Acct 441 Final
Which of the following business forms are distinct legal entities separate from their owners? 1. Sole Proprietorships 2. Partnerships 3. Corporations
2 and 3
Which of the following does not describe the partnership form of organization? 1. Partnerships allow numerous individuals to combine their efforts for a variety of business purposes in an organization that can last indefinitely. 2. Partnerships can survive the admission of new partners and the disassociation of existing partners as they retire. 3. From a tax standpoint, the taxing authorities view the partnership as a taxable entity and tax its profit like other forms of organization. 4. Partnerships pass through liabilities to the partners.
3. From a tax standpoint, the taxing authorities view the partnership as a taxable entity and tax its profit like other forms of organization.
Leahy, Inc., sells a machine to its subsidiary, Hopkins Company, at a $20,000 gain. The machine was classified as property, plant and equipment on Leahy's books and also will be classified as such on Hopkins' books. The consolidation entry(s) to eliminate the inter-company transaction at year-end will not include:
A credit to Gain on Sale of Equipment
Leahy, Inc., sells a machine to its subsidiary, Hopkins Company, at a $20,000 gain. The machine was classified as property, plant and equipment on Leahy's books and also will be classified as such on Hopkins' books. The consolidation entry(s) to eliminate the inter-company transaction at year-end will not include: A debit to Gain on Sale of Equipment A credit to Gain on Sale of Equipment A debit to Equipment A credit to Depreciation Expense
A credit to Gain on Sale of Equipment
When preparing a consolidated balance sheet, the noncontrolling interest amount must be presented:
As a part of stockholders' equity
Why does the intercompany sale of a building require subsequent adjustments to accumulated depreciation?
Because immediately after the sale, the balance in accumulated depreciation on the buyer's books is ZERO
An exchange rate of $1.25:¥1
Can also be expressed as $1: ¥0.80
The effective portion of a loss associated with a change in fair value of a derivative instrument should be reported as a component of other comprehensive income only if the derivative is appropriately designated as a
Cash flow hedge of the foreign currency exposure of a forecasted transaction
Current US GAAP requires the following accounting for financial derivatives:
Financial derivatives are reported at fair value at each statement date with unrealized gains (losses) reflected in Accumulated Other Comprehensive Income.
A U.S. company has customers in Singapore, who remit payments to the U.S. company in Singapore dollars. Which investment hedges the exchange risk associated with these customers?
Forward sale in Singapore dollars
If our company borrows money with a foreign currency-denominated loan:
It must record the loan and the accrued interest at the current $US value on each statement date.
During the translation process, the current year change to the cumulative translation adjustment is a function of which of the following relationships of the subsidiary?
Its total assets minus total liabilities
Net settlement means that:
Neither party is required to deliver an asset.
A partnership's income-sharing ratio applies to:
Partnership income after salaries and interest are deducted
Which of the following does not accurately describe the process relating to the dissolution of a partnership?
The assets of the partnership must be converted to cash used to pay the obligations to creditors, including partners who are creditors, and any remaining cash must be distributed to the partners in accordance with the relative proportions of their Capital Accounts.
If a company reports a receivable denominated in Euros (€) and the $US weakens vis-à-vis the Euro:
The company will accrue the gain in its financial statements as of the statement date, even before the receivable is collected.
Which of the following statements is true regarding the cumulative translation adjustment?
The cumulative translation adjustment account affects the amount of gain or loss reported upon the sale of a foreign subsidiary.
Which of the following is not true about the accounting for changes in partnership ownership involving revaluation of net assets?
The differential in value resulting from the revaluation of assets is recognized as a gain or loss in the partnership income statement.
Which of the following statements is true about the treatment of the AAP in the consolidation process?
The translation of the AAP requires both amortization and the recognition of gains or losses on the translation.
Which of the following best describes the translation of the statement of cash flows?
Translation of the statement of cash flows generally utilizes the weighted average exchange rate for all line items except significant one-time transactions.
If Radek Co. sold equipment with a six-year remaining useful life at a gain of $24,000 to Alto Industries, its subsidiary. In the consolidated statements, the gain will
be recognized over the six-year period.
Assume that our company incurs a Euro-denominated payable when the exchange rate is $1.20:€1 and that the $US weakens to $1.27:€1 before the payable is paid.
our company will recognize the loss on its next statement date.