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

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

1) Under the cost method of accounting for a stockinvestment, 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 ofinfluence or control. What method is generally tied to influencedeemed to be insignificant?
A.  Consolidation
B.  Equity Method
C.  Full Disclosure
D.  Cost Method

3) Which of the following observations is consistent with theequity method of accounting?
A.  Dividends declared by the investee are treated as incomeby the investor.
B.  It is used when the investor lacks the ability to exercisesignificant influence over the investee.
C.  It may be used in place of consolidation.
D.  Its primary use is in reporting no subsidiaryinvestments.

4) On January 1, 2007, Yang Corporation acquired 25 % of theoutstanding shares of Spiel Corporation for $100,000 cash. SpielCompany reported net income of $75,000 and paid dividends of$30,000 for both 2007 and 2008. The fair value of shares held byYang was $110,000 and $105,000 on December 31, 2007 and 2008,respectively. What amount will be reported by Yang as balance ininvestment in Spiel on December 31, 2008, if it used the equitymethod of accounting?
A.  $111,250
B.  $118,750
C.  $100,000
D.  $122,500

5) On January 1, 2007, Yang Corporation acquired 25 % of theoutstanding shares of Spiel Corporation for $100,000 cash. SpielCompany reported net income of $75,000 and paid dividends of$30,000 for both 2007 and 2008. The fair value of shares held byYang was $110,000 and $105,000 on December 31, 2007 and 2008,respectively. What amount will be reported by Yang as income fromits investment in Spiel for 2008, if it used the equity method ofaccounting?
A.  $7,500
B.  $11,250
C.  $18,750
D.  $26,250

6) Bista Corporation declares and distributes a cash dividend thatis a result of current earnings. How will the receipt of thosedividends affect the investment account of the investor under eachof the following accounting methods?
7) The primary role of the International Accounting Standards Board(IASB) is to
A.  set international standards and facilitate convergence ofaccounting practices
B.  regulate accountancy throughout Europe acc 440 finalexam
C.  ensure compliance with international accounting standardsand impose sanctions for noncompliant countries or businesses
D.  All of these answers are correct.

8) Which of the following statements about the InternationalAccounting Standards Board (IASB) is accurate?
A.  The IASB’s standards have not been widely adopted in theEuropean Union.
B.  The IASB’s recommendations standards are primarily basedon and grow out of the GAAP of the United States.
C.  The United States’ Financial Accounting Standards Board iscollaborating with the IASB to bring about convergence based onhigh quality standards.
D.  Throughout the 1970s, the competing standards issued bythe IASB and the International Federation of Accountants (IFAC)discouraged early adopters.

9) The Securities and Exchange Commission is working prospectivelytowards requiring public companies in the United States to completetheir financial statements in accordance with

 

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