Exam 8: Operating Activities

When the functional currency is the U.S. dollar, financial reporting requires firms to use the ___________________________________ translation method.

Expenditures included in the cost of a long-lived asset are:

Based on the information concerning Snowflake Corp. by what amount would Penguin increase depreciable assets when it consolidates Snowflake on the acquisition date?

Unrealized holding gains or losses that are recognized in the income statement are from securities classified as:

Coffee Corp. purchased 45% of the outstanding shares of Cream Corp. for $1,845,000. The investment allows Coffee to exert significant influence over the operations of Cream. During 2011 Cream recognized net income of $2,500,000 and paid $650,000 in dividends. Discuss how Coffee should account for its investment in Cream and how the information would appear in Coffee's balance sheet, income statement, and cash flow statement.

All of the following are difficulties encountered in determining fair values except :

When a long-lived asset loses its ability to generate future benefits, U.S. GAAP requires firms to write down the assets to their fair values and recognize a(n) ______________________________ in income from continuing operations.

When a foreign entity has the U.S. dollar as its functional currency, it uses which exchange rate to translate monetary assets and liabilities?

For some transactions U.S. GAAP requires that value changes are recognized on the balance sheet and the income statement when they occur, even if not realized. Discuss what types of transactions get this type of treatment and the logic behind this accounting.

When dividends from an investment are recognized as a reduction of the investment account, the investment must have been of which type?

Ashley Company Ashley Company purchased 2,000 of the 10,000 outstanding shares of Judd, Inc.'s common stock for $60,000 on January 1, 2010. During 2010, Judd declared a dividend of $5 per share and reported net income of $75,000. At the end of 2010 the market value of a share of Judd, Inc. stock has increased to $32 per share. If Ashley Company accounts for the investment as a minority, passive investment and classifies it as an available-for-sale security, then the investment will appear in the December 31, 2010 balance sheet at what amount?

Solo Corp. purchased $500,000 of bonds for $515,000 as an investment. If Solo expects to hold the bonds until they mature, the initial investment should be recorded at:

When a company records the cost of cutting down timber, this cost is deemed to be:

Specifically identifiable intangible assets acquired from others may have either a(n) ____________________ useful life or a(n) ____________________ useful life.

When a firm sells a trading security, it recognizes:

Which of the following terms is least consistent with the allocation of costs using a rational and systematic method?

When certain kinds of assets are built that require public welfare and safety expenditures at the end of the asset's life:

When one company acquires another company it may not be able to estimate the potential losses inherent in the acquired assets or the potential liability of the acquired company, for these reasons the acquirer may establish ________________________________________.

When there are two or more investing firms in an entity, how is it determined which entity consolidates the variable interest entity?

For U.S. GAAP, software development costs are capitalized as intangible assets: