Statement of Comprehensive Income Paper 3

To comply with the matching principle, the cost of labor services of an employee who participates in the manufacturing of a product normally should be charged to the income statement in the period in which the

Which one of the following errors will result in the overstatement of net income?

The following information applies to the income statement of Addison Company:
Gross sales....................... $1,000,000
Net sales............................ 900,000
Freight-in ...........................10,000
Ending inventory .................200,000
Gross profit margin 40% Addison’s cost of goods available for sale is

Unrealized gains and losses on trading securities should be presented in the

On July 1, Year 1, Denver Corp. purchased 3,000 shares of Eagle Co.’s 10,000 outstanding shares of common stock for $20 per share but did not elect the fair value option. On December 15, Year 1, Eagle paid $40,000 in dividends to its common shareholders. Eagle’s net income for the year ended December 31, Year 1, was $120,000, earned evenly throughout the year. In its Year 1 income statement, what amount of income from this investment should Denver report?

Net losses on firm purchase commitments to acquire goods for inventory result from a contract price that exceeds the current market price. If a firm expects that losses will occur when the purchase occurs, expected losses, if material,

When an equity security is appropriately carried and reported as securities available for sale, a gain should be reported in the income statement:

Unrealized holding gains and losses on securities available for sale would have the following effects on accumulated other comprehensive income:

On January 2, 2010, Howdy Doody Corporation purchased 12% of Ranger Corporation’s common stock for $50,000 and classified the investment as available for sale. Ranger’s net income for the years ended December 31, 2010 and 2011, were $10,000 and $50,000, respectively. During 2011, Ranger declared and paid a dividend of $60,000. There were no dividends in 2010. On December 31, 2010, the fair value of the Ranger stock owned by Howdy Doody had increased to $70,000. How much should Howdy Doody show in the 2011 income statement as income from this investment?

Jeremiah Corporation purchased securities during 2011 and classified them as securities available for sale:
(FV = Fair Value)
SecA: Cost:40k FV(12/31/11): 49k
SecB: Cost:70k FV(12/31/11): 66k
SecC: Cost:28k FV(12/31/11): 39k
All declines are considered to be temporary. How much gain will be reported by Jeremiah Corporation in the December 31, 2011, income statement relative to the portfolio?