Practice Exam I

Practice Exam I - PRACTICE EXAM I ADVANCED ACCOUNTING SPRING 2007 MULTIPLE CHOICE 1 Muttonbird Inc has 90 ownership of Beach Co but would not

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PRACTICE EXAM I ADVANCED ACCOUNTING SPRING 2007 MULTIPLE CHOICE 1. Muttonbird Inc. has 90% ownership of Beach Co., but would not consolidate Beach under FASB 94 if: a. Beach is in a regulated industry. b. Muttonbird expects to sell Beach within a year. c. Muttonbird uses the equity method for Beach. d. Beach is in a foreign country and records its books in a foreign currency. 2. Which one of the following will result in an increase to consolidated Retained Earnings? a. An increase in the value of goodwill subsequent to the parent's date of acquisition. b. The depreciation of a $10,000 excess in the fair value of equipment over its recorded book value. c. The sale of inventory by a subsidiary that had a $10,000 excess in fair value over recorded book value on the parent's date of acquisition. d. The amortization of a $10,000 excess in the fair value of a note payable over its recorded book value. 3. Scrubwren Corporation acquired a 100% interest in Heath Company for $1,780,000 when Heath had no liabilities. The book values and fair values of Heath's assets were: Book Value Fair Value Current assets $ 400,000 $ 700,000 Equipment 200,000 400,000 600,000 800,000 Total assets $1,200,000 $1,900,000 Immediately following the acquisition, equipment will be included on the consolidated balance sheet at: a. $300,000. b. $340,000. c. $360,000. d. $400,000.
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4. If Griffon Inc. has a 30% ownership in Duck Corporation, Griffon should use the equity method under which of the following circumstances: a. Diverse ownership. b. Surrender of significant stockholder rights by agreement between Griffon and Duck. c. Lack of membership on Duck’s board of directors. d. Temporary ownership by Griffon. 5. The investment in equity investee account would not be reported on a consolidated balance sheet if: a. the cost method is used. b. the investee has extraordinary or other “below the line” items. c. the investor company is amortizing cost-book value differentials. d. the investor company owns greater than 50% of the voting stock of the investee. 6. In a period in which an impairment loss occurs, SFAS No. 142 requires each of the following note disclosures except a. a description of the circumstances leading to the impairment. b.
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This test prep was uploaded on 04/05/2008 for the course ACCT 401 taught by Professor Schoderbek during the Spring '08 term at Rutgers.

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Practice Exam I - PRACTICE EXAM I ADVANCED ACCOUNTING SPRING 2007 MULTIPLE CHOICE 1 Muttonbird Inc has 90 ownership of Beach Co but would not

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