Ac 302 Final Exam

A statutory merger is a(n) A) Business combination in which only one of the two companies continues to exist as a legal corporation B) Business combination in which both companies continue to exist C) Acquisition of competitor D) Acquisition of a supplier or a customer E) Legal proposal to acquire outstanding shares of the targets stock

A

An investor should always use the equity method to account for an investment if: A. It has the ability to exercise significant influence over the operating policies of the investee. B. It owns 30% of an investees stock C. It has a controlling interest (more than 50%) of an investee's stock D. The investment was made primarily to earn a return on excess cash. E. It does not have the ability to exercise significant influence over the operating policies of the investee.

A

During 2020, Von Co. sold inventory to its wholly owned subsidiary, Lord Co. The inventory cost $30,000 and was sold to Lord for $44,000. From the perspective of the combination, when is the $14,000 gain realized? A) When the goods are sold to a third party by Lord B) When Lord pays Von for the goods C) When Von sold the goods to Lord D) When the goods are used by Lord E) No gain can be recognized since the transaction was between related parties

A

Kurves Corp. had six different operating segments reporting the following profit & (loss): A 112000 B (196000) C 1,316,000 D (616,000) E (126,000) F (140,000) Which of the following statements is TRUE? A) Segment D is a reportable segment based on this test B) Segment C is NOT a reportable segment based on this test C) Segment A is a reportable segment based on this test D) Segment B is NOT a reportable segment based on this test E) Segment E is a reportable segment based on this test

A

Lisa Co. Paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in A) Worksheet B) Lisa's general journal C) Vistorias general journal D) Victorias secret consolidation journal E) The general journals of both companies

A

Name the worksheet entry: DR Buildings DR Equip DR License Agreement CR Investment CR Goodwill S, A, I, D or E?

A

Regulation S-X specifies: A) The form and content of financial statements to be filed with the SEC B) The internal controls a publicly traded company must maintain C) Requirements for the nonfinancial information to be filed with the SEC D) That the financial statements included in a company's annual report must be audited E) Which form a company must file to register new securities

A

The SEC's operating costs are supported through: A) Registration fees from issuers offering securities to the public B) Fees paid by accounting firms that practice before the SEC C) Tax revenues of the Federal government D) Fees paid by stockbrokers E) Fees paid by stock exchanges

A

The goals of the SEC include all except which one of the following? A) Controlling the number of companies whose stock is listed on major stock exchanges B) Preventing the misuse of information especially by inside parties C) Ensuring that full and fair information is disclosed to all investors before the securities of a company may be bought and sold D) Prohibiting the dissemination of materially misstated information E) Regulating the operation of securities markets

A

What is a form 10 - K? A) An annual report filed with the SEC B) A quarterly report filed with the SEC C) A form filed with the SEC before the company issues stock for the first time D) A form filed with the SEC before issuing stocks to acquire another company E) A semiannual report filed with the SEC

A

When must form 8-K be filed with the SEC? A) Within 15 days of the occurrence of certain significant events B) Within 45 days of the end of any quarter other than the fourth quarter of the fiscal year C) When a relatively small company intends to issue securities D) Within 90 days of the end of the fiscal year E) Within 60 days of the end of the fiscal year

A

Which one of the following forms is used in connection with employee stock plans? A) S-8 B) S-11 C) S-1 D) S-4 E) S-3

A

What is the appropriate treatment in an interim financial report for a LIFO liquidation? A) The LIFO liquidation should always be reflected in gross profit on an interim income statement B) The LIFO liquidation should only be reflected in gross profit on an interim income statement if it is determined that it will not be replaced by year end C) The LIFO liquidation is always ignored for interim reporting D) The LIFO liquidation should always result in replacement cost valuation of ending inventories on the interim income statement but not the interim balance sheet E) The LIFO liquidation should always results in replacement cost valuation of ending inventory on the interim balance sheet and the interim income statement

B

When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true? A) Income from subsidiary is not recognized until there is an entire year of consolidated operations B) Income from subsidiary is recognized from date of acquisition to year end C) Excess cost over acquisition value is recognized at the beginning of the fiscal year D) No goodwill can be recognized E) Income from the subsidiary is recognized for the entire year

