Chapter 2 - Test Bank

Chapter 2 - Test Bank - ch02 Student: _ 1. If Push Company...

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ch02 Student: ___________________________________________________________________________ 1. If Push Company owned 51 percent of the outstanding common stock of Shove Company, which reporting method would be appropriate? A. Cost method B. Consolidation C. Equity method D. Merger method 2. Usually, an investment of 20 to 50 percent in another company's voting stock is reported under the: A. cost method. B. equity method. C. full consolidation method. D. fair value method. 3. The main pronouncement on equity-method reporting, APB 19 (ASC 323 and 325) requires all of the following except: A. The investor's share of the investee's extraordinary items should be reported. B. The investor's share of the investee's prior-period adjustments should be reported. C. Continued use of the equity-method even if continued losses results in a zero or negative balance in the investment account. D . Preferred dividends of the investee should be deducted from net income before the investor computes its share of investee earnings. On January 1, 20X4, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipping's retained earnings was $75,000 on the date of acquisition. On December 31, 20X4, the trial balance data for the two companies are as follows: 4. Based on the information provided, what amount of net income will be reported in the consolidated financial statements prepared on December 31, 20X4? A. $100,000 B. $85,000 C. $110,000 D. $125,000
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5. Based on the information provided, what amount of total assets will be reported in the consolidated balance sheet prepared on December 31, 20X4? A. $425,000 B. $525,000 C. $650,000 D. $630,000 6. Based on the information provided, what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31, 20X4? A. $235,000 B. $210,000 C. $310,000 D. $225,000 7. Based on the information provided, what amount of total liabilities will be reported in the consolidated balance sheet prepared on December 31, 20X4? A. $525,000 B. $115,000 C. $125,000 D. $190,000 8. Based on the information provided, what amount of total stockholder's equity will be reported in the consolidated balance sheet prepared on December 31, 20X4? A. $190,000 B. $335,000 C. $460,000 D. $310,000 9. From an investor's point of view, a liquidating dividend from an investee is: A. A dividend declared by the investee in excess of its earnings in the current year. B. A dividend declared by the investee in excess of its earnings since acquisition by the investor. C. Any dividend declared by the investee since acquisition. D. A dividend declared by the investee in excess of the investee's retained earnings.
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Chapter 2 - Test Bank - ch02 Student: _ 1. If Push Company...

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