Question

If annual major repairs made in the first quarter and paid for in the second quarter clearly benefit the entire year, when should they be expensed? An allocated portion in each of the last three quarters 1. a. An allocated portion in each quarter of the year In full in the first quarter In full in the second quarter b. c. d. During the second quarter of 2011, Dodge Company sold a 2. piece of equipment at a gain of S80,000. What portion of the gain should Dodge report in its income statement for the second quarter of 2011? In January 2011, Abel Company paid $250,000 in property taxes on its plant for the calendar year 2011. Also in January 2011, Abel estimated that its year-end bonuses to executives for 2011 would be $900,000. What is the amount of expenses related to these two items that should be reflected in Abel's quarterly income statement for the three months ended June 30, 2011 (second quarter)? 3. 4. For interim financial reporting, a company's income tax provision for the second quarter of 2011 should be determined using the statutory tax rate for 2011. effective tax rate expected to be applicable for the full year of 2011 as estimated at the end of the first quarter of 2011. effective tax rate expected to be applicable for the full year of 2011 as estimated at the end of the second quarter of 2011. a. b. c. d. effective tax rate expected to be applicable for the second quarter of 2011. 5. Which of the following reporting practices is permissible for interim financial reporting? Use of the gross profit method for interim inventory pricing. b. a. Use of the direct costing method for determining manufacturing inventories. Deferral of unplanned variances under a standard cost system until year-end. Deferral of inventory market declines until year-end. c. d. Which of the following statements most accurately describes interim period tax expense? 6. The best estimate of the annual tax rate times the ordinary income (loss) for the quarter. b. a. The best estimate of the annual tax rate times income (loss) for the year to date less tax expense (benefit) recognized in previous interim periods. Average tax rate for each quarter, including the current quarter, times the current income (loss). d. e. The previous year's actual effective tax rate times the current quarter's income. The computation ofa comnanv's third qumarter provision for 7.

Answer 1

The answer for Question 1 and Question 2 is attached in below picture

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Question - 1 Asmes us b) An allocated postion in each quarter of the year. Reason: In case of interim financial reporting, the cost incurred for the benefit of whole year shall be allocated for whole year evenly. On In case of accreeal system, the Cost incurred but not paid shall be considered from the period which the cost incurred not Honce payment of sepas ning not criteria to srecognise expenses o on Thus the repais cost incwood o cuales belt paid in quearles & which has benefit whole year shall be expensed evenly for the whole year.

Question -2. The answer is The whole gain shall be Second quals reported in Reason: As per Interim reporting it any income received occassionale or seasonally shall not be carried forward or deffered if it is not appropriate for théo entity The gain from sale of equipment $80000 is not from the main business of Dodge company. It is ocorred occassionally - Hence it is not appropriate to deffer the income over the period. This gain shall be reporter an quarter - 2 being the quarter of receipt