advance accounting

ch 10- A foreign subsidiary's functional currency is its local currency, which has not experienced significant inflation. The current exchange rate at the balance sheet date is the appropriate exchange rate for translating which of the following:

- Insurance Expense: no - Prepaid Insurance: yes

ch 10- At what rates should the following balance sheet accounts in foreign statements be translated (using the current rate method) into U.S. dollars?

-Equipment: Current -Accumulated depreciation-equipment: current

ch 9 Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses?

-Type of transaction: Import Purchase -Foreign currency: Depreciates -Foreign Exchange Gain or Loss: gain Option C

CH 5- Dunn Corporation owns 100 percent of Grey Corporation's common stock. On January 2, 2020, Dunn sold to Grey $67,250 of machinery with a carrying amount of $51,250. Grey is depreciating the acquired machinery over a five-year remaining life by the straight-line method. The net adjustments to compute 2020 and 2021 consolidated net income would be an increase (decrease) of

2020:$(12,800) & 2021:$3,200

Ch 4-On January 1, 2020, Chamberlain Corporation pays $686,800 for a 60 percent ownership in Neville. Annual excess fair-value amortization of $17,800 results from the acquisition. On December 31, 2021, Neville reports revenues of $500,000 and expenses of $317,000 and Chamberlain reports revenues of $764,000 and expenses of $408,000. The parent figures contain no income from the subsidiary. What is consolidated net income attributable to Chamberlain Corporation?

455,120

ch 12 - What is a letter of comments?

A letter the SEC sends to a company indicating needed changes or clarifications in a registration statement.

ch 10 - A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements?

A negative translation adjustment must be reported.

Ch - 12 Which of the following must be provided to every potential buyer of a new security?

A prospectus.

ch 12 - Which of the following is usually not filed with the SEC on a regular periodic basis?

A prospectus.

ch - 12 What is a shelf registration?

A registration process for large companies that allows them to offer securities over a period of time without seeking additional approval by the SEC.

ch 12 - What is a registration statement?

A statement that must be filed with the SEC before a company can begin an initial offering of securities to the public.

Ch 4-What is a basic premise of the acquisition method regarding accounting for a noncontrolling interest? -Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry. -A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership. -Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do not hold stock in the parent company. -Consolidated financial statements should be primarily for the benefit of the parent company's stockholders.

A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership.

ch -12 What is EDGAR?

A system designed by the SEC to allow electronic filings.

ch 10 - Which of the following statements is true for the translation process using the current rate method?

A translation adjustment is created by the change in the relative value of a subsidiary's net assets caused by exchange rate fluctuations.

Ch 4-A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year. In a step acquisition of this type, the original 32 percent acquisition should be

Adjusted to fair value at the date of the second acquisition with any resulting gain or loss recognized.

What is goodwill?

An intangible asset representing the excess of consideration transferred over the collective fair values of the net identifiable assets acquired in a business combination

ch 8 - In considering interim financial reporting, how does current U.S. GAAP require that such reporting be viewed? -As reporting for an integral part of an annual period -As a special type of reporting that need not follow generally accepted accounting principles -As useful only if activity is evenly spread throughout the year, making estimates unnecessary -As reporting for a basic accounting period

As reporting for an integral part of an annual period

Ch 4-Mittelstaedt, Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $242,000 but had a fair value of $606,000 at the acquisition date. What value should be attributed to this land in a consolidated balance sheet at the date of takeover? $364,000. $145,200. $460,800. $606,000.

At the date control is obtained, the parent consolidates subsidiary assets at fair value ($606,000 in this case) regardless of the parent's percentage ownership.

ch 12 - Which of the following is not a way by which the Sarbanes-Oxley Act attempts to ensure auditor independence from an audit client?

Audit fees must be approved by the Public Company Accounting Oversight Board.

ch 9 - On October 1, Tile Co., a U.S. company, purchased products from Azulejo, a Portuguese company, with payment due on December 1. If Tile's operating income included no foreign exchange gain or loss, the transaction could have

Been denominated in U.S. dollars.

ch 10 - Which of the following items is remeasured using the current exchange rate under the temporal method?

Bonds payable

CH 2-What is the appropriate accounting treatment for the value assigned to in-process research and development acquired in a business combination?

Capitalize as an asset.

ch 8 - Which of the following statements is not true under U.S. GAAP? -Operating segments can be determined by looking at a company's organization chart. -Companies that define their operating segments by product lines must provide revenue and asset information for the domestic country, for all foreign countries in total, and for each material foreign country. -Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements. -Companies must disclose total assets, investment in equity method affiliates, and total expenditures for long-lived assets by operating segment.

Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements.

Ch8 - Nottage Company has four separate operating segments: East West North South Sales to outsiders $139,000 $89,000 $103,000 $85,000 Intersegment transfers 35,000 30,000 14,600 19,600 What revenue amount must one customer generate before it must be identified as a major customer? -$51,520. -$41,600. -$62,400. -$45,760.

Consolidated sales (combined sales to outsiders) $416,000 10% criterion × 10% Minimum $41,600

CH 2-Consolidated financial statements are typically prepared when one company has

Control over another company.

ch 12 - What is the purpose of Regulation S-K?

Establishes required disclosure of nonfinancial information with the SEC.

Ch 4-James Company acquired 85 percent of Mark-Right Company on April 1. On its December 31 consolidated income statement, how should James account for Mark-Right's revenues and expenses that occurred before April 1?

Exclude 100 percent of the preacquisition revenues and 100 percent of the preacquisition expenses from their respective consolidated totals.

ch 9 - Brief, Inc., had a receivable from a foreign customer that is payable in the customer's local currency. On December 31, 2020, Brief correctly included this receivable for 405,000 local currency units (LCU) in its balance sheet at $177,500. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $187,800. In Brief's 2021 consolidated income statement, how much should it report as a foreign exchange gain?

$10,300

**Ch 5 -Angela, Inc., holds a 90 percent interest in Corby Company. During 2020, Corby sold inventory costing $84,750 to Angela for $113,000. Of this inventory, $56,400 worth was not sold to outsiders until 2021. During 2021, Corby sold inventory costing $79,300 to Angela for $122,000. A total of $53,800 of this inventory was not sold to outsiders until 2022. In 2021, Angela reported separate net income of $239,000 while Corby's net income was $121,000 after excess amortizations. What is the noncontrolling interest in the 2021 income of the subsidiary? Multiple Choice

$11,627

ch 9 - Matthias Corp. had the following foreign currency transactions during 2020: Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $63,100 and paid the invoice on April 20 at the U.S. dollar equivalent of $52,500. On September 1, borrowed the U.S. dollar equivalent of $306,000 evidenced by a note that is payable in the lender's local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $329,000. In Matthias's 2020 income statement, what amount should be included as a net foreign exchange gain or loss?

$12,400 loss

ch 9 - On July 1, 2020, Mifflin Company borrowed 280,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2021. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: Date July 1, 2020 (date borrowed)$265,000 December 31, 2020 (Mifflin's year-end) 258,800 July 1, 2021 (date repaid) 245,000

$13,800 gain

ch 8 - Livro Company has three operating segments with the following information: Books Calendars Bags Sales to outsiders $8,400 $4,260 $6,400 Intersegment transfers 640 1,080 1,300 In addition, corporate headquarters generates revenues of $1,000. What is the minimum amount of revenue that each of these segments must generate to be considered separately reportable? -$1,906. -$2,308. -$2,208. -$2,006.

$2,208. Sales to outsiders $19,060 Intersegment transfers 3,020 Combined segment revenues $22,080 10% criterion × 10% Minimum $2,208

ch 8 -Livro Company has three operating segments with the following information: Books Calendars Bags Sales to outsiders $12,000 $9,000 $8,000 Intersegment transfers 1,000 500 1,500 In addition, corporate headquarters generates revenues of $2,000. What is the minimum amount of revenue that each of these segments must generate to be considered separately reportable? -$3,300. -$3,400. -$3,200. -$2,900.

$3,200 Sales to outsiders $29,000 Intersegment transfers 3,000 Combined segment revenues $32,000 10% criterion × 10% Minimum $3,200

Ch 4-Jordan, Inc., holds 75 percent of the outstanding stock of Paxson Corporation. Paxson currently owes Jordan $567,500 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated? $567,500. $141,875. $425,625. $0

$567,500. In consolidating the subsidiary's figures, all intra-entity balances must be eliminated in their entirety for external reporting purposes. Even though the subsidiary is less than fully owned, the parent nonetheless controls it.

CH 3-Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2018. On that date, Paar's equipment (10-year remaining life) has a book value of $455,000 but a fair value of $570,000. Kimmel has equipment (10-year remaining life) with a book value of $266,000 but a fair value of $380,000. Paar uses the equity method to record its investment in Kimmel. On December 31, 2020, Paar has equipment with a book value of $318,500 but a fair value of $453,700. Kimmel has equipment with a book value of $186,200 but a fair value of $332,800. What is the consolidated balance for the Equipment account as of December 31, 2020?

$584,500.

ch 12 - What does the term incorporation by reference mean?

