Question 1

Consolidated financial statements combine the financial statements of the parent company and its subsidiaries.

Accepted Answer

A) True 
 B)False  True

Question 2

Marathon Corporation owns 500 shares of Mini Company's common stock.Mini Company has 100,000 shares of common stock outstanding.Marathon Corporation is the ________ and Mini Company is the ________.

Accepted Answer

A) investee; investor 
B) investor; investee 
C) parent company; subsidiary company 
D) controlling company; noncontrolling company 
A) investee; investor 
B) investor; investee 
C) parent company; subsidiary company 
D) controlling company; noncontrolling company B

Question 3

The present value of a future amount is found by discounting.

Accepted Answer

A) True 
 B)False  True

Question 4

The carrying amount of bonds at maturity should be equal to the face value of the bonds.

Accepted Answer

A) True 
 B)False

Question 5

If the stated rate of interest on a bond exceeds the market rate of interest,the bond will sell at a premium.

Accepted Answer

A) True 
 B)False

Question 6

On January 1,2015,Dodge Company purchases $100,000,6% bonds at a price of 90.4 and a maturity date of January 1,2025.Dodge Company intends to hold the bonds until their maturity date.Interest is paid semiannually,on January 1 and July 1.Dodge Company has a calendar year end.The entry to record the purchase of the bond investment on January 1,2015,is:

Accepted Answer

A) debit Held-to-Maturity Investment in Bonds for $100,000 and credit Cash for $100,000. 
B) debit Held-to-Maturity Investment in Bonds for $90,400 and credit Cash for $90,400. 
C) debit Cash for $100,000 and credit Bonds Payable for $100,000. 
D) debit Cash for $90,400 and credit Investment in Bonds for $90,400. 
A) debit Held-to-Maturity Investment in Bonds for $100,000 and credit Cash for $100,000. 
B) debit Held-to-Maturity Investment in Bonds for $90,400 and credit Cash for $90,400. 
C) debit Cash for $100,000 and credit Bonds Payable for $100,000. 
D) debit Cash for $90,400 and credit Investment in Bonds for $90,400.

Question 7

The balance in the Unrealized Gain on Investment in Available-for-Sale Securities account is reported on the ________.The investments are classified as long-term.

Accepted Answer

A) balance sheet as a contra asset account 
B) income statement under Other Expenses and Losses 
C) balance sheet,as part of the stockholders' equity section 
D) balance sheet,as part of Long-Term Investments 
A) balance sheet as a contra asset account 
B) income statement under Other Expenses and Losses 
C) balance sheet,as part of the stockholders' equity section 
D) balance sheet,as part of Long-Term Investments

Question 8

Goodwill arises when a parent company must pay more to acquire a subsidiary company than the fair value of the subsidiary's net assets.

Accepted Answer

A) True 
 B)False

Question 9

A U.S.company sells merchandise on account to a German company.The German company may settle the transaction in euros.

Accepted Answer

A) True 
 B)False

Question 10

The present value of a single amount in the future can be determined using a present value of $1 table.

Accepted Answer

A) True 
 B)False

Question 11

A company has a long-term investment in available-for-sale securities.The Unrealized Gain on (long-term)Investment in Available-for-Sale Securities is reported as:

Accepted Answer

A) Other Comprehensive Income in the Statement of Comprehensive Income. 
B) Other Gains on the income statement. 
C) Accumulated Other Comprehensive Income on the balance sheet. 
D) A and C. 
A) Other Comprehensive Income in the Statement of Comprehensive Income. 
B) Other Gains on the income statement. 
C) Accumulated Other Comprehensive Income on the balance sheet. 
D) A and C.

Question 12

Investments are classified as available-for-sale securities,trading securities or held-to-maturity securities.

Accepted Answer

A) True 
 B)False

Question 13

The journal entry to record the sale of a long-term available-for-sale investment includes a Gain on Sale of Investment in Available-for-Sale Securities for $500.The income statement will report:

Accepted Answer

A) other comprehensive income of $500. 
B) other income and gains of $500. 
C) an extraordinary gain of $500. 
D) accumulated other comprehensive income of $500. 
A) other comprehensive income of $500. 
B) other income and gains of $500. 
C) an extraordinary gain of $500. 
D) accumulated other comprehensive income of $500.

Question 14

The fair value of a long-term available-for-sale security has decreased from the last carrying value.The journal entry to record this decrease will include:

Accepted Answer

A) a debit to the Allowance to Adjust Investment in Available-for-Sale Securities to Market. 
B) a credit to the Allowance to Adjust Investment in Available-for-Sale Securities to Market. 
C) a credit to the Unrealized Loss on Investment in Available-for-Sale Securities. 
D) a debit to the Unrealized Gain on Investment in Available-for-Sale Securities. 
A) a debit to the Allowance to Adjust Investment in Available-for-Sale Securities to Market. 
B) a credit to the Allowance to Adjust Investment in Available-for-Sale Securities to Market. 
C) a credit to the Unrealized Loss on Investment in Available-for-Sale Securities. 
D) a debit to the Unrealized Gain on Investment in Available-for-Sale Securities.

Question 15

The cash paid to purchase a held-to-maturity investment in bonds is reported on the statement of cash flows as a(n):

Accepted Answer

A) increase in financing activities. 
B) decrease in financing activities. 
C) increase in investing activities. 
D) decrease in investing activities. 
A) increase in financing activities. 
B) decrease in financing activities. 
C) increase in investing activities. 
D) decrease in investing activities.

Question 16

Goodwill occurs when a parent company:

Accepted Answer

A) pays less to acquire a subsidiary company than the market value of the subsidiary's net assets. 
B) pays less to acquire a subsidiary company than the book value of the subsidiary's net assets. 
C) pays more to acquire a subsidiary company than the market value of the subsidiary's net assets. 
D) pays more to acquire a subsidiary company than the book value of the subsidiary's net assets. 
A) pays less to acquire a subsidiary company than the market value of the subsidiary's net assets. 
B) pays less to acquire a subsidiary company than the book value of the subsidiary's net assets. 
C) pays more to acquire a subsidiary company than the market value of the subsidiary's net assets. 
D) pays more to acquire a subsidiary company than the book value of the subsidiary's net assets.

Question 17

If 15% of the common stock of an investee company is purchased as a long-term investment,the appropriate method of accounting for the investment is:

Accepted Answer

A) the equity method. 
B) the consolidation method. 
C) the available-for-sale(fair value)method. 
D) the lower of cost or market method. 
A) the equity method. 
B) the consolidation method. 
C) the available-for-sale(fair value)method. 
D) the lower of cost or market method.

Question 18

How does the receipt of a stock dividend on long-term Investment in Available-for-Sale Securities affect the balance sheet?

Accepted Answer

A) Increases assets and increases paid-in-capital 
B) Increases assets and decreases stockholders' equity 
C) Increases assets and increases retained earnings 
D) Has no effect on assets or total stockholders' equity 
A) Increases assets and increases paid-in-capital 
B) Increases assets and decreases stockholders' equity 
C) Increases assets and increases retained earnings 
D) Has no effect on assets or total stockholders' equity

Question 19

The stated interest rate on a bond determines the amount of interest the issuer is expected to pay annually or semiannually.

Accepted Answer

A) True 
 B)False

Question 20

Colassal Company paid $100,000 for all the common stock of Glass Company.Glass Company borrowed $20,000 from Colassal Company on a note payable.The following information is available:
   Required:
Prepare the elimination entries.

Accepted Answer

The answer of Colassal Company paid $100,000 for all the...

Consolidated financial statements combine the financial statements of the parent company and its subsidiaries.

Marathon Corporation owns 500 shares of Mini Company's common stock.Mini Company has 100,000 shares of common stock outstanding.Marathon Corporation is the and Mini Company is the .

The present value of a future amount is found by discounting.

The carrying amount of bonds at maturity should be equal to the face value of the bonds.

If the stated rate of interest on a bond exceeds the market rate of interest,the bond will sell at a premium.

The balance in the Unrealized Gain on Investment in Available-for-Sale Securities account is reported on the ________.The investments are classified as long-term.

Goodwill arises when a parent company must pay more to acquire a subsidiary company than the fair value of the subsidiary's net assets.

A U.S.company sells merchandise on account to a German company.The German company may settle the transaction in euros.

The present value of a single amount in the future can be determined using a present value of $1 table.

A company has a long-term investment in available-for-sale securities.The Unrealized Gain on (long-term)Investment in Available-for-Sale Securities is reported as:

Investments are classified as available-for-sale securities,trading securities or held-to-maturity securities.

The journal entry to record the sale of a long-term available-for-sale investment includes a Gain on Sale of Investment in Available-for-Sale Securities for $500.The income statement will report:

The fair value of a long-term available-for-sale security has decreased from the last carrying value.The journal entry to record this decrease will include:

The cash paid to purchase a held-to-maturity investment in bonds is reported on the statement of cash flows as a(n):

Goodwill occurs when a parent company:

If 15% of the common stock of an investee company is purchased as a long-term investment,the appropriate method of accounting for the investment is:

How does the receipt of a stock dividend on long-term Investment in Available-for-Sale Securities affect the balance sheet?

The stated interest rate on a bond determines the amount of interest the issuer is expected to pay annually or semiannually.

Colassal Company paid $100,000 for all the common stock of Glass Company.Glass Company borrowed $20,000 from Colassal Company on a note payable.The following information is available: Required: Prepare the elimination entries.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 8: Long-Term Investments: The Time Value of Money

Consolidated financial statements combine the financial statements of the parent company and its subsidiaries.

Marathon Corporation owns 500 shares of Mini Company's common stock.Mini Company has 100,000 shares of common stock outstanding.Marathon Corporation is the ________ and Mini Company is the ________.

The present value of a future amount is found by discounting.

The carrying amount of bonds at maturity should be equal to the face value of the bonds.

If the stated rate of interest on a bond exceeds the market rate of interest,the bond will sell at a premium.

The balance in the Unrealized Gain on Investment in Available-for-Sale Securities account is reported on the ________.The investments are classified as long-term.

Goodwill arises when a parent company must pay more to acquire a subsidiary company than the fair value of the subsidiary's net assets.

A U.S.company sells merchandise on account to a German company.The German company may settle the transaction in euros.

The present value of a single amount in the future can be determined using a present value of $1 table.

A company has a long-term investment in available-for-sale securities.The Unrealized Gain on (long-term)Investment in Available-for-Sale Securities is reported as:

Investments are classified as available-for-sale securities,trading securities or held-to-maturity securities.

The journal entry to record the sale of a long-term available-for-sale investment includes a Gain on Sale of Investment in Available-for-Sale Securities for $500.The income statement will report:

The fair value of a long-term available-for-sale security has decreased from the last carrying value.The journal entry to record this decrease will include:

The cash paid to purchase a held-to-maturity investment in bonds is reported on the statement of cash flows as a(n):

Goodwill occurs when a parent company:

If 15% of the common stock of an investee company is purchased as a long-term investment,the appropriate method of accounting for the investment is:

How does the receipt of a stock dividend on long-term Investment in Available-for-Sale Securities affect the balance sheet?

The stated interest rate on a bond determines the amount of interest the issuer is expected to pay annually or semiannually.

Colassal Company paid $100,000 for all the common stock of Glass Company.Glass Company borrowed $20,000 from Colassal Company on a note payable.The following information is available: Required: Prepare the elimination entries.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters

Marathon Corporation owns 500 shares of Mini Company's common stock.Mini Company has 100,000 shares of common stock outstanding.Marathon Corporation is the and Mini Company is the .