Question 1

Gareth, a sales tax registered trader purchased a computer for use in his business. The invoice for the computer showed the following costs related to the purchase: $ Computer 890 Additional memory 95 Delivery 10 Installation 20 Maintenance (1 year) 25 –––––– 1,040 Sales tax (17·5%) 182 –––––– Total 1,222 –––––– How much should Gareth capitalise as a non-current asset in relation to the purchase?

Options :

A : $1,193

B : $1,040

C : $1,222

D : $1,015

Answer: D

Question 2

Which of the following requires filing a gift tax return if the transfer exceeds the available annual gift tax exclusion?

Options :

A : Medical expenses paid directly to a physician on behalf of an individual unrelated to the donor.

B : Tuition paid directly to an accredited university on behalf of an individual unrelated to the donor.

C : Payments for college books, supplies, and dormitory fees on behalf of an individual unrelated to the donor.

D : Campaign expenses paid to a political organization.

Answer: C

Question 3

Drillfast is a drilling corporation with operations at oil rigs around the world. For the 2014 annual report, which business segment should be reported as an operating segment?

Options :

A : South American segment, which contributes 8% of total revenues, 5% of profits and accounts for 9% of assets. South American operating manager reports to the chief operating officer.

B : African segment, which contributes 9% of the company’s assets, 16% of total revenues, and 18% of profits. The African operating manager reports to the British operating manager.

C : Australian segment, which contributes 10% of total revenues, 2% of assets, and 4% of profits. The Australian manager reports to the chief operating officer.

D : Texas based corporate headquarters

Answer: C

Question 4

Select all that apply: When applying the revenue test to determine if a segment is a reportable segment, the segment's revenues are compared to the total for the entity. Which of the following revenue items should be included in the revenue calculation?

Options :

A : Sales to unaffiliated customers

B : Interest eamed from loans to other segments

C : Intersegment sales of products

Answer: A

Question 5

Sam rents his second home. During the current year, he reported a $40,000 net loss from the rental. Assume Sam actively participates in the rental activity and no phase-out limitations apply. What is the greatest amount of the rental loss that Sam can deduct against ordinary income in the current year?

Options :

A : $25,000

B : $0

C : $40,000

D : $5,000

Answer: A