ACCT 405 COMPLETE WEEK QUIZ PACK LATEST

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ACCT 405 Complete Week Quiz Pack Latest

ACCT405

ACCT 405 Week 1 Quiz Latest

Question 1 (TCO 1)

Which of the following results in a decrease in the equity in investee income account when applying the equity method?

• Dividends paid by the investor
• Net income of the investee
• Unrealized gain on intercompany inventory transfers for the current year
• Unrealized gain on intercompany inventory transfers for the prior year

Question 2 (TCO 1)

In a situation where the investor exercises significant influence over the investee, which of the following entries is not actually posted to the books of the investor?

(1) Debit to the investment account and a credit to the equity in investee income account

(2) Debit to cash (for dividends received from the investee) and a credit to dividend revenue

(3) Debit to cash (for dividends received from the investee) and a credit to the investment account

• Entries 1 and 2
• Entries 2 and 3
• Entry 1 only
• Entry 2 only
• Entry 3 only

Question 3 (TCO 1)

A company should always use the equity method to account for an investment if

• it has the ability to exercise significant influence over the operating policies of the investee.
• it owns 30% of another company’s stock.
• it has a controlling interest (more than 50%) of another company’s stock.
• the investment was made primarily to earn a return on excess cash.
• it does not have the ability to exercise significant influence over the operating policies of the investee.

Question 4 (TCO 1)

George Company owns 15% of the common stock of Thomas Corporation and used the fair-value method to account for this investment. Thomas reported net income of $110,000 for the year 20×1 and paid dividends of $60,000 on October 1, 20×1. How much income should George recognize on this investment in 20×1?

• $16,500
• $9,000
• $25,500
• $7,500
• $60,000

Question 5 (TCO 1)

According to FAS 159,

• all entities may elect the fair value option.
• the statement permits all entities to choose to measure eligible items at fair value at specified dates.
• the fair value option may be applied instrument by instrument with a few exceptions.
• FAS 159 is similar to IAS 39 but is not identical.

ACCT 405 Week 2 Quiz Latest

Question 1 (TCO 2)

Which of the following is a characteristic of a business combination that should be accounted for as an acquisition?

• The combination must involve the exchange of equity securities only.
• The transaction establishes an acquisition fair value basis for the company being acquired.
• The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company.
• The transaction may be considered to be the uniting of the ownership interests of the companies involved.
• The acquired subsidiary must be smaller in size than the acquiring parent.

Question 2 (TCO 2)

According to SFAS No. 141, the pooling of interest method for business combinations

• is preferred to the purchase method.
• is allowed for all new acquisitions.
• is no longer allowed for business combinations after June 30, 2001.
• is no longer allowed for business combinations after December 31, 2001.
• is only allowed for large corporate mergers, such as Exxon and Mobil.

Question 3 (TCO 2)

Which of the following is a characteristic of a business combination that should be accounted for as a purchase?

• The transaction clearly establishes an acquisition price for the company being acquired.
• The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company.
• The transaction may be considered to be the uniting of the ownership interests of the companies involved.
• The acquired subsidiary must be smaller in size than the acquiring parent.

Question 4 (TCO 2)

In a transaction accounted for using the purchase method, where cost exceeds book value, which statement is true for the acquiring company with regard to its investment?

• Net assets of the acquired company are revalued to their fair values, and any excess of cost over fair value is allocated to goodwill.
• Net assets of the acquired company are maintained at book value, and any excess of cost over book value is allocated to goodwill.
• Assets are revalued to their fair values. Liabilities are maintained at book values. Any excess is allocated to goodwill.
• Long-term assets are revalued to their fair values. Any excess is allocated to goodwill.

Question 5 (TCO 2)

Plenty Corp. paid $300,000 for the outstanding common stock of Shirley Co. At that time, Shirley had the following condensed balance sheet.

(Carrying amounts)

Current assets: $40,000

Plant and equipment, net: $380,000

Liabilities: $200,000

Stockholders’ equity: $220,000

The fair value of the plant and equipment was $60,000 more than its recorded carrying amount. The fair values and carrying amounts were equal for all other assets and liabilities. Which amount of goodwill, related to Shirley’s acquisition, should Plenty report in its consolidated balance sheet?