B

Which of the following securities offerings is not exempt from registration prior to their sale? A) Securities issued by banks B) Securities issued to a company's board of directors C) Securities issued by savings and loan associations D) Offerings of no more than $1 million made to any number of investors within a 12 month period E) Securities issued by governments

B

Which of the following statements is false concerning the number of operating segments that should be disclosed? A) If an operating segment qualifies for disclosure in the current year, prior period segment data presented for comparative purposes must be restated to reflect the newly reportable segment as a separate segment B) Even though an operating segment has been reportable in the past and is of continuing significance, it must meet at least one of the three reporting tests to report separately in the current year C) If the 75% rule is not met by the results of applying all three reporting tests, additional segments must be disclosed separately despite their failure to satisfy even one of the three quantitative thresholds. D) The practical limit to the number of operating segments is 10 E) At least 75% of total company sales made to outsiders should be presented

B

Which one of the following forms is used when no other form is prescribed? A) S-8 B) S-1 C) S-4 D) S-3 E) S-11

B

Which one of the following prohibits fraudulent and unfair behavior such as sales practice abuses and insider training? A) The securities act of 1933 B) The securities exchange act of 1934 C) The Sarbanes Oxley act of 2002 D) The investment advisers act of 1940 E) The investment company act of 1940

B

Clement Co. owned all of the voting common stock of Snider Co. On January 1, 2020, Clement sold some equipment to snider for $125,000. The equipment had a book value of $100,000 and a remaining useful life of 5 years with no salvage value. Straight line depreciation is used by both companies. At what amount should the equipment (net of depreciation) be included on the consolidated balance sheet dated December 31, 2020? A) 100,000 B) 95,000 C) 80,000 D) 75,000 E) 85000

C

Consolidated net income using the equity method for an acquisition combination is computed as follows: A) Parent company's revenue from its own operations plus subsidiary retained earnings B) Parent's reported net income plus subsidiary dividends C) Combined revenues less combined expenses less equity in subsidiary's earnings less amortization of fair-value allocations in excess of book value D) Parents revenues less expenses for its own operations plus the equity from the subsidiary's earnings less subsidiary dividends E) None of the answer choices are correct

C

Filings with the SEC are divided generally into two broad categories: A) Registration filings and reconciliation statements B) Registration statements and perpetual filings C) Registration statements and periodic filings D) Reconciliation filings and perpetual filings E) Reconciliation statements and periodic filings

C

How should seasonal revenues be reported in an interim report? A) Disclose the seasonal nature of business operations and include a pro forma report for the next 12 month period. B) Seasonal revenues have no particular reporting requirement C) Disclose the seasonal nature of business operations and consider a report for the 12 month period ended at the interim date to supplement the interim report D) Financial statements should be adjusted to reflect the assumption that no seasonal revenues could be recognized E) Disclose the seasonal nature of business operations but do not include other reports supplemental to the interim report

C

How would consolidated earnings per share be calculated if the subsidiary has no convertible securities or warrants? A. Parent's earnings per share plus subsidiary's earnings per share. B. Parent's net income divided by parent's number of shares outstanding. C. Consolidated net income divided by parent's number of shares outstanding. D. Average of parent's earnings per share and subsidiary's earnings per share. E. Consolidated income divided by total number of shares outstanding for the parent and subsidiary.

C

In a business combination where a subsidiary retains its incorporation and which is accounted for under the acquisition method, how should stock issuance costs and direct combination costs be treated? A) Stock issuance costs and direct combination costs are expenses as incurred B) Direct combination costs are ignored, and stock issuance costs result in a reduction to additional paid-in capital C) Direct combination costs are expensed as incurred and stock issuance costs results in a reduction to additional paid in capital D) Both are treated as part of the acquisition consideration transferred E) Both reduce additional paid-in capital

C

Regulation S - K A) Controls the listing of securities by stock exchanges B) Describes the financial disclosure information that must be included in filings with the SEC C) Establishes requirements for nonfinancial information to be filed with the SEC D) Describes the internal controls a publicly traded company must maintain E) Prescribes the form of financial statements to be filed with the SEC

