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Dobson inc earns 1350000 and pays cash dividends of

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106.Dobson Inc. earns €1,350,000 and pays cash dividends of €450,000 during 2017.Cornwell Corporation owns 70,000 of the 210,000 outstanding shares of Dobson.What amount should Cornwell show in the investment account at December 31, 2017 ifthe beginning of the year balance in the account was €120,000?a.€420,000b.€300,000c.€450,000d.€600,000Ans: a, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Problem Solving,IMA: Reporting107.Dobson Inc. earns €1,350,000 and pays cash dividends of €450,000 during 2017.Cornwell Corporation owns 70,000 of the 210,000 outstanding shares of Dobson.How much revenue from investment should Cornwell report in 2017?a.150,000b.€300,000c.€450,000d.€600,000Ans: c, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Problem Solving,IMA: Reporting
InvestmentsFor Instructor Use Only12 - 21108.On January 1, 2017, Duvall Industries acquired a 25% interest in Florida Corporationthrough the purchase of 12,000 ordinary shares of Florida Corporation for $960,000.During 2017, Florida Corp. paid $240,000 in dividends and reported a net loss of$360,000. Duvall is able to exert significant influence on Florida. However, Duvallmistakenly records these transactions using the cost method rather than the equitymethod of accounting. Which of the following would show the correct presentation forDuvall's investment using the equity method?InvestmentNetAccountEarnings (loss)a.$360,000($120,000)b.$810,000($90,000)c.$870,000($90,000)d.$870,000($30,000)Ans: b, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Problem Solving,IMA: Reporting109.Consolidated financial statements are prepared when a company owns _________ of theordinary shares of another company.a. less than 20%b. between 20% and 50%c. less than 50%d. more than 50%Ans: d, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting110.The company whose shares are owned by the parent company is called thea. controlled company.b. subsidiary company.c. investee company.d. sibling company.Ans: b, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting111.A company that owns more than 50% of the ordinary shares of another company is knownas thea. charge company.b. subsidiary company.c. parent company.d. management company.Ans: c, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

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Term
Fall
Professor
Yoo
Tags
issuance of ordinary shares

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