• $20,000
• $40,000
• $60,000
• $80,000

ACCT 405 Week 3 Quiz Latest

Question 1 (TCO 2)

Which of the following internal record-keeping methods can a parent choose to account for a subsidiary acquired in a business combination?

• Initial value or book value
• Initial value, lower of cost or market value, or equity
• Initial value, equity, or partial equity
• Initial value, equity, or book value
• Initial value, lower of cost or market value, or partial equity

Question 2 (TCO 3)

One company acquires another company in a combination that is accounted for as an acquisition. The acquiring company decides to apply the initial value method in accounting for the combination. Which is one reason the acquiring company might have made this decision?

• It is the only method allowed by the SEC.
• It is relatively easy to apply. It is the only internal reporting method allowed by generally accepted accounting principles.
• Operating results on the parent’s financial records reflect consolidated totals.
• When the initial method is used, no worksheet entries are required in the consolidation process.

Question 3 (TCO 3)

Which of the following accounts would not appear on the consolidated financial statements at the end of the first fiscal period of the combination?

• Goodwill
• Equipment
• Investment in subsidiary
• Common stock
• Additional paid-in capital

Question 4 (TCO 3)

Parent Corp. bought 100% of Jack Inc. on January 1, 20×1, at a price in excess of the subsidiary’s fair value. On that date, Parent’s equipment (10-year life) had a book value of $360,000 but a fair value of $480,000. Jack had equipment (10-year life) with a book value of $240,000 and a fair value of $350,000. Parent used the partial equity method to record its investment in Jack. On December 31, 20×3, Parent had equipment with a book value of $250,000 and a fair value of $400,000. Jack had equipment with a book value of $170,000 and a fair value of $320,000. Which is the consolidated balance for the equipment account as of December 31, 20×3?

• $710,000
• $580,000
• $474,000
• $497,000
• $565,000

Question 5 (TCO 3)

On September 1, 20×1, Peter Inc. issued common stock in exchange for 20% of Sal Inc.’s outstanding common stock. In July of 20×3, Peter issued common stock for an additional 75% of Sal’s outstanding common stock. Sal continues in existence as Peter’s subsidiary. How much of Sal’s 20×3 net income should be reported as accruing to Peter?

• 20% of Sal’s net income to June 30 and all of Sal’s net income from July 1 to December 31
• 20% of Sal’s net income to June 30 and 95% of Sal’s net income from July 1 to December 31
• 95% of Sal’s net income
• All of Sal’s net income

ACCT 405 Week 5 Quiz Latest

Question 1 (TCO 3)

Parent sold land to its subsidiary for a gain in 20×1. The subsidiary sold the land externally for a gain in 20×3. Which of the following statements is true?

• A gain will be reported on the consolidated income statement in 20×1.
• A gain will be reported on the consolidated income statement in 20×3.
• No gain will be reported on the 20×3 consolidated income statement.
• Only the parent company will report a gain in 20×3.
• The subsidiary will report a gain in 20×1.

Question 2 (TCO 3)

During 20×1, Vonsamek Co. sold inventory to its wholly owned subsidiary, Link Co. The inventory cost $30,000 and was sold to Link for $44,000. From the perspective of the combination, when is the $14,000 gain realized?

• When the goods are sold to a third party by Link
• When Link pays Vonsamek for the goods
• When Vonsamek sold the goods to Link
• When the goods are used by Link

Question 3 (TCO 3)

Pop Co. owns 80% of Cool Co., common stock par value $10. On January 1, 20×1, Cool Co. issued 10,000 additional shares of common stock for $35 per share. Pop Co. acquired 8,000 of these shares. How would this transaction affect the additional paid-in capital of the parent company?

• Increase it by $28,700
• Increase it by $200,000
• $0
• Increase it by $280,000
• Increase it by $250,000

Question 4 (TCO 3)

Where do dividends paid to the noncontrolling interest of a subsidiary appear on a consolidated statement of cash flows?