C

Under the equity method, when the company's share of cumulative losses equals its investment and the company has no obligation or intention to fund such additional losses, which of the following statements is true? A) The investor should change to the fair-value method to account for its investment B) The investor should suspend applying the equity method until the investee reports income. C) The investor should suspend applying the equity method and not record any income of investee until its share of future profits is sufficient to recover losses that have not previously been recorded D) The cumulative losses should be reported as a prior period adjustment E) The investor should report these as equity method losses in its income statement

C

What is shelf registration? A) The registration of mutual funds that engage in investing and trading securities B) The registration of securities issued in connection with business combination transactions C) A procedure that allows large companies to register securities with the SEC and then sell them over a period of two years without registering again within that period D) A procedure that allows the sale of securities to a small group of knowledgeable investors without any general solicitation E) The method of filing form 10-K with the SEC

C

When a parent uses the equity method throughout the year for investment in a subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet? A) Parent company net income equals controlling interest in consolidated net income B) Parent company retained earnings equals consolidated retained earnings C) Parent company total assets equal consolidate total assets D) Parent company dividends equal consolidated dividends E) Goodwill may need to be recorded

C

When an investor sells shares of its investee company, which of the following statements is true? A) A recognized gain or loss is reported as the difference between selling price and original cost B) A unrecognized gain or loss is reported as the difference between selling price and original cost C) A recognized gain or loss is reported as the difference between selling price and carrying value D) An unrealized gain or loss is reported as the difference between selling price and carrying value E) Any gain or loss is reported as part of comprehensive income.

C

When would a letter of comments be issued by the SEC? A) In response to a company's filing of the form 8- K B) To indicate that a registration statement has been approved C) To request clarification of a registration statement D) After receiving the company's form 10 K E) To convey your pertinent comments to the SEC

C

Where do dividends paid to the non-controlling interest of a subsidiary appear on a consolidated statement of cash flows? A) Cash flows from operating activities B) Cash flows from investing activities C) Cash flows from financing activities D) Supplemental schedule of non-cash investing and financing activities E) They do not appear on the consolidated statement of cash flows

C

Which of the following results in a decrease in the Equity in Investee Income account when applying the equity method? A) Dividends paid by the investor B) Net income if the investee C) Investor's share of gross profit from intra-equity inventory sales for the current year D) Investor's share of gross profit on intra-equity inventory sales for the prior year E) Other comprehensive income of the investee

C

Which of the following statements is true? A) Goodwill recognized in consolidation must be amortized over 20 years B) Goodwill recognized in consolidation must be expenses in the period of acquisition C) Goodwill recognized in consolidation will not be amortized but subject to an annual test for impairment D) Goodwill recognized in consolidation can never be written off E) Goodwill recognized in consolidation must be amortized over 40 years

C

Which one of the following regulates the initial offerings of securities by a company or underwriter? A) The securities exchange act of 1934 B) The investment advisers act of 1940 C) The securities act of 1933 D) The investment company act of 1940 E) The Sarbanes Oxley act of 2002

C

A wraparound filing: A) May be used by large companies to sell securities over a period of two years without refiling with the SEC B) Is a filing completed using the SEC's electronic filing system C) May remain in effect for a period of 1 to 5 years D) Allows a company to simplify its periodic filing by attaching its annual reports to the form 10 -K E) Is a simplified registration procedure for securities to be issued by small companies

D

Acquired in-process research and development is considered as A) A definite-lived asset subject to amortization B) A definite-lived asset subject to testing for impairment C) An indefinite-lived asset subject to amortization D) An indefinite-lived asset subject to testing for impairment E) A research and development expense at the date of acquisition

D

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? (I) Debit to Investment account, and a credit to the investee Income account (II) Debit to cash (for dividends received from the investee), and a credit to Investment Income account. (III) Debit to cash (for dividends received from the investee), and a credit to the investment account A) Entries I and II B) Entries II and III C) Entry I only D) Entry II only E) Entry III only

D

McGuire company acquired 90 percent of Hogan Company on January 1, 2021, for $234,000 cash. Hogan's stockholders' equity consisted of common stock 0f $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following Book Value Fair Value Buildings $ 10,000 $ 8,000 Equipment 14,000 18,000 Land 5,000 12,000 In consolidation at December 31, 2022, what adjustment is necessary for Hogan's Buildings account? A) 1,440 Increase B) 1,440 decrease C) 1,600 increase D) 1,600 decrease E) 0

D

Name the worksheet entry: DR Investment CR Dividends Declared S, A, I, D, or E?

