Online Access Free FAR Practice Test
| Exam Code: | FAR |
| Exam Name: | CPA Financial Accounting and Reporting |
| Certification Provider: | AICPA |
| Free Question Number: | 165 |
| Posted: | Jul 15, 2026 |
Wilson Corp. experienced a $50,000 decline in the market value of its inventory in the first quarter of its
fiscal year. Wilson had expected this decline to reverse in the third quarter, and in fact, the third quarter
recovery exceeded the previous decline by $10,000. Wilson's inventory did not experience any other
declines in market value during the fiscal year. What amounts of loss and/or gain should Wilson report in
its interim financial statements for the first and third quarters?
Adam Corp. had the following infrequent transactions during 1989:
. A $190,000 gain on reacquisition and retirement of bonds. This material event is also considered
unusual for Adam Corp.
. A $260,000 gain on the disposal of a component of a business. Adam continues similar operations at
another location.
. A $90,000 loss on the abandonment of equipment.
In its 1989 income statement, what amount should Adam report as total infrequent net gains that are not
considered extraordinary?
Belle Co. determined after four years that the estimated useful life of its labeling machine should be 10
years rather than 12 years. The machine originally cost $46,000 and had an estimated salvage value of
$ 1,000. Belle uses straight-line depreciation. What amount should Belle report as depreciation expense
for the current year?
On January 2, 1989, Union Co. purchased a machine for $264,000 and depreciated it by the straight-line
method using an estimated useful life of eight years with no salvage value. On January 2, 1992, Union
determined that the machine had a useful life of six years from the date of acquisition and will have a
salvage value of $24,000. An accounting change was made in 1992 to reflect the additional data. The
accumulated depreciation for this machine should have a balance at December 31, 1992, of: