ACC 440 Final Exam Complete Complete A+ Answer

ACC 440 Final Exam Complete Complete A+ Answer

ACC 440 Final Exam Complete All Correct Answer

ACC 440 Final Exam Complete All Correct Answer

1) Under the cost method of accounting for a stock investment, the differential

A. is written down if related to limited-life assets
B. is written off

C. is not amortized or written off

D. is amortized

2) Accounting for investments depends in part to the level of influence or control. What method is generally tied to influence deemed to be insignifcant?

A. Consolidation

B. Equity Method

C. Full Disclosure

D. Cost Method

3) Which of the following observations is consistent with the equity method of accounting?

A. Dividends declared by the investee are treated as income by the investor.

B. It is used when the investor lacks the ability to exercise significant influence over the investee.
C. It may be used in place of consolidation.

D. Its primary use is in reporting nonsubsidiary investments.

4) On January 1, 2007, Yang Corporation acquired 25 % of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008, respectively. What amount will be reported by Yang as balance in investment in Spiel on December 31, 2008, if it used the equity method of accounting?

A. $111,250

B. $118,750

C. $100,000

D. $122,500

5) On January 1, 2007, Yang Corporation acquired 25 % of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008, respectively. What amount will be reported by Yang as income from its investment in Spiel for 2008, if it used the equity method of accounting?

A. $7,500

B. $11,250

C. $18,750

D. $26,250

6)
Bista Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?

A. Response A
B. Response B

C. Response C

D. Response D

7) The primary role of the International Accounting Standards Board (IASB) is to

A. set international standards and facilitate convergence of accounting practices

B. regulate accountancy throughout Europe

C. ensure compliance with international accounting standards and impose sanctions for noncompliant countries or businesses
D. All of these answers are correct.

8) Which of the following statements about the International Accounting Standards Board (IASB) is accurate?

A. The IASB’s standards have not been widely adopted in the European Union.

B. The IASB’s recommendations standards are primarily based on and grow out of the GAAP of the United States.
C. The United States’ Financial Accounting Standards Board is collaborating with the IASB to bring about convergence based on high quality standards.
D. Throughout the 1970s, the competing standards issued by the IASB and the International Federation of Accountants (IFAC) discouraged early adopters.

9) The Securities and Exchange Comission is working prospectively towards requiring public companies in the United States to complete their financial statements in accordance with

A. Generally Accepted Accounting Principles

B. Generally Accepted Auditing Standards

C. Technical Bulletins

D. International Financial Reporting Standards

10) On December 5, 2008, Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR), to be paid on January 10, 2009. The transaction is denominated in Saudi riyals. Imperial’s fiscal year ends on December 31, and its reporting currency is the U.S. dollar. The exchange rates are:

Based on this information, what journal entry would Imperial make on December 31, 2008, to revalue foreign currency payable to equivalent U.S. dollar value?

A. Option A

B. Option B

C. Option C

D. Option D

11)
On September 3, 2008, Jackson Corporation purchases goods for a U.S. dollar equivalent of $17,000 from a Swiss company. The transaction is denominated in Swiss francs (SFr). The payment is made on October 10. The exchange rates were September 3: 1 Swiss franc = $.85 October 10: 1 Swiss franc = $.90 What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on October 10?

A. Option A

B. Option C

C. Option B

D. Option D

12) On March 1, 2008, Wilson Corporation sold goods for a U.S. dollar equivalent of $31,000 to a Thai company. The transaction is denominated in Thai bahts. The payment is received on May 10. The exchange rates were:

What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on May 10?

A. Option A

B. Option C

C. Option B

D. Option D

13) If the U.S. dollar is the currency in which the foreign affiliate’s books and records are maintained, and the U.S. dollar is also the functional currency,

A. the translation method should be used for restatement

B. either translation or remeasurement could be used for restatement

C. the remeasurement method should be used for restatement

D. no restatement is required

14) The balance in Newsprint Corp.’s foreign exchange loss account was $10,000 on December 31, 2008, before any necessary year-end adjustment relating to the following:

(1) Newsprint had a $15,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 2008.

(2) Newsprint had an account payable to an unrelated foreign supplier, payable in the supplier’s local currency unit (LCU) on January 15, 2009. The U.S. dollar–equivalent of the payable was $50,000 on the December 1, 2008, invoice date and $53,000 on December 31, 2008.

In Newsprint’s 2008 consolidated income statement, what amount should be included as foreign exchange loss in computing net income, if the U.S. dollar is the functional currency and the remeasurement method is appropriate?

A. $15,000

B. $25,000

C. $10,000

D. $28,000

15) When the local currency of the foreign subsidiary is the functional currency, a foreign subsidiary’s inventory carried at cost would be converted to U.S. dollars by

A. translation using historical exchange rates

B. remeasurement using the current exchange rate

C. remeasurement using historical exchange rates

D. translation using the current exchange rate

16) On January 3, 2009, Jane Company acquired 75 % of Miller Company’s outstanding common stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Miller Company’s net assets at the date of acquisition. Selected balance sheet data at December 31, 2009, are as follows:

What amount should be reported as noncontrolling interest in net assets in Jane Company’s December 31, 2009, consolidated balance sheet?

A. $90,000

B. $36,000

C. $54,000

D. $0

17) Beta Company acquired 100 % of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of $150,000. Immediately prior to the acquisition, Beta reported total assets of $500,000, liabilities of $280,000, and stockholders’ equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders’ equity of $150,000. Included in Standard’s liabilities was an account payable to Beta in the amount of $20,000, which Beta included in its accounts receivable. What amount of total liabilities was reported in the consolidated balance sheet immediately after acquisition?

A. $500,000

B. $280,000

C. $530,000

D. $660,000

18) Beta Company acquired 100 % of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of $150,000. Immediately prior to the acquisition, Beta reported total assets of $500,000, liabilities of $280,000, and stockholders’ equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders’ equity of $150,000. Included in Standard’s liabilities was an account payable to Beta in the amount of $20,000, which Beta included in its accounts receivable. What amount of total assets did Beta report in its balance sheet immediately after the acquisition?

A. $500,000

B. $750,000

C. $650,000

D. $900,000

19) West, Inc. holds 100 % of the common stock of Coast Company, an investment acquired for $680,000. Immediately following the combination, West’s net assets have a book value of $1,150,000 and a fair value of $1,390,000. The book value and the fair value of Coast’s net assets on the date of combination are $400,000 and $550,000, respectively. Immediately following the combination, a consolidated balance sheet is prepared. Goodwill will be reported in the consolidated balance sheet in the amount of

A. $240,000

B. $150,000

C. $130,000

D. $270,000

20) West, Inc. holds 100 % of the common stock of Coast Company, an investment acquired for $680,000. Immediately following the combination, West’s net assets have a book value of $1,150,000 and a fair value of $1,390,000. The book value and the fair value of Coast’s net assets on the date of combination are $400,000 and $550,000, respectively. Immediately following the combination, a consolidated balance sheet is prepared. At what amount will West’s investment in Coast stock be reported in the consolidated balance sheet?

A. $0

B. $440,000

C. $400,000

D. $480,000

21) West, Inc. holds 100 % of the common stock of Coast Company, an investment acquired for $680,000. Immediately following the combination, West’s net assets have a book value of $1,150,000 and a fair value of $1,390,000. The book value and the fair value of Coast’s net assets on the date of combination are $400,000 and $550,000, respectively. Immediately following the combination, a consolidated balance sheet is prepared. What will be the amount of net assets reported in the consolidated balance sheet, prepared immediately following the combination?

A. $1,150,000

B. $1,700,000

C. $1,550,000

D. $1,830,000

22) Elvis Company purchases inventory for $70,000 on March 19, 2008, and sells it to Graceland Corporation for $95,000 on May 14, 2008. Graceland still holds the inventory on December 31, 2008, and determines that its market value (replacement cost) is $82,000 at that time. Graceland writes the inventory down from $95,000 to its lower market value of $82,000 at the end of the year. Elvis owns 75 % of Graceland. Based on this information, what amount of cost of goods sold should be eliminated in the consolidation workpaper for 2008?