D

Natarajan Inc had the following operating segments, with the indicated amounts of segment revenues and segment expenses: A External Revenues: 7,500,000 Intersegment Sales: 600,000 Segment Expenses: 6,300,000 B External Revenues: 2,900,000 Intersegment Sales: 1,000,000 Segment Expenses: 4,300,000 C External Revenues: 700,000 Intersegment Sales: 1,300,000 Segment Expenses: 2,200,000 D External Revenues: 4,000,000 Intersegment Sales: 250,000 Segment Expenses: 4,100,000 E External Revenues: 1,600,000 Intersegment Sales: 800,000 Segment Expenses: 2,700,000 According to the PROFIT OR LOSS TEST, which segments would require disaggregation? A) A only B) A, B and D C) A,B,D and E D) A,B,C and E E) A and D

D

On January 1, 2020, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620 and Riley paid $401,937 for them. How should the difference between carrying value and the purchase price be accounted for in the consolidated financial statements for 2020? A) The difference is added to the carrying value of the debt B) The difference is treated as a loss from the extinguishment of the debt C) The difference is deducted from the carrying value of the debt D) The difference is treated as a gain from the extinguishment of the debt E) The difference does not influence the consolidated financial statements

D

Provo Inc. has an estimated annual tax rate of 35% in the first quarter of 2018. Pretax income for the first quarter was $300,000. At the end of the second quarter of 2018, Provo expects the annual tax rate to be 32% because of anticipated tax credits. Pretax income for the second quarter was $350,000. Assume no items in either quarter of requiring that net of tax presentation. How much income tax expense is recognized in the second quarter of 2018? A) $122,500 B) $104,000 C) $112,000 D) $103,000 E) $208,000

D

Using the acquisition method for a business combination, goodwill is generally calculated as the: A) Cost of the investment less the subsidiary's book value at the beginning of the year B) Cost of the investment less the subsidiary's book value at the acquisition date C) Cost of the investment less the subsidiary's fair value at the beginning of the year D) Cost of the investment less the subsidiary's fair value at acquisition date E) Zero, it is no longer allowed under federal law

D

What information needs to be included in the form 10-Q? 1) Income statements for the most recent quarter and for the year to date as well as for the comparative periods in the previous year 2) Income statements for the most recent quarter and for the year to date as well as for a comparative periods in the previous two years 3) A statement of cash flows it is necessary but only for the year to date as well as for the corresponding period in the preceding year 4) Two balance sheets one for the end of the most recent quarter and one showing the company's financial position at the end of the previous fiscal year A) 2, 3, and 4 B) 1 and 3 C) 2 and 4 D) 1, 3 and 4 E) 1 and 2

D

Which of the following characteristics is not indicative of an enterprise qualifying as a primary beneficiary with a controlling financial interest in a variable interest entity? A) The direct ability to make decisions about the entity's activities B) The indirect ability to make decisions about the entity's activities C) The obligation to absorb the expected losses of the entity if they occur D) No ability to make decisions about the entity's activities E) The right to receive the expected residual returns of the entity if they occur

D

Which of the following results in a decrease in the investment account when applying the equity method? A) Dividends paid by the investor B) Net income if the investee C)Net income of the investor D) Share of gross profit on intra-equity inventory sales for the current year E) Purchase of additional common stock by the investor during the current year

D

Which of the following statements is true regarding the identifying factors used to determine which components of a business are operating segments? A) A component may be classified as an operating segment of the revenues assuming that it generates a material level of expense B) The corporate controller reviews each operating segment operating results to assess performance C) All parts of a company must be included in an operating segment D) An organizational unit can be operating segment even if all of its revenues or expanses result from transactions with other segments E) Operating segments are components of the enterprise that engage in business activities and from which if only recognizes revenues

