

$5,500

$5,900

$5,700

$6,100

Question 3
On January 1,2012,Happe Corp.issued a 3-year,5% coupon,$100,000 face value bond.The bond

was priced atan effective interestrate of8%,yielding proceeds of$92,137.This is the first and only

bond thatHappe has everissued.

Happe’s StatementofCash Flows forfiscalyear2012 had the folowing line items:

2012 2011
NetIncome $11,500 $10,350

Depreciation $25,478 $23,675

Amortization ofBond Discount $2,418 $0

W hatwas Happe’s InterestExpense on the bond during fiscalyear2012?

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$7,418

$5,000

$2,418

$8,000

$7,371

Question 4
On January 1,2012,Krishnan Ltd.signed a three-yearlease on a delivery truck.The lease

requires annualpayments of$29,103,which are due atthe end ofeach year.Krishnan’s managers

computed the presentvalue ofthe lease payments as $75,000 using an effective interestrate

of8% .Krishnan had to use capitallease accounting treatmentforthe truck.

W hatwas the totalexpense related to this lease during the fiscalyearended December31,

2012?

$29,103

$6,000

$31,000

$0

$25,000

Question 5
Andersen Telecom had the folowing lines in its Income Taxes footnote:

Deferred TaxLiabilities 12/31/2012 12/31/2011

Insurance Receivables $(60) $(63)

Depreciation $(858) $(745)

Other $(808) $(883)

TotalDeferred TaxLiabilities $(1,726) $(1,691)

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Andersen Telecom had the folowing lines in its StatementofCash Flows:

2012 2011

NetIncome $4,511 $4,357

Depreciation $1,288 $1,236

Andersen Telecom is a US companywith a 35% FederalStatutoryTaxRate.W hatwas

Andersen Telecom’s depreciation expense fortaxpurposes in fiscalyear2012?

$965

$1,288

$1,611

$1,401

$1,175

Question 6
Aftercompleting its preliminary financialstatements for2012,Alexander-Martin Inc.found a mistake in

computing its straight-line Depreciation Expense.Afterfixing the mistake,Alexander-Martin’s

Depreciation Expense was now $10,000 higher.Alexander-Martin is a US company with a 35%

FederalStatutory TaxRate.

How did the $10,000 increase in Depreciation Expense affectNetIncome for2012?

NetIncome dropped by $6,500

NetIncome dropped by $3,500

NetIncome increased by $3,500

NetIncome dropped by $10,000

NetIncome increased by $10,000

Question 7
Martino Inc.’s Balance Sheethad the folowing line items:

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Shareholders’Equity 12/31/2012 12/31/2011
Common Stock,parvalue $1 pershare $300,000 $300,000

(Shares Issued:300,000 in 2012 and 300,000 in 2011;

Shares Outstanding:250,000 in 2012 and 220,000 in 2011)

AdditionalPaid in Capital $1,750,500 $1,750,500

Retained Earnings $10,321,123 $8,675,309

Treasury Stock $(550,000) $(800,000)

Total $11,821,623 $9,925,809

W hatwas the average price pershare paid byMartino to acquire alofthe treasuryshares

held as ofDecember31,2012?

$11.00

$10.50

Notenough information

$10.38

$10.00

Question 8
Forthe yearended 12/31/2013,BaumgartCorp.reported NetIncome of$100,000,including $10,000

ofInterestExpense on convertible debt.Baumgarthad 10,000 common shares outstanding

throughout2013.Baumgartpaid $4,000 ofpreferred dividends during 2013. Baumgart’s convertible

debtis convertible into 2,000 shares ofcommon stock.Baumgartis a US company with a 35%

FederalStatutory TaxRate.

W hatis BaumgartCorp.’s Diluted EPS forfiscalyear2013?

$8.29

$7.17

$7.46

$8.54

$8.83

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In accordance with the Coursera HonorCode,I(M .FaisalNiazi)certify thatthe

answers here are my own work. Thank you!

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