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

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

In order to calculate the goodwill, we need to first calculate the fair value of the net assets acquired.

Fair value of assets acquired: 
Cash $479,000 
Accounts Receivable $210,000 
Inventory $105,000 
Depreciable Assets less Accumulated Depreciation $600,000 
Note Receivable $100,000 
Total Assets $1,494,000

Fair value of liabilities assumed: 
Accounts Payable $458,000 
Note Payable $325,000 
Deferred Income Tax Liability $125,000 
Total Liabilities $908,000

Fair value of net assets acquired: 
Total assets – Total liabilities = $1,494,000 - $908,000 = $586,000

Purchase price - Fair value of net assets acquired = Goodwill 
$1,200,000 - $586,000 = $614,000

Therefore, the amount of goodwill that CD should record at the acquisition date is $614,000.

Question 3

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 4

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

Accepted Answer

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

Question 5

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 If Ashley Company accounts for the investment...

Question 6

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 7

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 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 ____________________...

Question 9

___________________________________ 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,...

Question 10

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...

Question 11

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...

Question 12

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 13

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...

Question 14

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 exchange rate as of the end of the period for translating monetary assets and liabilities. This is in accordance with ASC 830-10-45-17. The average exchange rate during the period may not accurately represent the exchange rate at the end of the period, and using the historical or acquisition date exchange rate may not reflect the current economic conditions.

Question 15

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

Question 16

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 17

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 18

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 19

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 20

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

The answer of Under which of the following scenarios would...

Quiz 8: Operating Activities

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

Based on the information concerning Record Corp., what amount of goodwill should CD record at the acquisition date?

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

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

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?

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.

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

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

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

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

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

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

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?

Unrealized holding gains or losses that are recognized in the income statement are from securities classified as:

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

Under which of the following scenarios would an entity not be classified as a variable interest entity?