• Cash flows from operating activities
• Cash flows from investing activities
• Cash flows from financing activities
• Supplemental schedule of noncash investing and financing activities
• Not on the consolidated statement of cash flows

Question 5 (TCO 3)

During 20×1, Play Inc. acquired 100% of Stray Inc. by issuing 250,000 shares of its common stock. The acquisition was announced on March 31, 20×1, when Play’s common stock was selling for $45 per share, and finalized on October 15, 20×1, when the market price of Play’s common stock was $50 per share. On October 15, 20×1, Stray’s net assets had a book value of $10,750,000. Book value equaled fair value for all recognized assets and liabilities, except land, which had a fair value $500,000 higher than book value. Stray also had unpatented technology with a fair value of $225,000 and in-process research and development with a fair value of $365,000. Which is the goodwill to be reported on Play Inc.’s December 31, 20×1, balance sheet under U.S. GAAP?

• $500,000
• $660,000
• $1,250,000
• $1,750,000

ACCT 405 Week 6 Quiz Latest

Question 1 (TCO 4)

A U.S. company sells merchandise to a foreign company, denominated in U.S. dollars. Which of the following statements is true?

• If the foreign currency appreciates, a foreign exchange gain will result.
• If the foreign currency depreciates, a foreign exchange gain will result.
• No foreign exchange gain or loss will result.
• If the foreign currency appreciates, a foreign exchange loss will result.
• If the foreign currency depreciates, a foreign exchange loss will result.

Question 2 (TCO 4)

Which of the following translation methods was originally mandated by SFAS No. 8?

• Current/noncurrent method
• Monetary/nonmonetary method
• Current rate method
• Temporal method
• Indirect method

Question 3 (TCO 4)

Which is a company’s functional currency?

• The currency of the primary economic environment in which it operates
• The currency of the country where it has its headquarters
• The currency in which it prepares its financial statements
• The reporting currency of its parent for a subsidiary
• The currency it chooses to designate as such

Question 4 (TCO 4)

According to SFAS 52, which method is usually required for translating a foreign subsidiary’s financial statements into the parent’s reporting currency?

• The temporal method
• The current rate method
• The current/noncurrent method
• The monetary/nonmonetary method
• The noncurrent rate method

Question 5 (TCO 4)

Freddy Co., a U.S. company, contracted to purchase foreign goods. Payment in foreign currency was due 1 month after the goods were received at Freddy’s warehouse. Between the receipt of goods and the time of payment, the exchange rates changed in Freddy’s favor. The resulting gain should be included in Freddy’s financial statements as a(n)

• component of income from continuing operations.
• extraordinary item.
• deferred credit.
• separate component of other comprehensive income.

ACCT 405 Week 7 Quiz Latest

Question 1 (TCO 5)

The disadvantages of the partnership form of business organization, compared to corporations, include

• the legal requirements for formation.
• unlimited liability for the partners.
• the requirement for the partnership to pay income taxes.
• the extent of governmental regulation.
• the complexity of operations.

Question 2 (TCO 2)

Which of the following is not a characteristic of a partnership?

• The partnership itself pays no income taxes.
• It is easy to form a partnership.
• Any partner can be held personally liable for all debts of the business.
• A partnership requires written articles of partnership.
• Each partner has the power to obligate the partnership for liabilities.

Question 3 (TCO 5)

The partnership of Charley, Sammy, and Tommy was insolvent and will be unable to pay $30,000 in liabilities currently due. Which recourse was available to the partnership’s creditors?

• They must present equal claims to the three partners as individuals.
• They must try obtaining a payment from the partner with the largest capital account balance.
• They cannot seek remuneration from the partners as individuals.
• They may seek remuneration from any partner they choose.
• They must present their claims to the three partners in the order of the partners’ capital account balances.

Question 4 (TCO 5)

The partnership contract for Hal and Jan LLP provides that Hal is to receive a bonus of 20% of net income and that the remaining net income is to be divided equally. If the partnership income before the bonus for the year is $57,600, Hal’s share of this prebonus income is

• $28,800.
• $33,600.
• $34,560.
• $43,200.
• $57,600.

Question 5 (TCO 5)

Roger and Wolger formed a partnership in the Year 20×1. The partnership agreement provides for annual salary allowances of $55,000 for Roger and $45,000 for Wolger. The partners share profits equally and losses in a 60/40 ratio. The partnership had earnings of $80,000 for Year 20×2 before any allowance to partners. Which amount of these earnings should be credited to each partner’s capital account?

• Roger Wolger $40,000 $40,000
• Roger Wolger $43,000 $37,000
• Roger Wolger $44,000 $36,000
• Roger Wolger $45,000 $35,000