review for test 2 - All of the following are acceptable...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
All of the following are acceptable methods to account for a majority-owned investment in subsidiary except The equity method. The initial value method. The partial equity method. The fair-value method. Book value method. Under the equity method of accounting for an investment, The investment account remains at initial value. Dividends received are recorded as revenue. Goodwill is amortized over 20 years. Income reported by the subsidiary increases the investment account. Dividends received increase the investment account. Under the partial equity method of accounting for an investment, The investment account remains at initial value. Dividends received are recorded as revenue. The allocations for excess fair value allocations over book value of net assets at date of acquisition are applied over their useful lives to reduce the investment account. Amortization of the excess of fair value allocations over book value is ignored in regard to the investment account. Dividends received increase the investment account. Under the initial value method, when accounting for an investment in a subsidiary, Dividends received by the subsidiary decrease the investment account. The investment account is adjusted to fair value at year-end. Income reported by the subsidiary increases the investment account. The investment account remains at initial value. Dividends received are ignored. According to GAAP regarding amortization of goodwill and other intangible assets, which of the following statements is true? Goodwill recognized in consolidation must be amortized over 20 years. Goodwill recognized in consolidation must be expensed in the period of acquisition. Goodwill recognized in consolidation will not be amortized but subject to an annual test for impairment. Goodwill recognized in consolidation can never be written off. Goodwill recognized in consolidation must be amortized over 40 years.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
When a company applies the initial method in accounting for its investment in a subsidiary and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet? A above B above C above D above E above When a company applies the initial value method in accounting for its investment in a subsidiary and the subsidiary reports income less than dividends paid, what entry would be made for a consolidation worksheet? A above B above C above D above E above When a company applies the partial equity method in accounting for its investment in a subsidiary and the subsidiary's equipment has a fair value greater than its book value, what consolidation worksheet entry is made in a
Background image of page 2
year subsequent to the initial acquisition of the subsidiary? A above B above C above D above E above When a company applies the partial equity method in accounting for its investment in a subsidiary and initial value, book values, and fair values of net assets acquired are all equal, what consolidation worksheet entry would be made? A above
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/29/2011 for the course ADVANCED A 4110 taught by Professor Fridel during the Spring '11 term at University of Minnesota Duluth.

Page1 / 37

review for test 2 - All of the following are acceptable...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online