Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Textbook Question
Chapter 1, Problem 13Q
In a stock acquisition accounted for by the equity method, a portion of the purchase price often is attributed to
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Explain the adjustments made in the equity method when the fair value of the net assets underlying an investment exceeds their book value at acquisition.
Which of the following results in an increase in the Equity in the Investee Income acct. when applying the equity method?
Amortizations of purchase price over book value on date of purchase
Amortization since date of purchase of purchase price over book value on date of purchase
Sale of portion of the investment at a gain to the investor
Investors share of gross profit from intra-entity inventory sale for the prior year
Sale of a portion of the investment at a loss
Where are changes in fair value for available for sale securities reported?
Group of answer choices
as a prior period adjustment to retained earnings on the balance sheet
as a component of accumulated other comprehensive income on the balance sheet
as operating income or loss on the income statement
as income or loss from peripheral activities on the income statement
Chapter 1 Solutions
Advanced Accounting
Ch. 1 - What advantages does a company achieve when it...Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 4QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 6QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 8QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 14QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8PCh. 1 - Evan Company reports net income of $140,000 each...Ch. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 16PCh. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Prob. 23PCh. 1 - Matthew, Inc., owns 30 percent of the outstanding...Ch. 1 - Prob. 26PCh. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - Prob. 30PCh. 1 - Prob. 31P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Describe the equity method and the cost method of investor accounting for acquisitionsarrow_forwardWhich of the following accounting methods is used to account for controlling interest investments? A. cost method B. discounted cash flow method C. consolidation method D. acquisition methoarrow_forwardFor fi nancial assets classifi ed as trading securities, how are unrealized gains and losses refl ected in shareholders’ equity? C . Th ey are a component of accumulated other comprehensive income.arrow_forward
- Why are unrealized gains and losses on available-for-sale securities not reported in theincome statement, but instead are reported in other comprehensive income, and thenshown in accumulated other comprehensive income (AOCI) in the balance sheet?arrow_forwardStatement I: The equity securities issued as part of the consideration transferred shall be measured at the fair value of the shares at the date of acquisition.Statement II: The goodwill in the books of the acquiree shall be measured at its fair value at the date of acquisition. a. True, False b. False, True c. True, True d. False, Falsearrow_forwardShare-based payment transactions settled in equity are ? a) Measured at grant date fair value b) Remeasured each period c) Recorded at intrinsic value d) Measured at exercise datearrow_forward
- choose the correct answer: Equity security acquired for trading should be measured at reporting date a. cost, being the purchase price b. cost, being the purchase price plus transaction costs c. fair value, with change in FV taken through profit or loss. d. fair value, with change in FV taken through other comprehensive income.arrow_forwardInvestors sometimes transfer assets to investee’s shareholders other than cash and investor’s stock. How should theses transferred assets be accounted for the acquisition?arrow_forward37. When an entity reduces its interest in an investment in equity securities accounted for by the equity method and changes in to the fair value method. What is the initial measurement of the investment for purposes of subsequent changes in market value? a. Carrying amount at the date of changea. Original costb. Market value at the date of changec. Market value at the date of acquisitionarrow_forward
- In a stock acquisition that results to goodwill, the acquirer should classify it in its separate financial statements as a/an: a. Equity b. Asset c. Liability d. None of the abovearrow_forwardMarketable securities are accounted for at their current fair value using mark-to-market accounting. Discuss why mark-to-market accounting is superior to accounting for mar- ketable securities at their historical cost. Should mark-to-market accounting be adopted to account for all assets on the balance sheet? Why or why not?arrow_forwardFor which of the following securities will unrealized holding gains or losses be recorded as other comprehensive income? Enter 1, 2, 3, or 4 that represents the correct answer. Debt investments, trading. Debt investments, held-to-maturity. Equity investments, trading. Equity investments, available-for-sale.arrow_forward
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