ACCT 557 Final Exam
. (TCO A) Benny Building, Inc. won a bid for a new warehouse building contract.
Below is information from the project accountant.
Total Construction Fixed Price $25,000,000
Construction Start Date June 13, 2012
Construction Complete Date December 16, 2013
As of Dec. 31… 2012 2013
Actual cost incurred $11,500,000 $8,360,000
Estimated remaining costs $8,250,000 $-
Billed to customer $9,000,000 $16,000,000
Received from customer $7,500,000 $16,500,000
Assuming Benny Building, Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013?
2. (TCO B) At the beginning of 2012, Barbara, Inc. has a deferred tax asset of $8,000 and deferred tax liability of $6,500. In 2012, pretax financial income was $600,000 and the tax rate was 35%.
Pretax income included:
Interest income from municipal bonds $25,000
Accrued warranty costs, estimated to be used in 2013 $74,000
Prepaid rent expense, will be used in 2013 $16,000
Installment sales revenue, to be collected in 2013 $45,000
Operating loss carryforward $36,000
What is the adjustment needed to correct the balance of deferred tax asset for 2012?
3. (TCO C) Presented below is pension information related to Baked Goods, Inc. for the year 2013.
Service cost $103,000
Interest on projected benefit obligation $65,000
Interest on vested benefits $12,000
Amortization of prior service cost due to increase in benefits $14,000
Expected return on plan assets $18,000
The amount of pension expense to be reported for 2013 is
4. (TCO C) Bunny Hopping, Inc. sponsors a defined-benefit pension plan. The following data relate to the operation of the plan for the year 2013.
Service cost $135,000
Contributions to the plan $105,000
Actual return on plan assets $120,000
Projected benefit obligation (beginning of year) $1,800,000
Fair value of plan assets...