Filing information with the SEC by indicating that the information is already available in another document.

ch 12 - Which of the following is a registration statement used by large companies that already have a significant following in the stock market?

Form S-3.

ch 8 - Which of the following items must be disclosed in interim reports? -Total assets -Total liabilities -Gross revenues -Cash flow from operating activities

Gross revenues

CH 2- Which of the following is the best theoretical justification for consolidated financial statements?

In form, the companies are separate; in substance, they are one entity.

Ch 4-The noncontrolling interest represents an outside ownership in a subsidiary that is not attributable to the parent company. Where in the consolidated balance sheet is this outside ownership interest recognized? -In the liability section. -In a mezzanine section between liabilities and owners' equity. -In the owners' equity section. -The noncontrolling interest is not recognized in the consolidated balance sheet.

In the owners' equity section.

CH 3-If no legal, regulatory, contractual, competitive, economic, or other factors limit the life of an intangible asset, the asset's assigned value is allocated to expense over which of the following?

Indefinitely (no amortization) with an annual impairment review until its life becomes finite

CH 2 - Which of the following does not represent a primary motivation for business combinations?

Larger firms are less likely to fail.

ch 8- Which of the following operating segment disclosures is not required under current U.S. accounting guidelines? -Unusual items. -Intersegment sales. -Liabilities. -Interest expense.

Liabilities

Ch 5 - James Corporation owns 80 percent of Carl Corporation's common stock. During October, Carl sold merchandise to James for $120,000. At December 31, 40 percent of this merchandise remains in James's inventory. Gross profit percentages were 10 percent for James and 20 percent for Carl. The amount of intra-entity gross profit in inventory at December 31 that should be eliminated in the consolidation process is

Merchandise remaining in James's inventory $120,000 × 40% = $48,000. Intra-entity gross profit (based on subsidiary's gross profit rate as the seller) $48,000 × 20% = $9,600 is the answer. James's ownership percentage of Carl has no impact on this computation. answer: $9,600

Ch 5 -James Corporation owns 80 percent of Carl Corporation's common stock. During October, Carl sold merchandise to James for $250,000. At December 31, 40 percent of this merchandise remains in James's inventory. Gross profit percentages were 20 percent for James and 30 percent for Carl. The amount of intra-entity gross profit in inventory at December 31 that should be eliminated in the consolidation process is

Merchandise remaining in James's inventory $250,000 × 40% = $100,000. Intra-entity gross profit (based on subsidiary's gross profit rate as the seller) $100,000 × 30% = $30,000 is the answer. James's ownership percentage of Carl has no impact on this computation answer $30,000

CH 3-On January 1, 2021, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zee's acquisition-date fair values, Jay concluded that the carrying value of Zee's long-term debt (8-year remaining life) was less than its fair value by $16,600. At December 31, 2021, Zee Company's accounts show interest expense of $13,950 and long-term debt of $310,000. What amounts of interest expense and long-term debt should appear on the December 31, 2021, consolidated financial statements of Jay and its subsidiary Zee?

Option D, Interest expense $11,875 Long-term debt $324,525

Ch 4-On January 1, 2020, Grand Haven, Inc., reports net assets of $803,200 although equipment (with a four-year remaining life) having a book value of $454,000 is worth $533,500 and an unrecorded patent is valued at $47,700. Van Buren Corporation pays $744,320 on that date to acquire an 80 percent equity ownership in Grand Haven. If the patent has a remaining life of nine years, at what amount should the patent be reported on Van Buren's consolidated balance sheet at December 31, 2021? $42,400. $29,680. $33,390. $37,100.

Patent FV at 01/01/2020 $47,700 Amorti for 2yrs (9yrs remaining life) (10,600) Patent reported amount 12/31/ 2021 $37,100 An asset acquired in a business combination is initially valued at 100% acquisition-date fair value and subsequently amortized over its useful life

Ch 4- McKinley, Inc., owns 100 percent of Jackson Company's 45,000 voting shares. On June 30, McKinley's internal accounting records show a $192,000 equity method balance for its investment in Jackson. McKinley sells 15,000 of its Jackson shares on the open market for $80,000 on June 30. How should McKinley record the excess of the sale proceeds over its carrying amount for the shares?

Recognize a gain on sale for $16,000.

FASB ASC 805, "Business Combinations," provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be

Recognized as an ordinary gain from a bargain purchase.

ch 8 - For interim financial reporting, a gain from the sale of land occurring in the second quarter should be -Recognized ratably over the last three quarters. -Recognized ratably over all four quarters, with the first quarter being restated. -Disclosed by footnote only in the second quarter. -Recognized in the second quarter.

Recognized in the second quarter.

CH 2-According to the acquisition method of accounting for business combinations, costs paid to attorneys and accountants for services in arranging a merger should be

Recorded as an expense in the period the merger takes place.

ch 12 - The Securities Exchange Act of 1934

Regulates the public trading of previously issued securities through brokers and exchanges.

ch 12 - What is the difference between Regulation S-K and Regulation S-X?

Regulation S-K establishes regulations for nonfinancial information filed with the SEC whereas Regulation S-X prescribes the form and content of financial statements included in SEC filings.

ch 8 - Which of the following items is required to be disclosed by geographic area? -Revenues from external customers -Total assets -Capital expenditures -Profit or loss

Revenues from external customers

ch 8 - Under current U.S. accounting guidelines, which of the following items of information is a company not required to disclose, even if it were material in amount? -Revenues generated from export sales -Revenues generated from sales of its consumer products line of goods -Revenues generated by its Japanese subsidiary -Revenues generated from sales to Walmart

Revenues generated from export sales

ch 8 - Which of the following is a criterion for determining whether an operating segment is separately reportable? -Segment profit or loss is 10 percent or more of consolidated net income. -Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales. -Segment liabilities are 10 percent or more of consolidated liabilities. -Segment assets are 10 percent or more of combined segment assets.

Segment assets are 10 percent or more of combined segment assets.

ch 12- Which of the following statements is true?

The Securities Act of 1933 regulates the initial offering of securities by a company.

ch 10- What is a subsidiary's functional currency?

The currency in which the entity primarily generates and expends cash

CH 2-When negotiating a business acquisition, buyers sometimes agree to pay extra amounts to sellers in the future if performance metrics are achieved over specified time horizons. How should buyers account for such contingent consideration in recording an acquisition?

The fair value of the contingent consideration is included in the overall fair value of the consideration transferred.

ch -12 What is a prospectus?

The first part of a registration statement that a company must furnish to all potential buyers of a new security.

CH 2-An acquired firm's financial records sometimes show goodwill from previous business combinations. How does a parent company account for the preexisting goodwill of its newly acquired subsidiary?

The parent ignores preexisting subsidiary goodwill and allocates the subsidiary's fair value among the separately identifiable assets acquired and liabilities assumed.

CH 3-SK Corporation acquired Neptune, Inc., on January 1, 2020, by issuing 125,000 shares of common stock with a $5 per share par value and a $30 market value. This transaction resulted in recognizing $95,000 of goodwill. SK also agreed to compensate Neptune's former owners with an additional 20,000 shares of SK's common stock if Neptune's 2020 cash flow from operations exceeds $600,000. On February 1, 2021, SK issues the additional 20,000 shares to Neptune's former owners to honor the contingent consideration agreement. Which of the following is true?

The parent's additional paid-in capital from the contingent equity recorded at the acquisition date is reclassified as a regular common stock issue on February 1, 2021.

ch 10 - In comparing the current rate and temporal methods of translation, which of the following is true?

The reported balance of accounts receivable is normally the same under both methods.

ch 8 - In determining whether a particular operating segment is of significant size to warrant disclosure, which of the following is true? -Four tests are applied, and all four must be met. -Three tests are applied, and all three must be met. -Three tests are applied, and only one must be met. -Four tests are applied, and only one must be met.

Three tests are applied, and only one must be met

ch 8- For a U.S.-based company, which of the following would be an acceptable presentation of countries for providing information by geographic area? -United States, Canada and Mexico, Germany, Italy -Canada, Germany, France, All Other Countries -Europe, Asia, Africa -United States, Mexico, Japan, Spain, All Other Countries

United States, Mexico, Japan, Spain, All Other Countries

Ch 5-What is the primary reason we defer financial statement recognition of gross profits on intra-entity sales for goods that remain within the consolidated entity at year-end? -Intra-entity sales result in gross profit overstatements regardless of amounts remaining in ending inventory. - When intra-entity sales remain in ending inventory, control of the goods has not changed. -Revenues and COGS must be recognized for all intra-entity sales regardless of whether the sales are upstream or downstream. -Gross profits must be deferred indefinitely because sales among affiliates always remain in the consolidated group.

When intra-entity sales remain in ending inventory, control of the goods has not changed.

CH 3-When should a consolidated entity recognize a goodwill impairment loss?

When the fair value of a reporting unit with goodwill falls below its carrying amount

ch 9 - Grace Co. had a Chinese yuan payable resulting from imports from China and a Mexican peso receivable resulting from exports to Mexico. Grace recorded foreign exchange losses related to both its yuan payable and peso receivable. Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?

Yuan: increase Peso: decrease