Intermediate Accounting II - D104 WGU Exam Questions AND
Correct Answers
A company had both outstanding convertible bonds and stock
warrants during the current year. The company determined
that if the bonds had been converted during the year,
calculated basic earnings per share (EPS) would have
decreased, and if the warrants had been exercised during the
year, calculated basic EPS would have increased. How should
the company consider these securities when calculating and
presenting diluted earnings per share on the income
statement?
The company should include the effects of both the bonds and
the warrants.
The company should exclude the effects of both the bonds
and the warrants.
The company should include the effect of the warrants, but
exclude the effect of the bonds.
The company should include the effect of the bonds, but
exclude the effect of the warrants. - ✔✔The company should
include the effect of the bonds, but exclude the effect of the
warrants.
,A company has 10,000 shares of $6 par value common stock
outstanding. The market value of the stock is $10. What is the
impact of a 2-for-1 stock split?
Retained earnings is reduced by $100,000.
Par value of the stock is is reduced to $3 per share.
The number of shares of stock outstanding is reduced to
5,000.
Paid-in Capital in Excess of Par Value - Common Stock is
reduced by $30,000. - ✔✔Par value of the stock is is reduced
to $3 per share.
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 - ✔✔$20.00 per ton
, A company issues bonds at par with a 10-year term for
$1,000,000 on January 1 of Year 1. The bonds bear interest at
an annual rate of 7% payable semiannually on January 1 and
July 1. Which journal entry should be recorded on July 1 of
Year 1?
Debit Interest Expense for $70,000; Credit Bonds Payable for
$70,000
Debit Interest Expense for $70,000; Credit Cash for $70,000
Debit Interest Expense for $35,000; Credit Cash for $35,000
Debit Bonds Payable for $35,000: Credit Interest Expense for
$35,000 - ✔✔Debit Interest Expense for $35,000; Credit Cash
for $35,000
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 - ✔✔Cost of land
Correct Answers
A company had both outstanding convertible bonds and stock
warrants during the current year. The company determined
that if the bonds had been converted during the year,
calculated basic earnings per share (EPS) would have
decreased, and if the warrants had been exercised during the
year, calculated basic EPS would have increased. How should
the company consider these securities when calculating and
presenting diluted earnings per share on the income
statement?
The company should include the effects of both the bonds and
the warrants.
The company should exclude the effects of both the bonds
and the warrants.
The company should include the effect of the warrants, but
exclude the effect of the bonds.
The company should include the effect of the bonds, but
exclude the effect of the warrants. - ✔✔The company should
include the effect of the bonds, but exclude the effect of the
warrants.
,A company has 10,000 shares of $6 par value common stock
outstanding. The market value of the stock is $10. What is the
impact of a 2-for-1 stock split?
Retained earnings is reduced by $100,000.
Par value of the stock is is reduced to $3 per share.
The number of shares of stock outstanding is reduced to
5,000.
Paid-in Capital in Excess of Par Value - Common Stock is
reduced by $30,000. - ✔✔Par value of the stock is is reduced
to $3 per share.
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 - ✔✔$20.00 per ton
, A company issues bonds at par with a 10-year term for
$1,000,000 on January 1 of Year 1. The bonds bear interest at
an annual rate of 7% payable semiannually on January 1 and
July 1. Which journal entry should be recorded on July 1 of
Year 1?
Debit Interest Expense for $70,000; Credit Bonds Payable for
$70,000
Debit Interest Expense for $70,000; Credit Cash for $70,000
Debit Interest Expense for $35,000; Credit Cash for $35,000
Debit Bonds Payable for $35,000: Credit Interest Expense for
$35,000 - ✔✔Debit Interest Expense for $35,000; Credit Cash
for $35,000
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 - ✔✔Cost of land