D

Which one of the following varies between the equity, initial value, and partial equity methods of accounting for an investment? A) The amount of consolidated et income B) Total assets on the consolidated balance sheet C) Total liabilities on the consolidated balance sheet D) The balance in the investment account on the parents books E) The amount of consolidated costs of goods sold

D

Which statement is false regarding the public company accounting oversight board (PCAOB)? A) Regulates audit standards and independent audit firms B) Has five members appointed by the SEC C) Is funded by fees levied on all publicly traded companies D) Allows all members to be accountants past or present E) Is under the oversight in enforcement of the SEC

D

Natarajan Inc had the following operating segments, with the indicated amounts of segment revenues and segment expenses: A External Revenues: 7,500,000 Intersegment Sales: 600,000 Segment Expenses: 6,300,000 B External Revenues: 2,900,000 Intersegment Sales: 1,000,000 Segment Expenses: 4,300,000 C External Revenues: 700,000 Intersegment Sales: 1,300,000 Segment Expenses: 2,200,000 D External Revenues: 4,000,000 Intersegment Sales: 250,000 Segment Expenses: 4,100,000 E External Revenues: 1,600,000 Intersegment Sales: 800,000 Segment Expenses: 2,700,000 According to the REVENUE TEST, which segments would require disaggregation? A) B and C B) A, B and D C) C, D and E D) A and B E) A, B, D and E

E

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; ad (ii) accounting for a business combination when the subsidiary retains its incorporation? A) If the subsidiary is dissolved, it will not be operated as a separate division B) If the subsidiary is dissolved, assets and liabilities are consolidated at their book values C) If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition D) If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values E) If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company

E

When Jolt Co. acquired 75% of the common stock of Yelts Corp., Yelts owned land with a book value of $70,000 and a fair value of $100,000. What amount should have been reported for the land in a consolidated balance sheet at the acquisition date? A) 52,500 B) 70,000 C) 75,000 D) 92,500 E) 100,000

E

Which of the following statements is true regarding the reporting of revenues in an interim report? A) Revenues should be recognized on the cash basis of accounting for interim reporting B) Projected losses on long-term contracts should be deferred to the annual report C) The percentage of completion method of reporting long-term construction projects is not an acceptable method for interim reporting D) Revenue should be recognized on the income tax basis for interim reporting E) Revenues should be recognized in interim periods in the same way as they are on an annual basis

E

Which one of the following requires the audit committee to be responsible for the appointment and compensation of the external auditor? A) The Sarbanes Oxley act of 2002 B) The securities act of 1933 C) The Foreign corrupt practices act of 1977 D) The investment company act of 1940 E) The securities exchange act of 1934

E

Which tests must a company use to determine which operating segments require separate disclosure? A) Revenue test, Profit or loss test, and Asset test B) Profit or loss test and Asset test C) Revenue test and Asset test D) Revenue test, Asset test and Liability test E) Revenue test and profit or loss test

A

What information does US GAAP the required to be disclosed for a major customer? A) A length of time the customer has been a customer of the company B) The operating segment reporting sales to the customer C) The geographic area of the customer D) The identity of the customer E) These specific products or services purchased by the customer

B

Jansen Inc. acquired all of the outstanding common stock of Merriam Co. on January 1, 2021, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Jansen reported net income of $70,000 in 2021 and $50,000 in 2022 and paid $22,000 in dividends each year. Merriam reported net income of $40,000 in 2021 and $47,000 in 2022 and paid $10,000 in dividends each year. What is the Investment in Merriam Co. balance on Jansen's books as of December 31, 2022, if the equity method has been applied? A) 286,000 B) 296,000 C)276,000 D) 344,000 E) 300,000

A (257+40-19-10+47-19-10) *in thousands cost + NI - amort - div + NI2 - amort2 - div2...

All of the following statements regarding the investment account using the equity method are true except: A) The investment is recorded at cost. B) Dividends received are reported as revenue C) Net income of investee increases the investment account D) Dividends received reduce the investment account E) Amortization of fair value over cost reduces the investment account

B

Coulanger Corp. identifies four operating segments; A, B, C, and D. Segment A met the Revenue test for identifying reportable segments. While segment C met the Revenue test, Profit or loss test, and Asset test. Segment B and D did not meet any of these tests. Which of these segments disclose separately? A) Segment A and B B) Segments A and C C) Segments B and D D) No segments are disclosed separately E) All segments are disclosed separately

B

In an acquisition where 100% control is acquired, how would the land accounts of the parent and the land accounts of the subsidiary be reported on consolidated financial statements? Parent Subsidiary A) Book Value Book Value B) Book Value Fair Value C) Fair Value Fair Value D) Fair Value Book Value E) Cost Cost

B

McGuire company acquired 90 percent of Hogan Company on January 1, 2021, for $234,000 cash. Hogan's stockholders' equity consisted of common stock 0f $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following Book Value Fair Value Buildings $ 10,000 $ 8,000 Equipment 14,000 18,000 Land 5,000 12,000 In consolidation at December 31, 2022, what adjustment is necessary for Hogan's land account? A) 0 B) 7,000 increase C) 6,300 increase D) 6,300 decrease E) 7,000 decrease

B

On November 8, 2020 Power corporation's sold land to Wood Co, its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized? A) Proportionately over a designated period of years B) When Wood Co. sells the land to a third party C) No gain can be recognized D) As Wood uses the land E) When Wood Co. begins using the land productively

B

Parents sold land to its subsidiary for a gain in 2019. The subsidiary sold the land for a gain in 2021. Which of the following statements is true? A) A gain will be reported on the consolidated income statement in 2019 B) A gain will be reported on the consolidated income statement in 2021 C) No gain will be reported on the 2021 consolidated income statement D) Only the parent company will report a gain in 2021 E) The subsidiary will report a gain in 2019

B

Provo Inc. has an estimated annual tax rate of 35% in the first quarter of 2018. Pretax income for the first quarter was $300,000. At the end of the second quarter of 2018, Provo expects the annual tax rate to be 32% because of anticipated tax credits. Pretax income for the second quarter was $350,000. Assume no items in either quarter of requiring that net of tax presentation. How much income tax expense is recognized in the first quarter of 2018? A) $0.00 B) $105,000 C) $26,250 D) $112,000 E) $96,000

B

The SEC has usually restricted its role in establishing accounting principles to: A) Developing accounting standards for particular industries B) Determining required disclosures C) The promulgation and issuance of SAS's (Securities Accounting Standards) D) Specifying the information that should be included in interim financial statements E) Developing definitions of key accounting terms

B

Norek Corp. owned 70% of the voting common stock of Thelma Co. On January 1, 2020 Thelma sold a parcel of land to Norek. The land had a book value of $32,000 and was sold to Norek for $45,000. Thelma's reported net income for 2020 was $119,000. What is the non-controlling interests share of Thelma's net income? A) 35,700 B) 31,800 C) 39,600 D) 22,200 E) 26,100

B [119000-13000*.3) [Net income - Gain on Sale * NCI share]

Natarajan Inc had the following operating segments, with the indicated amounts of segment revenues and segment expenses: A External Revenues: 7,500,000 Intersegment Sales: 600,000 Segment Expenses: 6,300,000 B External Revenues: 2,900,000 Intersegment Sales: 1,000,000 Segment Expenses: 4,300,000 C External Revenues: 700,000 Intersegment Sales: 1,300,000 Segment Expenses: 2,200,000 D External Revenues: 4,000,000 Intersegment Sales: 250,000 Segment Expenses: 4,100,000 E External Revenues: 1,600,000 Intersegment Sales: 800,000 Segment Expenses: 2,700,000 When totaling the revenues to use as the basis for the 75% rule, what is the 75% hurdle that must be exceeded by the revenues of the reportable segments? A) $15,487,500 B) $12,525,000 C) $16,700,000 D) $1,670,000 E) $20,650,000 E) A, B, D and E

B (Add all revenues, times 75%)

A parent acquires all of a subsidiary's common stock and 60% of its preferred stock. The preferred stock has a cumulative dividend. No dividends are in arrears. How is the non-controlling interest in the subsidiary's net income assigned? A) Income is assigned as 40% of the value of the preferred stock, based on an allocation between common stock and preferred stock B) There is no allocation to the noncontrolling interest because the parent owns 100% of the common stock and net income belongs to the residual owners C) Income is assigned as 40% of the preferred stock dividends D) Income is assigned as 40% of the subsidiary's income before preferred stock dividends E) Income is assigned as 40% of the subsidiary's income after subtracting preferred stock

C

At the date of an acquisition which is not a bargain purchase, the acquisition method A) Consolidates the subsidiary's assets at fair value and the liabilities at book value B) Consolidates all subsidiary's assets and liabilities at book value C) Consolidates all subsidiary's assets and liabilities at fair value D) Consolidates current assets and liabilities at book value and long term assets and liabilities at fair value E) Consolidates the subsidiary's assets at book value and the liabilities at fair value

C

Audited financial statements in an annual report of an issuer that is subject to the SEC regulation must include: A) Three balance sheets, two income statements, two statements of cash flows B) Three balance sheets, three income statements, three statements of cash flows C) Two balance sheets, three income statements, three statements of cash flows D) Two balance sheets, two income statements, two statements of cash flows E) One balance sheet, one income statement, one statement of cash flows

C

Kaycee Corp.'s revenues for the year ended December 31, 2017 were as follows: Consolidated Revenue per the Income Statement: $1,200,000 Division 1 Intersegment Sales: $180,000 Division 2 Intersegment Sales: $60,000 For purposes of the Revenue test, which amount will be used as the benchmark for determining whether segment is reportable. A) 138,000 B) 120,000 C) 144,000 D) 24,000 E) 0

C (1.2m+180k+60k)*10%

Name the worksheet entry: DR Depreciation Expense DR Amortization Expense CR Equip CR Buildings CR License Agreement S, A, I, D, or E?

E

Natarajan Inc had the following operating segments, with the indicated amounts of segment revenues and segment expenses: A External Revenues: 7,500,000 Intersegment Sales: 600,000 Segment Expenses: 6,300,000 B External Revenues: 2,900,000 Intersegment Sales: 1,000,000 Segment Expenses: 4,300,000 C External Revenues: 700,000 Intersegment Sales: 1,300,000 Segment Expenses: 2,200,000 D External Revenues: 4,000,000 Intersegment Sales: 250,000 Segment Expenses: 4,100,000 E External Revenues: 1,600,000 Intersegment Sales: 800,000 Segment Expenses: 2,700,000 According to the PROFIT OR LOSS TEST, segment C's operating profit (loss) is: A) $200,000 B) $1,300,000 C) $2,000,000 D) $700,000 E) $(200,000)

E

Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments in 2017: A Total Revenues: 14,000,000 Profit: 2,450,000 Assets 12/31/17: 28,000,000 B Total Revenues: 11,200,000 Profit: 1,960,000 Assets 12/31/17: 24,500,000 C Total Revenues: 8,400,000 Profit: 1,680,000 Assets 12/31/17: 17,500,000 D Total Revenues: 4,200,000 Profit: 770,000 Assets 12/31/17: 10,500,000 E Total Revenues: 5,950,000 Profit: 945,000 Assets 12/31/17: 9,800,000 F Total Revenues: 2,100,000 Profit: 315,000 Assets 12/31/17: 4,200,000 Totals: Total Revenues: 45,850,000 Profit: 8,120,000 Assets 12/31/17: 94,500,000 What is the minimum amount of assets that each of these segments must own to be considered separately reportable? A) $10,643,000 B) $8,624,272 C) $10,413,000 D) $9,450,000 E) $12,936,408

D 94,500,000 * 10% = 9,450,000

How does the partial equity method differ from the equity method? A) In the total assets reported on the consolidated balance sheet B) In the treatment of dividends C) In the total liabilities reported on the consolidated balance sheet D) Under the partial equity method, subsidiary income does not increase the balance in the parents investment E) Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary

E

Name the worksheet entry: DR Equity in sub Earnings CR Investment S, A, I, D, or E?

I

Name the worksheet entry: DR common stock DR retained earnings 1/1/21 DR additional paid in capital CR Investment S, A, I, D, or E?

S