Question 1

Specifically identifiable intangible assets acquired from others may have either a(n)____________________ useful life or a(n)____________________ useful life.

Accepted Answer

The answer of Specifically identifiable intangible assets acquired from others...

Question 2

When a foreign entity has the U.S.dollar as its functional currency,it uses which exchange rate to translate monetary assets and liabilities?
A) the average exchange rate during the period
B) the end of the period exchange rate
C) the historical exchange rate
D) the exchange rate on the date the asset or liability was obtained

Accepted Answer

When a foreign entity has the U.S. dollar as its functional currency, it should use the end of period exchange rate to translate monetary assets and liabilities because they are considered to be fixed and measurable at the end of each accounting period. This is in accordance with the FASB ASC 830-10-45-9.

Question 3

Record Corporation
CD Inc.acquires 100% of the outstanding shares of Record Corp.for $1,200,000 and accounts for the transaction using the purchase method.Record Corp's balance sheet at the date of acquisition appears below:
 
-Based on the information concerning Record Corp. ,what amount of goodwill should CD record at the acquisition date?
A) ($294,000)
B) $614,000
C) $1,200,000
D) $350,000

Accepted Answer

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. In this case, the purchase price is $1,200,000 and the fair value of the net assets acquired is $586,000 ($415,000 + $78,000 + $93,000). Therefore, the goodwill is $614,000 ($1,200,000 - $586,000).

Question 4

When a foreign entity has the foreign currency as its functional currency,it uses which exchange rate to translate revenues and expenses in the income statement?
A) the average exchange rate during the period
B) the end of the period exchange rate
C) the historical exchange rate
D) the exchange rate on the date the asset or liability was obtained

Accepted Answer

The answer of When a foreign entity has the foreign...

Question 5

The ____________________ method views a corporate acquisition as conceptually identical to the purchase of any single asset.

Accepted Answer

The answer of The ____________________ method views a corporate acquisition...

Question 6

Olivia Co.owns 4,000 of the 10,000 outstanding shares of Hobbitt Corp.common stock and exercises significant influence over the company.During 2011,Hobbitt earns $80,000 and pays cash dividends of $30,000.For the year ended December 31,2011,Olivia should report income related to the investment equal to:
A) $0
B) $12,000
C) $32,000
D) $20,000

Accepted Answer

40%*$80,000= $32,000

Question 7

Most publicly traded firms in the United States use the _________________________ method of depreciation for ______________ statement purposes.

Accepted Answer

The answer of Most publicly traded firms in the United...

Question 8

U.S.GAAP stipulates that firms should ____________________ expenditures that increase the service potential of an asset beyond that originally anticipated

Accepted Answer

The answer of U.S.GAAP stipulates that firms should ____________________ expenditures...

Question 9

Record Corporation
CD Inc.acquires 100% of the outstanding shares of Record Corp.for $1,200,000 and accounts for the transaction using the purchase method.Record Corp's balance sheet at the date of acquisition appears below:
 
-Based on the information concerning Record Corp. ,what is the market value of the company's shareholders' equity at the acquisition date?
A) $0
B) $908,000
C) $1,200,000
D) $1,458,000

Accepted Answer

The answer of Record Corporation
CD Inc.acquires 100% of the outstanding...

Question 10

Firms recognize a(n)______________________________ when the carrying amount of a fixed asset exceeds its fair value and is deemed not recoverable.

Accepted Answer

The answer of Firms recognize a(n)______________________________ when the carrying amount...

Question 11

Firms that capitalize routine maintenance and repair charges will end up with the result of having the current period's income being ____________________.

Accepted Answer

The answer of Firms that capitalize routine maintenance and repair...

Question 12

Ashley Company
Ashley Company purchased 2,000 of the 10,000 outstanding shares of Judd,Inc.'s common stock for $60,000 on January 1,2010.During 2010,Judd declared a dividend of $5 per share and reported net income of $75,000.At the end of 2010 the market value of a share of Judd,Inc.stock has increased to $32 per share.
-If Ashley Company accounts for the investment as a minority,passive and classifies the investment as an available-for-sale investment,then Ashley will recognize what amount of 2010 income from the investment?
A) $4,000
B) $10,000
C) $25,000
D) $15,000

Accepted Answer

The answer of Ashley Company
Ashley Company purchased 2,000 of the...

Question 13

Unrealized holding gains or losses that are recognized in the income statement are from securities classified as:
A) trading
B) available for sale
C) held-to-maturity
D) equity

Accepted Answer

The answer of Unrealized holding gains or losses that are...

Question 14

___________________________________ include trade and brand names,trademarks,patents,copyrights,franchise rights,customer lists and goodwill.

Accepted Answer

The answer of ___________________________________ include trade and brand names,trademarks,patents,copyrights,franchise rights,customer...

Question 15

When a long-lived asset loses its ability to generate future benefits,U.S.GAAP requires firms to write down the assets to their fair values and recognize a(n)______________________________ in income from continuing operations.

Accepted Answer

The answer of When a long-lived asset loses its ability...

Question 16

When an intangible asset has a finite life,it is reported on the balance sheet at original cost with no ____________ taken.

Accepted Answer

The answer of When an intangible asset has a finite...

Question 17

Under U.S.GAAP,when an asset's carrying amount is deemed _______________,the asset is considered impaired.

Accepted Answer

The answer of Under U.S.GAAP,when an asset's carrying amount is...

Question 18

Under which of the following scenarios would an entity not be classified as a variable interest entity?
A) The equity investing firms do not have the obligation to absorb the expected losses of the variable interest entity if they occur.
B) The investing firms do not have the right to receive the expected residual returns of the variable interest entity if they occur.
C) The total equity investment at risk is sufficient to permit the variable interest entity to finance its activities without additional subordinated financial support from other parties.
D) The equity investing firms do not have the direct or indirect ability to make decisions about the variable interest entity's activities through voting rights or similar rights.

Accepted Answer

If the total equity investment at risk is sufficient to permit the variable interest entity to finance its activities without additional subordinated financial support from other parties, then the entity would not be classified as a variable interest entity. The other scenarios would result in the entity being classified as a variable interest entity.

Question 19

Financial reporting requires firms to ____________________ immediately all R&D costs incurred internally.

Accepted Answer

The answer of Financial reporting requires firms to ____________________ immediately...

Question 20

Olivia Co.owns 5,600 of the 14,000 outstanding shares of Hobbitt Corp.common stock and exercises significant influence over the company.During 2011,Hobbitt earns $90,000 and pays cash dividends of $25,000.If the beginning balance in the investment account was $190,000,the balance at December 31,2011 should be:
A) $192,000
B) $172,000
C) $180,000
D) $216,000

Accepted Answer

$190,000+40%*$90,000-40%*$25,000

Quiz 8: Investing Activities

Specifically identifiable intangible assets acquired from others may have either a(n) useful life or a(n) useful life.

When a foreign entity has the U.S.dollar as its functional currency,it uses which exchange rate to translate monetary assets and liabilities?

When a foreign entity has the foreign currency as its functional currency,it uses which exchange rate to translate revenues and expenses in the income statement?