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WGU D103 Intermediate Accounting II OBJECTIVE
ASSESSMENT ACTUAL EXAM STUDY GUIDE 2025/2026
ACCURATE QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES || 100% GUARANTEED
PASS <BRAND NEW VERSION>
Under the effective-interest method, companies:
.......Answer.........Compute bond interest expense first by
multiplying the carrying value (book value) of the bonds at the
beginning of the period by the effective-interest rate.6
Determine the bond discount or premium amortization next by
comparing the bond interest expense with the interest (cash) to
be paid.
Debt to Asset Ratio .......Answer.........total liabilities/total assets
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Times Interest Earned .......Answer.........(Net Income + Interest
Expense + Income Tax Expense) / Interest Expense
Proportional Method .......Answer.........If the fair value or other
sound basis for determining relative value is available for each
class of security, the company allocates the lump sum received
among the classes of securities on a proportional basis.
For instance, assume a company issues 1,000 shares of $10
stated value common stock having a market price of $20 a
share, and 1,000 shares of $10 par value preferred stock
having a market price of $12 a share, for a lump sum of
$30,000. Figure 6.1 shows how the company allocates the
$30,000 to the two classes of stock.
Incremental Method .......Answer.........In instances where a
company cannot determine the fair value of all classes of
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securities, it may use the incremental method. It uses the fair
value of the securities as a basis for those classes that it knows,
and allocates the remainder of the lump sum to the class for
which it does not know the fair value. For instance, if a company
issues 1,000 shares of $10 stated value common stock having a
fair value of $20, and 1,000 shares of $10 par value preferred
stock having no established fair value, for a lump sum of
$30,000, it allocates the $30,000 to the two classes as shown in
Figure 6.2. If a company cannot determine fair value for any of
the classes of stock involved in a lump-sum exchange, it may
need to use other approaches.
Which method should be used to handle indirect costs of self-
constructed assets?
Assigning no variable overhead to a constructed asset
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Allocating overhead on the basis of gained production
Assigning a pro rata portion of all overhead to the asset
Allocating the total overhead to the asset
.......Answer.........Assigning a pro rata portion of all overhead to
the asset
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
WGU D103 Intermediate Accounting II OBJECTIVE
ASSESSMENT ACTUAL EXAM STUDY GUIDE 2025/2026
ACCURATE QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES || 100% GUARANTEED
PASS <BRAND NEW VERSION>
Under the effective-interest method, companies:
.......Answer.........Compute bond interest expense first by
multiplying the carrying value (book value) of the bonds at the
beginning of the period by the effective-interest rate.6
Determine the bond discount or premium amortization next by
comparing the bond interest expense with the interest (cash) to
be paid.
Debt to Asset Ratio .......Answer.........total liabilities/total assets
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Times Interest Earned .......Answer.........(Net Income + Interest
Expense + Income Tax Expense) / Interest Expense
Proportional Method .......Answer.........If the fair value or other
sound basis for determining relative value is available for each
class of security, the company allocates the lump sum received
among the classes of securities on a proportional basis.
For instance, assume a company issues 1,000 shares of $10
stated value common stock having a market price of $20 a
share, and 1,000 shares of $10 par value preferred stock
having a market price of $12 a share, for a lump sum of
$30,000. Figure 6.1 shows how the company allocates the
$30,000 to the two classes of stock.
Incremental Method .......Answer.........In instances where a
company cannot determine the fair value of all classes of
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securities, it may use the incremental method. It uses the fair
value of the securities as a basis for those classes that it knows,
and allocates the remainder of the lump sum to the class for
which it does not know the fair value. For instance, if a company
issues 1,000 shares of $10 stated value common stock having a
fair value of $20, and 1,000 shares of $10 par value preferred
stock having no established fair value, for a lump sum of
$30,000, it allocates the $30,000 to the two classes as shown in
Figure 6.2. If a company cannot determine fair value for any of
the classes of stock involved in a lump-sum exchange, it may
need to use other approaches.
Which method should be used to handle indirect costs of self-
constructed assets?
Assigning no variable overhead to a constructed asset
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Allocating overhead on the basis of gained production
Assigning a pro rata portion of all overhead to the asset
Allocating the total overhead to the asset
.......Answer.........Assigning a pro rata portion of all overhead to
the asset
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
