Question 19 An investor uses the cost method of accounting for its investment in common stock. During the current year, the investor received $25,000 in dividends, an amount that exceeded the investor's share of the investee company's undistributed income since the investment was acquired. The investor should report dividend income of what amount? Answers: A. $25,000 as a reduction in the investment account B. $25,000 less the amount that is not in excess of its share of undistributed income since the investment was acquired C. $25,000 less recognized earnings D. $25,000 less the amount in excess of its share of undistributed income since the investment was acquired
- Question 19
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An investor uses the cost method of accounting for its investment in common stock. During the current year, the investor received $25,000 in dividends, an amount that exceeded the investor's share of the investee company's undistributed income since the investment was acquired. The investor should report dividend income of what amount? |
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- Question 20
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Pitch Co. paid $50,000 in fees to its accountants and lawyers in acquiring Slope Company. Pitch will treat the $50,000 as |
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- Question 21
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What is the amount of total assets? |
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- Question 22
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A parent company uses the equity method to account for its wholly-owned subsidiary, but has applied it incorrectly. In each of the past four full years, the company adjusted the Investment account when it received dividends from the subsidiary but did not adjust the account for any of the subsidiary's profits. The subsidiary had four years of profits and paid yearly dividends in amounts that were less than reported net incomes. Which one of the following statements is correct if the parent company discovered its mistake at the end of the fourth year, and is now preparing consolidation working papers? |
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- Question 23
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On June 1, 2014, Puell Company acquired 100% of the stock of Sorrell Inc. On this date, Puell had Retained Earnings of $100,000 and Sorrell had Retained Earnings of $50,000. On December 31, 2014, Puell had Retained Earnings of $120,000 and Sorrell had Retained Earnings of $60,000. The amount of Retained Earnings that appeared in the December 31, 2014 consolidated balance sheet was |
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- Question 24
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) Perth Corporation acquired a 100% interest in Sansone Company for $1,600,000 when Sansone had no liabilities. The book values and fair values of Sansone's assets were:
Book Value Fair Value Current assets $350,000 $400,000 Equipment 150,000 210,000 Land & buildings 570,000 590,000 Total assets $1,070,000 $1,200,000
Immediately following the acquisition, equipment will be included on the consolidated balance sheet at |
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- Question 25
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Pigeon Corporation acquired an 80% interest in Statue Company on January 1, 2014, for $90,000 cash when Statue had Capital Stock of $60,000 and Retained Earnings of $40,000. The fair value/book value differential of $12,500 was attributable to equipment with a 10-year (straight-line) life. Statue suffered a $10,000 net loss in 2014 and paid no dividends. At year-end 2014, Statue owed Pigeon $18,000 on account. Pigeon's separate income for 2011 was $150,000. Controlling interest share of consolidated net income for 2014 was |
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- Question 26
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What amount of total liabilities will be reported? |
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