A. $82,000

B. $95,000

C. $70,000

D. $60,000

23) ABC Corporation owns 75 % of XYZ Company’s voting shares. During 2008, ABC produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to XYZ for $90 each. XYZ sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 2008, and sold the remainder in early 2009 for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 2008?

A. $2,765,000

B. $1,422,000

C. $1,620,000

D. $2,963,000

24) On December 31, 2008, Melkor Corporation acquired 80 % of Sydney Company’s common stock for $160,000. At that date, the fair value of the noncontrolling interest was $40,000. Of the $75,000 differential, $10,000 related to the increased value of Sydney’s inventory, $20,000 related to the increased value of its land, and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination. Sydney sold all inventory it held at the end of 2008 during 2009. The land to which the differential related was also sold during 2009 for a large gain. At the date of combination, Sydney reported retained earnings of $75,000 and common stock outstanding of $50,000. In 2009, Sydney reported net income of $60,000, but paid no dividends. Melkor accounts for its investment in Sydney using the equity method. What is the elimination entry made to assign income to noncontrolling interest in the workpaper to prepare a full set of consolidated financial statements for the year 2009?

A. Option A

B. Option C

C. Option B

D. Option D

25) Bristle Corporation acquired 75 % of Silver Corporation’s common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver’s balance sheet immediately before the combination reflected the following balances:

A careful review of the fair value of Silver’s assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000, respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. What amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?

A. $65,000

B. $60,000

C. $0

D. $70,000

26) Bristle Corporation acquired 75 % of Silver Corporation’s common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver’s balance sheet immediately before the combination reflected the following balances:

A careful review of the fair value of Silver’s assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000, respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. What amount of land will be included in the consolidated balance sheet immediately following the acquisition?

A. $10,000

B. $100,000

C. $0

D. $90,000

27) On January 1, 2008, Wilhelm Corporation acquired 90 % of Kaiser Company’s voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 % of the book value of Kaiser at that date. Wilhelm uses the equity method in accounting for its ownership of Kaiser. On December 31, 2009, the trial balances of the two companies are as follows:

What amount would be reported as total assets in the consolidated balance sheet at December 31, 2009?

A. $712,000

B. $1,102,000

C. $805,000

D. $742,000

28) ABC Corporation purchased land on January 1, 2006, for $50,000. On July 15, 2008, it sold the land to its subsidiary, XYZ Corporation, for $70,000. ABC owns 80 % of XYZ’s voting shares. What will be the workpaper eliminating entry to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 2009?

A. Option B

B. Option D

C. Option A

D. Option C

29) Sky Corporation owns 75 % of Earth Company’s stock. On July 1, 2008, Sky sold a building to Earth for $33,000. Sky had purchased this building on January 1, 2006, for $36,000. The building’s original eight-year estimated total economic life remains unchanged. Both companies use straight-line depreciation. The equipment’s residual value is considered negligible. Based on this information, in the preparation of the 2009 consolidated income statement, depreciation expense will be

A. credited for $750 the eliminating entries

B. debited for $1,500 in the eliminating entries

C. debited for $750 in the eliminating entries

D. credited for $1,500 in the eliminating entries

30) Sky Corporation owns 75 % of Earth Company’s stock. On July 1, 2008, Sky sold a building to Earth for $33,000. Sky had purchased this building on January 1, 2006, for $36,000. The building’s original eight-year estimated total economic life remains unchanged. Both companies use straight-line depreciation. The equipment’s residual value is considered negligible. Based on this information, in the preparation of the 2008 consolidated financial statements, building will be _____ in the eliminating entries.

A. debited for $36,000

B. debited for $3,000

C. debited for $33,000

D. credited for $36,000

31) Sigma Company develops and markets organic food products to natural foods retailers. The following information is available for the company for the year 2008:

Based on the preceding information, what amount will be reported by the company as cash received from customers during the year?

A. $475,000

B. $425,000

C. $455,000

D. $450,000

32) Tower Corporation’s controller has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for the year ended December 31, 2009. Tower owns 80 % of Network Corporation’s stock, which it acquired at underlying book value on November 1, 2006. At that date, the fair value of the noncontrolling interest was equal to 20 % of Network Corporation’s book value. The following information is available:

Consolidated net income for 2009 was $160,000.
Network reported net income of $50,000 for 2009.
Tower paid dividends of $30,000 in 2009.
Network paid dividends of $10,000 in 2009.
Tower issued common stock on February, 18, 2009, for a total of $100,000.
Consolidated wages payable decreased by $6,000 in 2009.
Consolidated depreciation expense for the year was $15,000.
Consolidated accounts receivable decreased by $20,000 in 2009.
Bonds payable of Tower with a book value of $102,000 were retired for $100,000 on December 31, 2009.
Consolidated amortization expense on patents was $10,000 for 2009.
Tower sold land that it had purchased for $75,000 to a nonaffiliate for $80,000 on June 10, 2009.
Consolidated accounts payable decreased by $7,000 during 2009.
Total purchases of equipment by Tower and Network during 2009 were $180,000.
Consolidated inventory increased by $36,000 during 2009.

There were no intercompany transfers between Tower and Network in 2009 or prior years except for Network’s payment of dividends. Tower uses the indirect method in preparing its cash flow statement.

Based on the preceding information, what amount will be reported in the consolidated cash flow statement as net cash used in investing activities for 2009?

A. $100,000

B. $110,000

C. $180,000

D. $255,000

33) Sigma Company develops and markets organic food products to natural foods retailers. The following information is available for the company for the year 2008:

Based on the preceding information, what amount will be reported by the company as cash flows from operating activities for 2008?

A. $133,000

B. $207,000

C. $175,000

D. $167,000

34) Company X has net income of $100,000 and $150,000 in net income for 2008 and 2009, respectively. Weighted average number of shares outstanding is 1,000,000 for both 2008 and 2009. What is basic earnings per share for 2009?

A. .05

B. 15

C. .15

D. .07

35) Electric Corporation holds 80 % of Utility Company’s voting common shares, acquired at book values, but none of its preferred shares. At the date of acquisition, the fair value of the noncontrolling interest was equal to 20 % of the book value of Utility Company. Summary balance sheets for the companies on December 31, 2008, are as follows:

Neither of the preferred issues is convertible. Electric’s preferred pays an 8 % annual dividend, and Utility’s preferred pays a 12 % dividend. Utility reported net income of $30,000 and paid a total of $10,000 of dividends in 2008. Electric reported income from its separate operations of $70,000 and paid total dividends of $25,000 in 2008. Based on this information, what is the consolidated earnings per share for 2008?

A. 4.14

B. 4.55

C. 4.46

D. 4.35

36) Flyer Corporation holds 90 % of Kite Company’s common shares but none of its preferred shares. On the date of acquisition, the fair value of the noncontrolling interest was equal to 10 % of the book value of Kite Company. Summary balance sheets for the companies on December 31, 2008, are as follows:

Flyer’s preferred pays an 8 % annual dividend, and Kite’s preferred pays a 10 % dividend. Kite’s preferred shares can be converted into 20,000 shares of common stock at any time. Kite reported net income of $35,000 and paid a total of $10,000 of dividends in 2008. Flyer reported income from its separate operations of $80,000 and paid total dividends of $25,000 in 2008.

Based on the information provided, what is the basic earnings per share for the consolidated entity for 2008?

A. 5.24

B. 5.18

C. 5.04

D. 3.80

For getting the instant digital download solution, Please click on the “PURCHASE” link below to get ACC 440 Final Exam Complete Answer

For instant digital download of the above solution or tutorial, please click on the below link and make an instant purchase. You will be guided to the PAYPAL Standard payment page wherein you can pay and you will receive an email immediately with a download link.

In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@bizcourseqa.com

ACC 440 Final Exam Complete Answer